Energy Roundup: October 2024

Welcome to the third issue of our Energy Roundup. Each quarter, we’ll bring you all the latest news, views and insights to help you navigate the ever-changing complexities of the energy industry. 

Energy Overview 

UK power and gas markets

The wholesale energy market has certainly seen a bumpy road this year, and recent activity hasn’t changed this. There was some relief in early September as global gas prices began to ease. Norwegian gas supply resumed as planned following scheduled outages, and long-term weather forecasts for October suggested minimal risk of cold spells.

However, this reprieve was short-lived. Rising geopolitical tensions in the Middle East have driven global commodity markets higher. At the same time, the outlook has tightened as LNG supply to Europe has been slow to recover, and cooler-than-expected weather has added to concerns.

Looking ahead, temperature forecasts in both Europe and Asia will play a critical role in shaping market sentiment. Uncertainty surrounding geopolitical risks will also continue to add volatility to the global energy landscape.

Our Wholesale Market Services experts closely monitor any changes in the market. Stay informed on the latest developments by signing up for our next Power Market webinar.

Power Market Webinar
Join James Chaplin, Senior Manager of Curve Trading, for the next instalment of power market updates. James will help you navigate the current developments in the UK power market and provide an outlook on future prices.
Register for 21 November here

A brief outlook of non-energy costs

While energy costs are fairly straightforward, non-energy costs can be more complex. They include various government and third-party charges to cover the cost of transporting your energy. 

Contracts for Difference Scheme Updates

The Contracts for Difference (CfD) scheme is a UK government program that supports the development of low-carbon electricity generation. The CfD scheme incentivizes investment in renewable energy projects and protects consumers from paying higher support costs when electricity prices are high.

In early September, the government announced the results of the Contract for Difference (CfD) Allocation Round 6. They allocated a record £1.5 billion. As a result, a large volume of contracts and capacity were awarded, covering 9.6GW of energy capacity across 131 projects. This includes over 3GW of solar energy starting in 2026 and nearly 5GW of offshore wind from 2027 onwards. Since the agreed prices are close to current market prices, there is little expected effect on the charge for CfD.

Renewable Obligation Scheme Updates

The Renewables Obligation (RO) is a UK government policy designed to encourage the generation of electricity from renewable sources. It was introduced in 2002 to help the UK meet its renewable energy and carbon reduction targets and works by placing an obligation on electricity suppliers to source an increasing proportion of the electricity they supply from renewable energy sources.  The scheme closed to new generators in 2017, but costs still vary each year depending on DESNZ forecasts and inflation.

At the end of September, the Department for Energy Security and Net Zero (DESNZ) set the Obligation Level for the 2025/26 Renewable Obligation (RO) scheme at 0.493 ROCs/MWh for Great Britain and 0.193 ROCs/MWh for Northern Ireland, the highest ever for Great Britain. This may slightly increase the charges for RO, but the final amount will be confirmed in February 2024 based on inflation data. This announcement has reduced much of the previous uncertainty.

You can read more about the announcement on the government website here 

For more information, sign up for our next Monitor webinar.

Monitor (NECs explained) webinar
Join us as we take a deeper dive into our final Monitor in 2024, the quarterly report covering non-energy costs. In this webinar, our experts will share more detailed updates on how the current non-energy costs impact businesses.
Register for 12 December here

Energy in the news

This past quarter, we have seen many regulatory changes in the energy sector. Here are our top two:

DESNZ Consultation on Regulating TPIs in the retail energy market

On 20th September, DESNZ announced a consultation to explore options for the direct regulation of TPIs in the domestic and non-domestic energy markets. 

DESNZ set out several options for different regulatory frameworks, and stated their preferred option of a ‘general authorisation’ regime – this would mean TPIs could carry out an activity as long as they meet a set of conditions.

The consultation closes on 15th November 2024. DESNZ note that the consultation is open to all interested parties, with a particular focus on stakeholders within the energy sector, including TPIs, energy suppliers, consumer protection groups, and businesses relying on TPIs for energy procurement and management.

Find out more on this topic by visiting the government website here

Ofgem sets out vision for customer service culture change to make the energy sector the best in Britain

On 10th September, Ofgem launched its Consumer Confidence programme, stating that it will focus on three main areas:

• Defining the outcomes we want the sector to deliver, 
• Redesigning the regulations and incentives to deliver those outcomes
• Ensuring Ofgem has the right powers. 

Ofgem confirmed they will work closely with stakeholders over the coming months, consulting on the proposals. EDF Business Solutions welcomes this initiative and looks forward to engaging in the consultation process. In line with our commitment to delivering exceptional customer service, EDF Business Solutions has also joined the Institute of Customer Service. This demonstrates our dedication to enhancing customer experience and our ambition to be a leader in customer service excellence within the energy sector and beyond.

A view from Pieter Theuwis, Mid Market Director at EDF Business Solutions

Watch as Pieter Theuwis, Mid Market Director speaks about EDF Business Solutions’ commitment to Customer Experience.