Energy Roundup: July 2024

Welcome to our second issue of 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. 

UK power and gas markets

The last few months have seen several ups and downs in the UK power market, with geopolitics, Asian gas demand and even Australian LNG supply outages impacting UK energy prices.  Despite supply disruptions, Europe has kept on track in refilling gas storage needs ready for winter, however as ever supply risks will be at the forefront of the market, along with weather as global conditions transition to La Niña.

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
Thursday 22 August, 10am
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 your interest 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. 

BSUoS

Balancing Service Use of System (BSUoS) charges cover the daily costs of balancing the transmission system. These charges are influenced by the wholesale price of electricity, with National Grid having to pay market rates to generators when extra power is needed.

At the end of June, National Grid ESO set the Summer 2025 tariff at £10.74 per megawatt-hour (MWh), which is nearly £1.50/MWh cheaper than the Winter 2024 rate. 

This price drop comes after a stable period in wholesale and balancing costs. By the end of this summer, the ESO expects to have over-recovered about £215 million, which will be given back to consumers through the lower Summer 2025 tariff.

However, there’s still a chance that BSUoS costs could go up in the short term if geopolitical tensions flare up or bad weather hits. Looking further ahead, managing the Grid will become more challenging as more power comes from unpredictable sources like offshore wind farms, likely leading to higher BSUoS charges.

TNUoS

Transmission Network Use of System (TNUoS) charges cover the costs of building and maintaining the transmission system. In early May, National Grid released a 5-year forecast for TNUoS tariffs for 2025/26 to 2029/30, showing a significant increase of about £650 million per year compared to the previous 5-year forecast from 2023.

A large portion of this increase is due to the extra spending needed for network expansion and upgrades. This is necessary to handle the growing energy supply from intermittent renewable sources and the expected rise in demand from the electrification of transport and heating.

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

Monitor (NECs explained) webinar
Thursday 12  September, 3pm
Join us as we take a deeper dive into our third 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 your interest here

A view from Abigail Jones, Head of Corporate Affairs at EDF

With the Labour Party winning a landslide victory in the UK General Election earlier this month, Abigail Jones, Head of Corporate Affairs, considers the implications of the new government’s energy policies for Britain’s businesses.

Great British Energy

Labour have announced their intention to create a new publicly-owned energy company called Great British Energy. It would invest in domestic energy sources and seek to accelerate technologies to lower the cost of energy bills for consumers. It will have a budget of £8.3 billion to spend over the course of this Parliamentary term, with £3.3 billion being allocated to community energy Local Power Plan grants. 
 

2030 target

Labour has stated its ambition to make Britain a ‘clean energy superpower’ and as part of this mission pursuing a zero-carbon electricity system by 2030. To achieve this target they will need to rapidly accelerate Britain’s net zero transition and unlock barriers to the building of new infrastructure. They have committed to doubling onshore wind, tripling solar power and quadrupling offshore wind by 2030. They have said they will also invest in carbon capture and storage, as well as hydrogen and marine energy.  Labour has already lifted the ban on onshore wind.  
 

Planning reform

The new Labour government have set out that planning reform is one of the key measures they plan to address to stimulate economic growth and get Britain building. They have announced that they will reform the National Planning Policy Framework, consulting on a new growth-focused approach to the planning system before the end of the month. They will also give priority to energy projects in the planning system and support local authorities with 300 additional planning officers across the UK. 

Energy system reform

Labour have said they will ensure a much tougher system of regulation that puts consumers first and attracts investment to cut bills. They have indicated they will work with the regulator on reforms on standing charges and will strengthen Ofgem. 

Energy in the news

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

An update for Energy Intensive Industries 

Energy Intensive Industries (EIIs) include sectors such as steel, chemicals, engineering, and brick-making industries where energy usage makes up a significant part of production costs.  

As part of the Government’s British Industry Supercharger package, there are 3 upcoming changes for EIIs:

• From April 2024, EIIs will get a full 100% exemption from Renewables Obligation (RO), Contracts for Difference (CfD), and Feed-in Tariffs (FiT), up from the previous 85%.
• From 1st October 2024 (the start of the Capacity Market Delivery Year), EIIs will be completely exempt from Capacity Market charges
• The Network Charging Compensation (NCC) scheme will give EIIs up to 60% back on network costs (BSUoS, TNUoS, DUoS) incurred from April 2024 onwards. Payments will be made in arrears starting April 2025. This scheme will be funded through a charge (the EII Support Levy, ESL) on licenced electricity suppliers and, by extension, their customers. 

Elexon has recently been appointed as administrator of the NCC scheme. Stay tuned for more updates.

The Radio Teleswitch Service switch-off

Radio Teleswitch Service (RTS), also known as Dynamic Teleswitch Service (DTS), uses a radio signal to tell older electricity meters when to switch between peak and off-peak rates.

Introduced in the 1980s, RTS is ending on June 30, 2025, because the equipment needed to keep it running is becoming outdated and can't be properly maintained anymore.

Ofgem, the energy regulator for Great Britain, expects energy suppliers to replace all RTS meters before the service ends. If you have an RTS meter, this could affect your heating and hot water supply if you don’t upgrade.

Switching to a smart meter is the best option if you have an RTS or DTS meter as it can be programmed to a similar service. Learn more about the benefits of smart meters here.

If you are an EDF customer and are interested in upgrading your meter, please book an appointment here or get in touch.

Renewable Energy Guarantee of Origin Certificates

Our Renewable tariffs are backed by Renewable Energy Guarantee of Origin (REGO) certificates, which are used to demonstrate electricity has been generated from renewable sources. 

The window to finalise any REGOs for the latest compliance period (CP22), covering April 2023 to March 2024, recently closed on 1st July 2024. This period saw record-high REGO prices and a lot of volatility due to various factors.

REGOs are important as they influence the emissions factors your business can report under the Greenhouse Gas Protocol.

The Greenhouse Gas Protocol (GHG) provides standards, guidance, tools and training for businesses and governments to measure and manage climate-warming emissions. They are currently reviewing their corporate standards and guidance, with final standards/guidance expected to be published in late 2026.

The aim of any updates will be to align with best practices to ensure GHG Protocol standards provide a solid foundation for businesses to measure, plan and track progress toward science-based and net-zero targets in line with the global 1.5°C goal.

Stay tuned for the next issue of Energy Roundup!