Ofgem’s energy price cap came into force this January, potentially affecting up to 11 million UK domestic consumers. Meanwhile, there are a number of significant energy policies in the pipeline that also have the potential to impact thousands of UK businesses. Here are the dates and details you need to look out for.
Ofgem’s Targeted Charging Review (TCR)
4th February 2019 – Consultation concludes
This is a consultation on changes to the way in which Ofgem recovers the costs of the networks used to transport electricity to homes, public organisations and businesses. These costs are recovered through two types of charges:
• ‘forward-looking charges’ (which send signals about how much costs will increase or decrease with network usage)
• ‘residual charges’ (which recover the remainder of the costs)
Ofgem says it wants to ensure that these costs are shared fairly amongst all those who may want to use the electricity networks.
The need for action comes from the changes in the energy sector. More and more businesses and households have their own generation in the form of solar panels or wind turbines or more traditional types of generation. Electricity storage is becoming more common and we are seeing increased take up of heat pumps and electric vehicles.
The rapid pace of changes in energy mean that the issues with the existing charging structure are likely to become worse over time. Ofgem is therefore taking action to address this and to ensure that network charging works in the interests of current and future consumers as a whole.
In doing so, Ofgem is undertaking a review of the transmission and distribution residual network charges, as well as some of the remaining Embedded Benefits, which are different charging arrangements for smaller generators connected to the distribution system. This is significant as it could eliminate the incentive of Triad avoidance for some businesses. Under the proposals, charges will remain roughly the same to users where no Triad management is in place, however, it is expected that large increases will occur for those who use Triad avoidance to reduce the impact of the highest half-hourly peaks of electricity use between November and February.
Smart Export Guarantee
5th March 2018 – Consultation closes
With the closure of the Feed-in-Tariff (FiT) scheme (more on this below) other routes to the market for exported electricity are currently limited, with a focus on larger capacity generators. As a result, the Government is exploring new arrangements for small-scale low-carbon generators. Under the newly proposed Smart Export Guarantee (SEG), the government would legislate for suppliers to remunerate small-scale low-carbon generators for the electricity they export to the grid, offering a new opportunity for households and businesses to make money from any unused electricity they produce. As well as offering this financial incentive, the scheme could also help generally lower costs for consumers and promote the efficient use of electricity through price signals, for instance, by promoting export when the grid is experiencing high demand.
Though there is no current timeframe for the implementation of the scheme, the consultation process is now open and due to conclude on 5th March 2019.
29th March 2019 - UK set to leave the EU
Though the repercussions and ramifications of Brexit remain unclear (including whether the above date will remain in place, or indeed, whether Brexit will go ahead at all), the prospect of the UK leaving the EU has raised many questions regarding the issue of energy security.
According to an EU Energy and Environment sub-committee report, British energy consumers could be more vulnerable to energy shortages, power outages and price hikes as a result of Brexit. We’ve taken a look at how these possible energy scenarios could play out in our blog post here.
Feed-in Tariff (FiT) scheme
31st March 2019 – Scheme closure
Introduced on 1 April 2010, the Feed-in Tariffs (FIT) scheme is a government programme designed to promote the uptake of renewable and low-carbon electricity generation technologies, and requires participating licensed electricity suppliers to make payments on both generation and export from eligible installations.
On 18 December 2018 legislation was laid before government which closes the FIT scheme to new applicants from 1 April 2019, barring some exceptions. Ofgem has published an FAQ and guidance document which help explain the impact of these changes.
Streamlined Energy and Carbon Reporting (SECR)
1 April – Policy implementation
It is an ambitious objective of the government’s Clean Growth Strategy to enable businesses and industry in Britain to improve their energy efficiency by at least 20% by 2030. This April, the new Streamlined Energy and Carbon Reporting (SECR) framework is being brought in to help facilitate this target and will replace the reporting element of the scrapped CRC Energy Efficiency Scheme (the allowance costs associated with this scheme are being moved into the Climate Change Levy, which will increase in April 2019).
Under SECR, large UK organisations will be required to report their energy use, carbon emissions and energy efficiency measures in their annual reports as of April 2019. The introduction of this new carbon compliance scheme aims to reduce some of the administrative burden of overlapping schemes and improve the visibility of energy and carbon emissions when the CRC scheme ends.
Energy Savings Opportunity Scheme (ESOS)
5th December – ESOS Phase 2 compliance deadline
Phase 2 of the Energy Savings Opportunity Scheme is now underway, with regulations demanding that large businesses repeat the measures taken in Phase 1 before the compliance deadline of 5 December 2019. Broadly, these steps are to:
1) measure total energy consumption;
2) conduct audits to identify energy efficiency opportunities; and
3) report compliance to the national scheme administrator (Environment Agency in England, SEPA in Scotland, NIEA in Northern Ireland, and NRW in Wales).
Qualifying organisations will need to appoint a Lead Energy Assessor to conduct and sign-off the ESOS Assessment. ESOS compliance requires a 12 month period of data which includes the qualification date of 31 December 2018, so monitoring of energy consumption must have already begun. However, if you are yet to conduct your audits, you have until the deadline to do so.
As one of the UK’s leading energy and environmental consultancies, we offer an expert service to achieve ESOS compliance and convert energy saving opportunities into actual cost-cutting realities. Find out more.
For more information on our legislative compliance services, be it for SECR or ESOS, or for more advice on how any of the policies discussed above may affect your future energy spend, contact our energy management team today on 02920 893 811 or email us and we’ll get back to you.