Electricity generation

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The UK has risen two places to third in EY’s biannual global ranking of the best places to invest in renewable energy. Positive developments highlighted by the firm included the launch of the government’s new energy security strategy and the awarding of seabed right for tens of gigawatts of generation capacity in the ScotWind leasing round.
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The wholesale electricity market is “no longer fit for purpose” and, if left unchanged, will impose excessive and unnecessary costs on consumers, National Grid Electricity System Operator (ESO) has warned in a new report. The ESO said the current market design, based on a blanket national wholesale price for electricity, is contributing to a dramatic rise in constraints costs and inefficiencies in balancing the power grid, whilst also undermining the capability to deliver demand-side flexibility.
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Kwasi Kwarteng has asked the Electricity System Operator (ESO) to work with the industry to bolster UK security of supply by delivering non-gas fired, including coal, generating capacity for next winter.
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Utility Week speaks to Mark Futyan, chief executive at solar and storage developer Anesco, about the current state of the market for grid-scale batteries, which has quickly grown from nothing to a pipeline of many gigawatts over the last decade. He says a recent rise in battery prices due to supply constraints and surging demand from electric vehicles has done little to stop the boom as they become increasingly valuable to the energy system.  
Analysis
A major new report proposes key reforms to enable the energy retail market to deliver for customers and net zero. It examines where action can be taken now on easing affordability pressures, evolving regulation and wholesale markets and ensuring a healthy, competitive energy retail market.
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The inaugural UK Utilities Risk Report, from Utility Week and Marsh, highlights the key issues keeping sector leaders awake at night. From cybersecurity to policy and regulatory blockers, extreme weather and price volatility, this report presents a snapshot of the key concerns for utilities.
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Latest in Electricity generation

SSE Thermal and Equinor have purchased Triton Power from Energy Capital Partners for £341 million as part of the companies’ hydrogen ambitions for the Humber region. Triton Power operates the Saltend power station – a 1.2GW combined-cycle gas turbine and combined heat and power plant to the north of the Humber Estuary – that is expected to become a primary offtaker for Equinor’s planned H2H Saltend hydrogen production facility.
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The government has hailed the successful renegotiation of the Energy Charter Treaty as a “landmark agreement” that will protect taxpayers from costly legal challenges as the UK seeks to decarbonise its energy system. The Energy Charter Treaty provides an international framework for trade and investment in energy, including legal protections against political risks and provisions for dispute resolution.
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A Treasury minister has defended the lack of detail furnished by Rishi Sunak about government plans to extend its windfall tax on oil and gas profits to electricity generation. The chancellor of the exchequer said in last month’s cost-of-energy statement that he was “evaluating” an extension of the energy profits levy, which will initially be imposed on oil and gas production in the North Sea.
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The Department for Business, Energy and Industrial Strategy (BEIS) has proposed two temporary rule changes to improve liquidity in the next round of Capacity Market auctions. The proposals were prompted by concerns there may otherwise be insufficient capacity to meet the procurement target for the year-ahead (T-1) auction, increasing cost to consumers and jeopardising the security of supply.
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Extending the government’s windfall tax to electricity generators risks pushing more suppliers into collapse, Energy UK has warned. In a new paper, the trade body said it would also "jeopardise" the accomplishment of the government's 2050 net zero emissions target, lowering the "pace and scale" of investment in the low-carbon infrastructure needed to reduce the country's exposure to "expensive and volatile" international gas prices.
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The total cost of switching off wind farms to manage constraints on the power grid hit a record high of £507 million in 2021, according to analysis by LCP, up from £299 million the year before. In a new report, the consultancy said the more than £200 million increase, which occurred despite 2020 holding the record for curtailment volumes, was the result of higher costs for turning up gas generation to replace the lost wind output.
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The Treasury is looking at rolling out Irish-style "one stop shops" for energy efficiency to boost flagging home upgrade efforts, and will unveil the extension of its windfall tax on energy profits to electricity generators within weeks, Rishi Sunak has said. The chancellor of the exchequer, whose department has often been portrayed as a block on energy efficiency because of concerns about the costs of such programmes, said relatively cheap measures could deliver "significant returns".
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In the latest round-up of the weekend papers, generators express concerns over the government’s plans to levy a windfall tax on energy companies, ministers are reported to be considering financial aid for steelmakers struggling with rising energy prices and Octopus Energy partners with a house builder to offer energy self-sufficient homes with no annual bills.
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Ofgem has rejected a set of code modifications that sought to clarify the application of a regulatory limit on transmission charges on generators following a High Court ruling on the matter. The decision is the latest episode in a long-running dispute over the limit, which was initially introduced through EU regulation in 2010 and later transposed into UK law following Brexit.
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Locational electricity pricing could save £30 billion – or £1,000 per household – by 2035, according to a new study from Energy Systems Catapult and Octopus Energy. The report said the current market arrangements were designed for an energy system dominated by large, centralised generators and “no longer makes sense”, resulting in a “growing tension between the wholesale market and physical reality”.
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Ofgem is proceeding will plans to establish a new advisory group as part of reforms to the rule change process for the Capacity Market. The regulator said new arrangements will enable the process to become “more dynamic and adaptive to changing market conditions, whilst also increasing transparency and promoting collaboration”.
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More than 50GW of demand-side flexibility from energy storage, electrolysers and interconnectors will needed by 2030 to soak up surplus renewable and nuclear power, LCP has forecast. The figure was derived from modelling of the government’s energy security strategy, which contained new targets for 24GW of new nuclear and 50GW of offshore wind generation by the end of the current decade.
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