Welcome to this month's Energy and Water update, keeping you up to date with the major developments you need to know.

All the key energy and water developments this month in one place. We cover the latest Capacity Market changes, CCUS cluster sequencing, consultation on the new UK ETS and much more.

CAPACITY MARKET

GOVERNMENT RESPONDS TO PROPOSALS FOR IMPROVEMENTS TO THE CAPACITY MARKET

The Government has issued a response to the Department for Business, Energy andIndustrial Strategy (BEIS) consultation on proposals on incremental and technicalimprovements to the Capacity Market in 10 areas. The Government has now laid legislationin Parliament to amend the capacity market rules and the electricity capacity regulations inorder to implement the proposals. BEIS, 21 June 2021

BEIS PUBLISHES LETTER TO NATIONAL GRID ESO WITH PLANS TO HOLD CAPACITY AUCTIONS

BEIS has published a letter it has sent to National Grid Electricity System Operator (ESO)setting out the government’s plans to hold two Capacity Market auctions in 2022. The T-1auction, for 2022 to 2023, and a T-4 auction, for 2025–2026 in the auction windowbeginning on 1 September 2021. A letter that considers the auction parameters has alsobeen published. BEIS, 16 June 2021

CCUS

CCUS CLUSTER SEQUENCING

There are exciting times ahead as the UK government sets out how it will support the firstindustrial clusters using carbon capture, use and storage. Big emitters of CO2 should applynow to be part of it. We look at how the process works and what financial support is onoffer.

ELECTRIC VEHICLES

CONNECTING ELECTRIC VEHICLE CHARGEPOINTS TO THE ELECTRICITY NETWORK

A guide to the electricity connections process for those looking to install electric vehiclechargepoints at their business or site. BEIS, 16 June 2021

EMISSIONS TRADING

BEIS ISSUES CONSULTATION ON CARBON LEAKAGE RISK

BEIS is seeking views on the risk of carbon leakage due to the indirect emission cost fromthe UK Emissions Trading Scheme (ETS) and compensation price support (CPS)mechanism plus feedback on sector eligibility and scheme design. The consultation closeson 9 August 2021. BEIS, 14 June 2021

ENERGY REGULATION

THE ECODESIGN FOR ENERGY-RELATED PRODUCTS AND ENERGY INFORMATION REGULATIONS (SI2021 / 745)

These Regulations provide new Ecodesign and Energy Labelling requirements for certainenergy-related products that are placed on the market in Great Britain. They updateexisting Ecodesign requirements to increase the minimum energy performance and setmaterial efficiency of electric motors, household washing machines/washer-dryers,household dishwashers, household refrigeration and electronic displays. The Regulationsfurther introduce Ecodesign requirements which set minimum energy performance andmaterial efficiency standards for welding equipment and commercial refrigeration for thefirst time. The Regulations also introduce Energy Labelling requirements for commercialrefrigeration to enable consumers to discern the most energy efficient products on themarket. The Regulations partly came into force on 17 June 2021 and fully on 1 July 2021. Explanatory Memorandum

MAXIMISING NON-DOMESTIC SMART METER CONSUMER BENEFITS: CONSULTATION ONIMPROVING THE DATA OFFER AND ENABLING INNOVATION

BEIS is seeking views on proposals to help non-domestic smart meter customers saveenergy and manage costs through use of the data from their smart meters. The proposals would:

  • equire energy suppliers to provide non-domestic smart meter customers with regularfree information about their energy consumption, based on the data from their smartmeter;
  • make it easier for non-domestic customers to share their data with third partyinnovators (acting with their consent) to support energy saving and net zero initiatives;
  • andmake it easier for third parties acting with customer consent to access the data theyneed to enter the market and deliver services to non-domestic smart meter customers

The consultation ends: 24 September 2021. BEIS, 5 July 2021

OFGEM CONSULTATION ON PROPOSAL TO REVIEW COMPETITION IN THE ELECTRICITY CONNECTIONSMARKET FOR RIIO-ED2

An Ofgem consultation is seeking views on its proposed approach to reviewing the level ofcompetition in the electricity distribution connections market, in order to inform its design ofRIIO-ED2 connection outputs and incentives. Consultation ends: 13 August 2021. Ofgem, 18 June 2021

CONSULTATION ON CHANGES TO OFGEM'S ENFORCEMENT GUIDELINES AND SECTORAL PENALTYSTATEMENT

Ofgem is seeking views on the revised versions of its Enforcement Guidelines and theSectoral Statement of Policy in relation to financial penalties and consumer redress. Theresponses will help them to ensure that their enforcement processes are relevant andadaptable in the current energy market. Consultation ends: 4 August 2021. Ofgem, 9 June 2021

SMART METER POLICY FRAMEWORK POST 2020: GOVERNMENT RESPONSE TO A CONSULTATIONON MINIMUM ANNUAL TARGETS AND REPORTING THRESHOLDS FOR ENERGY SUPPLIER

Responding to the BEIS consultation on annual tolerance levels associated with smartmeter installation targets for energy suppliers in the UK and the level of reportingthresholds for large energy suppliers, the Government confirms, amongst other things, theextension of the current "All Reasonable Steps" obligation for 6 months to 31 December2021, with the new Framework commencing on the 1 January 2022. BEIS, 1 June 2021

ENERGY STORAGE

BEIS LAUNCHES COMPETITION FOR LONGER DURATION ENERGY STORAGE PROJECTS

BEIS has launched two competitions looking at the development of innovative longerduration energy storage projects. Stream one is for pre-commercial demonstrator grants, whilst Stream two focuses on first-of-a-kind full-system prototypes. A competition event willbe held on 17 June 2021 and applicants must register for the competition by 2 pm on 23July 2021. Full proposals must be submitted by 2pm on 13 August 2021. BEIS, 7 June 2021

HEAT

STATUTORY UPDATES TO THE COMBINED HEAT AND POWER QUALITY ASSURANCE (CHPQA)STANDARD

The Combined Heat and Power Quality Assurance (Temporary Modifications) Regulations2021 (SI 2021 / 656) were made on 18 May 2021 and update the definition of the CHPQAStandard in the relevant RO and EPS legislation for 12 months to provide a temporaryeasement in the certification process for CHP operators directly impacted by COVID-19 toensure they receive continued financial support. The RHI Modification Regulations makesimilar changes to the relevant RHI legislation.

The Climate Change Levy (General) (Amendment and Modification) Regulations 2021 (SI2021 / 675) also amend the Climate Change Levy (General) Regulations 2001 (S.I.2001/838) to update references in those Regulations to the Combined Heat and PowerQuality Assurance Standard (“CHPQA”) and to certificates issued under it. Legislation.gov.uk, June 2021

GOVERNMENT LAUNCHES CONSULTATION ON WARM HOME DISCOUNT SCHEME

BEIS is seeking views on proposals to extend, expand, and reform the Warm HomeDiscount scheme to 2026. This follows regulations (SI 2021/667) which amend the WHDRegulations to run the scheme until 31st March 2022 and additionally make someamendments to the operation of the scheme. The regulations came into force on 25 June2021 and the consultation to extend the scheme closes on 22 August 2021. BEIS, 28 June 2021

HYDROGEN

BEIS PUBLISHES GUIDANCE DOCUMENTS FOR LOW CARBON HYDROGEN SUPPLY 2COMPETITION

BEIS has published a series of documents providing more information about the LowCarbon Hydrogen Supply 2 Competition. This includes for Stream 1 and Stream 2 and aStakeholder Engagement Day questions and answers document to provide more information about the competition. BEIS, 25 June 2021

INTERNATIONAL

STATEMENT ON BILATERAL ENERGY RELATIONSHIP ISSUED BY THE UK / NORWAY

The UK Secretary of State for Business, Energy and Industrial Strategy (BEIS), KwasiKwarteng, and the Norwegian Energy Minister, Tina Bru, held their first in-person meetingin Oslo. The Ministers published a joint statement confirming the importance of the bilateralenergy relationship, as both countries recover from the coronavirus pandemic and tackleclimate change. BEIS, 28 June 2021

COUNCIL AGREES ON NEW RULES FOR CROSS-BORDER ENERGY INFRASTRUCTURE

The European Council has announced it has reached a general approach on the revision ofthe Trans-European Networks for Energy (TEN-E) Regulation. The objective of the revisedTEN-E regulation is to modernise, decarbonise and interconnect the EU’s cross-borderenergy infrastructure in order to help the EU achieve its 2050 climate neutrality objectives. European Council, 11 June 2021

NET ZERO

END TO COAL POWER BROUGHT FORWARD TO OCTOBER 2024

The deadline to phase out coal from Great Britain's energy system has been broughtforward by a year, highlighting the UK’s leadership to go further in driving down emissionsand tackling climate change. BEIS, 30 June 2021

CCC 2021 PROGRESS REPORT TO PARLIAMENT

The Climate Change Committee (CCC) has published its annual assessment of UKprogress in reducing emissions and biennial assessment of progress in adapting to climatechange. Climate Change Committee, 24 June 2021

NET ZERO GOVERNANCE - CALL FOR EVIDENCE

A Business, Energy and Industrial Strategy Committee inquiry on net zero governance willexamine the leadership and co-ordination which will be needed by government to deliver onthe UK’s commitment to reach net zero by 2050. Consultation ends: 27 August 2021. UK Parliament, 24 June 2021

GREAT BRITAIN ON TRACK FOR ZERO CARBON ELECTRICITY PERIODS BY 2025

National Grid ESO has announced that Great Britain’s electrical system is on track and willbe capable of delivering fossil free carbon emissions for short periods by 2025. This wouldbe a significant enabler in reaching zero carbon electricity generation by 2035. National Grid ESO, 15 June 2021