" "
Three UK policy announcements shaping our road to net zero
Nov 25, 2021

Over the summer the UK Government published three key strategies across hydrogen, flexibility and transport which provide real opportunity for organisations to decarbonise and use their energy more efficient.

With COP26 just around the corner, 2021 is proving to be a pivotal year in sustainability. Throughout the summer the UK government launched a number of important policies and plans to strengthen our collective efforts in fighting climate change, and provide clarity to organisations on what they can expect. 


In this article, Jack Presley Abbott - Head of Wholesale and Trading Regulation - outlines a summary of three important strategies that have been announced, including:


  • Transport Decarbonisation Plan – How the UK will reduce emissions from the transport sector
  • Hydrogen Strategy - Lays the foundations for the UK’s future hydrogen economy
  • Smart System and Flexibility Plan - a vision and work programme to deliver a smart and flexible energy system

 

Additionally, we have included other content to help you and your business dive deeper into these topics and accelerate your own ambitions around net zero.

1. Transport Decarbonisation Plan

Earlier in 2021, the government committed to ban new petrol and diesel cars from 2030. Published in July, the Transport Decarbonisation Plan sets out policies that it will consider to ensure that this ban can be implemented and to ensure that low-carbon alternatives, such as electric vehicles are widely available and cost-effective.


The government will consider introducing zero emission vehicle (ZEV) mandates, which will require manufacturers to sell a certain proportion of zero emission vehicles, such as electric vehicles (EVs).


To ensure that electric vehicles can be rolled out and there can be confidence from consumers, there must be enough charging points to enable EVs to be widely used. There is a commitment to a £1.3bn 'EV Infrastructure Strategy' later in 2021 to help deliver the charging points. Furthermore, all new-build residential and non-residential buildings with an associated parking space will need a charge point in the future


Centrica welcomed the plan’s publication and the focus on charge point infrastructure is welcome and necessary to accelerate EVs being used by customers and the infrastructure needed to support this.


2. Smart Systems and Flexibility Plan

In July, the government and energy regulator Ofgem, jointly published its smart systems and flexibility plan on how to deliver a smart and flexible energy system. This means using smart technologies to provide flexibility to the system, to help manage supply and demand. Flexibility provides consumers greater control over their energy bills, through access to smart technologies and services. In addition, it facilitates the integration of local solutions for low carbon power, heat and transport.


A smart flexible system is seen as key to meeting the cost of net zero at lowest overall cost, reducing costs to consumer by £10bn/year. This is by reducing the amount of generation and network assets that need to be built to meet peak demand


Centrica supports the plan as it is embedding policy that encourages flexibility from consumers and seeks to widening participation in flexibility markets, as well as improving energy system data provision.


Centrica Business Solutions can work with consumers to optimise energy use from their assets, including on-site generation, battery storage and electric vehicles. This plan further demonstrates the importance of optimisation and the increasing focus on this from the government.

3. Hydrogen Strategy

In August, the UK’s Hydrogen Strategy was published which seeks to kickstart the hydrogen economy and sets out how Government will support innovation and stimulate investment in low carbon hydrogen


BEIS analysis demonstrates that by 2050 hydrogen could represent 20-35% of the UK’s energy consumption, demonstrating the real potential of this new clean fuel.


The strategy sets out a number of areas that it wants to work with interested parties on, such as Centrica.


There is proposed support for new low-carbon hydrogen production, mirroring the support scheme used for wind generation. This will be for both green hydrogen (using low-carbon power, such as wind generation to produce hydrogen by splitting water through a process called electrolysis) and blue hydrogen (producing hydrogen by splitting natural gas, and capturing and storing the CO2 by-product). The aim is for the first contracts to be awarded by 2023.


Industrial clusters and wider industry are significant potential demand centres for low carbon hydrogen. Industrial users are expected to provide the most significant new demand for hydrogen by 2030 through industrial fuel switching, reaching up to 45TWh by 2035. Government is supporting switching to hydrogen through the £315m Industrial Energy Transformation Fund and £20m Industrial Fuel Switching Competition.


Hydrogen could play a key role in heating and has launched a series of larger trials which will help inform a decision in 2026 on the role of hydrogen in decarbonising heat.


With this focus on hydrogen, Centrica Business Solutions can work with businesses to work towards deep decarbonisation of all processes with a range of technologies; including the potential that hydrogen-blending, on-site electrolysis and hydrogen fuelled generation presents.

The impact of all these announcements will provide businesses and public sector organisations with a range of new options, directives and funding options to accelerate their net zero ambitions. Find out more by getting in touch today.

> Get in touch
06 Jul, 2022
Balancing planet and profit during unprecedented market volatility
By Vander Caceres 14 Jun, 2022
Wholesale energy prices have experienced unprecedented levels of volatility since the end of summer 2021, with both day ahead/spot and future contracts surging to all-time highs. In the last couple of months, prices have decreased but still remain high compared to a year ago. This period of high energy prices is expected to continue for the foreseeable future (see next section). Energy prices have surged for a number of reasons: A global increase in gas demand following the ease or end of Covid-related restrictions throughout 2021. After the pandemic, economies across the world started to recover. Asian countries like China saw their imports of Liquified Natural Gas (LNG) increase. This resulted in lower LNG shipments to the UK and Europe. On the supply side, the Covid-19 lockdowns pushed some maintenance work from 2020 into 2021 at a time when demand was recovering. In 2021, gas production hit a record low of 363TWh, 47TWh below the previous record low in 2013. Low production was the result of an extensive summer maintenance schedule which saw shutdowns at several major terminals, as well as the Forties Pipeline System which serves a significant proportion of UK gas and oil production. A lack of wind in the summer resulted in higher demand for conventional power. European gas storage in 2021 and Q1’22 remained far below previous years and it’s unclear how these are going to be replenished in the summer given the concerns around supply including the potential suspension of Russian gas flows due to sanctions. The 1,234km offshore Nord Stream 2 gas pipeline, which was designed to double the flow of gas between Russia and Germany (and by extension the rest of Europe) has been abandoned following the invasion of Ukraine. Gas storage in the UK is extremely minimal with capacity at less than 2% of the UK’s annual demand, compared with 22% for other European countries. Whilst the UK is not heavily reliant on gas coming from Russia, it sources almost half it’s gas supply from Europe. Hence, wholesale gas and power prices in the UK are now subject to knock-on-effects from the conflict in Ukraine.
08 Mar, 2022
As part of Ofgem’s Targeted Charging Review (TCR), the way in which Network Operators recover their costs from suppliers is changing. It means from the 1 April 2022, the distribution of these network charges will partly shift away from Unit Rates and into Standing Charges. And as a result, energy suppliers may change the way they price their electricity contracts. But what exactly does this mean for your business? Ralph Smith, Non-Commodity Cost Analyst at British Gas, outlines the new changes coming our way and how your business energy costs may be effected.
> Show More
Share by: