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Professional Energy Services publishes weekly UK energy industry news. We keep you up to date on the latest energy market analysis, focusing on the gas, power, and oil markets, changes to legalisation, and industry updates such as noticeable company activities, and green news.

PES Energy News – 03 April 2023

| Alex Dovey |

PES Energy News – 03 April 2023 

Table of contents:

01 – Powering Up Britain: Green initiative set to hike gas bills by £100 per year – The government aims to rebalance energy levies by encouraging the use of electricity instead of gas

02 – UK energy revolution: bold moves to boost energy security – The new government package includes commitments to carbon capture and storage, offshore wind, green hydrogen, renewable electricity and energy efficiency

03 – Bids invited for next carbon capture clusters – Scotland will host new hydrogen, floating offshore wind and CCUS projects

04 – ‘UK’s reliance on gas is only set to grow’ – Oil and gas production meets more than three quarters of Britain’s energy needs currently

05 – ‘Firms on the verge of experiencing 85% decrease in energy support’ – The British Chambers of Commerce has stressed the importance of implementing an energy support contingency plan



Green_initiative_to_hike_gas _bills_by_£100_per_year

01 – Powering Up Britain: Green initiative set to hike gas bills by £100 per year

The government has unveiled a new ‘green’ initiative that could result in a rise of about £100 per year in gas bills.

This forms part of the government’s efforts to ‘rebalance’ energy levies, prompting individuals to use electricity rather than gas.

This approach, part of a broader Net Zero Growth plan, aims to speed up the transition to cleaner energy sources.

Currently, households bear the cost of transitioning to green energy through state levies on electricity, which makes it more expensive than gas.

These charges, along with subsidies for insulation and the vulnerable, amount to £131 on the average annual electricity bill. Conversely, levies on a typical gas bill are just £34.

The government is worried that this disparity will deter people from replacing their gas boilers with alternatives such as electric heat pumps.

It is estimated that the proposed rebalancing could raise gas bills by up to £100 per year.

The proposal will be up for consultation and there is no set schedule for their implementation yet.



02 – UK energy revolution: bold moves to boost energy security

The government has announced a series of measures aimed at bolstering its efforts to boost the UK’s energy supply, cut carbon and drive bills down.

Among the key initiatives are a commitment to carbon capture usage and storage (CCUS), with the first projects set to be announced soon.

The government is also launching a £160 million fund to support port infrastructure projects to kickstart investment in the UK’s emerging floating offshore wind industry, while the first tranche of green hydrogen production projects is set to receive backing under the £240 million Net Zero Hydrogen Fund.

In addition, the fifth round of the UK’s Contracts for Difference scheme, aimed at incentivising investment in renewable electricity, will be backed by a budget of £205 million.

Plans have also been announced for a new competition to select the best small modular reactor technologies.

Meanwhile, the government is speeding up the planning process to attract investment, reforming it to enable the building of more energy infrastructure, including solar power and offshore wind projects, more quickly.



03 – Bids invited for next carbon capture clusters

The UK government is inviting bids for the next carbon capture and storage (CCUS) clusters in Scotland.

These CCUS clusters will be responsible for capturing 30 megatonnes of carbon dioxide each year by 2030, with the government identifying Aberdeenshire for one of the projects.

In his Spring Budget, the Chancellor earmarked £20 billion for CCUS, with Energy Security Secretary Grant Shapps also launching a £160 million fund to grow floating offshore wind.

Scotland will host CCUS, hydrogen and floating offshore wind projects to help achieve the UK’s overall aims.

These include 10GW of hydrogen production and 5GW of floating offshore wind by 2030.

Prime Minister Rishi Sunak said: “Thanks to our unique geography and strong expertise in clean technology, the UK is well placed to create thriving new industries in carbon capture, hydrogen and floating offshore wind across the country.”

UK Government Minister for Scotland John Lamont added: “Scotland is a key part of the UK’s net zero plans and helping to boost economic growth through green jobs.”



04 – ‘UK’s reliance on gas is only set to grow’

The reliance on gas in the UK is set to grow, with more demand for domestic heating. That’s according to a report by Offshore Energies UK (OEUK), revealing that domestic heating is the country’s second largest use of energy and the biggest contributor to gas consumption.

The report states that 85% of British homes are currently heated by gas, with the most optimistic scenario still seeing gas as the top energy source for domestic heating in 2032.

Heat pumps have been touted as the answer – but the report claims this is unlikely; revealing that 26 million heat pumps need to be installed by 2050 for net zero aims.

Oil and gas production meets more than three quarters of the UK’s energy needs currently – but is also a key contributor to the Scottish economy, specifically.

OEUK says that 9% of Scotland’s GDP comes from the oil and gas industry, providing £16 billion in gross value added in 2022.

It calls for a switch of focus in Scotland to more renewables – with Scotland having great conditions for wind and tidal energy.

David Whitehouse, OEUK Chief Executive, said: “Scotland will play a huge part in this, drawing on its various natural resources to provide power to millions of homes while building cleaner, low carbon technology. With the North Sea on our doorstep, we are calling on the UK government to work with the industry to ensure that we can continue to near-shore our energy production.



05 – ‘Firms on the verge of experiencing 85% decrease in energy support’

The British Chambers of Commerce (BCC) has said businesses are facing an 85% reduction in energy support from April.

The BCC is underscoring the pressing necessity for an energy support contingency plan and urging for a collaborative and targeted initiative to aid companies struggling with this matter.

With the deadline for the reduction rapidly approaching, the situation has escalated to a critical level and prompt action has become indispensable, the BCC has said.

Alex Veitch, Director of Policy and Public Affairs at the BCC, said: “We have been signalling for months that many businesses will struggle to afford their energy bills when financial assistance reduces by 85%, with many receiving a fraction of their original support.

“Almost half (47%) of firms say paying bills will be difficult from tomorrow onwards.”

Mr Veitch emphasised that to ensure competition in the business energy sector and address market failures, the government must grant Ofgem the necessary powers to regulate the industry effectively.



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