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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 – 27 March 2023

| Alex Dovey |

PES Energy News – 27 March 2023 

Table of contents:

01 – UK urged to take stronger stance on FHS by ensuring no ‘fossil fuel loopholes’ – The government has been asked to confirm that no new gas grid connections will be permitted under the Future Homes Standard

02 – Energy bills predicted to drop below £2,000 in July – Falling wholesale gas prices will drive this change, according to a new report

03 – Small firms facing ‘financial doom’ as Energy Bill Relief Scheme set to end – The end of the scheme may cause a significant increase in energy bills for businesses who fixed their prices last year, new research shows

04 – ‘UK’s energy import bill skyrockets to £117bn in just one year’ – The average household will have to bear the burden of £4,200 due to this escalation, according to a new report

05 – Nuclear hydrogen rejected by nations as ‘renewable’ – Classifying low carbon as renewable could deter from growing renewable infrastructure, seven EU nations claim




01 – UK urged to take strong stance on FHS by ensuring no ‘fossil fuel loopholes’

A coalition of organisations, including energy companies, financial institutions, aviation firms and manufacturers have written to the UK Minister for Housing to request confirmation that no new gas grid connections will be permitted under the Future Homes Standard (FHS).

The FHS is a key government policy aimed at ensuring newly built homes are fit for the future, with high fabric performance and clean heat.

Heat pumps, low carbon heat networks, and electric technologies are anticipated to be the primary heating sources required in the new standards, as they offer significantly lower carbon emissions compared to traditional gas boilers.

According to the letter sent to the Minister for Housing, a clear and long-term signal is necessary to spur investment in British clean tech supply chains, skills and training. The letter also emphasised the importance of ensuring no fossil fuel loopholes in the FHS.

The organisations requested the government to confirm that new homes will not be connected to the gas grid to burn fossil fuels for years to come and hydrogen-ready boilers will not be installed, which could create a loophole that allows new homes to be connected to the gas grid.

The coalition’s main concern is that allowing hydrogen-ready boilers and new connections to the gas grid could trap new homeowners into using fossil fuels, putting them at risk of expensive retrofits in case the domestic gas grid is never fully converted to green hydrogen.



02 – Energy bills predicted to drop below £2,000 in July

Analysts have predicted a drop in energy bills below £2,000 from July due to falling wholesale gas prices.

Wealth management group Investec suggests energy bills in the UK will fall to an average of £1,981 per year from July, due to a decrease in wholesale gas prices across Europe.

The report notes that this is a fifth lower than their previous forecast of £2,478 for July.

In addition, the government‘s funding for household bills will reduce in July, resulting in a cap on the amount people pay per kilowatt of gas and electricity, which will see an end to its support scheme.

According to recent data, the government had spent around £1,500 per household this winter, contributing to an all-time high borrowing of £16.7 billion in February.



03 – Small firms facing ‘financial doom’ as Energy Bill Relief Scheme set to end

The Energy Bill Relief Scheme (EBRS) coming to an end in seven days could endanger the future of hundreds of thousands of small businesses.

That’s according to research conducted by the Federation of Small Businesses (FSB), which warns that nearly 370,000 small firms who fixed their energy bills last year may need to shrink, restructure, or close when their bills revert to a higher price on 1st April, as help for energy bills is due to be significantly downscaled.

The new government scheme, the Energy Bills Discount Scheme (EBDS), will offer far lower support for small businesses.

While market prices have stabilised for those fixing their contracts now or who are on variable tariffs, those who fixed last year will see substantial increases as they are locked into a high price before the government’s relief, the FSB has said.

Many small businesses have reported to FSB that their energy bills had skyrocketed three, four, five-fold, or even more between 2021 and 2022.

The FSB research found that around 24% of small businesses are locked into energy contracts signed last year, at a time when wholesale prices were soaring.

Additionally, more than a quarter of this group (28%) could have to downsize, rethink their business model, or even close when they are hit by the rise in energy costs, according to the report.



04 – ‘UK’s energy import bill skyrockets to £117bn in just one year’

The UK’s energy import bill has more than doubled in the past year, reaching a record breaking £117 billion.

That’s according to a new report by Offshore Energies UK, which suggests this marks the first time that annual energy import costs have surpassed the £100 billion mark.

The surge in costs has been attributed to a rise in spending on crude oil, petrol, diesel, and other oil-based fuels, which totalled £63 billion, as well as a spend of £49 billion on gas.

The remaining expenditure was on imports of coal and electricity.

The report estimates that the average UK household will have to bear a cost of £4,200 due to the increase in energy import costs.

In 2021, the UK spent £54 billion on energy imports, while the figure was £48 billion in 2019.



05 – Nuclear hydrogen rejected by nations as ‘renewable’

Seven European nations have stated they will not consider hydrogen derived from nuclear power as a renewable option for transport aims.

Led by Germany, the seven EU members have written a letter to the European Commission outlining their rejection of using nuclear power to calculate fuel targets for the transport sector.

Austria, Denmark, Ireland, Luxembourg, Spain and Portugal have joined Germany in signing the letter – clapping back at France’s push for the opposite.

Sitting on the other side of the fence, backing nuclear’s implementation into green transport targets, are Bulgaria, Croatia, Slovenia, Slovakia, Hungary, the Czech Republic and Poland.

The seven signatories believe low carbon fuels should not be involved in the renewable energy directive.

The letter reads: “The production and use of low carbon hydrogen and low carbon fuels should not be incentivised through a directive on the promotion of renewable energy.”

It continues: “Especially by accounting them towards the overall 2030 or any sectoral renewable energy targets or deducting them from the denominator.”

Although the nations accept that nuclear-made hydrogen will have its place in the European energy mix, it should not deter from growing renewable infrastructure.



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