The Utility Market Experts (TUME)’s Post

This week, the government published its second REMA consultation, putting forward proposals for sweeping reform of electricity market arrangements.   Building on the first consultation released in July 2022, this publication significantly narrows down options for reform, setting out a clearer view of the potential future design of the market.   Keeping abreast of the REMA programme is crucial for those operating in the electricity sector. Key mechanisms, including the Capacity Market and Contracts for Difference, will be reformed with the aim of enabling the effective operation of a renewables-dominated system.   Another notable aspect of REMA is the impact on consumers. Potentially bringing the largest shake-up to consumer energy bills in decade, the consultation includes proposals to implement a 'locational' pricing system, which could result in sizable variation in energy bills across the country.   REMA is just one part of the wide-ranging reform taking place across the sector. Grid and network improvements, consultations on bespoke support mechanisms for low-carbon technologies and further change to the CfD and CM schemes will inform, and be informed by, REMA.   I was delighted to draft this report for PLMR, which can be found below. You can also read my further political insights on the programme here - https://lnkd.in/enQeN_BU.   If you need advice or if you are interested in engaging with key decision-makers on REMA, please contact me at amy.colwell@plmr.co.uk.

We've written about the second REMA consultation - see our blog below. Interestingly, the more radical proposals to split the wholesale market have been dropped, and instead a "future-proofed" CfD will be the primary framework going forward to pass on the cost savings of renewables and drive investment in renewable generation. A move to zonal locational pricing is also still on the table to deliver more efficient locational signals, which will be considered in more detail alongside other options like TNUoS reform, expanding constraint management measures and optimising the use of interconnectors. Final decisions will be taken in mid-2025, so these will fall to the next government. That government might also have a target to decarbonise power 5 years earlier than the current plan, which could significantly impact decisions...

Interesting insights from Power Advisory underscore the need for clarity: government sets policy, not economic regulators. Bill 165's stance on #naturalgas clarifies its role in the #energytransition, especially for space heating, #electricity generation, and hard-to-abate industries. While there is no doubt around the crucial independence of the economic regulator, alignment with government objectives and policies is a must to ensuring the affordability, reliability, and resiliency of the grid and fostering an investment-friendly environment. As indicated by the Electrification and Energy Transition Panel, economic regulators are not equipped to set policy and should not be expected to do so. As Ontario's #energy demand surges and industries flock to the province, it's crucial to ensure regulatory coherence to prevent investment outflows.

Another new post on Power Advisory today by Brady Yauch and myself, taking a look at the many elements, such as new powers for the Minister of Energy, contained in Ontario's recently introduced Bill 165, Keeping Energy Costs Down Act, 2024. #onpoli #energy #energytransition #regulation

The Department for Energy Security and Net Zero has released the second stage of its Review of the Electricity Market Arrangements consultation. Read our article for a breakdown of the key strands from the consultation: https://loom.ly/E8l2A6w

National Grid’s electricity system operator (ESO) has mapped out power “motorways” across Great Britain to allow for the biggest investment since the 1960s. “Transformational investment in the electricity network is needed to ensure we can make the most of low-cost, low-carbon wind power. Getting this right will help to reduce energy bills for consumers and enable the deployment of electric vehicles and heat pumps” https://lnkd.in/ddyJ36Rb

Feedback due November 22, 2024: "The Ministry of Energy and Electrification is proposing legislative amendments that would enable the development of Ontario’s first Integrated Energy Resource Plan, make it more cost-effective to connect to the electricity grid, help reduce energy use to save families and businesses money, and support the growth of EV adoption in Ontario." #ontario #energy #electricity #regulation

Map of clean energy by state (but note the data are from 2022 before IRA investments across the US) https://lnkd.in/ePmbmp94

Should AEMO be privatised? What are the benefits and costs of such a move? Will this improve or hinder how we want the electricity system to operate in Australia?

How a simple fix could double the size of the U.S. electricity grid Upgrading existing high-voltage lines could double the flow of power through the electricity grid. The limitations of the grid are slowing the transition to clean energy. This work has been slow because utilities profit more from building new lines than upgrading them. https://lnkd.in/e4jHCzmM #RewireTheGrid