Regulation & Policy

Critics of Germany’s reform of the Renewable Energy Act (EEG) have warned that the abolition of Feed-in Tarrifs (FITs) will “make the country’s once vaunted Energiewende policy run out of steam”. From the start of 2017, FITs will be replaced with a competitive auction system as Berlin seeks to keep costs for renewables under control. Caps on new-build wind and solar power will limit the deployment of intermittent power sources.

Yuval Steinitz, the Israeli energy minister, has mandated the closure of four old coal-fired power units and their replacement with two new combined-cycle gas power plants. Earlier this year, Steinitz ordered state-run Israel Electric Corp (IEC) to use 15% more gas, replacing an equivalent amount of coal generation.

Flexibility of power systems can be enhanced by thermostat-based demand response, aggregators and small energy storage. However, high transaction costs - relative to the size of resource - prevent these emerging small resources from participating directly in electricity markets, the Oxford Institute of Energy Studies (OIES) finds. Remunerating different kinds of flexibility – MW, MW/min and emission performance – would facilitate a more balanced competition.

In the aftermath of a month-long leak at SoCalGas’ storage, California is taking urgent measures to cap the gas use in the power sector. Looking ahead to the autumn and winter season, the State Energy Commission, CPUC and the California ISO evaluate the option of importing LNG.

Offshore wind and gas power plants are expected to fill Britain’s capacity gap amid uncertainty over the future of the contested Hinkley Point nuclear project. The UK government approved plans by Dong Energy to expand a wind farm in the North Sea to a size that would produce nearly as much electricity as the two Hinkely Point reactors.

Lack of regulatory certainty is counteracting South Africa’s ambition to get over 3,000 MW of gas-fired generating capacity online between 2019 and 2055. Eskom, the country’s state-owned utility, even said it would no longer sign any independent PPA that it had not negotiated itself.

Determined to end load shedding, Pakistan’s Prime Minister Nawaz Sharif has requested a “timely completion” of power projects across the country. Several plant conversions and new-builds with a combined capacity of nearly 5.8 GW are targeted to supply electricity to the grid by mid-2018.

Called on by the Competition Markets Authority (CMA) to cap some of the most expensive retail power tariffs in Britain, energy regulator Ofgem has now committed to implementing measures that will improve competition. One utility boss criticised, however, that “too much onus” is being put on consumers.

Britain’s energy regulator Ofgem has voiced concerns that so-called embedded benefits, paid by power suppliers to distribution grid-connected generators, seems to put them at an advantage over larger plants connected to the high-voltage grid. Distributed generators cash in on £45/kW in embedded benefits in addition to selling electricity.

Power shortages in South Australia’s heavily wind-reliant electricity market have highlighted the urgency of developing backup capacity, the grid operator warned. Prices had surged tenfold to hit $14,000/MWh amid severe supply shortages, prompting policy makers to plea for the restart of a mothballed gas power station.

ACEEE’s 2016 International Energy Efficiency Scorecard has ranked Germany as the frontrunner for energy efficiency, followed by Italy and Japan (tied for second place), France and the UK. Though Germany scored highest for ‘national efforts’, ‘buildings’ and ‘industry’, it was overtaken by India, Italy and Japan in the ‘transport’ category. 

Importing cheap hydropower from Norway and Denmark is deemed a ‘quick fix’ for Britain’s capacity shortage as investment in new large power projects is hard to come by. Yet, Britain’s vote to leave the EU is jeopardizing the future use of interconnectors in the UK capacity market scheme. Demand-side response and power storage are some of the options left.

Uncertainty over the future operation of Britain’s energy market, rising financing costs and post-Brexit challenges to include interconnectors in the UK’s capacity market are expected to “add a risk premium into all forward capacity auctions,” Cornwall Energy says. Higher clearing prices at auction could add over £360 million to consumers’ energy bills.

Theresa May, the new UK Prime Minister, has shut down the Department of Energy and Climate Change (DECC) and moved responsibilities to the newly created Department for Business, Energy and Industrial Strategy, led by Greg Clarke. Critics in Whitehall voiced concerns that the new government places less importance on closing Britain's power gen capacity gap as main attention lies on Brexit.

US consumer watchdog has warned the California Independent System Operator (CASIO) against introducing a ‘Western Power Grid’ that would strengthen links between eight states and facilitate more electricity exports to Mexico. Critics warn this would be “burdening consumers with higher costs [of generation] to benefit investors,” while proponents say an interregional grid would help save nearly $1 billion over the next decade.