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With COP26 looming and net zero ahead, decarbonisation of energy will be front and centre in 2020.
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White papers, EVs and the ESO: What to look out for in 2020

With COP26 looming and net zero ahead, decarbonisation of energy will be front and centre in 2020.

There are a number of important things to keep an eye out for in 2020, including the energy white paper, the results of the National Grid Electricity System Operator (ESO) review, how businesses approach RIIO-2 and tax changes for electric vehicles (EVs).

The new Conservative government will be particularly closely observed, with COP26 in Glasgow looming and net zero enshrined in law, meaning the decarbonisation of energy is front and centre.

But the sector did not feature heavily in the party’s manifesto, and time is running out. The Committee on Climate Change (CCC) has called on Boris Johnson to make 2020 the year of "renewed policy implementation", with net zero requiring huge amounts of change.

The energy white paper

The energy white paper has been a long time coming. It was originally supposed to be published in early summer 2019, but has been consistently pushed back.

In October, then energy secretary Andrea Leadsom told the BEIS select committee that the white paper would be published in Q1 on 2020.

It will include details on the country's path to achieving net zero emissions by 2050, including which technologies will receive support. The government has been criticised by the energy industry and environmentalists for the lack of information that has been provided about the pathway to net zero so far.

The CCC said that the government's actions thus far have been insufficient in its 2019 Progress Report, calling for the white paper to provide details on routes to market for solar and wind, as well as how to quadruple low carbon generation.

“It’s time for the government to show it takes its responsibilities seriously. Reducing emissions to net zero by 2050, requires real action by government now," said the CCC chairman Lord Deben.

Ofgems review of National Grid ESO

In 2020 we can also expect to see the results of Ofgem’s review of National Grid ESO. This came into particular focus recently, when the regulator released its investigation into the blackout that occurred last August.

While it found no direct causal link between the ESO and the blackout, the investigation “raised questions” about the management of the system.

As such, Ofgem has said that it is going to accelerate its review into ESO’s structure and governance, looking at how it is “adapting to the complex and changing world it operates in”.

In particular, the review will focus on the Security and Quality of Supply Standard, and ESO’s ability to apply it. This is unsurprising, as the ESO itself suggested that higher levels of resilience may be appropriate in its report to Ofgem in September.

Jonathan Brearley, the executive director of Ofgem commented: “As the energy market changes it is vitally important we futureproof the networks to ensure consumers continue to benefit from one of the most reliable electricity systems in the world."

The RIIO 2 framework

In December, Ofgem released the finalised RIIO-ED2 framework, designed to drive electricity distribution companies to go further towards decarbonisation.

The price controls it lays out won’t start till 2023, but over the next year we’re likely to see DNOs begin preparations. Ofgem described the framework as “tough by fair”, with the industry welcoming the commitments to decarbonisation within the framework.

Renewable Energy Association’s (REA) head of policy Frank Gordon was amongst those praising the change to allowable returns and bringing the default contract period down to five years outlined in the new framework.

“The REA cannot understate the importance of this process. Whilst many networks are presently becoming more involved in managing grid constraints, for example by tendering for energy storage services, distribution networks have traditionally been major obstacles for the deployment of renewable energy and clean technologies,” he continued.

The methodology for RIIO-ED2 will be released in 2020, following a consultation that is set to be published this summer.

Tax changes for EVs

In April, the Benefit in Kind (BiK) tax for EVs is going to be reduced to 0%, and this is likely to fuel a huge uptake.

The change to the tax was announced in July following a government review, and is designed to speed up the switch to the cleaner transportation option. 2019 saw battery EV sales increase by 144%, but cost still remains prohibitive. In a study commissioned by BP and created by Systra, entitled the One the Move report, cost was listed as the biggest deterrent to switching to an EV.

With the reduction in BiK, driving a company EV will become cheaper than a petrol alternative, and could be the push the industry needs, even kick-starting a second hand market.

This shift in tax was one of the key predictions made by a number of contributors to the Current± Predicts series, published at the end of 2019.

For more insights into what the key players in the industry are expecting from 2020, check out the series.

Editorial

Molly Lempriere Deputy Editor, Current±

Molly Lempriere is deputy editor at Solar Media, responsible for its UK-facing publications Solar Power Portal and Current±.

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