Spring 2019 Scottishscottish Energyenergy Newsnews

Local Energy Matters:

Scotland

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To coincide with the start of the new financial year, we have issued a bumper edition of Local Energy Matters this month, covering local energy news, energy tariffs, electric vehicles and other developments across March and April. For more details on the cheapest energy tariffs across Scotland in March, please contact Michael Brown at [email protected] or 01603 542122.

Scottish government publishes networks vision The Scottish government has published a report on its vision for gas and electricity networks up to 2030. Released on 14 March, the report said that new electricity transmission links need to be built within Scotland and to the rest of Great Britain, as well as new and stronger interconnections with Europe. Scotland is to have a secure and resilient transmission network with a System Operator able to access the technical services needed to maintain stability. Electricity distribution networks will have sufficient capacity to meet the growing demand for distributed generation. For gas transmission, Scotland will develop the evidence base to show the feasibility and costs associated with adapting the network to support regional energy systems based on 100% hydrogen. Additionally, the report said that Scotland aims to introduce increasing quantities of low carbon gases into the gas distribution network. Gas and electricity networks will work in delivering the principles and priorities of the Scottish Energy Strategy through a whole system view, a smarter local energy model, system security and flexibility and consumer engagement and protection. Social homes gain £13mn low-carbon investment

The Scottish Government’s Low Carbon Infrastructure Transition Programme (LCITP), set up in 2015, plans to invest £13.4mn on a variety of low-carbon projects in Scotland, it announced on 30 March. The fund was set up to support the country’s transition to a low-carbon economy, and the range of projects which will benefit include solar panels on social housing in Aberdeenshire, and a district heat network in Midlothian. Previously the fund has secured financial support for Nova Innovation’s Tidal Energy Storage project in Shetland, which provides 24-hour renewable energy for the island. Paul Wheelhouse, Scotland’s Energy Minister, said: “This latest announcement of funding offers will help further develop our low-carbon capabilities as we continue to attract, retain and advance low carbon innovations […] The LCITP continues to help place Scotland at the forefront of the low carbon transition and support our wider programmes to meet our world-leading climate change targets.”

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Private rented sector to be given efficiency targets On 26 March, the Scottish Government launched a consultation on further development of its proposed EES policy programme. The new consultation suggested bringing forward proposed regulations that would require landlords in the private rented sector to ensure their properties meet EPC Band E from April 2020, increasing to EPC Band D from April 2022. It has been suggested that all properties in the private rented sector should reach EPC Band C from 2025 when there is a change in tenancy.

What is Energy Efficient Scotland? Energy Efficient Scotland (EES) is a 20-year framework for Scotland to meet two key objectives; removing poor energy efficiency as a driver for fuel poverty, and to reduce total greenhouse gas emissions in line with targets set out in Scotland’s Climate Change Plan.

This new consultation sets out the legislation being prepared to support the delivery of EES, including a Heat Networks Bill as well as secondary legislation setting minimum energy efficiency standards social housing and revised energy efficiency standards for non-domestic properties.

Fife district heating network opened Minister for Energy, Connectivity and the Islands Paul Wheelhouse opened a new £24mn district heating network in Glenrothes on 26 April. The project, which is a collaboration between Fife Council and RWE, received £8.6mn support from the Scottish Government’s Low Carbon Infrastructure Transition Programme. Located in central Glenrothes, the network is providing low-carbon heat to the Fife House complex, Rothes Halls and a nearby sheltered housing complex. Councillor Ross Vettraino, Fife Council’s spokesperson for the environment said: “Fife continues leading the way in tackling climate change. Bringing this district heating scheme to Glenrothes helps Fife Council reach its goal of reducing carbon emissions by 42% by 2020. The scheme demonstrates how to tackle the Government’s long-term climate change targets at a local level and helps build confidence in modern, low carbon heat technology.”

Scottish energy efficiency mechanism analysed

The Scottish Government published its analysis of possible delivery mechanisms for the EES programme on 19 April. The programme aims to make Scotland’s existing buildings near zero carbon by 2050 to reduce fuel poverty and tackle climate change. The analysis found that bringing all of Scotland’s housing stock up to the required standard will necessitate an average of 66,000 measures installed a year between now and 2040 – the government said that the current rate of installations is in line to hit this target, but the rate is slowing down. It also found that property owner buy-in will be required, as well as incentivising private landlords.

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Dundee City Council develops energy efficiency It was announced on 4 March that Dundee City Council is to invest in £2.5mn of energy efficiency works in its buildings in order to help promote energy savings across the city in order to cut carbon dioxide emissions by 700 tonnes every year. Works are set to include a range of energy conservation measures including LED lighting upgrades, solar photovoltaic roof panels, modifications to heating and ventilation and cooling systems, according to Lynne Short, Convener of Dundee City Council’s city development committee. These energy efficiency measures are able to guarantee energy savings of over £260,000 a year which is around a third of the total energy costs for the 17 properties chosen to receive works. These buildings include primary and secondary schools, libraries, workshops and multi storey car parks, helping to promote changes for decarbonisation in the public space. Scotland marine energy to be worth £800mn A report produced by the Highlands & Islands Enterprise (HIE) has forecasted that Scotland’s marine economy could be worth £5bn by 2035, a seven-fold increase from now. Of this, £800mn can be attributed to the marine energy sector. The growth is dependent on key industries, such as wave and tidal energy, aquaculture and marine biotechnology, undergoing successful development. The HIE-led consortium, which includes the University of the Highlands and Islands, Marine Scotland and the European Marine Energy Centre (EMEC), formed in 2016 to audit the value of the marine economy. It observes a number of current capabilities and strengths already occupied by Scotland including: • its EMEC is already a globally renowned test centre • it has locally based skills, innovation and expertise • it plays host to the world’s largest tidal stream array project, and • it has access to some of the best wave and tidal resources in the world with around 61% of the UK’s coastline in the Highlands and Islands. Scotland is estimated to have potential to host around 25% of tidal stream energy across Europe in 2035. However, the report also highlights critical barriers to realising the potential of these industries. Amongst these, skills gaps, limited commercialisation routes for technologies and planning rules, were cited as the key hurdles to overcome. The HIE-led consortium will now reorganise and collaborate to help industry plan on how the findings of the research can be implemented. HIE’s Head of Universities, Education and Skills, Morven Cameron, said: “Our lochs, rivers and coastal waters constitute a tremendously valuable asset that already makes a massive contribution to the regional economy and has the potential to achieve even more. [ ] Sectors as diverse as food and drink, tourism, life sciences and renewable energy are well established, supporting thousands of jobs, many of them in fragile areas of our islands and rural mainland.” 4 | P a g e

Energy tariff headlines Large suppliers cluster at caps On 1 April 2019, Ofgem introduced increased prepayment and default tariff price cap levels, rising to £1,254/year for direct debit, £1,242/year for pay on receipt of bill and £1,344/year for prepayment meter. Default tariffs offered by large suppliers were on average at the level of the 1 April cap, while small and medium suppliers profiled in this report had default tariffs that were on average £101-159 below this cap. Consequently, suppliers have positioned their SVT tariffs in line with the next price cap. When looking at how suppliers are positioned against the cap, there is a clear trend for large suppliers to offer prices at or near the cap, while smaller suppliers position themselves below the cap. On average medium suppliers’ tariffs fell mid-way between the large and small suppliers as shown in Figure 1. The six large suppliers together with Ebico, Robin Hood Energy, Co- operative Energy, Tonik Energy, Ovo Energy, Bristol Energy and Toto Energy have announced a price rise in their default tariffs.

Figure 1: Prepayment tariffs and position against cap 1,300

1,250

1,200 Dual fuel annual spend (£)spend Dual annual fuel 1,150

1,100

1,050

1,000 Large Supplier Large Supplier Medium Medium Small Supplier Small Supplier Variable Fixed Supplier Supplier Fixed Variable Fixed Variable 21/12/2018 28/02/2019 Price cap from 1 Jan Price cap from 1 April

Source: Cornwall Insight Business supplier moves into domestic supply In recent years we have observed a number of domestic suppliers enter into the supply of energy to small and medium enterprises (SMEs). While few SME suppliers tend to move into domestic supply, in March we saw business energy supplier Symbio Energy enter the domestic electricity market with very competitive fixed and variable tariffs. The last business energy supplier to enter the domestic arena was ENGIE in December 2016.

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Scotland energy tariffs

Overview In this section, we illustrate the cheapest tariffs for the previous month for various customer types (A-G) in Scotland. Customer types are described in our ‘Best buys’ section overleaf and are based on typical electricity and gas consumption values. The three main types of tariff are shown in the table below.

Tariff Definition

Standard variable A supply contract with an indefinite length, which has prices that tariff (SVT) can go up and down with the market.

Offers guaranteed standing charges and unit rates, usually until a Fixed tariff defined end date. A tariff for customers with prepayment meters, which requires Prepayment (PPM) payment for energy in advance through ‘topping-up’ using prepay tariff cards or a key. PPM tariffs can be fixed or variable.

March prices Distribution networks are operated in the north and south of Scotland by two different operators: Scottish Hydro (north) and Scottish Power (south). As a result, tariff prices differ between these two regions. The cheapest deals for households in southern Scotland are always lower than in northern Scotland, mostly a result of lower network charges. The lowest average cost of fixed tariffs this month was £950 and £800 in northern and southern Scotland respectively. These cheapest deals were provided by Yorkshire Energy to customer types A and C-G in northern and southern Scotland with customer type B supplied the cheapest deals by Avro Energy in the north and People’s Energy in the south. The average prices for the lowest cost SVT across all customer types for northern and southern Scotland were £951 and £875 respectively this month. Bulb provided the cheapest deals to customer types A-D in the north, but just to customer type B in the south where Outfox the Market was predominantly the cheapest. For PPM tariffs, the average price of the lowest cost deal across all customer types was £1,044 and £947 for northern and southern Scotland respectively. The cheapest suppliers were exactly split between the two regions in March with Nabuh Energy the cheapest in the north and OVO Energy in the south.

Useful Contacts

Citizens Advice Scotland is able to independently advise on your energy supply (Contact: 03454 04 05 06)

Home Energy Scotland is a network of local advice centres able to provide advice on home energy savings, greener travel and more (Contact: 0131 555 7900)

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Best buys in Scotland

Key A. Smaller electricity-heated homes Gas – 0kWh Electricity – 6,130kWh

Supplier Northern Southern

SVT Outfox the Market Bulb Fixed Yorkshire Yorkshire Energy Energy PPM £894 £966 £952 £903

£1,036 £925

Nabuh Energy OVO Energy

B. All other electricity-heated Gas – 0kWh Electricity – 8,912kWh

Northern Southern Bulb Bulb

Avro Energy People’s Energy

£1,371 £1,226

£1,355 £1,244

£1,455 £1,276

Nabuh Energy OVO Energy

C. Smaller non-metered fuel-heated Gas – 0kWh Electricity – 3,383kWh homes Northern Southern Bulb Outfox the Market Yorkshire Energy Yorkshire Energy £567 £511 £552 £521

£621 £555 Nabuh Energy OVO Energy

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D. All other non-metered fuel -heated Gas – 0kWh Electricity – 4,814kWh homes Northern Southern Bulb Outfox the Market Yorkshire Yorkshire Energy Energy £775 £711 £761 £720

£837 £748 Nabuh Energy OVO Energy

E. Single adults in social rented flats Gas – 10,592kWh Electricity – 2,640kWh

Northern Southern Powershop Outfox the Market

Yorkshire Energy Yorkshire Energy

£832 £772

£838 £881

£883 £948 Nabuh Energy OVO Energy

F. Younger working families in Gas – 13,595kWh Electricity – 3,491kWh medium-sized rented homes

Northern Southern Powershop Outfox the Market

Yorkshire Yorkshire Energy Energy

£1,043 £976 £1,031 £1,062 £1,090 £1,172 OVO Energy Nabuh Energy

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G. “Average” mains gas-heated Gas – 15,280kWh Electricity – 3,585kWh households

Northern Southern

Powershop Outfox the Market Yorkshire Energy Yorkshire Energy £1,105 £1,037 £1,133 £1,101

£1,240 £1,154 Nabuh Energy OVO Energy

Tariff changes from last month

This month, northern Scotland customers saw the greatest rise in cheapest tariff deals with SVT and PPM offerings rising by £73 (8.31%) and £42 (4.19% ) respectively on February prices. However, cheapest fixed tariff prices were seen to fall by £38 (3.85%).

This is much the same in southern Scotland, where the cheapest fixed offering fell by £125 (13.5%). Cheapest PPM prices also fell by £4 (0.42%), although rose for SVTs by £43 (5.17%).

Switching savings New -entry suppliers often enter the GB retail market with innovative and disruptive technology to attract customers away from the Big Six suppliers. This month, we have calculated the savings that an average customer switching supply from one of the six biggest suppliers to one of the cheapest tariff suppliers would have made. The annual potential savings are as follows:

• SVT customers switching could save £292 and £344 in the north and south of Scotland respectively • PPM customers switching tariff could benefit from savings of £144 in the north and £202 in the south. • Fixed tariff customer switching is usually rarer due to exit fees. However, if switching this month, fixed tariff customers could make savings of £129 in northern Scotland and £244 in southern Scotland (excluding additional costs).

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Other energy news

CMA publishes findings on vulnerable customers

On 28 February, the Competition and Markets Authority (CMA) published findings on vulnerable consumers from a survey of 7,000 domestic energy consumers. Analysis in the report, Consumer vulnerability: challenges and potential solutions, found several challenges concerning vulnerable customers in the energy sector, including that just over 50% of people on default tariffs for more than three years either did not have access to the internet or did not feel confident using price comparison websites.

What is a default tariff?

A default tariff is the standard tariff that an energy supplier will enrol its customer on after expiry of their fixed deal. This normally costs more than other tariffs available to consumers at a given time.

The report also found that prepayment customers (approximately 50% of whom earned below £18,000) got a far worse deal than other customers, since they did not have access to cheap tariffs. The CMA said that these findings will inform its approach to selecting projects, analysing problems and developing effective remedies to help vulnerable consumers.

S mart meters lose functionality on supplier switch A new survey from Which? has found that 48% of smart meters lose functionality on switching supplier. Published on 8 March, the survey results showed that 19% of people found that their smart meter stopped working when they switched supplier, and that a further 29% said that both their smart meter and in-home display no longer worked. Which? reported that just 42% of those who have smart meters and switched energy supplier ended up with both a smart meter and an in-home display that still worked.

There are two types of smart meter, first and second generation. First generation meters dominate the market with around 16.7mn deployed as of February 2019. Most issues stem from the fact that first generation smart meters have not been registered in the central wireless network used by energy suppliers. Second generation meters, of which there are approximately 0.8mn deployed as of February 2019, have been enrolled. A supplier switch therefore affects these first generation meters. If a smart meter loses its intelligent functionality through a supplier switch it will revert to ‘dumb’ mode, meaning that gas and electricity meter readings no longer automatically go to the supplier, real-time data on energy use can no longer be received, and smart meter tariffs can no longer be accessed. The government states that most first generation meters will have their smart functionality restored by the end of 2020, as these meters will be enrolled in the central wireless network in late 2019.

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Scotland outperforming UK in emissions reduction

The SNP has highlighted research from the Scottish Parliament's Information Centre (SPICe) which concluded that Scotland is outperforming the rest of the UK in reducing carbon emissions. In a press release on 24 March, the SNP said that Scotland's total emissions reduced by 35% between 2008 and 2016, compared with a 27% reduction across the UK for the same period. The decarbonisation of the Scotland electricity sector, reductions in emissions from waste and the closure of the Longannet power station in March 2016 were cited as major factors. The SNP also highlighted the upcoming debate on the Scottish government’s Climate Change Bill.

Scotland fuel poverty to receive further investment

The Warmer Homes Scotland initiative has awarded more than £38mn to managing agent Warmworks, the Scottish government announced on 17 April.

What is a Warmer Homes Scotland?

Warmer Homes Scotland is a national energy efficiency strategy delivered by Warmworks. The scheme works by helping vulnerable people heat their homes through installation of and information on energy efficiency measures.

This, the government said, would enable Warmworks to continue supporting the government’s fuel poverty scheme to 2022. Those at risk of fuel poverty are eligible to receive further investment to improve their property through the installation of new heating systems and insulation, providing £300 in savings per household each year. Since its inception in June 2018, the initiative has supported up to 15,000 customers. Scottish Housing Minister Kevin Stewart said: “We have taken a world leading approach to tackling fuel poverty with the introduction of the Fuel Poverty Bill and setting an ambitious target that, by 2040, no more than 5% of Scottish households are in fuel poverty.”

Orkney Islands considering new community wind

The Orkney Islands Council has announced plans to investigate an additional two sites as part of the Orkney’s Community Wind Farm Project. Published on 26 April, the new developments would be in addition to the current 28MW project under investigation on Hoy. The site at Faray in the North Isles could reach up to 32MW and include eight 150m blade tip turbines, while Quanterness in St Ola could reach up to 24MW, with the potential capacity for six 150m blade tip height turbines. The developments will work to promote collaboration between the Council and local developers to contribute to a Needs Case for a new interconnector for Orkney, supporting future renewable energy developments.

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Hybrid heat pumps offer low cost heating A recent study by Ramboll, published on 16 April, investigates alternative heat solutions for a typical medium sized town in the UK – in this case assessing demand in Cowdenbeath, Scotland. The study provides a bottom-up estimate of the costs of four different low- carbon heating solutions and compares their performance if implemented. The solutions include: • distributed hydrogen for heating combined with electric cooking • district heating (DH) fuelled by biomass and electric heat pumps and electric cooking • Electric heat pumps (EHP) and electric cooking • Hybrid heat pumps (HHP) with gas cooking The analysis includes the net present costs (NPC) and cost of carbon dioxide reduction, against business-as-usual standards. Figure 2 summarises the total cost to consumers per MWh in financial value and in terms of carbon abatement over a 40-year life-cycle.

Figure 2: Comparison of NPC and cost of CO2 emissions reductions for different technology scenarios

100 300

90 250 80

70 200 60

50 150 NPC NPC (£/MWh)

40 NPC NPC per tonne CO2 100 30

20 50 10

0 0 Hydrogen DH EHP HHP

High Temperature Low Temperature Cost per tonne CO2 - High Cost per tonne CO2 - Low

Source: Pixie Energy, Adapted from Ramboll

The lowest NPC is offered by the hybrid heat pump solution, with costs of £43.70/MWh and £39.40/MWh of heat delivered for high and low temperature scenarios respectively. This compares to a typical gas price of approximately £45 - 50/MWh. However, in terms of cost per tonne of carbon dioxide saved, hydrogen came out on top. Despite this, the range between highest and lowest cost scenarios across all technologies was around 25%, meaning that all solutions are economically viable.

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Electric vehicles update

EV registrations boom due to ‘19’ licence plates

On 4 April, the Society for Motor Manufacturers and Traders (SMMT) published its March 2019 UK EV registration data. The figures indicate that battery electric vehicles (EVs) sales were greater in March 2019 than February 2019, with a five-fold increase. This is due to the March release of the new licence plate (ending ’19) which traditionally leads to a spike in car sales in the UK. Year-to-date sales for 2019 have increased by 153.6% on 2018. Figure 3 (below) compares UK EV sales. Figure 3: EV registrations

7,000 5,982 6,000

5,000

3,917 3,894 4,000

2,904 3,000

2,000

1,000 731 355

0 February March Year-to-date

2018 2019 Source: Pixie Energy £8.5mn project to investigate EV uptake

Announced on 9 April, ScottishPower has teamed up with Glasgow-based Smarter Grid Solutions to address the main challenges to the uptake of EVs across the UK. The £8.5mn project will also see contribution from engineering solution and consultancy provider EA Technology and traffic software provider PTV Group. Its aims will be to find the best way of charging EVs in the absence of a driveway for homeowners and in public spaces. Solutions to be investigated includes smart charging in order to better manage the flexible source along more intermittent low-carbon energy generation. Founder and Executive Director at SGS, Graham Ault, said: “The ability to manage EV [electric vehicle] charging in parallel with all of those other low carbon technologies has great value in the flexible, cleaner, smarter power grid.”

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Edinburgh to get on-street EV charging hubs

On Tuesday 5 March, members of the Transport and Environment Committee agreed a detailed project plan for the installation of charging infrastructure for Electric Vehicles (EVs). This includes selected locations for 66 on-street charging points across 14 hubs.

It has been proposed that the implementation of 211 on-street charging hubs will be obtained by 2023 at a cost of £3.3m. Infrastructure improvements are predicted to result in carbon savings of 7,715 tonnes and savings in Nitrogen Dioxide of over 14 tonnes. A combination of rapid, fast and slow chargers will be placed strategically around Edinburgh, these are intended to be placed on roads instead of pavements to reduce the amount of street clutter. And is desired to be installed near, but not adjacent to, residential properties, which will allow residents to park outside of their homes.

A potential enforcement policy is currently under development, to ensure electric vehicle bays, which operate 24 hours a day, seven days a week, are not used for unlimited parking and are reserved for electric vehicles.

Due to this proposal, the idea of owning an EV within Edinburgh is now more favourable for on-street parking customers.

Edinburgh-based Felxitricity to host solar car

An R&D collaboration between Flexitricity, Flexisolar, Turbo Power Systems and parks trial Smart Power Systems has secured funding for a project to demonstrate a solar- powered car park supported by battery storage where motorists can charge their cars. Announced on 29 March, the Smart Hubs II project will also utilise vehicle- to-grid technology to enable electric cars and other vehicles to deliver electricity back to the grid. The consortium is looking for six sites to begin the trial later this year, with 150 vehicles set to be allowed to charge across the different locations. Dr Alastair Martin, chief strategy officer at Edinburgh-based electrical engineering company Flexitricity, said: "Having the ability to recharge in a short time using a grid friendly infrastructure will have a huge impact on the electric vehicles market – it really is a question about how quickly we can deliver this capability." [ ] "We are now looking forward to identifying partner sites and embarking on the trials later this year, as we strive to deliver a solution that will drive the growth of the electric vehicle market and bring transformational benefits to motorists, car park operators and energy re-sellers."

Pixie Energy is now operating the website Scottish Energy News. Please visit

www.scottishenergynews.com to keep up-to-date on developments in the Scottish energy market or contact us on 01603 542119 or by email at [email protected] for more information.

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