July’s Bryt Insight arrives at the same time as a newly elected Labour government so, in this edition, we explore what the party’s manifesto could mean for the UK’s net zero strategy. Whilst nationally fewer announcements or decisions were made in the run up to the election during the ‘period of sensitivity’, internationally, preparations for COP29 – the annual global climate summit – are well underway.

Our experts have also taken a look back at the electricity market over the second quarter of 2024 to provide you with a roundup of the key trends and highlights that your business needs to know:

June began with the highest forward-looking electricity prices (i.e. prices for October-24 and April-25) of the year so far, before then lowering, due to reduced electricity demand, increased amounts of renewable generation, and falling gas prices through to the middle of the month.

Here’s what you need to know:

• Reduced electricity demand and increased renewables

Demand on the transmission network dropped by 10% in June, partially due to longer daylight hours and increased temperatures. Wind generation accounted for 30% of the UK’s electricity supply during the month and solar generation also helped to meet demand but, as solar is connected to the distribution network rather than the transmission network, it isn’t recorded as part of the UK’s generation figures.

• Falling gas prices

The falling gas price (which still has a large effect on UK electricity prices) was driven by Norwegian North Sea oil and gas maintenance work completing earlier than expected, high gas storage levels, and lower electricity demand thanks to the warmer weather.

• Reduced volatility towards the end of the month

The second half of the month saw less volatility than the start of June, with lower electricity demand tempering price rises. Factors that did impact prices included:

• Falling amounts of renewable generation compared to the start of the month
• Increased competition for LNG (liquefied natural gas), with only one cargo of LNG arriving in the UK in the latter half of June
• Political change, with several elections happening across Europe causing uncertainty in future energy policies.

• Day-ahead prices

In the near-term, day-ahead wholesale electricity prices have been very volatile across June, driven by changing weather conditions and fluctuating renewable generation. The UK has even seen a number of afternoons, when it has been both sunny and windy, where power prices at the time have turned negative.

Looking back overall at the second quarter of 2024, wholesale electricity prices increased by just over 20% from the start of April to the beginning of June, before reducing by approximately 6%, resulting in an overall increase of 14% in the last quarter. Geopolitical tensions, delays in French nuclear generation being back up and running following maintenance, and low wind generation at the start of the quarter all impacted certainty of supply and drove the increase. However, lower electricity demand across the UK, increased renewable generation at the end of the quarter, and Norwegian gas field maintenance completed earlier than expected have all helped steady some of the price rises.

June’s eREGo auction sold very few Renewable Energy Guarantees of Origin (REGO) certificates and at a significantly lower cost than in May’s auction. This is typical of this time of year, as by this auction most suppliers already have the REGOs they need for their Fuel Mix reporting compliance period (in this instance for 2023-2024). The auction is expected to return to normal next month, with REGOs for the new compliance year then available to buy.

With the Labour Party recently announced as the winner of the UK’s general election, we look at what the party’s manifesto might mean for the UK’s climate strategy and businesses going forwards.

Here are some of Labour’s key manifesto plans regarding net zero, sustainability and business energy¹:

• Labour will set up Great British Energy, headquartered in Scotland, which will receive £8.3 billion over the next parliament. A publicly owned company, it will partner with industry and trade unions to invest in technologies such as floating offshore wind and tidal, and accelerate the rollout of renewable generation, including wind and solar.
• Over the course of the next Parliament, Labour plans to focus on local power generation. This is through its Local Power Plan, which will deploy more distributed renewable energy capacity. Great British Energy will partner with energy companies, local authorities and co-operatives to develop 8GW of community energy projects, with some of the profits from projects redirected to local communities.
• Plans to save businesses £53bn in energy bills up to 2030, by delivering a cheaper, zero carbon electricity system by 2030.
• Put £7.3 billion into the National Wealth Fund, which aims to support British business and jobs in “green” industries. It also aims to support the most energy-intensive sectors to decarbonise. The Fund is a core element of the party’s Green Prosperity Plan, and over the course of the next Parliament will allocate:
  • £1 billion to accelerate the deployment of carbon capture.
  • £500 million to support the manufacturing of green hydrogen – a sustainable alternative to fossil fuel gas that can be produced using renewable electricity.
• Their Green Prosperity Plan aims to:
  • Create 650,000 jobs across the country by 2030.
  • Double onshore wind by removing the effective ban in place, triple solar power and quadruple offshore wind by 2030.
  • Upgrade Britain’s electricity transmission infrastructure.
• Reward energy developers in the UK’s industrial heartlands, coastal areas and existing energy communities with a British Jobs Bonus. This will allocate up to £500 million per year from 2026 to incentivise firms who offer good employment conditions and build their manufacturing supply chains in these areas.
• Make the UK the green finance capital of the world, mandating UK-regulated financial institutions – including banks, asset managers, pension funds, and insurers – and FTSE 100 companies to develop and implement credible climate transition plans that align with the 1.5°C goal of the Paris Agreement.

In the lead up to the election, there was criticism towards the majority of political parties that manifestos didn’t go far enough in tackling climate change, lacking the ‘scale and urgency’ needed to meet the UK’s climate commitments². Over 400 scientists signed a letter asking party leaders to adopt key measures, including: transitioning away from fossil fuels, helping the UK to adapt and manage the worst impacts of climate change, and increasing climate funding to developing countries. It is hoped the new Government’s plans will addresses these keys measures and set the UK on a credible pathway to net zero.

To learn more about the Labour Party’s election manifesto, visit here.

In preparation for COP29 – the 29^th annual Conference of the Parties global climate summit – representatives from nearly 200 nations gathered in Bonn, Germany. The two weeks of consultations focused on how to accelerate action on climate change to achieve the goals of the Paris Agreement, which aims to limit global warming to 1.5°C above pre-industrial levels³.

The mid-year discussions at Bonn will play a key role in informing decisions made at Azerbaijan’s COP in November, building momentum on the outcomes from previous COPs.

Key takeaways around sustainability and emission reduction initiatives include:

• Climate finance: This theme was high on the agenda this year, with discussions focused on the need to improve how developing countries access climate-related financial support in order to meet their climate targets – and who should be contributing to this fund. Although there was no formal consensus on this, all parties are obligated to agree on a new global climate finance goal by the end of COP29.
• Loss and damage fund: The loss and damage fund, launched at COP28, aims to provide financial support for developing countries affected by climate change and the resulting extreme weather events. At the Bonn conference, discussions mainly focused on ensuring there was a separate pot of funding specifically for loss and damage within the wider “climate finance” fund. Despite new figures suggesting the consequences of extreme weather caused £41bn of damage in the first half of 2024⁴, no formal agreements were made, with discussions being carried forward to COP29.
• Emissions reduction targets: Countries signed-up to the Paris Agreement each have a set of ‘nationally determined contributions’ (NDCs) to reduce emissions and adapt to the impacts of climate change. However, many at the conference deemed the current goals as inadequate and highlighted the need for more ambition, particularly from developed countries. New and updated NDCs are expected by early 2025 and, ahead of this, progress will be measured in the first Biennial Transparency Report, which is due by 31st December 2024.
• Taxation: The idea was brought forward that the five biggest private sector oil companies should provide financial help to developing countries tackling the consequences of climate change. The International Energy Agency has supported this idea, but a consensus wasn’t reached at Bonn and will be on the agenda for COP29.

For a more in-depth overview of the takeaways from the Bonn Climate Change Conference, you can read the official press release.

Global hydropower capacity reaches record figure

According to the 2024 World Hydropower Outlook, global hydropower reached a record 1,412GW capacity in 2023⁵. This is encouraging news, with hydropower currently the largest source of renewable energy globally, providing a stable source of generation during periods of fluctuating electricity demand, playing a pivotal part in the journey to net zero.

Nevertheless, the report estimates that double the current hydropower capacity will be needed to reach net zero by 2050, requiring an investment of approximately $3.7tn.

To learn more about why we’ve chosen hydropower to be part of our own fuel mix, take a read of our blog.

Wind and solar to account for three-quarters of electricity by 2050

A new report by DNV New Power Systems predicts wind and solar energy will generate half of the world’s electricity by 2040⁶. The figure will reach 70% by 2050 – with almost 90% of all electricity coming from renewable sources.

With solar and wind power making up part of our own fuel mix, it’s encouraging to see these renewable sources increase at a global level.

Renewables critical in bolstering energy security

New insights from the Energy and Climate Intelligence Unit (ECIU) reveal that renewables will play a larger role than domestic oil and gas in the UK’s energy security⁷. As domestic oil and gas production from the North Sea continues to decline, the UK is set to become more dependent on international energy imports over the next five years, and renewables and other low carbon technologies (such as heat pumps and electric vehicles) will make the biggest difference to bolstering energy security. To learn more, read the ECIU’s press release.

As part of the Statkraft Group, we’re sharing a few of their key updates this month:

• Our parent company, Statkraft, recently celebrated the 60^th anniversary of its Rheidol Hydropower Scheme first opening. The scheme’s 49MW renewable energy capacity is the largest of its kind across Wales and England, and also has a key role in providing stability to the electricity grid⁸. To learn more about the history of the Rheidol Hydropower Scheme and the local people involved in the project over the years, visit here.
• In its latest strategic review, Statkraft has sharpened its strategy to prioritise growth in its core business areas, to provide the ‘most value-creating opportunities’ in the energy transition⁹. This involves focusing on growth in solar, wind and batteries in Europe and specific international markets, prioritising investments in Norwegian hydropower, as well as developing offshore wind and green hydrogen solutions. The approach will also involve divesting from district heating and finding ‘investors in the biofuels company Silva Green Fuel and the EV charging company Mer’, to strengthen focus on being a ‘driving force in the energy transition in Norway, Europe and the world’. For more information on Statkraft’s strategy, visit here.

If you have any questions on how any of the updates might affect your business, our team of experts is on hand to answer them. You can get in touch with us on 0330 053 8620 or at heretohelp@brytenergy.co.uk.