Energy Shift in Progress: Cabinet Office Affirms Net Zero Pledge in Procurement, Ecotricity Transfers Electric Highway to GRIDSERVE, and Renewable Energy Credits Recover Pre-Pandemic Costs.
In a significant move towards a greener future, the UK government has announced new requirements for businesses to commit to net zero carbon emissions by 2050 and publish detailed decarbonisation plans as a condition for bidding on large government contracts.
The requirements, part of the government’s broader “Plan for Change” and its ambition to make the UK the “sustainable finance capital of the world”, aim to increase transparency for investors, ensure efficient capital allocation, and help the UK maintain its position as a global sustainable finance hub.
The focus will initially be on “economically significant” businesses, with consultations ongoing to define the exact scope and which firms will be covered. While the specifics of how and when this will be implemented are still under consultation, it is anticipated that demonstrating a credible, published decarbonisation plan will become a prerequisite for bidding on large government contracts. Failure to comply may result in being barred from bidding processes.
The National Grid Electricity System Operator (Neso) has outlined the critical importance of the 2025–2030 period for scaling up renewables, electrifying transport and heating, and investing in hydrogen and carbon capture infrastructure to stay on track for 2050 targets. Businesses will need to demonstrate how their plans align with these sectoral priorities and the government’s overarching decarbonisation strategy.
Key projects in line with these new requirements include Northern Powergrid, Delta-EE, and TNEI's Community DSO project, which trials Smart Local Energy Systems with localised management of low voltage levels. The project has requested £11 million of NIC funding, with a total project cost of £12 million. Similarly, Electricity North West (ENW), Delta-EE, and Ricardo Energy and Environment's Smarter Heat project requires £5.4 million of NIC funding to reach its total cost of £6 million.
The Smarter Heat project aims to understand whether a "connect and manage" approach can serve as an effective route for the increasing uptake of heat pumps, domestic solar, and EV charging. Meanwhile, Western Power Distribution's EQUINOX project aims to demonstrate innovative commercial arrangements for encouraging load shifting and releasing flexibility from thermal batteries and heat pumps, with £7.2 million requested from the NIC to help fund the £12.2 million project.
ENW's BiTraDER project explores the potential for a merit order stack trading market between Distributed Energy Resources (DERs), while the BiTraDER project aims to create a transparent trading platform and specific rules for bilateral trading of DER capacity.
The UK government's new measures will affect businesses bidding for contracts above £5 million a year and they must comply by September 2021. Businesses should monitor these developments closely, as adherence to robust transition plans is expected to become a critical factor in accessing major government procurement opportunities in the near future.
In other news, Ecotricity has sold its Electric Highway, the world's first national electric vehicle (EV) charging network, to GRIDSERVE. Meanwhile, NewMotion and Mer have entered a roaming agreement to improve EV charging for British drivers, aiming to make EV charging as seamless as possible. Additionally, REGO prices have increased by 50% compared to January 2021 as electricity prices revert to pre-pandemic levels.
Businesses, in compliance with the UK government's new measures, will need to demonstrate their commitment to renewable energy and decarbonisation as a prerequisite for bidding on large government contracts above £5 million a year, starting from September 2021. To align with sectoral priorities and the government's overarching decarbonisation strategy, these businesses should focus on scaling up renewables, electrifying transport and heating, and investing in hydrogen and carbon capture infrastructure.
