ENA Bulletin 29 June

Issue 275: Wednesday 29 June 2011  

  • Crime Prevention Minister Attends Metal Theft Event

  • ENA Meet Energy Minister  

  • Networks Present Government with Initiative to Enhance Cyber Security  

  • ENA Secures Sensible Approach on Directive  

  • Enduring Role of Gas to MPs Highlighted By ENA  

  • Energy Networks are Key to Government’s Super-fast Broadband Plan ENA Mentioned in Government Microgen Action Plan  

  • Government Planning Statements are Welcomed  

  • Response to Government Waste Review

  • Brussels Update  

  • Forthcoming Events Organised and/or Supported by ENA    


Crime Prevention Minister Attends Metal Theft Event

New Crime Prevention Minister Baroness Browning signalled for the first time last week that the law governing scrap metal dealers may need to be changed to help stop metal theft. This is a move that ENA have been demanding for some time. She was speaking at an ENA organised event at the House of Commons hosted by former Labour Minister Tom Watson MP for West Bromwich East. The event was attended by over fifteen MPs and a wide range of industry representatives from across all the affected sectors, and also included the Shadow Energy Minister and the Leader of the Democratic Unionists.  

This was the first ever parliamentary summit on metal theft and there were speeches from ENA Board Member Barry Hatton of UK Power Networks, the Director of Operations at Network Rail, and the Head of Metal Theft at BT Openreach. The event was held as part of a cross-industry approach to tackle this increasingly dangerous and damaging crime. At the summit there was a call from the MPs and industry present for a change in legislation to address this problem in a comprehensive way.  

The Minister for Crime Prevention and Anti-social Behaviour Reduction Baroness Browning said “I have been astonished by the costs incurred and damage that metal theft is causing to businesses, services, and local communities”.  

There were 6,000 incidents against the energy networks alone last year and this is on the increase with January 2011 seeing double the number of metal theft crimes than January 2010. There have been at least three fatalities and 31 serious injuries to criminals as well as 135 losses of supply to homes, schools, and communities. Only this week there was an explosion in the north of England caused by theft of gas pipe.  

ENA Chief Executive David Smith stated “The current legislation is from a time of ‘Steptoe & Son’. Legislation needs updating with a robust and enforceable registration process, greater police powers to close down illegal scrap metal dealers, and a move to a cashless system”.  

This view was perfectly echoed by the Minister who set out a range of options, which she has asked her officials to consider. These included moving to a licensed rather than registered regime, more stringent identification requirements when selling metal, a duty that the scrap metal dealer should reasonably satisfy themselves that they are purchasing legitimately owned material, the power to close scrap metal yards where there is clear evidence of sustained illegal activity, and the possibility of moving away from cash as a method of payment for the industry. The Minister was clear that the regulation reduction agenda would not impede action on this issue where clearly something had to be done.  

Tom Watson MP said “It has been nearly half a century since metal theft laws were last updated. We need urgent improvements to legislation.” He was “delighted” to hear what the Minister had said about possible options for dealing with this issue.  

We are now working in a cross-industry approach with the reputable scrap metal industry and the Home Office on how we can reform the current regulatory and legislative framework.  


ENA Meet Energy Minister  

ENA’s Incoming Chairman Steve Johnson, Chief Executive David Smith, and Press and Public Affairs Manager Tony Glover held an extensive private meeting with Energy Minister Charles Hendry last week and gave an update on ENA’s activities and its increasingly diverse membership. He also heard about our range of work on network futures that tied in well with DECC’s workstreams. Amongst the issues we discussed were smart grid development and ENA’s latest research projects on low carbon technologies, the future role for gas, Ofgem and regulatory framework, Assessment and Design Fees, and the impact of EU legislation on networks policy.  

On the day that the Minister published the Energy National Policy Statements for Parliament to debate (see below), we also reaffirmed our support for the DECC’s work on the planning reform process. In addition, we updated him on the Parliamentary metal theft summit held the previous day and he reinforced his support for our work in this area.  


Networks Present Government with Initiative to Enhance Cyber Security  

ENA has today, Wednesday 29 June 2011, published an independent report by respected international consultants KEMA into Smart Grid Cyber Security. The report, commissioned by ENA for DECC considered how government and networks should develop a strategy to secure the future UK electricity infrastructure together.  

The report comes just weeks before a newly formed taskforce will bring together the energy networks’ and government’s security advisers to discuss how the future influx of IT and communications on the grid will be protected.  

The report found that although plans for distribution network operators and Government are rigorous, a more coherent and joined-up approach is needed to meet concerns of the future.  

Energy Minister Charles Hendry said, “The UK is taking action now, investing in smart grid development and planning for the future. I am grateful to the ENA for this report, which I am sure will prove to be an important contribution to making sure our electricity grid infrastructure remains secure. We will study its recommendations carefully. The Government will shortly publish a high level strategy for the development of the smart grid as part of the forthcoming White Paper on electricity market reform”.  

ENA’s Chief Executive David Smith stated, “In the future, our energy networks will be ‘smarter’ and more complex to ensure we provide for the diverse nature of our energy generation and consumption. However, this presents additional vulnerability. Through a coordinated approach to cyber security we can ensure the lower carbon future of our energy networks with their greater communication is secure and robust.  

“As well as addressing risk assessments with government, the networks will deliver improved technology and have dedicated resources as part of the development of a Smart Grid. This cannot sit in isolation, however, and we are keen to work with government so that cyber security is not a sub-project but reflects the risks posed to critical infrastructure we depend upon so much”.  

The full report can be found here.


ENA Secures Sensible Approach on Directive  

Following private meetings with Health & Safety Minister Chris Grayling and EU Commission, ENA have secured a sensible approach to the EU EMFs Directive currently passing through the legislative process. As a result of our lobbying the version of the Directive that will go before MEPs should now not impose excessive costs upon our industry, and crucially, will be based upon ICNIRP guidelines, which are the most widely recognised, and will therefore carry the most credibility. A number of aspects of the Directive that could have led to unnecessary regulatory burden and costs on the industry have now been removed. The common sense approach that ENA has taken has been accepted by the Commission and has been strongly reinforced by both the Health & Safety Minister and the HSE. We now need to ensure that nothing unreasonable is added to the Directive as it travels through the European Parliament.  


Enduring Role of Gas to MPs Highlighted By ENA    

The Parliamentary Group for Energy Studies (PGES) heard from National Grid’s Janine Freeman and Shell UK Chairman, Graham van’t Hoff last week. The speakers, organised by ENA, gave a broad vision for how gas will be a part of the UK energy mix, not just to 2050 but for the foreseeable future.

Graham van’t Hoff spoke of the need for a diverse portfolio with medium-term flexibility to ensure that as new technologies are developed further, we don’t turn our backs on affordable opportunities to reduce our carbon emissions. He spoke of the factors affecting our energy market with instability in the Arab world and the reactions to Fukushima across Europe all pointing to a need for gas as a stable and proven technology. He also went on to highlight that both Redpoint’s Future Scenarios Project, commissioned by ENA, and the latest IEA report pointed to gas as a crucial part of the mix.  

 Janine Freeman, Head of UK and EU Public Affairs for National Grid, spoke of the importance of increased electrification in reducing our carbon emissions but that unconventional gas sources were vital to ensuring we meet our climate change targets affordably. She also explained that the economics of electrifying heat, with the need for significant reinforcement of the networks just to provide adequate generation and demand for the coldest few weeks of the year, were difficult. The role of CCS technology, biomethane, and anaerobic digestion are all increasingly important and key to a lower carbon future and our 2050 targets.  


Energy Networks are Key to Government’s Super-fast Broadband Plan  

ENA and its members met with representatives from telecoms companies and Broadband Delivery UK (BDUK), now part of the Department for Culture, Media and Sport (DCMS), this week to discuss the delivery of the fibre optic super-fast broadband roll-out.  

DCMS are keen not to have to legislate but both Secretary of State Chris Huhne and Jeremy Hunt will be reminding DNOs and telecoms companies that this is a commitment they want to see followed through to ensure broadband is delivered to the most rural parts of the country by 2015.  

With progress on pilot projects moving quickly it is important that certain issues are agreed on a national scale to ensure a smooth roll-out across the country. The workshop was able to make significant progress and achieve agreement in principle on a range of areas such as ownership of long-distance high-voltage assets and shared use of both national transmission and regional distribution networks’ assets to reduce the cost and time of delivering a new infrastructure. The complex issue of wayleaves was also discussed and it was felt that the best way forward would be for Government to assist in this.  

However, significant work is required to enable the safe use of the electricity network. The whole workshop, including those from the telecoms industry, emphasised how important it was that Ofgem allow appropriate revenue from this additional service. There will need to be standards written and amended, training procedures introduced or updated, and significant resource allocation all just from the part of the DNOs.


ENA Mentioned in Government Microgen Action Plan  

The work of ENA was highlighted in the Government’s Microgeneration Action Plan published last week.  

The plan includes actions to improve the Microgeneration Certification Scheme (MCS) process, making it work more effectively for SMEs while continuing to protect consumers, for example by allowing greater flexibility in the treatment of micro hydro installations. This will be taken forward through the FITs comprehensive review, which will be launched later this summer.  

There was a call in the Plan for DECC to facilitate informal contact between the Microgeneration Government Industry Contact Group and Ofgem/ENA to consider connection issues for microgeneration technologies. We can report that this process is already underway and is delivering positive results.  

The Plan also reported that network companies under the auspices of ENA have published a common Distributed Generation (DG) Connection Guide. This guide includes:

  • An overview of the UK power sector and the role of DG

  • An overview of getting connected and the connection application process

  • Details of standards that apply to DG e.g., G59 and G83  

  • Costs and charges; ongoing charges

  • Selling electricity; feed-in tariffs

  • A feedback process for improving the guidance  

The Plan highlights how network companies are trialling new ways of operating the network through the £500 million Low Carbon Network (LCN) Fund that runs until 2015. The Plan also trialled the publication of a high-level strategy for future networks and system flexibility as part of the Electricity Market Reform White Paper, which ENA are working with DECC to deliver.  

The plan can be read here.


Government Planning Statements are Welcomed  

Published on the day we were meeting Energy Minister Charles Hendry, ENA welcomed the laying before Parliament of the Energy National Policy Statements (NPSs) last Thursday.  

ENA Chief Executive David Smith said of the Statements, "We welcome the constructive changes that have been made to the National Policy Statement on networks (EN-5). Network companies can now work with the certainty that the National Policy Statements will become policy very soon. Getting planning right is crucial to delivery of vital energy projects. The NPSs are central to underpinning the new planning system. The publication is the final step in achieving this. We have long said that the key to delivering effective planning reform is ensuring the NPSs have the necessary democratic accountability. The process beginning today will ensure this".  

The full statements can be read here


Response to Government Waste Review

ENA have responded extremely positively to Defra’s Waste Review published last week. We are very much in support of the review. We believe it will ensure an even playing field in incentives/barriers to entry for biomethane used for generation as well as injection.  

The Review highlights the higher efficiencies of biomethane injection over electricity generation. Currently most biomethane from anaerobic digestion (AD) in the UK is used for electricity generation with an efficiency of approximately 30%. However, if this biomethane was injected into the gas grid and transported to consumer homes for heating purposes, this could be utilised at more than 90% efficiency.  

We welcome the recommendation that landfill gas injection is included in the updated Renewable Heat Incentive (RHI) scheme this autumn. DECC have, so far, not included landfill gas in the RHI due to a lack of costs but it is thought that these will be higher than for biomethane produced from AD due to the cleaning required. Consequently, in the absence of firm evidence that the RHI should be greater than for ADs then it should at least get the same as biomethane. The logic for this is that the greenhouse gas reduction is the same as for biomethane from landfill gas.  

The Review recommends a cooperative approach (industry, Government and Regulator) to overcome the barriers to entry for biomethane injection - Defra currently has an AD Strategy Group and Ofgem are about to start a review group in this area – this all reinforces our call to ensure a consistent joined- up approach.  

Details of the Review can be found here.  


Brussels Update  

Eurelectric – DSO Directors Gathering  

The DSO Directors Gathering is Eurelectric’s top strategic decision making body for its networks activities, with its focus on the monitoring and co-ordinating of crucial work on smart grids projects, and the Commission’s European Electricity Grid industrial funding Initiative (EEGI).  

Members of the Directors Gathering are appointed from both national associations and individual European Distribution companies. Following elections at the annual Eurelectric Conference in Stockholm earlier this month, a new 2 year mandate has just been given to the top 20 Directors, which includes David Smith representing ENA.  

Michele Bellon from ERDF has been appointed as Chairman and Ari Kopenen, representing Finnish Energy Industries, appointed Vice Chairman. Key actions over the past 12 months include the development and publication of a brochure, 10 Steps to Smart Grids, and the establishment of a DSO co-ordination platform for Smart Grids deployment, which is working on a pan European catalogue of smart grid project data and cost benefit analysis, which is to be presented to the Commission.  

The focus of work for the coming year will be the development of a DSO “image” brochure, the identification of key performance indicators for Smart Grid projects, and consideration of capacity issues from the view point of demand side management.  

ENTSOG Consultation on Capacity Management EU Network Code  

The European Network of Transmission System Operators for Gas (ENTSOG) has just published its draft network code on Capacity Allocation Mechanisms (CAM). This new EU gas code, the first to be produced under the process set out in the third energy package of energy legislation, will help to define the manner in which system users gain access to the European gas grid, so as to develop a single European gas market.  

The code proposes rules in a number of key areas, including the design of harmonised auctions for capacity products of various durations, the bundling of cross-border capacity, the development of booking platforms, and the alignment of interruptible capacity. It also includes interim tariff provisions, to enable auctions to be implemented before a new European tariff framework is developed.  

ENA will be reviewing the draft ENTSOG code from the UK networks’ perspective. The ENTSOG deadline for responses is in August 2011, and the finalised code is due to be published in January 2012.  

EU Smart Grids Task Force – (almost) Final Session

The EU Smart Grids Task Force headed by the Commission has almost completed the job it set itself to give impetus and legislative force to the roll-out of electricity and gas smart grids. ENA has participated through European energy associations GEODE and Eurelectric. At its June meeting, a review was undertaken of key decisions on the future of smart grids.  

As far as smart meter/smart grid standards are concerned, European standards bodies have been mandated to produce new standards by the end of 2012, which is an ambitious timescale.  

In terms of data security and privacy standards, preliminary conclusions are that the existing legal framework will probably be sufficient, but a final decision will be taken later this year, and this is the only outstanding action.  

With regards to gas specific smart grids, an expert group report defines the services and functionalities of gas smart grids, and addresses specifically the benefits of cogeneration and micro-generation, together with initiatives related to standardisation and future regulation. Contrary to electricity smart grids, the gas experts have taken the view that gas smart grids can be developed independently of a full roll-out of smart meters. However, the group has concluded that gas smart grids cannot be developed in isolation but should be linked to future electricity smart grids, and should facilitate smart energy utilisation, for example CHP and heating and cooling.  

Although a specific Smart Grids Directive is not expected from the Commission any time soon, the new Energy Efficiency Directive, published just last week, does have a legislative proposal referring to smart grids and the need for network regulation and tariffs to allow network operators to offer system services and tariffs to networks users permitting them to implement energy efficiency improvement measures in the context of the continuing deployment of smart grids. This is a positive development.  

Poland, Denmark, and Cyprus – Three EU Presidencies  

Poland takes on the EU Presidency on 1 July 2011, Denmark takes over on 1 January 2012, and Cyprus on 1 July 2012.  

These three countries have just published their 18 month programme of work. On energy issues, they promise a careful monitoring of the implementation of the third energy package by Member States. They also offer support for any other measures that will contribute to the better functioning of the market, for example the draft Regulation for Energy Market Integrity and Transparency (REMIT), which is currently under consideration by Parliament and Council. A policy initiative to reinforce co-operation at a regional level is also promised for the second half of 2011.  

Top priority will be given to the new Energy Efficiency Directive, and related initiatives on eco-design and energy labelling, and the Smart Cities and Smart Communities industrial Initiative, with potential EU funding of up to €80 million, which was launched last week, with ENA representatives participating.  

From the networks’ viewpoint we will be particularly interested to see what is proposed in the new Energy Security and Infrastructure funding instrument expected in October 2011, which will support cross border i.e., transmission projects of European Interest. We understand that the new financing instrument, which will replace TEN-E, will clarify the criteria for the selection of projects eligible for EU funding, suggest more efficient mechanisms for planning and authorisation procedures, and consider the adaptation of the networks to smarter grids. The hope is that this new funding instrument will help remove some of the hurdles currently facing TSOs, in particular planning delays and obtaining access to capital markets due to unstable and unattractive regulation.      


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