Consultus Energy Outlook - March 2020

Your one stop guide to what is affecting the energy markets.

 Budget 2020: electricity CCL freeze, Green Gas Levy and EV charging investment

 

On 7 February, the BBC reported the government is looking to shift clean energy costs to taxpayers rather than energy consumers, as part of the UK’s net zero transitionChancellor Rishi Sunak’s first Budget on 11 March included some significant announcements around carbon taxation, heat and transport.

The government is raising the Climate Change Levy (CCL) on gas in 2022-23 and 2023-24 (whilst freezing the rate on electricity). The CCL is a tax on energy delivered to businesses. Alongside this, the government will consult on introducing a Green Gas Levy to support biomethane production to increase the proportion of green gas on the grid. The Climate Change Agreement scheme will be reopened and extended by two years. Additionally, Carbon Price Support is to be frozen for 2021-22.

There were several heat announcements in the document. The Budget confirmed £96mn for the final year of the Heat Networks Investment Project, which ends in March 2022. After this, the government will invest a further £270mn in a new Green Heat Networks Scheme, enabling new and existing heat networks to be low carbon and connect to waste heat.

The government will extend the Domestic RHI in Great Britain until 31 March 2022. It will also introduce a new allocation of flexible tariff guarantees to the Non-Domestic RHI in Great Britain in March 2021, helping to provide investment certainty for the larger and more cost-effective renewable heat projects. The government will consult on introducing a new grant scheme from April 2022 to help households and small businesses invest in heat pumps and biomass boilers, backed by £100mn of funding.

Speaking with the BBC, Centrica Chief Executive, Iain Conn called on the government to “move the funding to income tax, which would mean a typical low income worker would save £100 a year,” or for government to means-test households, adding that moving costs from bill payers to tax payers would create minimal disruption to overall annual costs. Whilst the BBC said that Conn was to be meeting Chancellor of the Exchequer Sajid Javid (prior to his resignation on 13 February) to discuss his proposal, it has been informed the idea is underway as part of the Treasury’s review of current energy policy

£500mn for electric vehicle (EV) rapid charging hubs was also announced. This will include a Rapid Charging Fund to help businesses with the cost of connecting fast charge points to the electricity grid. …read more

 

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