Peak demand continues to fall, and government confirms increased Renewable Obligation

By Daniel Starman , Sales Energy Market Lead

A revision to the Renewable Obligation (RO) following approval of legislation to increase the maximum Energy Intensive Industries (EII) renewable levy exemption, publication of 2023/24 Triads, and the start of a new charging year. Explore my thoughts on the latest stories in energy below.

Extended EII exemption increases Renewables Obligation

On Tuesday (26 March) government confirmed that legislation had been passed to increase the maximum Energy Intensive Industries (EIIs) renewable levy exemption from 85% to 100%. This will reduce liable volumes for the Renewable Obligation, as a greater proportion of EII demand will be exempt. Subsequently, the obligation for 2024-25 has been increased from 0.487 Rocs/ MWh to 0.491 Rocs/ MWh for non-EII demand. Multiplying the obligation by the buy-out price per certificate (￡64.73/MWh) provides a revised cost of ￡31.78/MWh.

Triads show a decline on 2022-23

Separately, on the same day, National Grid ESO published its Triad data for the winter. The triads are the three periods of peak net system demand separated by ten days. Since the implementation of Ofgem’s Targeted Charging Review (TCR), triads are not the big news story they once were, as most of the Transmission Network Use of System (TNUoS) cost is now comprised of a fixed charge for users. However, I still like to track them to see how peak net system demand is evolving!

In summary, 2023-24 showed another year of falling average demand over the three peaks, very marginally falling below the previous year’s. 41,971 MW was 0.2% lower than 42,052 MW the previous year. The maximum triad demand (43,984 MW) fell 1.3% on the previous winter but failed to reach the lows of 2021-22 (43,748 MW). The lowest demand of the three periods fell below 40,000 MW for the second year in a row, although the daily peak breached this threshold one more time than last year (23 times vs 22 last year). The triads all fell over settlement periods 35 and 36 (between 5pm and 6pm), echoing the trend from last year.

For context, the highest triad peak in winter 2010-11 was 58,861 MW, 34% higher than seen this winter!

Commencement of a new charging year

On 1 April, we transitioned from the 2023-24 to the 2024-25 charging year. What does this mean for some of the components of your bill? We’ve provided a summary below.

For more expert analysis and commentary, explore Intelligence at energy.drax.com/intelligence: