Posts in category: Utility Companies

A new government deal with industry could see nearly a third of British electricity generated by offshore wind farms by 2030.

If successful, officials say the plan would see more electricity being generated by renewables than fossil fuels for the first time in UK history, with 70 per cent coming from low-carbon sources.

Currently offshore wind provides just 7 per cent of British power, but this would be boosted to 30 per cent by the end of the next decade.

Not everyone is convinced by the announcement, with some environmentalists warning renewables would have to be scaled up even further as the nation’s nuclear ambitions floundered.

According to the government, its promised green power “revolution” would bring 27,000 jobs to the energy sector.

“This new sector deal will drive a surge in the clean, green offshore wind revolution that is powering homes and businesses across the UK, bringing investment into coastal communities and ensuring we maintain our position as global leaders in this growing sector,” said energy minister Claire Perry.

The deal will increase the involvement of UK companies in offshore wind projects to 60 per cent, ensuring the £557m the government has pledged in state subsidies benefits local communities.

This will be accompanied by a £250m investment from industry, which will help ensure British companies are world-leaders in new areas such as robotics, floating wind farms and larger turbines.

Alongside the deal, the government will provide more than £4m for British businesses to help countries such as Indonesia and Pakistan move from coal power to offshore wind projects.

There will also be more efforts to reduce the cost of offshore wind projects – which have already been halved in the past two years – to help move to a subsidy-free system.

The Crown Estate will be releasing new seabed land from 2019 for future offshore wind projects.

Energy UK’s chief executive, Lawrence Slade, said the deal will “further cement the UK’s position as a world-leader in offshore wind”.

“The offshore wind industry has been a great success story for the UK, bringing thousands of skilled jobs and billions in investment while delivering clean energy at an ever-falling cost to customers.”

Industry body RenewableUK said the deal was about creating opportunities for the diverse array of people who would be part of the new workforce.

However, with less certainty around other strategies to tackle climate change, such as nuclear power and carbon capture technologies, Greenpeace said renewables needed to be scaled up even more.

“The government’s plans for a fleet of new nuclear reactors has collapsed. This leaves Britain with a big energy gap in the future,” said John Sauven, executive director of Greenpeace UK.

“It means the government’s latest offshore wind target of 30 gigawatts by 2030 is woefully inadequate.

“Renewable power now presents the best opportunity for cheaper, cleaner and faster decarbonisation.

“Wind and solar must be tripled between now and 2030, with offshore wind the future backbone of the UK’s energy system.”

Additional reporting by agencies.

Energy prices are one of the biggest consumer worries around Brexit. More than half of people (54%) think their energy bills will change, or have already done so, as a result. So what impact could Brexit have on your bills? We look at the insight available to find out.

A third of people (32%) think that Brexit will affect energy prices in future, according to our research. Another 22% think Brexit has had an impact already.

Aside from Brexit, energy prices are one of the costs the most consumers worry about. Two-thirds of you are concerned about the price of gas and electricity, and two-thirds worry about fuel prices. But you might be worrying more than necessary about Brexit adding to your energy bills. Read on to find out what Brexit might change and what this could mean for you.

Are you worried about energy prices? Just over half of people think Brexit will, or already has, affected energy prices. And more people think Brexit will, or already has, impacted the price of other things, such as food, holidays abroad and more:

On the other hand, just over a third of people expect there to be no impact on broadband or TV/online subscription prices. And a fifth think energy prices won’t be affected by Brexit. Energy and Brexit: what do we know so far? Some of the gas and electricity we use in the UK is imported via ‘interconnectors’ (pipes or wires that carry electricity or gas between countries). Companies can buy and sell from the rest of Europe thanks to the EU Internal Energy Market which governs cross-border energy trading. Without a Brexit deal, the UK would leave this market. The EU would stop governing cross-border electricity flows from interconnectors with the UK. So new trading agreements will be needed. Gas is traded by an independently-owned platform. So the government does not expect gas trading to fundamentally change.

Where does our energy come from?

Around 12% of gas and 5% of electricity we use annually in the UK comes from the EU.

We also import gas from Norway and buy gas in liquid form, which arrives by ship, mainly from Qatar.

More interconnectors are being built – to Norway and Denmark – but trade via these could be less efficient after March if there is no agreement in place. Will Brexit increase energy prices? Without a deal, an old set-up for trading electricity could be used instead of creating something new. This could be slightly less efficient and increase prices by around £200m by the mid-2020s, consultancy Vivid Economics suggests, though exchange rate movements will likely have a greater impact.

National Grid estimates that UK consumers could face £500m of extra costs per year as a result of being outside the EU’s Internal Energy Market. The UK will also stop being part of some European energy organisations so it will not be able to influence their new policies in favour of the UK.

For example, leaving Euratom could make it harder to get hold of nuclear material for power stations, or experts to service them. It is not yet known how directly this will affect consumer bills.

Will the lights go out after Brexit? The interconnectors which link the UK to the EU make a contribution to energy security. But regardless of the outcome of Brexit, the connections to the EU network will remain. So blackouts or supply shortages for England, Scotland and Wales are unlikely.

But interconnectors are also important to having a low carbon energy system. Excess low-carbon power (including renewables) can be traded across a large area, making the whole system more efficient.

Why is Northern Ireland different for energy?

Northern Ireland and the Republic of Ireland use the same market for trading wholesale electricity. This is called the Single Electricity Market and relies on cross-border trading which is governed by EU law.

But once outside the EU, this law will not apply to the north. So cross-border supply may no longer be possible. Separate markets would be less efficient, and potentially costly for consumers.

The government says it will take ’all possible measure to maintain’ the Single Electricity Market and has advised companies to keep using its processes for the moment.

Previously the government has considered generating electricity using military generators on barges in the short-term, which would be very costly. Since then, there have been auctions in Northern Ireland for capacity which the System Operator says will address any potential security of supply issues.

Will climate targets be affected by Brexit?

Leaving the EU will mean that EU climate change and emissions reduction targets will no longer apply.

The EU Emissions Trading Scheme, for installations which emit pollutants, will be replaced with a UK Carbon Tax. This will be broadly the same, and cost companies £16/tonne from 1 April.

The Climate Change Act, which commits the UK to reduce greenhouse gases to at least 80% of 1990 levels by 2050, is domestic law so will still apply if the UK is outside the EU.

What happens now?

Government, energy regulator Ofgem and the Northern Ireland Utility Regulator are working with electricity interconnectors to get new rules approved.

But it’s not clear if these will be ready by the time we leave the EU. In Northern Ireland, if the market can’t continue, government and the Northern Ireland Utility Regulator will ‘take action to seek to ensure continued security of supply and market stability’.

ScottishPower has announced it will spend up to £2billion in the UK in 2019, the company’s biggest ever investment in the country in a single year. The announcement came as ScottishPower updated its investment plans following the sale of its thermal generation business and transition to 100% renewable energy in 2018.

ScottishPower CEO, Keith Anderson, said: “Our first investment plan since leaving coal and gas behind is a historic milestone for ScottishPower and is a vote of confidence in the UK’s commitment to decarbonising the economy. In a time of uncertainty the UK needs to deliver its Industrial and Energy strategy and that’s what we’re providing with our biggest ever investment in a single year.

“Consumers want and need access to reliable, clean and affordable energy. That is what ScottishPower is focused on delivering and as long as Government climate change commitments stay firm, with sensible policies to support them, this investment will continue.

“Now that we have sold our gas power stations our growth plans are about cleaner and smarter power that will help the UK to decarbonise faster and we have set out the part we will play in the transition to electrify the economy where it matters most now – in transport and in heating.”

Between 2018-2022 ScottishPower will spend £6billion in the UK with 40% on new renewable energy generation, 42% on smarter enhanced networks and 15% on innovative services and products for customers.

ScottishPower will invest in smarter services for customers, including products to unlock the market for electric vehicle ownership.

As part of its strategy for growth ScottishPower announced plans for a new public electric charging service based within the company’s Retail division. The new business will install fast chargers across the UK at strategic commercial locations from winter 2019.

The company also announced plans for a 50MW battery storage project at Whitelee the UK’s largest onshore windfarm. The large-scale battery project will be the first of a series of storage schemes, mainly located at windfarms and at strategic points on the network. ScottishPower believes the combination of renewable energy and flexible storage are the most cost effective low carbon solution for consumers.

In renewables ScottishPower set out plans to develop a 1GW pipeline of onshore wind projects by 2025. Onshore wind remains the lowest cost technology for new electricity generation in the UK and ScottishPower sees substantial opportunities for the continued development of onshore wind projects across Scotland and other areas of the UK.

Construction continues at pace for the East Anglia ONE offshore windfarm located 43km off the Suffolk coast. The £2.5billion project will see 102 Siemens Gamesa turbines deployed, each with a capacity of 7 megawatts; which could in total provide enough clean energy to power the equivalent of more than 630,000 homes annually. Over 50 percent of the project’s total investment will be spent  in the UK, ensuring the benefits of East Anglia ONE are felt across the country.

ScottishPower has also gained planning consent for East Anglia THREE windfarm for up to 1,200MW and planning consultations on the company’s next two large offshore windfarms in the East Anglia zone have begun. If consents are granted, it is anticipated that East Anglia TWO will commence construction in 2024 and East Anglia ONE North will commence construction in 2025.

SP Energy Networks will continue to deliver smart and efficient grids capable of supporting the UK’s future energy needs. In 2019 the networks business will focus investments on continuing the company’s leading role in connecting renewables in Scotland, Wales and England.

Investments will also target the digitalisation of the grid including ground-breaking artificial intelligence systems that will control and balance the network in areas with high penetration of low carbon technologies enabling the transition to widespread use of electric vehicles.

LONDON (Reuters) – A committee of British MPs has launched an inquiry into the outlook for future investment in energy infrastructure in Britain after two nuclear projects were halted, it said on Thursday.

Last month, Japan’s Hitachi put a $28 billion (£21 billion) nuclear power project in Britain on hold, dealing a blow to the country’s plans for the replacement of ageing plants and coalplant closures.

Another Japanese firm, Toshiba Corp., scrapped its British NuGen project last year after its U.S. reactor unit Westinghouse went bankrupt and it failed to find a buyer.

The Business, Energy and Industrial Strategy Committee said it will look at whether the government needs a new approach to accelerate investment in a future low-carbon energy system.

The inquiry will also likely examine ways of financing future nuclear plant new-builds and concerns over foreign investors in the sector.

“In the wake of investment decisions over nuclear plants at sites such as Moorside and Wylfa, a giant hole has developed in UK energy policy,” said Rachel Reeves, chair of the committee.

“A bigger shift in our energy infrastructure to a low-cost, low-carbon energy system is necessary,” she added.

The committee has invited interested parties to make submissions on its website until April 3.

Boiler owners under the Renewable Heat Incentive (RHI) scheme are to face another huge cut in their payments, under new regulations announced on Tuesday.

Annual subsidy levels for the most common type of boiler will fall from around £13,000 to just over £2,000.

An equivalent scheme in Great Britain is paying up to £20,000 per boiler.

Businesses in Northern Ireland will also be offered the option of a buyout.

There are around 2,100 boilers in the Northern Ireland scheme, which was suspended amidst political controversy in early 2016.

The RHI scheme was one of the primary reasons for the collapse of the Northern Ireland Executive in January 2017 after the exposure of its flaws and a vast projected overspend of public money.

A year-long public inquiry has examined the design, operation and oversight of the scheme and is due to report in the coming months.

Boiler owners express concern

Boiler owners have criticised the depth of the cut in their tariffs, claiming it could force some to close their businesses.

The boilers were installed in a range of firms including hotels, nursing homes and manufacturing facilities.

Around half are in agri-businesses with many of those on poultry farms.

Claimants signed up to the 20-year government scheme with a guaranteed tariff and banks were encouraged to lend on the strength of a letter from former Enterprise Minister Arlene Foster.

However, the subsidy paid was higher than the cost of biomass fuel and hundreds of firms piled in to take advantage of the generous subsidy.

The budget was quickly overwhelmed and it took several cuts in subsidy levels to bring it back into line.

The latest change will see claimants receiving a rate of return on their investment of 12%, which is consistent with EU state aid approval for the scheme.

While the UK is set to leave the EU, post-Brexit the same rule will be applied by the UK’s Competition and Markets Authority.

Officials say £120m has already been paid out of Treasury funds to RHI claimants and it expects to spend an additional £70m during the remainder of the 20-year scheme.

But that leaves close to £300m of available budget which will not now be drawn down.

County Antrim poultry farmer Tom Forgrave, with 10 boilers, was one of those who received the greatest amount of public subsidy.

In the first three years he got £750,000 in subsidy.

Reverting to fossil fuel

He said he’d borrowed half a million pounds from his bank over 10 years to install the boilers and associated pipe work and boiler houses, and was just half way through his repayments.

He said that based on the new tariff, any profit from the business would have to go to repaying his boiler debt.

“I’m concerned about the viability of my farm over the next five years,” he said.

He claimed many biomass boiler owners might now switch them off and revert to fossil fuel.

But the Department for the Economy said it was convinced the new tariff was “fair”.

It said the scheme was meant to compensate businesses for the difference in price of the more costly biomass boilers, compared to the cheaper fossil fuel equivalent.

Richard Rodgers, the department’s head of energy, said the difference in price was around £24,000 and with a subsidy of just over £2,000 for the remaining 17 years of the scheme, firms would make up the differential.

Mr Rodgers said biomass fuel was consistently the lowest price fuel in the market and the cheapest way to generate heat, and a decision to turn the boilers off would be irrational.

The new regulations will take effect from 1 April 2019 once legislation is passed at Westminster.

The Competition and Markets Authority (CMA) is investigating the proposed buyout of a minority stake in E.ON by German utility RWE.

Under the agreement between the two companies, RWE is to sell its 76.8% stake in innogy for a resulting shareholding in E.ON of 16.67%.

The CMA is examining whether the merger could result in a “substantial lessening of competition within any market or markets in the United Kingdom for goods or services”.

It is inviting comments about any competition issues until 13^th March 2019.

The acquisition is part of an asset swap deal which involves breaking up innogy and dividing its assets between parent company RWE and E.ON.

Earlier this month, E.ON submitted its application to the European Commission to acquire innogy.

Energy suppliers will not be subject to mandatory payments to meet Capacity Market levies while the fate of the market is being determined, BEIS has decided. But suppliers will be invoiced and have to pay in full within a few weeks of any ‘triggering event’ that reinstates the market. BEIS will enable suppliers to make “prudent provision in the interim, including through making voluntary payments to the ESC”, to ensure they can pay the full amount of supplier charges promptly when they become due.

Payments will be held in an interest-bearing account until the market’s future is clear (although suppliers can make provision for themselves), and suppliers will be able to request information from on their post-standstill liability.

Responding to a consultation, BEIS also promised to hold the T-1 auction planned for January in summer this year, allowing pre-registered parties to retain their registration but also allowing them to withdraw from the auction.

It also set out a variety of adjustments for companies that have Capacity Market contracts, including extending deadlines for ‘financial commitment milestones’, connection agreements and various testing and metering requirements.

To give effect to these plans draft Regulations (two separate sets are necessary) have been  laid before Parliament and should come into force in late March. They must be debated and agreed by both Houses.

BEIS makes it clear that the decisions do not address all the implications if the EC does not grant State Aid clearance for the Capacity Market, or if the EC requires changes in the Market. At that point it would “take all steps necessary” including further consultation, BEIS said.

Wholesale gas and electricity prices tumbled last month as unseasonably mild weather left demand trailing normal levels, a report shows today.

The Naturgy Energy Review and Forecast shows that wholesale gas prices fell 18 per cent last month from January’s levels, while electricity prices were 31 per cent down.

Warmer than normal weather in February contributed to the fall in the wholesale prices of gas and electricity as demand for both was lower than usual.

Naturgy points out that there was also an oversupply of natural gas last month. At the same time, cheaper renewable-generated electricity accounted for 47 per cent of the electricity generated in Ireland in February.

The company, an independent energy supplier, believes that prices will remain low this month.

Bearish outlook

“While energy prices and in particular gas prices have shown significant growth up to year end 2018, we predict the outlook on prices for March to remain bearish with mild weather set to continue and security of supply continuing, due to liquid natural gas deliveries expected in the UK,” said energy analyst Lauren Stewart.

Day-ahead prices for natural gas averaged 47.6 pence sterling a therm (the unit in which the fuel is traded) in February, down 18 per cent on the previous month, Naturgy said.

Seasonal contracts for natural gas supplies in summer and winter 2019 were also down.

Day-ahead prices for electricity fell to 2.76 cent a kilowatt hour, their lowest since the introduction of a new market in October, on February 17th.

Good wind speeds, which boosted supplies of renewable-generated electricity, combined with the falling prices, saw Ireland export power to Britain via a connecting line running underneath Irish Sea.

UK energy department BEIS is expected to publish the long-awaited offshore wind sector deal this week, according to industry sources.

The sector deal aims to deliver at least a third of the country’s electricity from offshore wind by 2030, equivalent to 30GW of installed capacity.

“The offshore sector deal will likely be published this week,” a source told reNEWS.

“BEIS is leading on this and it is likely to be the back end of the week,” the source added.

The sector deal will set out how the industry will employ 27,000 people by the end of the next decade.

The plan will also set a blueprint for the global market for offshore wind products and services provided by UK-based companies to be worth nearly £5bn a year.

The industry had hoped BEIS would publish the sector deal last month but sources said the detail of documents had yet to be finalised by the joint industry-government body, the Offshore Wind Industry Council.

BEIS has yet to respond to inquiries from reNEWS.