Gas to overtake oil as world’s primary energy source, say DNV GL

A majority of energy firms expect to see “increased investment” in gas over future oil exploration, a survey by a technical advisory company to the to the sector revealed today.

The survey by DNV GL found that 64% of oil and gas sector leaders said that they “expect to increase or sustain” spending on gas projects this year as the industry as a whole looks to prioritise gas energy sources over traditional oil.

A further 86% of the 813 senior industry respondents surveyed said they expect gas, such as natural gas, to “play and increasingly important role” in the energy mix, up from 77% last year.

The Transition in Motion report findings show the oil and gas industry future outlook and seeks to identify the primary drivers for investment within the global energy transition.


Liv Hovem, CEO, DNV GL – Oil & Gas, said: “Society’s transition to a less carbon-intensive energy mix is already a reality, and oil and gas will continue to be crucial components.

“Our research affirms that the industry is already taking positive steps to secure the important role we forecast gas to play in helping to meet future, lower-carbon energy requirements.”

Significantly, 72% of respondents believe that, as traditional coal energy generation becomes obsolete over the coming decades, the long-term attractiveness of gas will significantly improve.

Ms Hovem added: “Significant investment will be needed in the gas industry over the coming decades to increase capacity, transform assets to source and transport a decarbonized mix of energies, and to safely build and maintain the infrastructure needed to connect emerging supply regions with evolving demand centres.”


Opposing onshore UK windfarms ‘means higher energy bills’

The portfolio of global offshore wind projects in operation, under construction or in development grew by over 10% in the last year according to new data RenewableUK is publishing at our Global Offshore Wind 2018 conference in Manchester.

The new figures from RenewableUK’s Offshore Wind Project intelligence show that the global pipeline of offshore wind projects stands at over 104 gigawatts (GW), up from 95GW in June 2017.

The new figures show the UK retaining the top spot as the largest offshore wind market in the world with a portfolio of 35.2GW, followed by Germany (23.4GW), Taiwan (8.3GW), China (7.7GW) and the USA (7.5GW) rounds out the top 5. These countries share just under 80% of the global market.

The latest figures do not include possible extensions of existing wind farms totalling nearly 3GW recently announced by The Crown Estate – which could push the UK even further ahead when they are confirmed next summer.

Taiwan made the biggest gains in the last 12 months adding 6.7GW which accounts for over two-thirds (68%) of global growth. Although it was not in the top 10 in 2017, Taiwan has powered past the USA and China to become the third largest market in the world and the largest outside Europe.

The UK retains its global number one position in a year which saw auctions for new power contracts (Contracts for Difference) secure offshore wind at half the price of auctions in 2015, making new offshore wind cheaper than new gas and nuclear power plants.

The offshore wind industry in the UK recently announced details of its 2030 vision for the sector which would see 30GW of operational capacity installed by the end of the next decade, providing 30% of UK power needs (up from 7.1GW at present). This would lead to a doubling of jobs to over 27,000. Industry is currently working with Government on a Sector Deal to secure this. Between 2017 and 2021 investment in new offshore wind capacity is expected to total over £18.9bn.

Commenting on the new figures, RenewableUK CEO Hugh McNeal said:

“Our industry is already delivering for the UK and we want to go further, with offshore wind as the backbone of a clean, reliable and affordable energy system. To achieve this ambition, the industry will invest tens of billions of pounds, creating thousands of skilled jobs and supporting prosperous communities across the UK.

Offshore wind is a global growth opportunity and a major energy source. The sector will be worth over £30bn worldwide by 2030 and UK companies must be ready to seize opportunities in new markets. We are transforming the UK supply chain, as we grow our exports five-fold by 2030.”

innogy’s largest offshore market is in the UK, where it operates over 1GW of offshore wind power.innogy’s Director of Offshore Investment & Asset Management, Richard Sandford, said:


“The UK has demonstrated true transformational growth, from the early days of our North Hoyle project, the UK’s first commercial scale offshore wind farm, to the modern technologically ground-breaking turbines being installed today. We’re seeing bigger more powerful turbines, further from shore and in deeper waters, with developers like ourselves installing faster than ever. At the same time, the growth in offshore wind has created an industry of manufacturers and suppliers that are becoming increasingly innovative and expert, and are helping positioning the UK as a world-wide hub of offshore expertise.”

Jonathan Cole, Managing Director for Offshore Wind at ScottishPower Renewables, said:

“The UK continues to lead the world in offshore wind, and the industry here is in a strong position to capitalise on export opportunities in growing markets across the globe. We have the skills, knowledge and expertise that other markets need.”


British Gas in hot water over meters

Britain’s biggest energy supplier has been rebuked by the regulator for forcibly installing an unusually high number of pre-payment meters in homes.

British Gas obtained court warrants to install meters in the homes of about twice as many newly indebted customers as the industry average, Ofgem said.

The regulator said that the tactics were being used “too often” and that suppliers must use forcible installations only as a “last resort”.

Pre-payment meters have to be fed via keys or tokens topped up in shops and post offices before the customer can use gas or electricity. People using them are among the most vulnerable.

Some customers agree to have them installed to help them to manage their payments but suppliers can go to court to install them against their wishes.

British Gas, which is part of Centrica, has about 8 million household customers in the UK. Last year it obtained court warrants for 41,614 pre-payment meter installations, Ofgem figures show, 26 per cent more than in 2016. It accounted for almost half of all such installations across the industry, which rose to 84,230, from 80,594 in 2016.

Although British Gas is the largest supplier, Ofgem said that its installation rate was disproportionately high and it had installed meters in the homes of newly indebted customers at about twice the industry average rate.

Ofgem also highlighted high installation rates of Utility Warehouse, at about five times the industry average, and Ovo Energy, at about a third higher than the industry average, but said that their rates had improved since 2016.

A British Gas spokesman said: “Warrants are only ever issued as a last resort and we have seen a decrease in the numbers carried out this year.”


SSE hits 2.4 million customers with gas and electricity bill hike

SSE will hit around 2.4 million customers with energy bill hikes in July, making it the latest big supplier to raise gas and electricity prices.

Households supplied by the company will see bills rise by an average of £76 per year, or 6.7 per cent for those on a dual fuel tariff.

Gas prices will jump 5.7 per cent while electricity will increase by 7.7 per cent on 11 July.

This will equate to an average rise of around £1.50 a week for customers buying both gas and electricity.

The increases are significantly above both inflation and the pace of wage growth, meaning a further squeeze for households.

Stephen Forbes, chief commercial officer of SSE Energy Services, said: “We deeply regret having to raise prices and have worked hard to withstand the increasing costs that are largely outside our control by reducing our own internal costs.

“However, as we’ve seen with recent adjustments to Ofgem’s price caps, the cost of supplying energy is increasing and this ultimately impacts the prices we’re able to offer customers.”

The move from SSE comes after all the other five of the big six suppliers increased prices in recent months.

Npower announced in April that it would increase the cost of its average energy bill by 5.3 per cent,

That came after Labour’s shadow cabinet office minister, Jon Trickett, accused British Gas of delivering a “slap in the face” to customers with its own 5.5 per cent hike.

Earlier this month, E.On reported a 41 per cent rise in profits, just weeks after slapping households with price rises.

In total, around nine million households will see bills rise over the summer, with the average dual fuel tariff now costing £100 per month, according to Money Saving Expert (MSE).

MSE founder Martin Lewis accused the big energy firms of acting like sheep by all raising prices in quick succession.

“Npower is the worst offender, charging someone with typical use £1,230 a year – well over £100 a month,” Mr Lewis said.

“Eon has the least-worst of the big six standard tariffs at £1,153. Yet even that is massively over the odds.

“Anyone on a big six standard tariff is ripping themselves off by failing to take action. Do-nothings pay massively more than the do-somethings.

“Switch firm and you could cut bills to almost £800 a year, even with the same usage.

“And even if for some reason you’re loyal to your current provider, almost all big six suppliers have alternative tariffs over £100 a year cheaper than their standard deals. However, they operate ‘don’t ask, don’t get’ policies. So at the very least, ask!”

No Brexit for energy as UK set to draw more power from EU

As the U.K. government works to exit the European Union, the nation’s electric utilities are working to get closer.

Power already flows between the U.K., France, Ireland and Northern Ireland through four interconnector cables, and work is under way to more than quadruple the capacity of those links. The cables, detailed in the chart below, will establish a stronger physical tie with the continent regardless of what politicians decide on Brexit.

The investments mark a contrast with Prime Minister Theresa May’s effort to make the U.K. more independent of its continental neighbors. Building more power cables between nations will bind Britain’s electricity market closer to those of continental Europe. That will benefit both Britain and Europe, giving grid managers everywhere additional flexibility to respond to shocks and the system and to buy the cheapest power.


The Brexit process may undermine the economic and logistical case for using interconnectors. To maintain flows after April 1, the U.K. must agree to remain part of the EU internal energy market. That must be written into Britain’s agreement with the EU to exit the union, and that hasn’t happened so far. What happens to electricity if there’s a no-deal hard Brexit would add so much friction to the system that utilities think it’s unthinkable.

For two decades, energy interconnectors have become more common throughout Europe as the union sought to build a single market in energy. The U.K. has been a major proponent in that process—and a big beneficiary.

For an island nation like Britain, links are a helpful source of cheap electricity and flexibility for grid managers, who would otherwise have to rely on utilities building costly generation plants. They give another source of electricity at peak times, like the cold winter days when there’s high demand for heating.

Whether the U.K. can still rely its neighbors for energy at times of stress depends on the the U.K.’s energy relationship with the EU after Brexit. Those matters haven’t had much discussion yet. Policy makers have focused on other issues like the nature of the border with Ireland. Some analysts are warning greater dependence on the EU leaves Britain’s grid vulnerable.

“If rules governing the flows of electricity and gas around Europe are set outside the influence of the U.K., that could change how comfortable we are relying on imports,” Neil Cornelius, managing director at the Berkeley Research Group LLC said.

At the moment, the biggest link Britain has is with France, which exports excess power from its network of nuclear power plants. Despite Brexit, the energy industry is forging ahead with plans to build 11 more interconnectors bringing total capacity to almost 18 gigawatts—more than a third of current peak demand.

Not all of these projects are likely to get built, since EU funding for some of them may disappear with Brexit, according to John Feddersen, chief executive of Aurora Energy Research Ltd. And if Britain is treated as a third country outside the EU, that could reduce the willingness some nations have in supplying power to the U.K. in an emergency.

“Irrespective of Brexit, if the lights are about to go out in France, they wouldn’t be sending us power anyway,” he said.

Interconnectors improve security of electricity supply and help to reduce bills for consumers. They provide flexibility for grid managers, like power to back up intermittent flows from renewables such as solar and wind farms, the U.K. Department of Business, Energy and Industrial Strategy says.

The projects in development are expected to cut bills by as much as 20 billion pounds ($26.6 billion), the government estimates.

“An alternative to interconnectors would be to develop additional generation at home, and potentially gas storage,” Cornelius said. “These would enhance supply security. But there are obviously costs associated with this.”

Government to invest billions of pounds in new nuclear power station

The Government is set to announce a multibillion pound investment in a new nuclear power station, as well as underwriting billions of pounds of loans.


Business Secretary Greg Clark is expected to give MPs details later on Monday of a funding deal for the proposed Wylfa Newydd plant in Anglesey, North Wales.

The Government is expected to make a direct investment in the project alongside the Japanese government and Horizon Nuclear Power, a subsidiary of Japanese giant Hitachi, which is developing the project.

A guaranteed price for the electricity generated at the power station is expected to be around £15 per megawatt hour less than the £92.50so-called strike price awarded to EDF for the Hinkley Point C nuclear power station being built in Somerset.

Justin Bowden, national officer of the GMB union, told the Press Association: “We are witnessing an outbreak of energy policy common sense.

Sue Ferns, deputy general secretary of the Prospect union, said: “The Government’s decision to take a direct stake in the Wylfa nuclear power plant is a sensible move that needs to be adopted for wider UK energy policy decisions to allow a low-carbon infrastructure to be fully developed.

“By taking a share in this project the costs can be lowered, work can be directed to UK companies and the UK’s skills base can be developed.“

“In order to capitalise on this the Government must take a similar approach to other sites such as Moorside in Cumbria.“

“Rather than choosing one energy infrastructure model over another, the Government must take a broad view and recognise that other projects such as the Swansea tidal lagoon also have an important role in building energy resilience and capacity and would benefit from similar funding models.

“The energy sector needs to see this latest change as the start of a new approach.”