Queen’s property chief delays sale of Scottish seabed windfarm plots

The Queen’s property manager in Scotland has delayed the auction of Scottish seabed plots for windfarms after runaway bids for leases in England and Wales handed the Queen and the Treasury a multibillion-pound windfall.

Crown Estate Scotland paused its auction in order to carry out a review of the process after the “unprecedented” bidding in an auction for England and Wales lease options last week reached record highs.

The Queen and the Treasury could share a windfall of up to £9bn over the next decade from the England and Wales auction after energy companies including BP offered to pay five times more than expected for the option to build new windfarms.

Crown Estate Scotland decided with ministers in the Scottish parliament that it would be “sensible” to undertake a six-week review of the structure for its own auction to ensure it secures “a fair price” for the seabed sites along the Scottish coast.

Many within the renewable energy industry have blamed the structure of the Crown Estate’s auction for allowing aggressive “closed envelope” bids from oil companies to skew the market value of the seabed lease.

BP took its first step into the UK’s offshore wind sector during last week’s auction with bids for two windfarms worth 15 times the rate paid by developers in the past, raising concerns within the industry that the rocketing seabed prices would inflate the cost of reaching the UK’s climate targets.

Energy executives have warned that the costs would ultimately mean higher energy bills, and lower returns for green investors. The UK government hopes to build enough offshore windfarms to power every home in the UK by 2030.

Crown Estate Scotland manages the Queen’s property, but unlike the Crown Estate – which manages property in the rest of the UK – it does not return its profits to the Treasury or the Queen. Instead, the revenues are handed to the Scottish Consolidated Fund, which in turn finances the Scottish government.

The review will conclude on 24 March, but Crown Estate Scotland has not set a new date for the start of the auction, which was due to begin next month.

Amanda Bryan, the chair of Crown Estate Scotland, said the “unprecedented outcome” of the auction for England and Wales “has, overnight, changed the market dynamics around offshore wind leasing, and could have significant implications for offshore wind development in Scotland”.

The Crown Estate’s auction for seabed plots in England and Wales guaranteed the Treasury and the monarch total payments of £879m a year from windfarm developers, for up to 10 years. This would hand the Queen a share worth close to £220m a year to run the official royal household and pay for repairs to Buckingham Palace.

Roseanna Cunningham, the Scottish government’s cabinet secretary for environment and climate, said: “In light of the significant changes that we are now seeing in the wider UK offshore wind market, ministers have agreed with Crown Estate Scotland that it would be sensible to review our leasing process.”


National Grid Gas fined £4M over missing records

Liverpool Crown Court previous heard that in June 2017 the Health and Safety Executive (HSE) requested information from gas distribution network (GDN) companies about their management of gas networks in high rise multiple occupancy buildings (HRMOBs).

At the time of the offence National Grid Gas operated the nationwide gas transmission system and the gas distribution systems supplying gas to approximately half of the UK domestic and industrial gas customers, including the gas pipes in HRMOBs.

However, in 2016 National Grid Gas sold part of its operations to Cadent Gas Ltd, this included the activities which the failings relate to. HSE’s investigation revealed the incomplete records were transferred to Cadent by National Grid Gas when they sold their gas networks to Cadent. The system had not been subject to any audits or reviews when the records issue came to light in December 2017. As such Cadent were continuing to inspect only the buildings on the existing database.

After HSE had requested the information, it found that Cadent’s management records were incomplete and found that records on 769 buildings were missing, meaning gas risers in these HRMOBs had not been subject to a condition survey, inspection or routine maintenance for a number of years.

Additionally, the investigation found that National Grid Gas had failed to ensure that 112 HRMOBs had Pipeline Isolation Valves (PIVs) so that gas to these buildings could be isolated in the event of an incident.

As a result of this, HSE undertook a criminal investigation that considered the risk that residents and members of the public were exposed to as a result of breaches to Health and Safety legislation. Enforcement notices were issued in April 2018 requiring Cadent to take remedial action. Cadent took appropriate action and complied with the notices by September 2018.

National Grid Gas plc of 1-3 Strand, London, WC2N 5EH pleaded guilty to breaching Section 3(1) of the Health and Safety at Work etc Act 1974 on 06 November 2020. Today they were fined £4 million with £91,805 costs at Liverpool Crown Court.

After the hearing, HM principal inspector for HSE, Julie Voce said, “This case had wide ranging implications. Our investigations found that people living and working in the high-rise buildings where the failings took place were not protected from the risk of gas leaks.

“National Grid Gas did not have a robust system for recording the details of the gas pipes within these buildings. Opportunities arose where National Grid Gas identified data errors, but these were never satisfactorily acted upon, and opportunities to correct the situation were missed.

“This sentence reflects how important it is when companies are charged with ensuring records that could keep people safe and well are up to date, that they make that task a priority.”

British energy suppliers to begin recouping COVID-19 costs from April – regulator

LONDON (Reuters) – British energy suppliers will be able recoup some of their costs relating to the coronavirius pandemic from April, the regulator said on Tuesday, a move that will increase electricity bills for millions of Britons.

Government measures over the past year to control the pandemic have shut down much of the economy and led to job losses and an increase in the number of people struggling to pay their energy bills.

“We have concluded that it’s in customers’ interests to allow suppliers to start to recover some additional costs related to COVID-19 from April,” Ofgem said in a statement.

A cap on electricity and gas bills came into effect in January 2019 and was a flagship policy of former British Prime Minister Theresa May to end what she called “rip-off” prices.

Ofgem sets its price cap using a formula based on supplier’s costs such as wholesale gas and electricity prices, environmental levies and costs to use and maintain the country’s energy networks.

But the next cap level, to be announced on Feb. 5 and to come into effect from April, will also include a provision of 23.69 pounds ($32.42) per customer due to coronavirus-related costs, Ofgem said.

The extra allowance would “account for the additional bad-debt costs incurred by suppliers as a result of the COVID-19 crisis,” Ofgem said.

($1 = 0.7307 pounds)

(Reporting by Susanna Twidale; editing by Jason Neely)


Elexon proposes reforms to System Operator roles and code arrangements

lexon has set out options for a single energy code body to work alongside a reformed System Operator (SO) in their new policy, ‘Reforming the System Operator Roles and Code Arrangements’. This approach will allow better management of the energy system on the road to net zero.

Elexon has put forward options for reforming gas and electricity system operation and the energy codes in tandem so that ‘once in a generation’ changes can be made to how central services for the energy system are delivered.

Elexon initially outlined its thinking on reforms at its annual seminar last year.

Ofgem has recommended to the Government that an independent body, fully separated from National Grid, be created to carry out the electricity SO role and lead the path to net zero.

About the current roles
Currently the electricity and gas SO roles are carried out by National Grid ESO and National Grid Gas. The BSC is one of 11 energy codes across the energy sector managed by six different organisations. Major changes to the codes can take years to be implemented, which does not lend itself to making fast, widespread, cross-fuel changes to support the energy transition to net zero.

Advantages of a new ‘Market Operator’
Elexon believes that the gas and electricity system operators could be merged, and that a new ‘market operator’ could be set up as a single independent body managing all of the energy codes.

The advantages of this include:

a co-ordinated ‘whole system’ approach to gas and electricity system operation, which will support major changes including heat decarbonisation and electric ‘vehicle to grid’ schemes
faster, more co-ordinated changes to energy code rules aiding in the delivery of net zero
greater ability to make quicker and more widespread changes to commercial agreements across the energy sector
a simpler set of code arrangements for energy companies to manage and engage with
Download the policy
Reforming the System Operator roles and code arrangements
Alternative options
An alternative option is for a single body to carry out gas and electricity system operation, together with management of all energy codes. Elexon believes that this would be more complex and harder to deliver compared with a merged System Operator working alongside a Market Operator.

Views of the Elexon CEO
Elexon’s Chief Executive, Mark Bygraves, said:

“The scale of change needed across the energy sector to achieve net zero is vast. Elexon has been advocating consolidation of the energy code arrangements for a number of years and we believe there is now a golden opportunity for holistic reform of the code and system operation arrangements.

“We welcome the Government’s White Paper and we want to contribute to the reform process that follows it. We believe that the options we have set out are an ambitious, but achievable, set of changes which the Government could consider as part of the next steps.”

Next steps
Following the Energy White Paper, published in December, it is expected that the Government will consult later this year on energy code governance arrangements, and review the organisational structure for the Electricity System Operator (ESO).

Energy white paper: Powering our net zero future