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Scottish Power becomes first major UK energy company to generate all electricity from wind

Scottish Power has become the first major UK energy firm to completely drop fossil fuels in favour of wind power, after selling off its remaining gas and hydro stations to Drax for £702m.

While customers will still get some electricity from non-green sources that the company has purchased from other operators, the firm indicated it would now be freed up to invest more in UK renewable energy sources like sunlight, wind, rain, tides and waves.

It plans to invest £5.2bn over the next four years to more than double its renewable capacity.

Calling it a “pivotal shift”, the company’s chief executive Keith Anderson said: “We are leaving carbon generation behind for a renewable future powered by cheaper green energy. We have closed coal, sold gas and built enough wind to power 1.2 million homes.”

The firm is the first of the “big six” energy suppliers, which also includes British Gas, EDF Energy, E.ON, Npower and SSE, to make such a switch.

The government has already decreed that coal power should be phased out by 2025.

Some smaller energy suppliers like Ecotricity and Good Energy already offer totally renewable tariffs, with their power generated from wind turbines, solar panels and hydro sources.

Scottish Power has already closed all of its coal plants and has 2,700MW of wind power projects operating or in the pipeline.

The firm’s Spanish parent company Iberdrola is aiming to reduce emissions by 30 per cent by 2020, and 50 per cent by 2030 compared to 2007. Its goal is to be completely carbon neutral by 2050.

The move also marks a further step away from coal-burning stations for Drax, which has already converted four of its six stations to burn wood pellets instead.

Although the company has been criticised for the level of air pollution coming from these sources, the firm has insisted that pollution levels were “well within” legal limits.

Its continued use of comparatively clean power sources such as gas and biomass would allow it to fill in any gaps left when solar and wind production is too low to completely supply the UK with electricity, the company said.

After the sale was announced, the company’s chief executive Will Gardiner said it was “a critical time in the UK power sector”.

He added: “As the system transitions towards renewable technologies, the demand for flexible, secure energy sources is set to grow.”

Kate Blagojevic, head of energy at Greenpeace UK, said the move by Scottish Power was part of a much larger trend.

“Big utilities across Europe have been shedding their dirty fossil fuel infrastructure because it makes economic and environmental sense,” she said. “This move by Scottish Power shows that the same maths adds up in the UK too. Climate science could not be clearer that renewables are the future for powering our world.

“We need the government to give renewable energy industry its full backing rather than propping up the fossil fuel and nuclear companies.”

A renewed focus has been placed on renewable energy since a major United Nations reportannounced that major changes would be needed across the world to limit the worst effects of climate change. This included a recommendation of a 45 per cent cut in carbon emissions by 2030.

Britain’s government asked its climate advisers to prepare recommendations for the changes needed across the nation’s energy sector, as well as industry, transport, buildings and lifestyles, to meet the strict limits outlined in the report.

Fracking is too high a price to pay for cheap energy

Fracking is the wrong answer to a good question: how can the world find the energy supplies to sustain economic growth and living standards?

It is perfectly plain that the global fracking boom – centred on North America – has dramatically altered the balance of power in fossil fuels. It has pushed the price of a barrel of oil lower, and lower in any case than it would otherwise be, such is the quantity of the oil and gas now being produced. The United States has regained its status as an energy superpower. And yet we know where all of that is heading – more carbon dioxide emissions, more global warming, another steps towards global armageddon.

The decision by High Court judges to allow fracking in Lancashire to go ahead, quashing an appeal against it by anxious residents, has a particular unfortunate timing. It comes, after all, only days after the Intergovernmental Panel on Climate Change issued an urgent warning about the scale and pace of climate change, and how life on earth will be effectively extinguished over the course of the next century or so if global temperatures are allowed to creep even higher than they are trending. The stakes, in other words, could hardly be higher, though the public seems increasingly desensitised to the warnings.

In the case of fracking, the effects on water supplies, for example, and localised pollution are additional unwanted effects of this new technology. The people of Lancashire will not be the last to discover that energy security can carry a high price for some.

 

Yet the opponents of fracking have to answer the question as to where a reliable and economical source of energy can be discovered. Fortunately, the answers are readily available. Renewables – wind, solar and wave – are already making their contribution to our energy supplies, but remain too small a sector. The remaining issues are how to make them compete on price with hydrocarbons and, connected to that, how energy produced during peaks can be stored so as to match peak demand, and vice versa. The development of battery technologies has been impressive since lithium-ion technology emerged three decades ago, and it has much further potential. This would enable large amounts of electricity to be stored, both to meet household demand, for example, to feed fast chargers for cars without the need to bolster the capacity of the national grid.

As to cost, it is doubtful that, on their own terms, renewables will be cheaper than fossil fuels for a long time – but that is to neglect the greatest cost of all from burning carbon – the damage to the planet, which is beyond price. The failure of governments to fix this market failure adequately – whereby the damage to the planet is not reflected in the cost of burning carbon fuels is perhaps the biggest single factor in the degradation of our planet.

There are micro solutions too. When electric cars become ready to travel, say, 200 miles in winter between charges, we may reach appoint where they can be integrated with homes, so that “spare” electricity in them can be pumped back into he home or even sold to the National Grid, with a windmill and solar panels on the roof generating enough for most household needs. That may soon become a reality in the coming decades.

Energy supplies need to be resilient and economical. A variety of sources – carbon, nuclear, renewables – help to ensure security of supply. Energy generated and recycled in Britain, for example, will mean more energy independence, reduce the political risks associated with imports from the Middle East, and cut the trade deficit. There are many answers to the energy problem, then, and fracking need not be one of them.

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Profits slide at big six energy firms as 1.4m customers switch

Britain’s biggest energy firms saw their profits dive by 10% last year as more than 1 million customers left them for smaller challenger companies.

Profits at the so-called big six firms fell from £1bn to £900m in the face of increasingly tough competition, and their market share dropped to a record low of three-quarters.

But figures published by the energy regulator, Ofgem, revealed huge differences in the companies’ profitability.

The market leader, British Gas, maintained a healthy margin of 8% as an ongoing cost-cutting drive offset the loss of hundreds of thousands of customers.

SSE still made a 7% margin, E.ON was down to 5% and ScottishPower’s margin fell to 0.5%. EDF made a profit for the first time since 2009, while Npower narrowed its continuing losses. The merger of SSE and Npower was given the green light this week by competition authorities.

In total, 1.4 million people left the big six between June 2017 and June 2018, according to Ofgem’s annual state of the market report.

Newer entrants have grown their market share to 25% of gas supplies and 24% for electricity, but so far none have managed to break through to the scale of the big six.

Householders now have 73 energy suppliers to choose from, and switching rates are at a record high.

The emergence of a new breed of middleman companies, who switch customers automatically, was putting additional competitive pressure on firms, Ofgem said.

But the report found a significant chunk of people are still not shopping around.

One-third of consumers said they have never switched, and 27% said they had only switched once, in figures almost identical to a year ago.

And while the number of people on poor value default tariffs has continued to fall, 54% are still on such standard variable tariffs.

The government said the fact so many households were still paying over the odds showed why it was introducing a price cap at the end of the year.

“Many customers, including the elderly and those on low incomes, are still paying too much,” said Claire Perry, the energy minister.

But the industry warned the cap, which will apply to 11m households, would be a significant challenge for many suppliers.

 

Lawrence Slade, the chief executive of Energy UK, said: “It will be important to ensure it does not undermine the positive change within the energy sector and have any unintended consequences for customers.”

There are signs in the report that the cap could turn back the clock on switching rates.

Ofgem cited evidence that switching for the 5m vulnerable households protected by an existing cap had slowed down between March 2017 and March 2018. More than 90% of those households were found to be paying a tariff either at the level of the cap, or close to it.

Dermot Nolan, the chief executive of Ofgem, said: “We have witnessed many positive developments in energy over the last year, but the market is still not delivering good outcomes for all, especially the vulnerable.”

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Npower and SSE merger given final clearance by competition watchdog

Two of the UK’s Big Six energy suppliers have been given the all clear to merge their retail businesses by the competition watchdog.

The Competition and Markets Authority (CMA) said consumers would still have “plenty of choice” on standard variable tariffs (SVTs) after Npower and SSE’s proposed tie-up.

 

MPs and consumer groups have criticised big gas and electric firms for profiting from loyal customers by switching them to expensive SVTs when their initial tariff ends.

But the CMA said SSE and Npower are “not close rivals” on the tariffs, which had been an area of particular concern for the regulator.

The Big Six suppliers, which also includes British Gas, E.On, Scottish Power and EDF, have already lost hundreds of thousands of customers to newer competitors and are predicted to shed another 2.4 million in 2018, according to industry trade body Energy UK.

Price comparison site uSwitch said in August that it had seen a 40 per cent rise in customers changing utility suppliers this year suggesting that households have become more savvy.

Anne Lambert, chair of the CMA inquiry group, said: “With many energy companies out there, people switching away from expensive standard variable tariffs will still have plenty of choice when they shop around after this merger.

“But we know that the energy market still isn’t working well for many people who don’t switch, so we looked carefully at how the merger would affect SVT prices.

“Following a thorough investigation and consultation, we are confident that SSE and Npower are not close rivals for these customers and so the deal will not change how they set SVT prices.”

Rik Smith, an energy expert at uSwitch, said the merger would affect up to 9 million households.

He added: “With regulatory intervention due to be in place by the end of the year, how will the new supplier engage those customers who are still on poor value standard variable tariffs and get them onto better deals?”

The merger announcement comes after the government has pledged to help customers harmed by a lack of competition in the energy market.

Prices have soared this year, with the average dual-fuel energy bill now £1,138 a year, after the main suppliers all hiked tariffs.

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National Grid to recoup £111m from consumers to upgrade North Sea gas pipelines

The energy regulator will allow National Grid to pass on the costs of upgrading a major North Sea gas pipeline in Yorkshire to consumers, reversing its previous stance, after it emerged the country’s security could be at risk if nothing is done.

Ofgem has approved National Grid’s plan to spend £111m upgrading compressors and pipelines at Easington, in the Humber Estuary, one of the country’s biggest gas import terminals. The cost of the project will be recouped through a levy on household and business energy bills.

The regulator had initially rejected National Grid’s request to undertake the work, but changed its mind because “the resilience of the energy system could be impacted if the pipeline isn’t replaced”.

National Grid, which runs the country’s central gas and electricity transmission networks, had originally asked for £140m, which Ofgem said was too expensive.

Ofgem decides how much money gas and electricity companies can charge consumers through their energy bills to pay for investments, and regulates how much profit they can make. Companies can apply for additional allowances to cover extra costs.

Separately, the regulator has given National Grid and its partners, Wales and West Utilities and Cadent, the green-light to recoup £96m from energy bills to prevent cyber security threats, pay for street works and compensate landowners for disruption.

Ofgem has also rejected National Grid’s request for £123m to maintain gas compressors. The regulator said National Grid must complete the work with the original £500,000 allowance already offered.

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European gas prices hit three-year highs and are set to keep rising as companies scramble to store enough gas for winter

Energy bills are expected to rise when the temperature falls this winter, as the price of gas soars amid a squeeze on supplies and storage.

The price for winter gas is close to 50pc higher than it was this time last year and experts expect prices to rise further, with costs passed on to households and businesses.

Supply jitters have unsettled the market in the wake of a cold spring, while the rising price of oil and carbon allowances drive costs higher still. ­Although major energy companies typically buy about half their gas a year before it is used, many smaller firms secure a tenth of their supply in advance, threatening higher bills for consumers or financial strain for providers.

In the UK market, winter gas prices are 71.75 pence per therm compared to 48.85p/th ahead of the previous winter.

Dutch and German traders are paying €25.58/MWh (£23.13) for winter gas compared to €17.02/MWh this time last year. Even buying gas one month in ­advance commands prices not seen since early 2015. Energy markets are riding high after European gas stores were depleted by the freezing temperatures brought by the “Beast from the East”. Local gas production has also continued to fall. Gas stores stand only 58pc full, ­compared with 77pc this time last year and despite substantial injections over the summer.

The task of replenishing these stores has become more difficult because North Sea production is dwindling and global gas players would rather sell in Asia where returns are higher.

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Massive price hike for Ovo Energy customers – supplier ups price of Simpler Energy tariff by 12.4% for some

In proof that it’s not just the big boys increasing energy prices, even the most popular suppliers are now hiking rates for people on variable tariffs.

Customers of Ovo Energy’s “Simpler” tariff are about to see bills rise by as much as 12.4%.

Ovo, with more than 600,000 customers is one of a new breed of ethical, challenger brands that have emerged in the past 10 years. It’s also popular – being named the best provider for customer satisfaction last year.

But it is the second time the Bristol-based firm has upped prices in 2018.

“Wholesale energy costs have risen by over 15% since June, as a result we’re increasing our variable plan rates and removing the online discount from our variable plan,” Ovo said when announcing the change.

“The price change and removal of the online discount from the variable rate takes effect from 17th October 2018.”

The move follows hikes from challenger brands such as Bulb as well as by the Big Six.

Who’s affected and what will it cost them?

Ovo is increasing the price of its Simpler Energy plan by 6.5% – adding an average of £75 to fuel bills. But that’s not its only change.

The firm is also ditching the online discount it offered Simpler Energy customers – meaning an extra £60 on bills and an effective increase of £135, or 12.4%, for customers who had been using it.

And it might not be the last price rise people on this plan face.

“We review our prices every week,” Ovo said when announcing the latest change.

There is some good news though – everyone affected by this change is also free to move to a new supplier.

“Today’s announcement from Ovo suggests it really does pay to switch and fix your energy tariff,” said Stephen Murray, energy expert at MoneySuperMarket .

“With all indications that prices will continue to increase this winter, now is the time to switch to one of the many competitive fixed-rate tariffs on the market.

“The price you pay will be secured for the next 12 months – or 24 if you go with two year fixed tariff – and you will save £250 or more on your bills.”

Other ways to save on your energy

Moving to a cheaper deal is the simplest way to cut the amount you spend on energy, but there are other steps you can take too.

First, make sure you supply regular, up-to-date meter readings. Don’t leave your provider reliant on estimated bills – make sure you only pay for what you use.

Second, ensure your home is properly insulated – that way you won’t lose any heat through gaps in your walls or roof.

The Energy Saving Trust calculates that a properly insulated home is £160 a year cheaper to heat.

While cavity wall insulation, double glazing and loft insulation can cost a lot, there are plenty of cheap, simple ways to insulate your home too.

In the winter, turning down your thermostat by just 1 degree can knock £85 off your annual bill according to the Energy Saving Trust, while the body reckons that turning appliances off properly rather than leaving them on standby costs us all £30 a year.

Finally, see if your supplier owes you money – millions of us have overpaid on our bills, and our suppliers are sitting on that extra cash

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SSE shares plunge as it warns profits will be ‘significantly lower’ due to Ofgem price cap

SSE has blamed the better-than-expected weather this year for an anticipated £190m hit to profits in the first five months of the year, and warned of more pain to come from the energy price cap proposed by Ofgem.

Shares in the group dropped by 10 per cent in early trading on Wednesday after it published the numbers in an unscheduled trading update.

The energy provider said relatively dry, still and warm weather and persistently high gas prices had led to “a higher cost of energy than expected, lower than expected output from renewable sources, and lower volumes of energy being consumed”.

These factors led to an £80m impact on first quarter profits, and a £190m dent in operating profit for the first five months of the financial year. Of this total, half was due to higher than expected commodity prices, and half was down to the weather, SSE said.

Looking ahead, the company said Ofgem’s proposed price cap is expected to result in profits being “significantly lower” in 2018/19 than previously expected.

The energy market regulator wants to apply a cap of of £1,136 per year for a typical dual fuel customer paying by direct debit, and is aiming to have the price restriction in place by the end of the year.

The firm also noted: “Unlike other suppliers, SSE Energy Services has implemented only one increase in standard household energy prices in Great Britain in the course of 2018.”

SSE hiked prices for 2.4 million customers in May, one of 41 bill increases imposed by energy providers so far this year.

“Lower than expected output of renewable energy and higher than expected gas prices mean that SSE’s financial performance in the first five months has been disappointing and regrettable,” said Alistair Phillips-Davies, chief executive of SSE.

“The underlying quality of SSE’s businesses remains strong, with regulated networks and renewables providing the core of what will be an infrastructure-focused SSE group in the years ahead.”

George Salmon, equity analyst at Hargreaves Lansdown, said: “While most of us enjoyed day after day of blissful sunshine earlier this year, it wasn’t such a great summer for SSE.

“Hardly any rain or wind meant output from its hydro and wind assets wilted in the heat, and with nobody putting the heating on, customer meters just didn’t tick over. All the while, the price of gas in the wholesale market has kept on rising.”

He added: “Investors should remember that SSE can’t control any of these factors, and a business increasingly focused on renewable energy will have good years and bad.”

SSE is in the process of merging its energy services business with Npower, but made no comment on the transaction in its latest update aside from noting that the division will be excluded from earnings calculations for the current financial year.

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Perry encourages Saudi, OPEC, Russia to work against oil price spike

MOSCOW (Reuters) – Saudi Arabia, other members of OPEC and Russia are to be admired for trying to prevent a spike in global oil prices, U.S. Energy Secretary Rick Perry said after meeting Russian Energy Minister Alexander Novak in Moscow.

U.S. sanctions on Iran’s oil exports, which come into force in November, have already cut supply back to two-year lows, while falling Venezuelan output and unplanned outages elsewhere will also keep the supply-demand balance tight, the International Energy Agency said on Thursday.

“The kingdom (Saudi Arabia), the members of OPEC that are opting their production to be able to make sure that the citizenry of the world does not see a spike in oil price … are to be admired and appreciated, and Russia is one of them,” Perry told reporters.

The United States, Russia and Saudi Arabia are also working together to make sure the world has access to affordable energy, he added

Oil prices fell on Thursday, slipping back from four-month highs as investors focussed on the risk that emerging market crises and trade disputes could dent demand even as supply tightens.

Russia’s Novak said earlier this week that his country could raise output if needed and warned of uncertainty on the market due to the upcoming U.S. sanctions against Iran’s oil exports.

In September, the Middle East-dominated Organization of the Petroleum Exporting Countries and a group of non-OPEC producers, including Russia, will meet in Algeria to discuss the market situation.

During the meeting with Perry, Novak said he proposed creating a joint investment fund to develop new projects, adding the Russian Direct Investment Fund (RDIF) could be part of such a fund.

The RDIF supports this idea and will propose possible parameters for such an arrangement soon, it said in a statement.

Perry and Novak also touched on the topic of gas pipeline project Nord Stream 2, that would double Russia’s export capacity via the Baltic Sea. In July, Washington repeated a warning to Western firms invested in the pipeline that they were at risk of sanctions, saying Moscow was using the project to divide Europe.

Perry, who also met with Russian Deputy Prime Minister and Minister of Finance Anton Siluanov, told the officials that the Trump administration opposes Nord Stream 2 because it would concentrate a single route of Russian gas into Europe, “one vulnerable to disruption and risks of over reliance for European customers,” his spokeswoman, Shaylyn Hynes said.

The United States is boosting its own gas exports to Europe, including to Poland and Lithuania, through liquefied natural gas, or LNG shipments. LNG is more expensive for Europe than gas pipelined from Russia, but Washington is emphasizing the reliability of U.S. LNG.

Russian state energy company Gazprom has in the past cut off gas to Ukraine, and onward to Western Europe, during price disputes in deep winter, and imposed bans on customers reselling gas to other countries.

Perry told the Russian officials that the Trump administration welcomes competition on energy from Russia, but “Moscow can no longer use energy as an economic weapon,” Hynes said.

Novak said Nord Stream 2 was a “commercial project”, which Russia hoped would continue to be developed and that the United States would approach rationally.

Perry did not rule out the introduction of sanctions against Nord Stream 2, but said neither leaders of the two countries, nor their energy ministers, wanted to get to the point where sanctions against the project would be engaged.

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World’s biggest working wind farm opens in the UK – built by Danes

The Walney Extension, a Danish-led and funded project in the Irish Sea off Cumbria, has 87 turbines – each around twice the height of Big Ben, standing approximately 190 metres high.

The windfarm is nearly 19 kilometres (12 miles) off Walney Island, Barrow-in-Furness, and covers an area of 145 square kilometres – equal to an area of around 20,000 football pitches.

It is capable of generating 695 megawatts, enough green energy to power around 600,000 homes and uses more than 300km of cables to connect the turbines offshore to the National Grid onshore.

Walney Extension overtakes the current largest operational wind farm, London Array, off the Kent coast in the Thames Estuary.

Construction of the project started in 2015, and has been completed by Danish energy firm Orsted, with the backing of two Danish pension funds.

Each turbine’s blades were manufactured in the UK, in Hull and the Isle of Wight, and the projec

t used key suppliers across the UK, Orsted said – with ongoing operations and maintenance activities for the wind farm based in Barrow and supporting around 250 jobs.

Matthew Wright, Orsted UK managing director, said: “The UK is the global leader in offshore wind and Walney Extension showcases the industry’s incredible success story.

“The project, completed on time and within budget, also marks another important step towards Orsted’s vision of a world that runs entirely on green energy.

“The north west region plays an important role in our UK offshore wind operations and our aim is to make a lasting and positive impact here.

“We want to ensure that the local community becomes an integral part of the renewable energy revolution that’s happening along its coastline.”

Orsted also supports the local community in Barrow and beyond with a £15 million community fund and a “Skills Fund” to promote education, support local students and increase uptake of Stem subjects (science, technology, engineering and maths) for young people with apprenticeships in the wind turbine industry.

Energy and Clean Growth Minister Claire Perry MP, said: “Record-breaking engineering landmarks like this huge offshore wind farm help us consolidate our global leadership position, break records for generating renewable energy, and create thousands of high quality jobs.

“As part of our modern Industrial Strategy we’ve set out a further £557 million of funding for new renewable projects, helping to tackle climate change and deliver clean growth to local economies.”

RenewableUK’s chief executive Hugh McNeal said: “As this project shows, UK supply chain companies up and down the country are reaping the economic benefits of multi-billion pound investments in offshore wind.

“The industry is working with Government to reach a Sector Deal which will see offshore wind generating one-third of the UK’s electricity by 2030, as well as boosting the innovative UK companies which are supplying offshore wind projects at home and exporting products and expertise around the world”.