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Pay up or have licences ripped up, Ofgem warns five suppliers

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Experts worry that only a handful of energy suppliers might be left in the British market by Christmas after gas prices soared
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Energy regulator Ofgem says gas crisis not its fault

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The head of Ofgem has rejected claims from the industry the current energy crisis represents a failure to adequately regulate the market.

Six suppliers have gone bust recently, leaving about 1.5 million customers facing higher bills, with more firms expected to fold.

Ofgem boss Jonathan Brearley, told the BBC: “No-one could have predicted the kind of gas price rises we have seen.

“In a situation like that any market would be under strain.”

Gas prices are up four-fold, Mr Brearley said.

However, his view has little support from senior executives in the industry who have told the BBC the regulator knew full well that many smaller suppliers would not be resilient in the face of rises that should have been part of the regulator’s stress testing of the sector.

The boss of the UK’s fifth largest energy provider, Scottish Power, said the government was essentially asking larger providers to weaken their own financial position by shouldering billions in additional cost to provide these customers with energy that costs more to buy than they are allowed to sell it for under a government-imposed retail price cap.

Ofgem insists its primary concern has been protecting consumers, but that promise sounds slightly hollow when millions of customers face being moved to higher tariffs from bigger suppliers and the cost those larger companies incur from taking on new customers will be added to all consumers bills through an industry wide levy.

 

Larger suppliers, including Centrica owned-British Gas, have agreed to take on hundreds of thousands of marooned customers, but expect the cost of doing so to be recouped in a mechanism that Ofgem described as “tried and tested” but which bigger companies say is not designed for the mass failures we are now seeing.

The Ofgem boss admits that the energy cap (£1,277 for a dual fuel household with average energy consumption) which limits the ability of companies to pass on higher wholesale costs to retail customers, is likely to rise again when it is reset in April 2022 after a 12% rise due to take effect at the end of this month.

Industry sources also agree that many of the larger companies may be prepared to take on new customers not only because the retail price cap will inevitably rise, but also because the new customers they acquire will be “stickier”. This means they will be less likely to switch in future given a lack of confidence that cheaper suppliers can be relied upon in the future,

The received wisdom and advice of the last ten years to continually switch suppliers now looks less persuasive.

Ofgem’s Mr Brearley insists he wants a competitive market in the future. Critics argue that it presided over a market that it knew would collapse in a gas crunch – resulting in fewer companies and meaning a less competitive market.

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UK energy crisis: Big firms positioned for further gains

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FTSE 350 Oil Gas and Coal has risen 9.3%

1.5 million UK customers have been left out in the cold without a gas provider in recent weeks.

However, perverse though it may seem, it is the gas sector that is winning from an investment perspective and it could see further benefits as industry commentators expect the government to rethink their energy transition strategies.

In the month to 22 September, the FTSE 350 Oil Gas and Coal index has risen 9.3%, while the FTSE 350 has risen just 0.2% and the MSCI ACWI Climate Paris Aligned index has returned 0.1%, according to Morningstar Direct figures.

Some of the top gainers in the Oil Gas and Coal index include Centrica, which was up 8.4% in the five days to 23 September and Tullow Oil up 3.3%, Royal Dutch Shell up 3% and BP up 2.4% over the same time period.

“There have been some gains as far as the bigger energy providers are concerned given that the failures of smaller companies would extend their customer base significantly,” explained Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

Countries’ climate action plans point to rise in emissions by 2030, UN warns

Harrison Williams, equity research analyst at Quilter Cheviot, agreed and said Centrica and E.ON were both “positioned well for further market consolidation”.

Both Streeter and Williams also thought some of the share price uptick was down to conjectures on the UK Government’s next move.

Streeter pointed to “speculation that the UK Government could provide extra funding for the bigger companies to take on stranded customers”. However, she expects that to be “short lived”.

Williams said a more long-term shift could be in the UK Government “tweaking or dropping entirely recent proposals for further increasing competition in the space with the proposals for opt-in switching from 2023 and a trial for opt-out switching to make it easier for consumers to find a cheaper deal.”

However, it is not just government policies on the sector itself that could lead to long-term boosts to the big oil companies. The shortage, not just in the UK, but across Europe and in Texas, has highlighted the need to re-think climate change proposals and incentives, according to Robert Minter, director of investment strategy at ASI.

“Many governments worldwide have sought to restrict capital flows to fossil fuel companies,” explained Minter.

Has the wind gone out of alternative energy?

He highlighted the global depletion rate of oil production is 5%-7% per year, which means if no investments are made into future production, the oil supply constricts naturally by five-to-seven million barrels per day.

“The plan of governments has been to restrict capital, allow oil supply to fall by this amount or more, and force users, the demand side, to shift to alternatives,” explained Minter. “While this is a ‘cheap policy’ that does not affect government budgets, it does nothing to incentivise people to demand more renewable energy.”

Clive Hale, chief strategist at Albemarle Street Partners, agreed that lack of investment was playing a significant role but said there were other important factors when it comes to the UK’s recent shortage including that France is short on power-generation and there has been a fire at the UK end of the under-Channel power cable,  “which will be running on much reduced capacity until next spring”.

So where next for government’s climate change policy?

“There has to be more focus on other alternative generation and energy storage sources that complement the intermittency to ensure energy security,” according to Richard Lum, co-CIO of Victory Hill Capital Advisors.

However, Streeter said it could be that gas is seen as “a vital transition fuel” going forward, particularly liquefied natural gas.

Streeter added the big oil companies are diversified in low carbon energy so “if gas proves a vital transition fuel as we move toward a lower carbon energy mix, then oil majors are in a position to capitalise on that short-term gain and future green investment at the same time”.

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Government signals extension to cap on energy bills

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The Government has set out proposals for a shake-up in the energy market which it promises will save customers money.

New legislation is being planned to keep the energy price cap in place beyond 2023 “if needed”, it said.

The price cap on energy bills limits the amount some customers can be charged, if they are on their supplier’s default tariff.

It was designed to protect those who are least likely to shop around for better deals.

Since being introduced in January 2019, the price cap has forced bills down as suppliers race to attract more customers. Around 15 million households directly benefit, saving between £75 and £100 on their energy bills each year.

The Government is also looking at other plans which it hopes will increase competition.

They include trials to automatically move customers from expensive to cheaper deals, unless they opt out.

These will take place in 2024, the Government said.

It also plans to create a framework for opt-in switching, which would actively inform customers on expensive deals that they could be better off elsewhere.

A study by regulator Ofgem showed that customers who are contacted in this way are five to 10 times more likely to switch their energy supplier.

“We want to unleash a wave of competition within the energy market and keep energy bills low so households across the UK can keep more money in their back pockets,” said Business and Energy Secretary Kwasi Kwarteng.

“Although more of us are now shopping around for the cheapest tariffs, the existence of better deals on the market is not sufficient in itself to drive consumer behaviour. That’s why we will make the switching process even easier so we can tackle the ‘loyalty penalty’ and ensure everyone pays a fair price for powering their homes.”

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Government to tackle ‘subscription traps’, ban fake reviews and safeguard Christmas savings cash as it unveils new consumer protections

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The Government has announced a new set of wide-ranging consumer protection rules, which will require Christmas savings clubs to safeguard customers’ money, firms to make it easier to cancel subscriptions and regulators to stamp out “dodgy tactics” used to lure online shoppers, plus much more. But the new rules won’t come into effect for a while yet.

The plans were initially revealed by the Government on 19 July before it today (20 July) launched a full consultation on them entitled ‘Reforming Competition and Consumer Policy’. The consultation runs until 1 October. Key proposals outlined include:

  • Changing the law so that Christmas savings clubs have to safeguard customers’ money. This will seek to protect savers in the event a scheme collapses (as happened in 2006 when approximately 120,000 customers lost a combined total of £40 million in the Farepak collapse).
  • Strengthening the legal requirements for subscription contracts. Firms will be required to provide clearer information at sign-up including around auto-renewals.
  • Making it illegal to pay someone to write, or host, a fake review. The Government says it’ll target “bogus online ratings”.
  • Helping regulators curb “dodgy tactics” used to dupe online shoppers. The Government says websites are increasing the collection and use of consumer data, and some are using this insight unfairly to exploit consumers’ behavioural biases, forcing them into purchases they would not have otherwise made.

We run through the proposals in more detail below. For more info on the current protections you get as a consumer, see our Consumer Rights guide.

Christmas savings clubs will have to safeguard customers’ money

In the consultation, the Government proposes to increase consumer protection by amending the Consumer Rights Act 2015. This means legislation would be added that will ensure any prepayments made by customers to schemes, such as Christmas savings clubs, will need to be safeguarded through insurance or trust accounts.

We are checking whether these schemes will also come under Financial Conduct Authority (FCA) regulation and whether payments will be protected by the Financial Services Compensation Scheme (FSCS) too and we will update this story when we know more. See our Are my savings safe? guide for more on this.

Firms will need to make info on subscriptions and auto-renewals clearer

Firms will need to make it explicitly clear in the early stages of the subscription process and immediately after the person places their order, that they are signing up for a subscription service; explaining the contract terms and price per billing period, whether the contract will auto-renew and the minimum notice period for cancellation.

Firms will also need to offer customers a clear choice, making sure they are actively choosing the subscription service. They’ll also have to introduce reminders for customers when the contract is set to renew and make it easier to cancel, for example, by only requiring a consumer to put in essential information and making the process easy and straightforward. This will also need to include providing:

  • The date on which the contract will auto-renew or roll-over, and for how long.
  • The current price of the contract and the price following renewal or roll-over.
  • Any notice period for cancelling the auto-renewal or roll-over and details on how to cancel.

But the Government proposes to exclude any contracts for goods, services, and digital content from the proposals, where an interruption in supply could result in serious harm to consumer welfare. For example, this would likely involve excluding contracts for the supply of medicine or for certain financial services, such as insurance. From 1 January 2022, car and home insurers will be banned from charging renewing customers more than newbies under separate FCA action.

It’ll be illegal to pay someone to post a fake review

The Government says it is considering whether to amend its list of unfair practices to include:

  • Commissioning a person to write and/ or submit fake consumer reviews of goods, services, or digital content. Or;
  • Commissioning or incentivising a person to write and/ or submit a fake consumer review of goods or services.

But there are exclusions – within the consultation, the Government said it would not consider a review fake if it reflects the expert’s, influencer’s or consumer’s genuine experience or impartial opinion of the good or service.

‘Dodgy tactics’ used to dupe online shoppers will be stopped

The Government says it will crackdown on “dodgy” practices online including:

  • “Dark patterns”, which manipulate consumers into spending more than they wanted to;
  • “Sludges”, where businesses pay to have their product feature highly on a retailer’s website while hiding the fact they paid for it;
  • And “drip pricing”, where traders use an appealing headline price to entice customers, then load on additional, unavoidable charges before you reach check-out.

Mediation will be mandatory for firms in the used car and home improvement sectors and there will be speedier resolutions

Arbitration or mediation will be made mandatory for firms in the used car and home improvement sectors. This means consumers can use ADR schemes to resolve issues directly, rather than going through court.

The consultation also proposes halving the eight-week wait that consumers currently experience before they can approach an ADR, such as an ombudsman. The Government says this is so businesses are incentivised to resolve customer disputes more quickly and consumers are faced with less stress and financial pressure.

MoneySavingExpert has been campaigning for over four years for this change – read our full story on the proposal for further information.

The CMA will be given new beefed-up powers to impose penalties

The consultation proposes that the CMA should be able to impose fixed penalties of up to 1% of a business’ annual turnover, as well as being given the power to impose an additional daily penalty of up to 5% of daily turnover while non-compliance continues.

Penalties for individuals would remain capped at £30,000 along with the possibility of a daily penalty of up to £15,000 while noncompliance continues. It will also be able to fine unscrupulous traders that breach consumer law up to 10% of turnover.

In addition, the watchdog will be able to enforce consumer law directly rather than going through a court process, block a wider range of harmful company mergers, and disqualify company directors if they lie to it.

The idea behind this shake-up is to make it quicker and easier for the CMA to secure refunds from companies for consumers. The CMA has received around 100,000 complaints relating to refunds since the start of the pandemic, for example.

Source: https://www.moneysavingexpert.com/news/2021/07/stronger-consumer-protections-competition-watchdog/

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National Grid could lose electricity system operator role under new BEIS and Ofgem plans

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The UK Government and energy regulator Ofgem have outlined their initial views on replacing National Grid with a new independent system operator for electricity and gas, as part of a string of policy updates designed to accelerate the low-carbon transition.

Ofgem and the Department for Business, Energy and Industrial Strategy (BEIS) have today (20 July) launched a consultation on the management of energy systems operations in England, Scotland and Wales (Northern Ireland has devolved responsibilities here). They are proposing that the National Grid, which has balanced supply and demand to ensure electricity access for more than 30 years, is replaced with an independent “future system operator” (FSO).

This move, the organisations claim, could help accelerate the transition of the UK’s energy systems to net-zero at the lowest possible cost to domestic and commercial energy users. Ofgem stated earlier this year that National Grid would face a “conflict of interest” in advising on the future of the energy system because it is a FTSE100 firm that also owns and operates networks.

The consultation document proposes that the FSO should take on strategic network planning, long-term forecasting and market strategy functions for gas. It also outlines “new or enhanced roles and functions” including overseeing the UK’s hydrogen and carbon capture and storage (CCS) sectors, which are set to grow rapidly in the coming decades.

Five high-level characteristics for the FSO are then detailed: “It will need to be technically expert; operationally excellent; accountable to consumers and able to support the delivery of net zero on behalf of the public; independently minded; and operationally and financially resilient.”

National Grid has stated that it “welcomes” the consultation and will “work closely” with BEIS and Ofgem throughout. As the consultation concludes in late September, a phased introduction of the FSO is expected.

Separately, BEIS and Ofgem are consulting on proposals to reform the codes that govern electricity and gas markets, with an ambition to ensure that clean solutions are more affordable and high-carbon options increase in price.

Flurry of announcements

These consultations have been posted alongside a string of other updates from BEIS today.

As well as calls for evidence on large-scale and long-duration electricity storage and vehicle-to-grid (V2G)  technologies, a new Smart Systems and Flexibility Plan has been published.

The Plan stipulates that embedding a “flexibility first” approach could reduce the annual costs of managing the UK’s energy networks by £10bn by 2050 and increase annual profits by £2.7bn, creating up to 24,000 jobs in fields such as engineering, system installation and data science. Exports alone could create 14,000 jobs. These calculations are based on a situation in which the UK hosts around 30GW of low-carbon flexible energy capacity by 2030, doubling to 60GW by 2050. This is up from 10W at present.

For these benefits to be realised, the document states, technologies like electric cars, heat pumps, energy storage systems and renewable generation arrays “will need to be seamlessly integrated onto our energy system so that low carbon power is available in the right places and at the right times to meet our energy needs”.

Proposals covered in the Plan are divided into four key themes: supporting customers to provide flexibility; removing barriers to electricity storage and interconnection; reforming markets to reward flexibility (i.e. through the Capacity Market and Contracts for Difference auction scheme) and digitising the system. These proposals build on the Energy White Paper, published late last year. There are also recommendations on improving governance.

On digitisation, the UK’s first Energy Digitisation Strategy has also been published this week following collaboration between BEIS and Innovate UK.

Commenting on the Plan and Strategy, Ofgem’s chief executive Jonathan Brearley said: A smart and flexible energy system is essential to hitting the UK’s net-zero climate goal while keeping energy bills affordable for everyone. This plan is an important step in transforming not just how we generate energy but also how we all use and pay for it.

“As we change the way we fuel our cars and heat our homes, demand for electricity will increase from millions of new electric vehicles (EVs) and heat pumps. Being more flexible in when we use electricity will help avoid the need to build new generating and grid capacity to meet this demand, resulting in significant savings on energy bills.”

The Plan and Strategy have attracted many reactions across the UK’s green economy. The Energy Networks Association’s chief executive David Smith called the plans “a huge sign of progress towards the intelligent and adaptive energy system which the networks have already begun building”.

Smith said: “Transforming traditional energy networks with digital innovations is a foundational part of putting customers at the heart of the net-zero journey. It makes networks smarter, more flexible and more able to manage increases in local renewable generation, green gas, heat pumps and EVs.”

Regen’s policy manager and policy lead for the electricity storage network, Madeline Greenhalgh, said: “The Smart Systems and Flexibility Plan is one area of government strategy that is actually providing clear and concrete actions that will enable a smart, flexible, decarbonised electricity system. The progress made since the last iteration is clear, with big steps forward in long-duration storage and modelling the future system.

“The storage industry will be able to use these projections to invest and grow the industry, particularly in the long-duration space, where many innovative companies are coming forward with new ideas and business models. The Electricity Storage Network will continue to drive forward work to improve the supply chain for raw materials, and a robust health and safety regime.”

Ashurst’s energy partner Antony Skinner said: “The fact that the Government is focusing on the barriers to the development of battery storage projects and has published a call for evidence on the deployment of large-scale and long-duration storage is a very positive development.

“Battery storage is a key component of an energy mix that will have a high proportion of intermittent renewable energy and while some steps have already been taking to facilitate battery storage, more needs to be done to ensure that such projects have access to a reliable revenue stream, so the Government’s recognition of this fact is very welcome.”

Skinner’s colleague Adam Eskdale added: “The overriding principle of both the Smart Systems and Flexibility Plan and the Energy Digitalisation Strategy is that energy system data must be open and visible, shared and interoperable, in order to build in grid flexibility and unlock the new digital solutions we need to reach net-zero.

“This is the central tenet of the Energy Data Taskforce’s work in 2019 and it is encouraging to see the Government continue to build on it.

“This is good news for new and potential market participants relying on data-driven business models, products and services. However, larger incumbents will be keeping an eye on how this principle continues to be built into Ofgem’s pricing controls and further code changes. Equally, there is a question about the extent to which they will be expected to contribute their data to national registries, catalogues and systems maps, and how much impact the concept of ‘presumed open’ data, will have on their valuable information.”

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BEIS and Ofgem look to overhaul the ‘complex and fragmented’ energy code system

by with No Comment Energy News

A consultation has been launched on overhauling the energy code governance framework to help drive the transition to a clean energy system.

Published today by the Department for Business, Energy and Industrial Strategy (BEIS) and Ofgem, the consultation states that while the codes have thus far done a “remarkable job guiding the industry post-privatisation” they were not designed to deal with the increasingly decentralised and distributed energy system in Britain.

As such, the framework has become complex, fragmented and lacks incentives to innovate, and there is an urgent need to update it. This was identified in the energy white paper last year, when the government committed to consulting on options for reformation, building on a previous consultation in 2019.

The four areas in need of reform are; providing strategic direction, empowered and accountable code management, independent decision-making and code simplification and consolidation. The overarching nature of these areas will mean they cover all 12 of the current electricity and gas codes as well as relevant engineering standards.

Additionally, BEIS and Ofgem are proposing to bring central system delivery bodies into the scope, meaning it would also include the electricity systems operated by Elexon, the smart systems operated by the Data Communications Company (DCC) and the Data Transfer Service (DTS) operated by Electralink.

Building on the 2019 consultation, two potential models for delivering the desired agile code system have been laid out by BEIS and Ofgem. The first would see the regulator as a strategic body working with a separate code manager.

This would involve Ofgem developing and annually publishing directions for codes and ensuring their delivery by managers, approving material code changes and leading code changes themselves. Within this model the code managers would be selected through a tender process, replacing the existing code administrations after a suitable transition period. They would then be responsible for developing an annual delivery plan based on the strategic direction they receive from Ofgem.

Within the second proposed model, an Integrated Rule Making Body within the Future System Operator would be established. This would see the strategic function and code manager function combined, with one body holding most of the responsibilities detailed in the first model, although Ofgem would retain some oversight and decision making roles to protect against potential conflicts of interest.

BEIS and Ofgem launched a consultation on the creation of a Future System Operator today as part of an influx of calls for evidence, and would see an entirely independent operator take on much of National Grid ESO’s role in an effort to avoid any potential conflict of interest given its links to National Grid as the system continues to transition to net zero.

This builds on a report from Ofgem in January into system operator governance arrangements, which itself led Elexon to throw its weight behind a reorganisation of both the system operator roles and code arrangements to develop a ‘holistic’ system that can support net zero.

The consultation into code reform will act as an initial high-level insight into stake-holder views, allowing Ofgem to then work in consultation to develop elements of the reforms that do not require primary legislation. To ensure this is delivered as quickly as possible, the regulator will then look to review the options for code consolidation before the new governance structure is implemented.

This would see delivery of code consolidation begin in 2024 if model one is chosen, and in 2026 if model two is. The consolidation into the Design and Delivery of the Energy Code Reform opens today, and will run until 28 September 2021.

 

For more information and to respond to the consultation, see here.

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National Grid ESO has warned of tight margins come winter due to supply uncertainty

by with No Comment Energy News

ollowing the tight margins seen on the electricity system last winter, National Grid ESO has released an early view of its winter outlook.

It is expecting there to be similar or even slightly lower system margins over winter, and is predicting a base case de-rated margin of 4.3GW or 7.3%. While this is slightly lower than last year, it still falls within the reliability standard of three hours, with a loss of load expectation (LOLE) of around 0.1 hours/year.

There is some uncertainty, however, around this de-rated margin due to the availability of supply. Across the operators three cases – low, base and high – the margin varies between 3.1-5.4GW or 5.3-9%.

With nuclear and coal plants closing, supply over the last winter became more complicated. Both Dungeness B and Hunterston B nuclear power stations are now expected to be offline come winter 2021/22, and only coal units with capacity market agreements are expected to be available over the winter.

Additionally, Baglan Bay, Severn Power and Sutton Bridge combined cycle gas turbine (CCGT) power stations are all expected to be offline in the winter.

There is expected to be more interconnector capacity than last winter, however, with IFA2 to France available and NSL to Norway expected to be online from October. Renewables, storage and distributed generation is all expected to be in line with expectations set out in the Future Energy Scenarios.

A number of factors could impact the availability of supply. For example, within the low case, there is a margin of just 3.1GW, which could be caused by just two power stations going down, or a combination of higher demand and one outage. This would bring the margin to 5.3%, its tightest since 2015-16.

Average cold spell (ACS) peak demand is expected to be 59.5GW, and experience no suppression due to the COVID-19 pandemic. Last year, lockdowns across Britain led to demand being reduced by 3-4%.

Despite this reduction, cold weather and low winds pushed the electricity system on a number of occasions. As such, National Grid had to put out six Electricity Market Notices (EMN) in an effort to manage the volatility.

This volatility drove up prices with the day ahead prices jumping to almost £1,500/MWh, while Balancing Market hit a record breaking £4,000/MWh on Friday 8 January. EDF’s West Burton B CCGT plant, for example, achieved the highest daily revenue from the Balancing Mechanism, receiving over £7.5 million in a single day.

Despite the challenges seen last year, and the uncertainty around supply going into winter 2021/22, National Grid ESO said it had the tools available to manage the grid.

“We may see some tight margins again this winter, but we’re confident there’ll be enough electricity to keep Britain’s lights on,” it said in a statement.

Following this early look, the full Winter Outlook is due to be published in October 2021.

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Retrofitting leaky homes would cost £5bn over next four years, UK ministers told

by with No Comment Green Energy UKNews

Renovating the UK’s draughty homes to low-carbon standards would cost the government only £5bn within the next four years and would create 100,000 jobs, cut people’s energy bills, increase tax revenue and bring tens of billions in economic benefits, the construction industry has estimated.

Sector leaders have written to ministers proposing a new “national retrofit strategy” that they say would boost a green recovery in the UK and put Britain on track to meet its climate targets.

The proposal comes ahead of the government’s heat and buildings strategy, which is expected to be published soon. Decarbonising the UK’s homes, which are among the leakiest in Europe, and which produce nearly one-fifth of the UK’s carbon output, is a pressing issue as the government seeks cuts of 78% to greenhouse gas emissions by 2035.

Gas boilers will have to be replaced with heat pumps, district heating systems and possibly hydrogen systems, and homes will need loft, window and wall insulation. But the task is huge, and a plan has so far been lacking, with the green homes grant – an insulation scheme launched to fanfare last year as a way to build a green recovery from the Covid-19 pandemic – having been scrapped after a disastrous six months in operation.

In a letter to the business secretary, Kwasi Kwarteng, signed by more than 50 organisations and seen by the Guardian, the Construction Leadership Council set out a strategy that would help people to save more than £400 on their energy bills each year, and improve the health of those in fuel poverty.

“If the UK is to meet our world-leading carbon reduction targets, create jobs and level up, we must address the energy and water efficiency of our 28m homes. Our strategy is a blueprint, endorsed by the construction industry and beyond,” they wrote.

A government-led programme for refurbishing houses between now and 2024 would “support the levelling-up agenda, generate government revenue of more than £12bn, provide additional GDP of more than £21bn and unlock £11.4bn of private capital,” they added.

As well as a short-term strategy for this parliament of recruiting tens of thousands of people to install insulation and low-carbon heating systems in more than 850,000 homes, they propose a long-term strategy that would refurbish all of the UK’s homes by 2040. This would cost £524bn in total, of which the government would need to invest £168bn, and would create 500,000 jobs.

According to the construction industry’s strategy, this would require a mix of policies, including green mortgages to provide the finance for people to install low-carbon heating, stamp duty rebates on refurbished homes, reduced VAT on home improvement works, and loans to landlords to improve their properties.

Low-income households would need government grants, and those on higher incomes should be given access to low interest loans and council tax rebates, paid for by central government, the Construction Leadership Council said. Ministers should also act quickly to enable companies to start training employees and new recruits in the skills needed, the companies said.

“Wide-scale domestic retrofit is essential to the net zero agenda and backing a long-term strategy will help position the UK as global market leader in the low carbon economy ahead of the UN climate change conference [Cop26] in November,” the organisations added.

A spokesperson for the Department for Business, Energy and Industrial Strategy said: “We are already investing in making our buildings more energy efficient, and in order to meet our world-leading commitments on carbon emissions, we are gradually transitioning away from fossil fuel boilers and incentivising the take-up of low carbon alternatives as appliances are replaced, in a way that is fair, affordable and practical. To encourage energy efficiency and lower people’s energy bills, we are considering a range of options put forward by stakeholders and plan to launch a call for evidence to test what will work best for consumers in the UK.”

The government has said that people would not be fined for using their existing gas boilers, or refusing to switch to a low-carbon heating system, and that no one would be prevented from selling their homes if they do not meet energy efficiency standards, as some media reports have claimed.

Jenny Hill, the head of buildings and international action at the Committee on Climate Change, the government’s statutory adviser, said the industry’s proposed strategy was in line with the government’s net zero target. “This report shows a can-do attitude and a clear vision by the construction industry,” she told the Guardian. “It has all the different elements that are needed to come together: skills, consumer education, compliance and enforcement, performance standards, and a framework for market certainty.”

Public backing for the move to low-carbon heating would be essential, Hill added. Many media reports have focused on the difficulties of switching away from gas boilers, and the cost of low-carbon alternatives such as heat pumps. However, without a comprehensive programme for domestic housing there is little chance of meeting climate targets.

“It’s a condition of success that the negative impacts are minimised, that this is fair and equitable, and that people have a say in the process,” said Hill. “This transition definitely can be done in a sensible way that supports people and listens to their concerns.”

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Water company United Utilities to sell £65M renewables business

by with No Comment Business Utilities NewsEnergy NewsNews

Water company United Utilities has put its renewables energy business up for sale.
The decision to market the group’s renewable energy business, United Utilities Renewable Energy Limited, was taken in April and the sake process is expected to commence during June 2021. United Utilities said it will involve the sale of assets – primarily property, plant and equipment – with a carrying value of £65.5 million.
The company said the sale will mean it can continue to benefit from the output of the renewable energy assets over the long term, while being able to reinvest sales proceeds in other low carbon projects. The company said in its annual report, “Our portfolio of renewable energy assets is operating satisfactorily and our investment has delivered the returns that we targeted. Having maximised the opportunities to date and established long-term contracts to secure a proportion of our renewable energy out to 2045, we are now looking at how we can recycle our investment in order to achieve further strong returns and take the next steps in our plans to achieve net zero by 2030”.
In 2019/20 UU generated the equivalent of 191GWh of renewable electricity, an increase of 18GWh on the previous year. It did this with a mix of generation from wind, hydro, solar photovoltaics and energy recovery from bio resources (using sewage sludge to power combined heat and power generators).
The renewables business includes a 1MW floating solar array at Langthwaite reservoir near Lancaster, installed in 2018. Last year it installed a 2MW battery alongside solar panels at its Clifton Marsh wastewater treatment works near Preston. The batteries at were provided by Zenobe Energy.