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Thames Water chief Steve Robertson steps down after regulator criticises leak record

Thames Water’s chief executive has stepped down amid harsh criticism over its failure to tackle leaks.

The country’s biggest water supplier announced Steve Robertson was being replaced in the top job by chairman Ian Marchant while a permanent successor was found.

Mr Robertson, who had been in the role less than three years, will leave the company at the end of June, Thames Water said.

In the last six months, the firm has been criticised by the industry regulator over leaks, its response to the Beast from the East and its business plans.

Mr Marchant said Thames Water had seen “significant change” and Mr Robertson had put “building blocks” in place for the company’s long-term success.

“We need to continue to ensure that Thames Water is an organisation that both customers and staff feel proud of,” he said.

“We remain fully committed to our proposed business plan focused on providing industry-leading customer service through a substantial investment programme which we are determined to deliver.”

Mr Marchant said Thames Water’s executive team had to meet its “vital” responsibilities to its millions of users “each day”.

Mr Robertson said he was “proud of what we have achieved over the last two and a half years” but admitted “challenges remain”.

Thames Water is the UK’s biggest water and wastewater services provider, with more than 15 million customers across London, the Thames Valley and surrounding areas.

Earlier this year, it was among 14 firms to fail a business review by industry regulator Ofwat, which ordered Thames Water to “substantially rework and resubmit” its five-year plan.

The watchdog placed the firm under “significant scrutiny” and said it had the most to do in order to deliver lower bills and better service for customers.

Thames Water submitted new plans, which included aims to reduce combined bills by 1.3% and set more ambitious targets on reducing pollution, supply interruptions and flooding.

In January, water companies were criticised for their response to winter weather in early 2018 that caused supply interruptions to more than 200,000 customers across England and Wales.

 

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Biomass can help deliver much-needed UK heat decarbonisation

Biomass could play a pivotal role in heat decarbonisation and help the UK meet its renewable heat targets, AMP Clean Energy said today.

Around 6% of heat in the UK currently comes from renewable sources, but EU targets require it to double to 12% by 2020.

The Renewable Energy Association (REA) report ‘Bioenergy in the UK – vision to 2032 and beyond’ has found that the UK could almost triple the use of bioenergy as a source of heat – from 6% to 16% by 2032 – with biomass a major contributor.

The report found that wood fuels could make a substantially larger contribution to meeting heating needs for buildings and industry, playing a particular role in providing low carbon heating in off gas-grid properties and those where heating via heat pumps is more challenging.

It concluded that bioenergy, which uses sustainable biomass and biofuels produced from wood, crops and food wastes, is the lowest cost route to heat decarbonisation, while also providing a pathway to the development and commercial deployment of future technologies.

Richard Burrell, CEO of AMP Clean Energy, said: “Biomass is a proven, world -renowned technology which can continue to make a significant contribution to the decarbonisation of heat in the UK.

Under the RHI, 87% of renewable heat to date has come from biomass, which has been particularly successful in decarbonising community buildings, schools, hotels and agricultural processes. We now need off-gas grid industrial processes to convert from fossil fuels to biomass and we can help with the financing, fuel and operation and maintenance.

“With the Renewable Heat Incentive (RHI) coming to an end in 2021, there is an opportunity to install new systems before that date as well as to look at new and innovative ways of financing the decarbonisation of heat. We need to find a way to deliver the much-needed transition to renewable heat generation to build on some of the positive steps that have already been taken and to avoid a cliff-edge for new renewable heat installations after 2021. At AMP Clean Energy we are considering what mechanisms could be deployed to achieve this and look forward to discussing our thoughts with Government.”

In January 2019 the REA launched an industry-led review of bioenergy ‘s potential and the policies needed to maximise this to 2032. AMP Clean Energy is one of the industry partners contributing to the review.

You can read the REA report here.

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Renewable energy jobs in UK plunge by a third

The number of jobs in renewable energy in the UK has plunged by nearly a third in recent years, and the amount of new green generating capacity by a similar amount, causing havoc among companies in the sector, a new report has found.

Prospect, the union which covers much of the sector, has found a 30% drop in renewable energy jobs between 2014 and 2017, as government cuts to incentives and support schemes started to bite. It also found investment in renewables in the UK more than halved between 2015 and 2017.

The union compared the situation to the devastation caused to coalmining communities in the 1980s and demanded instead a “just transition” to clean energy.

The Prospect report analysed and collated data taken from various sources, including the government, surveys and industry.

Sue Ferns, the senior deputy secretary general at Prospect, told the Guardian: “The government’s market-led approach has failed, and resulted on offshoring green jobs while UK workers are left behind. Without a proper industrial strategy from government that promotes low-carbon generation like renewables and new nuclear, we will be unable to secure the future of our energy supply, which is under threat in the coming decade.”

The focus on Brexit had not helped, she added. “The government’s tunnel vision on Brexit means the real challenges facing our country have been neglected for too long. We need a sensible deliverable strategy that provides a stable long-term pathway to decarbonisation.”

The drastic fall in jobs came as the government effectively shut down schemes that rewarded consumers for buying solar panels, withdrew subsidies for onshore wind and reduced incentives for low-carbon energy. Ministers have argued that as the costs of renewable energy have fallen sharply in recent years, the industries should no longer rely on public subsidy, but multiple redrawings of government schemes in recent years have helped to create turmoil and a lack of certainty for companies.

Government support has taken the form of various schemes across the last decade, including feed-in tariffs for consumers with solar panels, a renewables obligation forcing the big energy suppliers to invest in renewables, and most recently, contracts for difference. The latter were meant to overhaul the whole energy sector by setting up auctions by which companies would bid for generation contracts favouring low-carbon energy, but early troubles meant dirty energy such as diesel generators were often the inadvertent winners, and while the scheme still operates it has enjoyed little support from successive chancellors.

Between 2016 and 2017, there was a sharp fall in investment in UK renewables, which fell 56% to the lowest level since 2008, according to the as-yet-unpublished Prospect report that has been seen by the Guardian. Last year, the annual rate of addition of renewables capacity fell to its lowest level since 2012, which the union said was driven by the collapse in solar and onshore wind deployment. Without the significant rise in bioenergy capacity that took place in 2018, the fall in new renewables would have been much greater, the union said.

While some sectors have remained buoyant, such as offshore wind, new capacity in onshore wind in England slowed markedly after the government withdrew financial support and changed planning laws to make the construction of windfarms more difficult.

Luke Clark, head of external affairs at the trade body RenewableUK, said: “We’re expecting the number of direct jobs in offshore wind to treble to 27,000 by 2030, as part of the landmark offshore wind sector deal we’ve agreed with government, as this provides long-term certainty for the industry. However, as onshore wind remains excluded from government-backed auctions for contracts to generate power, the UK is missing out on employment and investment opportunities offered by this technology. The auction process has also failed to bring forward new technologies like tidal energy projects, so there is huge potential to ramp up employment in renewables as we move to net zero emissions.”

The trade union said the dismal picture for jobs in much of the sector contrasted with government rhetoric on issues such as moving to a net zerocarbon target and parliament declaring a climate emergency.

Ferns told the Guardian: “Successive governments have promised us a green jobs revolution, but after an initial upsurge we have now started going backwards. This is deeply worrying for the future of the energy sector and for low-carbon jobs in the UK.”

She added: “The Committee on Climate Change has recommended zero carbon by 2050 and others are pushing for even more ambitious timescales. We need a just transition for all the workers affected and this means we need to work proactively to ensure that the damage inflicted on coal communities in the 1980s is not repeated.”

A spokesperson for BEIS told the Guardian: “We’ve seen the number of green collar jobs soar to approximately 400,000, with clean growth at the heart of this government’s modern industrial strategy. This figure could more than quadrupled to 2m by 2030. We’ve injected £2.5bn into low-carbon innovation and [the] deal with the offshore wind industry will see up to £40bn infrastructure investment.”

Green collar jobs are defined by BEIS as those in clean growth, which means activity that increases the national income while reducing emissions. The number of people working in green jobs in the UK was estimated at 1m in 2012, by the UN.

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Britain’s energy bosses back UK bid to host key 2020 climate talks

Bosses at the UK’s leading energy firms are urging the Government to ensure the UK is picked as the venue for key international climate talks in 2020.

Britain is bidding to host the UN climate change conference next year, the biggest since the Paris agreement was signed in 2015

Under UN rules the COP (Conference of the Parties) next year should be hosted by a European nation and take place in the first year the Paris agreement would come into full effect.

The conference will mark a crucial deadline for countries to comply with their commitments in Paris on reducing greenhouse gas emissions and move on to tougher targets for the decade to 2030.

If successful, the move would be a strong signal of the UK government’s determination to retain its role on the world stage after Brexit.

‘Strong record of leadership’

In a letter to ministers and opposition leaders, the bosses of companies including Centrica, ScottishPower, National Grid, Drax, BP and Shell said hosting the UN meeting would give the UK an opportunity to be seen as a green leader.

In addition 162 MPs have signed a letter to Prime Minister Theresa May, saying the country’s “strong record of leadership and ongoing commitment on climate change” makes it the ideal place to hold them.

Energy and Clean Growth Minister Claire Perry revealed last December that she had officially written to express the UK Government’s interest in hosting the talks in 2020.

A decision on where in Europe to hold the “Cop26” talks at the end of next year is expected in June.

‘Maximise the opportunities’

The UN awards the hosting of the COP usually by alternating among developed and developing countries, and different continents, though the rules can be flexible

In the letter from the energy giants – which also include Affinity Water, Anglian Water, Capita, GKN Automotive, Heathrow Airport and Innogy Renewables UK, business bosses back the British bid to host the talks.

“Hosting Cop26 would provide the UK with a platform to further develop and maximise the opportunities of the global shift to clean growth and showcase to the world the best of the UK economy.

“It would be the country’s moment to build further support for an ambitious clean growth trajectory, underscore ambitions for a net-zero economy in line with the Paris Agreement, and set out the opportunity of economic renewal and enhancement through climate action.”

One of the signatories, John Pettigrew, chief executive of National Grid, said hosting the talks would let the UK send a message to the world that “we are proud to take the lead in the fight against climate change”.

“Our progress on clean energy has seen this country make international headlines; for example, when we recently went over a week without any coal generation for the first time since the 19th century. But we all need to do much more.

“This summit represents an opportunity to get the world to unite behind one of the most important challenges we all face and we look forward to working with the Government to bring COP to our shores,” he said.

Lead signatory of the letter from MPs, Labour and Co-operative MP Alex Sobel said: “Having just announced a climate emergency, MPs from across all parties in the UK Parliament are keen to see bold action taken on climate change.

“Cop26 is a key moment when the countries of the world will also be looking to cross divides to come together and build on their climate change pledges.

“With its diplomatic weight and having passed the World’s first Climate Change Act over 10 years ago, the UK is ideally placed to play this role, guiding even those less ambitious countries towards strong commitments.”

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Developing a framework for assessing whether conditions are in place for effective competition in domestic supply contracts

We are seeking views from stakeholders on our proposed framework for assessing whether conditions are in place for effective competition in the domestic energy retail market. This is for the purpose of recommending to the Secretary of State whether or not the cap on default and standard variable tariffs should remain in place, as required under the Domestic Gas and Electricity (Tariff Cap) Act 2018.

The cap was introduced because the retail energy market was not working well for all consumers. Consumers on default and standard variable tariffs were paying substantially more than those who shopped around for fixed tariff deals. To protect these consumers, the government passed legislation in 2018 for a temporary cap on default and standard variable tariffs. This cap was introduced by Ofgem in January 2019. Alongside this, the government and Ofgem are working towards structural reforms to improve the competitive process in the domestic retail market and outcomes for energy consumers.

With the cap on default tariffs now in place, the Domestic Gas and Electricity (Tariff Cap) Act 2018 requires Ofgem to review whether conditions are in place for effective competition for domestic supply contracts. This review must be published by 31 August 2020 and include a recommendation on whether the cap should remain in place for 2021 or be removed. The Secretary of State will consider this review and make a decision by 31 October 2020. If the default tariff cap is extended into 2021, the process will be repeated in 2021; if the cap is extended into 2022 the exercise will be repeated for a final time in 2022 as the cap will cease to have effect at the end of 2023.

This paper proposes a framework for making that assessment. We would welcome your views on it.

We plan to hold a workshop while the consultation is open, and details will be made available here shortly.

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UK power prices turn negative for nine hours, balancing costs spike during ‘extraordinary’ weekend

UK power prices turned negative for nine consecutive hours on Sunday in what’s been billed as an “extraordinary turn of events” for the country’s electricity system.

Unusually low demand, some 2GW below forecasts, combined with high wind generation to send prices spiralling, and National Grid was even forced into instructing onshore and offshore wind farms to turn down their generation.

Between the hours of 12:00pm and 9:00pm on Sunday 26 May, the UK endured an extended period of negative pricing, with wholesale power prices falling to as low as -£71.26/MWh.

National Grid Electricity System Operator’s daily balancing report for 26 May 2019 reveals that the SO paid more than £6.6 million on balancing costs, having spent just £300,000 the day before, providing an indication as to the scale of the volatility experienced on the system throughout the day.

At nine hours long, it amounts to the longest consecutive period of negative pricing the UK has encountered and has been described as “unprecedented” by energy tech company Limejump, which acts within the balancing mechanism.

In addition, after a slight recovery, the market dipped back into negative pricing between 11:45pm on Sunday and 1:45am on the morning of Monday 27 May, meaning that negative prices were in action for around 11 hours within a 24 hour period.

The instances of negative pricing left the average system price for power on Sunday 26 May at -£12.16/MWh.

Those prices were essentially created by low demand. The average power demand on Sunday was just 25.4GW, while the minimum demand in that period was 19.8GW, recorded between 3:45am and 4:15am, right towards the lower end of minimum demand forecasts within National Grid’s 2019 Summer Outlook.

The event comes just two months after the previous long run of negative system prices, a period of six hours which occurred on Sunday 24 March that witnessed system prices fall to similar lows.

Limejump said in a trading note issued to customers: “The question traders have been asking themselves earlier this year – ‘Are negative system prices an anomaly or are they here to stay?’ – has now been answered without a doubt by these an a number of other observed similar scenarios.”

Speaking to Current±, a Limejump spokesperson said that those operating battery storage plants over the weekend were obvious winners.

“Smart trading strategies deliver great revenue especially those with accurate forecasting. Batteries that were charging during these negative prices time frame, including Limejump’s, were definitely happy recipient.”

It was also a significant weekend for the carbon intensity of the grid, which at times dipped well below the 100g CO2/kWh threshold required to comply with the Fifth Carbon Budget. Sunday afternoon saw carbon intensity dip to just 69g CO2/kWh on the back of surging wind and solar activity.

Coal meanwhile is in the midst of yet another record breaking absence from the UK’s power mix, having not generated for more than 250 hours, equivalent to almost 11 days. Only earlier this month Britain celebrated its first coal-free month since the Industrial Revolution, and coal has now experienced more than 1,500 hours off the grid in 2019.

Wind meanwhile spent large portions of Sunday afternoon providing more than 11GW of power, equivalent to 37-39% of total demand.

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EON confident in assets swap with RWE as Q1 profit drops

German energy giant EON expressed confidence in its planned massive assets swap with RWE’s renewable energy subsidiary, despite weaker first quarter results released Monday.

Essen-based group EON, which suffered terrible losses from 2014 until 2016 due to restructuring and Germany’s abandoning of nuclear power, has since got back in the black, but its figures were down for the first quarter of 2019.

Between January and March, its adjusted net profit — which strips out discontinued operations in the renewables segment, as well as other non-operating effects — declined 11 percent year-on-year to 650 million euros ($730 million).

Its adjusted operating profit also fell eight percent to 1.17 billion euros.

The figures roughly tally with the expectations of analysts from financial services provider Factset, which expected adjusted net income of 626 million euros and adjusted operating income of 1.15 billion euros.

“Aside from the special case of the United Kingdom,” where capped prices and keen competition saw a sharp decline in the group’s profits, “our core businesses delivered a solid performance,” said chief financial officer Marc Spieker.

The German energy giant has confirmed its target for adjusted operating income for 2019 is between 2.9 and 3.1 billion euros.

The adjusted net income is expected to be in the range of 1.4 to 1.6 billion euros.

Last year EON announced plans to take over German rival RWE’s renewables unit Innogy as part of a complex asset swap deal set to shake up the energy sector.

“The planned transaction with RWE is right on schedule,” EON said of the deal that is expected to impact the two energy giants’ financials.

EON added that as expected, the European Commission in March opened an in-depth probe into the deal but that the company was “confident that it will obtain the necessary approvals in the second half of 2019”.

The redistribution of assets allows the two former rivals to specialise in energy distribution and production respectively.

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Yü Energy shares soar after FCA drops investigation

Yü Group’s share price climbed 66 per cent in early trading on news that the Financial Conduct Authority has discontinued its investigation into the company and does not intend to take action.

The business energy and water supplier revealed a hole in accounts last October related to revenue it had booked but that was not actually recoverable from clients. As a result, Yü said would post a loss for full year 2018 and a much reduced profit for 2019. Its share price collapsed by 80 per cent.

Yü then hired PwC and DLA Piper to conduct a “forensic review” of its books, and CEO Bobby Kalar said the company would be “more selective and prudent” about customer acquisition.

Bad debt is a longstanding issue in the business energy market, particularly at SME level. Drax-owned B2B energy suppliers Opus Energy and Haven Power reported a 72 per cent increase in bad debt charges to £31m for the year ended 31 December.

 

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Siemens spins off struggling gas and power in smart digital shift

MUNICH (Reuters) – Siemens is spinning off its gas and power business, which has dragged on the German engineering firm’s performance as the rise of renewable power hits demand for gas turbines.

The new firm would be a “major player” in energy with revenues of 27 billion euros ($30 billion) and more than 80,000 employees, Siemens said on Tuesday, adding that it would now focus on its Digital Industries and Smart Infrastructure businesses.

Siemens said the Gas and Power division, which includes its oil and gas, conventional power generation, power transmission and related services businesses, will be set up as a standalone company with the aim of a public listing by September 2020.

Last week Reuters, citing sources familiar with the matter, reported that Siemens was considering carving out the unit, whose 2018 profit fell by 75 percent to 377 million euros ($421 million) as revenue dropped 19 percent.

“The new company won’t have to compete for resources with higher margin business like smart infrastructure and digital industries,” Siemens Chief Executive Joe Kaeser told reporters.

Siemens also plans to include its 59 percent stake in wind energy company Siemens Gamesa Renewable Energy in Gas and Power.

The decision to separate the business, which will be led by Gas and Power head Lisa Davis, was approved by Siemens supervisory board, which met on Tuesday ahead of its second quarter figures on Wednesday.

The Munich-based company said it would remain an anchor shareholder in Gas and Power with between 25 and 50 percent.

“It’s the right thing to do; it’s necessary and courageous to trigger the planned changes when the company is doing well,” Siemens chairman Jim Hagemann Snabe said.

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Unions also supported the decision, saying the business was better off outside Siemens.

“If the unit were to stay part of Siemens, investments would be further reduced. Thus the business would literally be starved to death,” Siemens works council head Birgit Steinborn, who is also deputy chairwoman of the company, said in a statement.

“With the planned initial public offering in Germany, co-determination will be maintained and Siemens remains committed to keeping jobs in Germany and Europe. In a joint venture, for example with a Japanese competitor, we would have seen that at great risk,” she added.

Siemens is targeting cost cuts of 2.2 billion by 2023 by cutting 10,400 jobs – mainly administration and support roles – at its remaining core units, including 3,000 at Smart Infrastructure and 4,900 at Digital Industries. The company will shed at least 10,400 jobs in the overhaul.

At the same time, Siemens plans to create 20,500 jobs by 2023, resulting in a net increase.

For its Smart Infrastructure unit – which makes fire safety and security products, grid control or energy storage systems for buildings – Siemens is now targeting a profit margin of 13-15 percent by 2023.

 

Digital Industries – which among other products offers industrial software and automation solutions for companies – is targeting a margin of 17-23 percent.

Kaeser stressed that Siemens has many options and plenty of time available for its rail unit Siemens Mobility.

Siemens tried to combine Mobility with listed peer Alstom, but scrapped the deal earlier this year as antitrust concerns mounted. Analysts expect that Siemens will eventually opt for a stock market listing for the unit.

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Government sidesteps Committee’s call for Scottish oil and gas sector deal

09 May 2019

The Government’s response to the Scottish Affairs Committee’s report on the future of the oil and gas does not directly address the Committee’s call for a sector deal, and instead states that the Government’s relationship with the sector is already “well-established.”

The Committee today publishes the Government’s response to its report on the future of the oil and gas industry. The Government sidesteps addressing the Committee’s headline recommendation of an ambitious sector deal to ensure Scotland’s energy industry can navigate the challenges of its future and continue to prosper.

Chair’s comments

Chair of the Committee, Pete Wishart MP said:

“Though there are some positive noises from the government, such as their enhanced funding for carbon capture and storage technologies and the recently announced centre of underwater engineering, we are disappointed by its reluctance to give a clear answer about whether it will implement an over-arching sector deal that would truly transform the oil and gas industry in Scotland. A sector deal would provide the coordinated approach needed to support transition to a new clean energy industry. The last thing the industry needs now is continuing uncertainty, so I have written to the Minister to press for more clarification on the Government’s stance on a sector deal.”

Sector deal

The Committee recommended an oil and gas sector deal that has the detail and ambition needed to support the industry’s challenging future and reflect the Government’s climate change targets by setting out a coordinated way for the sector to transition to green energy production. However, the Government response merely “acknowledges” the Committee’s support for a sector deal and argues that the Government already has a “well-established relationship” with the sector.

The Government suggests that a phased approach to funding and supporting the sector may be preferable to a formal deal. The Chair of the Committee has written to the Energy Minister, Claire Perry MP, to press the Government for more detail on its approach to supporting the industry, including its stance on a formal sector deal and to ask how it will ensure its phased approach does not lead to areas of less immediate economic benefit to the sector, such as work on energy transition and carbon capture, being neglected in favour of the areas of the deal that promise a more immediate economic return.

Climate change and new technologies

The Committee’s report outlined that one of the biggest challenges facing the industry is climate change and called on Government and industry to take a visibly more proactive approach to limiting the sector’s carbon footprint. The Government’s has responded positively to the Committee’s recommendations for increased support for carbon capture, usage and storage (CCUS) technologies.

In particular, the Government highlights its enhanced funding for CCUS innovations through the BEIS
call for funding applications for feasibility studies, industrial research and experimental development.

The government recently announced its support for a new underwater engineering centre at Aberdeen, which would bring together industry and academia from across the UK to develop new technologies which would enable the sector to move towards a low carbon economy. The Committee called for this in its report, however suggested it should be part of a more structured sector plan.

Decommissioning and skills transfer

The Committee’s report recommended that decommissioning – the process by which oil and gas infrastructure is shut down, or reconfigured, after oil and gas production ceases – should be made a central part of a sector deal. While the Government response acknowledges that decommissioning expertise presents a global economic opportunity for Scotland’s industry, little tangible progress has been made. The Government response points to the launch of a call for evidence on decommissioning in spring 2019, however this announcement had already been made in the 2018 Budget, marking a significant delay in opening the consultation.

Additionally, the Government does not make it clear whether it supports the Committee’s recommendation to set measurable targets for skills transfer as oil production ceases and industry professionals seek new work in clean energy technologies. The Chair of the Committee asks the Minister to provide more information on what the Government is doing to support decommissioning and skills transfer as the sector prepares for its future.

Commenting on the response, Pete Wishart MP said:

“Though the oil and gas industry will have a challenging future, these new circumstances could bring
significant opportunities and help the Government meet the UK’s climate change targets.  If the economic potential of decommissioning and cleaner energies is to be harnessed, the Government must act now by providing strategic vision, and support for the industry.”