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Water company United Utilities to sell £65M renewables business

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.

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Commercially viable electricity from nuclear fusion a step closer thanks to British breakthrough

Scientists appear to have solved the exhaust problem for compact fusion power plants, making them more economically-viable.

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Centrica calls on Government to pay homeowners for heat pump switch

British Gas owner says Retrofit Fund would fund household switch to hybrid systems, where homes run on heat pumps plus a backup boiler

British Gas owner Centrica is calling on the Government to fund the rollout of new “hybrid” heating systems, as ministers face mounting pressure to clarify the future of the gas boiler in Britain.

Hybrid heating systems combine a small gas boiler with an air source heat pump. Transitioning to such a system would cut household carbon emissions in the short term, but would rely on green hydrogen replacing natural gas on the gas grid to become a zero emissions solution for home heating.

Centrica, which is the largest installer of gas boilers in the UK, said ministers should launch a Retrofit Fund to help at least 5,000 households change from a traditional gas boiler to a hybrid heating system by 2024.

The fund could target the draughtiest homes, gathering data to help officials decide whether to subsidise a mass rollout of hybrid systems, Centrica said.

The calls follow advice from the International Energy Agency and the CBI, which both say the installation of new gas boilers should be banned by 2025 to keep the UK on track for its net zero emissions target. The Government is reportedly considering a later phase-out date of 2035, but a key strategy document that will set out more details on ministerial plans has been delayed until next month.

 

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Unsustainable transmission charges could jeopardise British infrastructure investment warns report

Green energy infrastructure investment is being jeopardised by British regulations that favour EU electricity imports.

In new analysis put together by RIDG (Renewable Infrastructure Development Group), a member company of RenewableUK, the transmission charges set by the regulator Ofgem and paid by electricity generators in the country are criticised in comparison to competing European generators.

On average the report suggests EU generators pay £0.46/MWh in transmission system charges. However, in Scotland the average is £6.42/MWh as of 2021.

This difference is even starker in the windy north of Scotland where the price spikes to £7.36/MWh.

“The UK has the best wind resource in Europe, and we should be making the most of the clean electricity we’re producing for UK consumers at the lowest cost and ensuring we can export the massive amount of power we’re generating when there’s a surplus,” said RenewableUK’s director of future electricity systems Barnaby Wharton.

“The current approach to transmission grid charging is not sustainable if we want global Britain to become a bigger player in the international power market. If Ofgem is serious about supporting UK’s net zero emissions target, it should change its approach to ensure we can take advantage of the bountiful natural resources we have.

“Ofgem needs to have a specific net zero remit to ensure we maximise our zero carbon generation as a matter of urgency – and this should be addressed by Ministers alongside the government’s forthcoming Strategy and Policy Statement for Ofgem.”

Transmission charges are set to cover the cost of building and maintaining the network, and are ultimately paid by consumers as part of their bills.

At their current levels, the UK risks becoming a net importer of renewable energy from the EU in coming decades, as cheaper energy is favoured in comparison with that generated in the UK that is subject to the transmission charges.

“Of 36 countries in the European transmission network, 20 do not charge generators at all and only five levy charges based on location,” expanded associate director of RIDG Marc Smeed. “Compare this to Scottish offshore wind projects, which our analysis forecasts will pay £10/MWh – around a quarter of a project’s revenue – to access the grid in the years ahead.

“Addressing this imbalance would help unlock the best wind energy resources in Europe, bringing billions of pounds of investment and jobs to some of the most remote and disadvantaged parts of the UK.”

The report follows criticism from network operator Scottish and Southern Electricity Networks (SSEN) of the current Transmission Network Use of System (TNUoS) charging regime, which it has described as “unfair and volatile”. Similarly it highlighted that the current system makes wind generation in the north of Scotland particularly expensive.

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Half of Shell’s energy mix to be clean next decade, CEO says

Royal Dutch Shell Plc’s head expects clean energy to make up half of the company’s energy mix “somewhere in the next decade.”

“If we do not make that type of process by the middle of next decade, we have a problem not just as a company but as a society,” Chief Executive Officer Ben van Beurden said in an interview with AXIOS on HBO.

Like its European peers, the Anglo-Dutch major has set itself an “ambition” to become a net-zero emissions energy company by the middle of this century. The feat involves producing less oil, more gas and renewables, as well as using technologies still in their infancy like hydrogen and carbon sequestration. Not everyone is convinced, with the energy giant set to clash with some shareholders on the matter at its annual general meeting later this month.

“If you want to get rid of hydrocarbons in the mix, you have to do something about the use of it, not the production of it,” van Beurden said. Speaking on the challenges of the transition, the 63-year-old Dutchman also said that people want to see results straightaway, but “don’t expect that tomorrow we will stop selling diesel to trucks.”

While van Beurden welcomed the U.S. rejoining the Paris Climate Agreement, which seeks to limit global warming temperature increases to less than 2 degrees Celsius from pre-industrial levels, he questioned other policies. “What I also see is that the government is flirting with popular ideas that are clear, simple, and wrong, which is, ‘Let’s ban the production of oil and gas in our country.’”

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Supplier Symbio Energy fined £100,000 for repeated late payments under the feed-in tariff and Renewables obligation schemes

On 05 May 2021 the Gas and Electricity Markets Authority (“the Authority”) decided to confirm its proposal to impose a financial penalty of £100,000 on Symbio Energy Limited (“Symbio”) for its failure to comply with Standard Licence Condition 33 of the Electricity Supply Licence, the Feed-In Tariff  Order 2012, Articles 68 and 74 of the Renewable Obligation Order 2015 and Article 49 of the Renewable Obligation (Scotland) Order 2009.

The Enforcement Decision Panel made the above decision having carefully heard and considered representations from Symbio and third parties which were submitted in response to the notice of proposal to impose a penalty dated 27 January 2021.

The Authority gives notice of its decision under section 27A(5) of the Electricity Act 1989.

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Energy Assets acquires UK smart meter portfolio from Macquarie

Energy Assets Group has added more than 600,000 industrial and commercial meters to its growing portfolio of assets with the acquisition of a UK smart meter portfolio from Macquarie Specialised and Asset Finance.

Energy Assets has invested an undisclosed sum to buy Cortex Metering Solutions (CMS) from Macquarie.

Colin Lynch, Energy Assets CEO, said: “This acquisition complements our gas metering portfolio and aligns with our strategy to be a leader in technologies and services that support the journey to Net-Zero.

“We very much look forward to extending our reach in industrial and commercial metering assets on behalf of new and existing customers, working in partnership with more than 80 energy suppliers who have relationships with CMS.”

Julian Liddy, senior managing director and head of Macquarie Specialised and Asset Finance in EMEA said: “Having played an active and founding role in the UK’s metering industry for the last 18 years, we are proud of the contribution we have made in building out the I&C portfolio to this point and helping our clients to deploy smart meters across the country.”

Neil Denley, a managing director for Macquarie Specialised and Asset Finance in EMEA, added: “The sale of part of our industrial and commercial portfolio will allow us to focus on our residential metering business – where we have an important role to play in helping meet our customers’ ambitious smart meter rollout targets.”

Macquarie, which entered industrial and commercial metering in 2006, said it will continue to focus its efforts on the residential metering sector going forward.

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British Gas owner Centrica warns financial outlook is uncertain

The owner of British Gas has warned investors it has faced a difficult start to the year, weeks after sacking hundreds of its engineers through a controversial fire and rehire scheme to help turn the business around.

Centrica told its shareholders its financial outlook for the year was uncertain after the impact of the Covid-19 pandemic continued to drag on the business, which has struggled in recent years due to rising competition in the energy market.

In the first quarter of this year, demand for electricity was 15% lower than the year before among the company’s business customers, the company said in a trading update ahead of its annual shareholder meeting. Home boiler repairs and installations were 11% lower than the same time last year because non-essential home service visits were postponed to help prevent the spread of Covid-19.

The slump in home energy services was also due to a long-running series of strikes by thousands of its engineers in response to the company’s plan to toughen its employment contracts in an effort to boost productivity and become more competitive.

Under the fire and rehire plans, most of Centrica’s 20,000 staff were told to accept the new conditions, which would increase working hours for its engineers, or lose their jobs.

The company confirmed that 460 engineers were dismissed last month, as a result of what the GMB trade union has called “a dirty, bullying tactic”. A survey by the union found that more than three-quarters of the public believe that fire and rehire schemes should be made illegal.

Chris O’Shea, who became Centrica chief executive last year, said his plans to modernise the company remained on track and “the difficult, but necessary process to move colleagues on to new terms and conditions is now complete”.

“We are pleased that 98% of UK colleagues have accepted the new contracts which will enable us to better serve the needs of our customers. Although the external environment remains uncertain, our tight focus on cash and on fixing the basics across the group leaves us well placed as we continue the turnaround of our company,” O’Shea said.

O’Shea hopes to save £100m in operational costs this year as part of a plan to stem the steady decline of the FTSE 250 energy company in recent years. British Gas has lost about 3 million household energy customers in the last decade following an influx of successful new energy startups. Centrica crashed out of the FTSE 100 after losing more than 70% of its market value in the last five years.

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50,000 jobs by 2050: UK Government outlines plans to scale up carbon capture sector

Published late on Friday (7 May), the policy paper states that the UK will aim to capture and store 10 million tonnes of CO2 per year by 2030. Should this target be met, and progress continue accelerating between 2030 and 2050, the paper states, some 50,000 jobs could be supported.

The emerging CCUS sector is described in the report as a “great incubator of green jobs” as Ministers seek to get the UK on track to host two million such roles by the end of the decade. It is also described as a sector that can help deliver a “fair and equitable transition” for oil and gas workers who will likely need new roles in the coming years, given that many in the sector will have transferrable skills.

While the report describes itself as a ‘roadmap’, there is little detail on how the Government will support the skills, infrastructure and technologies needed to deliver on 2030 and 2050 targets. It states that a full map of opportunities and challenges, as well as Government supports, will be published later this year. This document will come alongside a ‘Fit for CCUS’ scheme for businesses, designed to help high emitters like oil and gas majors and heavy industrial sites to prepare to adopt the technology.

The document does state that BEIS will work more closely with bodies including the Treasury, the Department for National Trade, the British Business Bank and the National Infrastructure Bank (NIB) to develop the map. Ministers have faced multiple accusations in recent months of failing to work across departments to avoid net-zero loopholes. The NIB is notably entering operation this week, with questions still remaining about its climate remit.

It also reassures readers within the sector that BEIS remains open to supporting CCUS projects it is not currently aware of, through mechanisms such as the dedicated Infrastructure Fund. Announced late last year as part of the Ten Point Plan, the Fund’s remit was updated last week in line with the UK’s adoption of the Climate Change Committee’s (CCC) Sixth Carbon Budget recommendations last month. The paper also expresses the possibility of CCUS being included in future post-Brexit trade deals.

Existing projects, the policy paper states, should identify and advertise potential delivery contractors “as visibly and as early as possible”.

Clusters and dispersed sites

The paper comes after a report commissioned by BEIS, and published last year, concluded that the department is lacking a “comprehensive regulatory framework” to overcome challenges to “dispersed” sites that would be suitable for CCUS but that aren’t located in industrial clusters.

Indeed, the overarching target for CCUS to date has been for the UK to fully decarbonise at least one industrial cluster by 2040. Clusters are seen as less risky locations for deployment as, with dispersed sites, new transportation infrastructure will be needed.

The UK Government has increasingly focused on CCS since setting its legally binding net-zero target. Before then, the previous £1bn competition fund for CCS was actually scrapped by the now-defunct Department for Energy and Climate Change (DECC).

According to the CCC, CCUS is a “non-optional” component of the UK’s transition to net-zero. However, some green groups would like to see Ministers doing more to prioritise technologies that are already mature, alongside nature-based solutions for sequestering carbon, in the short to mid-term.

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‘93% of stakeholders back UK grid charging reform’

Over 90% of stakeholders support reform of the current transmission charging regime to support the UK’s legally binding net zero emissions target, according to a survey by SSEN Transmission.

 

The company said the existing regime currently results in Scottish generators paying a higher cost for use of the transmission network compared to other areas in the UK.

 

For example, while a wind farm in the north of Scotland pays £5.50 per unit of energy, an equivalent wind farm in Wales will get paid £2.80 per unit, it said.

SSEN Transmission said that following the publication of a Transmission Network Use of System (TNUoS) charges discussion paper earlier this year, it has published a follow up summary report this week which analyses and outlines the feedback received from stakeholders on the paper’s findings.

 

It said 93% of all stakeholders agreed that some form of TNUoS reform is required, while 84% told SSEN that TNUoS acts as a barrier to the delivery of their renewable projects in Scotland.

 

SSEN Transmission head of whole system Andrew Urquhart (pictured) said: “Our generation customers and wider stakeholders have been consistently telling us that charges for transmission access in the north of Scotland, as well as uncertainty about future charges, are acting as a barrier to the commercial viability of renewable energy projects.

 

“This, in turn, is making it difficult for us to determine system investment needs for our transmission network.

 

“It is clear from our analysis and engagement to date that there is overwhelming support for TNUoS reform and that urgent action is required to address current barriers in the context of the climate emergency.

 

“Given the level of concern raised by our stakeholders, we hope the feedback outlined in our report will help to encourage action on the need for an urgent review of the current regime to support the UK’s ambitious net zero targets and green recovery goals.”