European Gas Futures Gain Amid Deeper Norwegian Supply Cuts

by with No Comment Brexit and Government Energy NewsBusiness Utilities NewsEnergy NewsGreen Energy UK

European natural gas prices rose as much as 7.9% after Norway extended capacity reductions at several facilities that help bring the fuel to Europe.

Shipments from the country declined further on Tuesday, with progressively reduced supplies to both the UK’s Easington and Belgium’s Zeebrugge terminals.

The curbs were caused by an incident at the Sleipner field, where the impact is expected to last until Thursday, according to data from network operator Gassco. The outage has also affected the Kollsnes and Nyhamna processing plants in Norway, which have been hit by heavier reductions than what was announced on Monday.

Lower Norwegian flows coincide with a halt of Russia’s key Nord Stream pipeline for planned maintenance, squeezing supply at a time when nations rush to fill storage sites for the winter and a heatwave boosts demand for electricity to cool homes. The UK, where temperatures are well above seasonal norms, has seen higher generation than normal from gas-fired power plants for this time of the year in recent days. The capacity at Interconnector, a pipeline connecting Britain with Belgium, is curbed due to “high ambient temperature,” the operator said.

Norway oil and gas workers end strike as government steps in

by with No Comment Brexit and Government Energy NewsBusiness Utilities NewsEnergy NewsGreen Energy UK

The Norwegian government on Tuesday intervened to end a strike in the petroleum sector that had cut oil and gas output, a union leader and the labour ministry said, ending a stalemate that could have worsened Europe’s energy supply crunch.

Norwegian offshore oil and gas workers went on strike over pay on Tuesday, the first day of planned industrial action that had threatened to cut the country’s gas exports by almost 60% and exacerbate supply shortages linked to the Ukraine war.

“Workers are going back to work as soon as possible. We are cancelling the planned escalation,” Lederne union leader Audun Ingvartsen told Reuters. Asked whether the strike was over, he said: “Yes”.

The labour ministry separately confirmed it had exercised its right to intervene.

“Norway plays a vital role in supplying gas to Europe, and the planned escalation (of the strike) would have had serious consequences, for Britain, Germany and other nations,” Labour Minister Marte Mjoes Persen told Reuters.

“The volume impact would have been dramatic in light of the current European situation.”

By Saturday, the strike would have cut daily gas exports by 1,117,000 barrels of oil equivalent (boe), or 56% of daily gas exports, while 341,000 of barrels of oil would have been lost, the Norwegian Oil and Gas (NOG) employers’ lobby said.

In a worst case scenario, Belgium and Britain would not have received any piped Norwegian gas from Saturday, gas pipeline operator Gassco had said, because of the risk of a shutdown at Sleipner, a gas transportation hub in the North Sea.

Oil and gas from Norway, Europe’s second-largest energy supplier after Russia, is in high demand as the country is seen as a reliable and predictable supplier, especially with Russia’s Nord Stream 1 gas pipeline due to shut for maintenance from July 11 for 10 days.

British wholesale gas price for day-ahead delivery had leapt nearly 16% on Tuesday, though the price of Brent crude fell as fears of a global recession outweighed concerns about supply disruption, including the strike in Norway.

FORCED SETTLEMENT

The Norwegian government has the power to intervene in strikes under certain circumstances.

Such powers have also previously been used to end petroleum sector strikes, to protect Norway’s reputation as a reliable gas supplier to Europe.

“We are glad to see that the government understood the seriousness of the situation and acted to uphold Norway’s reputation as a reliable and stable supplier of natural gas to Europe,” NOG, the oil lobby, said in a statement.

Like workers elsewhere, Lederne union members had been concerned about accelerating inflation eroding their wages, though they are among the best paid employers working offshore Norway.

Last week, they had turned down a pay rise of between 4% and 4.5%, negotiated by union leaders and oil companies. Inflation in May stood at 5.7% year-on-year.

Under the forced settlement by the government, workers will receive the same terms as the two other oil unions that had neogiated deals with employers, though the specifics will be agreed at a later stage, said Ingvarsten, the union leader.

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UK looking to target Russia’s energy sector in new sanctions

by with No Comment Brexit and Government Energy NewsGreen Energy UKNews

LONDON, March 4 (Reuters) – Britain will look to target Russia’s energy sector in future rounds of sanctions, a move the government has so far resisted amid warnings this could push up energy bills with oil and gas prices already at multi-year highs.

Since Russia’s invasion of Ukraine last week, Britain has imposed a ban on Russia selling debt in its capital markets and targeted several Russian banks with sanctions, as well as companies like defence firm Rostec and airline Aeroflot.

“We’ve been very coordinated on sanctions, we’ve shown huge unity. It’s having a big effect in Russia, but we now need to do more,” Liz Truss, Britain’s foreign minister, said during a visit to Brussels for a meeting of NATO members.

“We particularly need to look at the oil and gas sector, how do we reduce our dependence across Europe on Russian gas, how do we cut off the funding to Vladimir Putin’s war machine?”

Numerous nations have imposed sweeping sanctions against Russian companies, banks and individuals following Russia’s invasion of Ukraine, although energy has largely been exempt to try and prevent prices spiralling even higher.

Despite that, the oil trade is in disarray, with producers postponing sales, importers rejecting Russian ships and buyers worldwide searching elsewhere for needed crude.

In Britain a ban on Russian ships docking in its ports, sanctions on banking and trade and a move to prevent Russian companies raising finance in London have indirectly impacted energy firms.

The likes of Gazprom have secondary London listings, and the London Stock Exchange (LSE) this week has suspended trading in Russian securities. read more

The United States and EU already have some sanctions in place on Russia’s energy and oil refining sectors, but Washington has been cautious on imposing sanctions on Russia’s oil and gas flows. read more

Russia is the second largest exporter of crude oil worldwide, trailing only Saudi Arabia.

Some of the world’s largest energy companies, such as BP and Shell, have also begun to abandon multibillion-dollar positions in Russia since the invasion began.

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Energy crisis: Factory production could come to halt as gas prices soar

by with No Comment Energy NewsGreen Energy UK

Factories across the country could stop production due to rising energy costs, industry leaders have warned.

Representatives of energy intensive industries met with Business Secretary Kwasi Kwarteng on Friday to discuss the ongoing crisis.

It came amid reports that energy bills could go up even further for UK customers, with an additional charge being introduced.

The new strategy could commit the Government to cutting the price of electricity and imposing a levy on gas bills to fund low-carbon heating, according to The Times.

A series of consultations are expected to be released before going ahead with the plan, which is likely to start in 2023 and could add £170 a year to gas bills, the paper said.

During talks, leaders warned the Government of “production curtailments” that could be on the way as the winter crisis looms.

Dr Richard Leese, chair of the Energy Intensive Users Group (EIUG), said: “Our message to the Secretary of State was for prompt and preventative measures to help avoid recent production curtailments in the fertiliser and steel sectors being replicated in other areas this winter.

“EIUG will work with Government to avoid threats both to the production of essential domestic and industrial products, as well an enormous range of supply chains critical to our economy and levelling up the country.”

The EIUG’s membership comprises trade associations and customer groups representing industrial sectors with the heaviest energy consumption in the UK. They include UK Steel, the Chemical Industries Association, the Confederation of Paper Industries, the Mineral Products Association, the British Glass Manufacturers Federation, the British Ceramic Confederation, BOC, Air Products and the Major Energy Users Council.

However, the Government has said it remains “confident” in the security of gas supply in coming months.

In a statement, the Department for Business, Energy and Industrial Strategy said about the meeting: “The Business Secretary stressed that the Government remained confident in the security of gas supply this winter.

“He also highlighted the £2 billion package of support that has been made available to industry since 2013 to help reduce electricity costs.

“The Business Secretary noted he was determined to secure a competitive future for our energy-intensive industries and promised to continue to work closely with companies over the coming days to further understand and help mitigate the impacts of any cost increases faced by businesses.”

Shadow Business Secretary Ed Miliband argued that “this is a crisis made in Downing Street”.

He said: “Kwasi Kwarteng is scrambling to meet industry bosses but he is all talk. This chaotic Tory government got us into this mess in the first place and has no plan to address it.”

It comes as there have already been warnings that bills could rise by 30 per cent in 2022.

Research agency Cornwall Insight predicted that the potential collapse of even more suppliers could push the energy price cap to about £1,660 in summer – approximately a third higher than the record £1,277 price cap set for winter 2021-22, which commenced at the start of October.

Energy regulator Ofgem reviews the price cap once every six months, with it changing based on the cost that suppliers have to pay for their energy, cost of policies and operating costs, among other things.

Mr Kwarteng said consumers will be better insulated from erratic gas prices as wind and solar power start providing more energy to the UK’s households.

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Kwarteng seeks to calm energy chiefs, as Price Cap’s architect calls for its overhaul

by with No Comment Green Energy UKNews

Beleaguered energy secretary Kwasi Kwarteng won the support of Britain’s power bosses today, reassuring them that vulnerable consumers would be continue to be protected, as he warned that more suppliers are set to quit UK retailing.

Speaking at EnergyUK’s annual conference, the minister repeated his three principles to overcome Britain’s crisis, caused by spiralling wholesale costs of gas:

  • No government bail-outs for failed suppliers
  • Customers, particularly the most vulnerable, will have their supply safeguarded
  • The UK energy market must remain competitive

More under-financed retailers would quit the supply business in coming months, Kwarteng predicted, but he vowed ‘there must be no public payouts for bad management’.

He said Britain must continue to press ahead in deploying more generation from renewables. In the medium term it would protect consumers from what the minister called ‘exorbitant spikes’ in prices.

EnergyUK’s chief executive Emma Pinchbeck indicated to BBC Radio at lunchtime her acceptance that the minister was doing all he could to combat the crisis.

She asked only that D-BEIS continue to monitor gas wholesale markets closely, and Ofgem should institute reforms so that this ‘unprecedented crisis’ should not happen again.

Ofgem’s price cap as implemented last month is already predicted to inflict a £ 100 per year rise this winter on up to 15 million home account holders.  Business tariffs are not protected.  The cap’s revision next April, based around current wholesale prices, is feared to extract a further £400 million from consumers’ wallets in 2022.

In a dramatic intervention this afternoon, the price cap’s architect John Penrose MP called for its radical overhaul.

Penrose, appointed by premier Johnson as his government’s competition czar, and husband of track-and-trace boss Dido Harding, argued that energy markets needed a ‘circuit-breaker’, suspending trades in times of unusual volatility such as the present.

Delivering the prestigious Beesley Lecture to economists, Penrose would say:

“The energy price cap was supposed to wipe out the ‘loyalty penalty’, where loyal customers on default tariffs were quietly charged miles more than people who switched. But it isn’t working.

“Since the cap was introduced, the loyalty penalty has hardly changed at all, so millions of families are still being ripped off at the same time as prices are spiking and energy firms are going bust. We’ve got the worst of both worlds.

 “We should reform the cap so it stops loyal customers from being ripped off in the 99 months out of a hundred when the market is normal. But make sure it still protects us for the 1 month in a hundred when things aren’t normal, like now, when there’s an international price spike.

“The fix would be pretty simple. The Financial Conduct Authority is already introducing new rules to wipe out loyalty penalty ripoffs in insurance, by saying insurance firms can’t charge existing customers more than new ones. We should do the same for energy too.

“But Ofgem should still be able to fix a price cap on the – thankfully pretty rare – moments when there’s an international price spike too.  

“Lots of stock markets have an emergency circuit-breaker, where regulators intervene if prices suddenly rise or fall really fast, and we should have the same for energy. Ofgem would be able to intervene to protect customers with a new price cap when it was really needed, if the international price spiked by more than a pre-set amount and time.

“The reformed price cap wouldn’t just stop loyalty penalty ripoffs and protect families from price spikes. It would make energy firms healthier and more resilient too.

“They’d be able to hedge their risks when international prices spike, because the circuit-breaker would only be triggered if prices moved by more than the pre-set amount.

“Challenger firms would be financially stronger and healthier because they wouldn’t face unfair competition from big incumbents with lots of long-term clients who were being milked with loyalty penalties to subsidise new customers either”.

Not-for-profit promoters of clean power Regen earlier this week proposed their own structural reforms, this time to supply and generation.

An ambitious but easy doubling to 10GW of all the onshore renewables projects eligible to enter this December’s coming Contracts for Difference auctions would yield the opportunity quickly to hedge against rising power prices, and at no cost to tax- or bill-payers, the body argued in its letter to Kwarteng.

“CfDs are an excellent energy price hedge: in return for revenue certainty, generators pay back to the public purse when prices are high – directly reducing electricity bills, Regen said.  Annual CfD auctions were needed, Regen said.

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

by with No Comment Energy NewsGreen Energy UKNews

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

The dream of pollution and radiation-free electricity derived from nuclear fusion could be a step closer to reality thanks to a breakthrough by British scientists.

They have developed an exhaust system that can deal with the immense temperatures created during the fusion process and which so far have limited the viability of commercial fusion power plants.

Initial results from the UK Atomic Energy Authority’s MAST Upgrade experiment suggest that the world-first could mean developing fusion energy becomes easier.

Producing electricity using a fusion reactor is still in the experimental stage but experts have said fusion energy – based on the same principle by which stars create heat and light – could be a safe and sustainable part of our energy supply in the future.

A fusion power station uses a machine called a tokamak to enable hydrogen atoms to fuse together, releasing energy that can make electricity.

But fusion reactions can produce a lot of heat and, without an exhaust system to handle this, materials need to be replaced more often.

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Centrica calls on Government to pay homeowners for heat pump switch

by with No Comment Energy NewsGreen Energy UKNews

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

by with No Comment Energy NewsGreen Energy UK

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

by with No Comment Energy NewsGreen Energy UK

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.’”