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Electric shock: Could Brexit scar Britain’s energy landscape?

Britain’s exit from the EU, which will finally happen on Friday (31 January), has sparked fears of disruption to its electricity market, from higher bills to supply issues and stalled de-carbonisation efforts.

Britain depends on the European Union for much of its electricity supply.

Its own generation fell in 2018 by 1.6%, according to the latest available statistics.

This reduction stems from the gradual shutdown of coal-fired power plants, which is yet to be fully compensated by a rise in wind power.

Imports of electricity and gas have increased in response, predominantly from France, the Netherlands and Ireland, which now account for almost 40% of Britain’s energy consumption.

Britain’s imminent departure from the 28-member EU and its single electricity market therefore represents a risk for an already fragile network, which suffered a big blackout in August.

It will continue to benefit from existing arrangements during a post-Brexit transition phase, while it seeks a new agreement on everything from energy to security cooperation with Brussels.

But it is not clear if these talks will entirely resolve the issue.

British industry regulator Ofgem has said “alternative trading arrangements will need to be developed”, without giving further details.

It insists that whatever deal is struck, it does not “expect Brexit to interrupt the flows of electricity and gas”.

But at times of peak demand, Britain may find itself at the back of the line for electricity.

“EU countries could get preference,” Weijie Mak, of research company Aurora, told AFP.

As with other areas such as finance, agreeing so-called equivalence on things like CO2 emission rules – so countries who produce cleaner and more expensive electricity are not disadvantaged – will be key.

Price rise?

Uncertainty over equivalence and the possible return of tariffs or quotas if trade negotiations falter has left some sceptical that nothing will change post-Brexit.

“The electricity trade will become more expensive,” said Joseph Dutton, policy advisor at climate change think tank E3G. “It could mean higher bills for consumers.”

Trading in electricity across the Channel is currently based on an auction system, which could be upset by Britain’s EU departure.

Eurelectric, the association representing the industry at the European level, sees it as a “lose-lose situation” because of “less efficient gas and power trading”.

The hazy picture has seen the French government put on hold several interconnector projects aimed at better linking the electric power grids of Britain and the continent.

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Sadiq Khan launches his own green energy company – London Power

Sadiq Khan has launched his own green energy company, claiming it will save the average household £300-a-year on bills.

The mayor of London today unveiled London Power, in conjunction with Octopus Energy, as a part of his Energy for Londoners programme.

Read more: New Octopus Energy tarif aims to slash the charging cost of electric cars

The company – which will only be available in London – will act as a non-profit company, with all profit “reinvested into community projects”.

The service will be provided by Octopus Energy and will rely on 100 per cent renewable energy.

Khan said the new energy provider would be within the cheapest 10 per cent of similar tariffs in the market and would save the average household £300 on bills.

“It is a disgrace that many Londoners pay too much to heat and light their homes, with more than a million living in fuel poverty,” he said.

“For the first time we have a fair, affordable, green energy company specially designed for Londoners.”

London Power enters a market that is already home to 64 active suppliers, according to Ofgem.

The energy market watchdog’s 2019 report on the energy market found 53 per cent of consumers had never switched energy companies.

However, the figure for London – where energy prices are among the most expensive in the country – is not known.

Peter Earl, head of energy at Compare the Market, said he welcomed the extra competitio, but that it may be difficult to attract new customers.

“It’s an industry challenge to activate the large section of people who have never changed their energy company,” he said.

“[Khan’s] got an offering that should be attractive to people, but it’s not going to be easy.”

The formation of London Power won plaudits from green energy advocacy groups the Renewable Energy Agency (REA) and National Energy Action.

REA chief executive Nina Skorupska said: “By adopting this model, City Hall has shown themselves to be one of the pioneers in the move towards a Net Zero UK.”

Caroline Russell, Green Party leader in the London Assembly, on the other hand said Khan’s plans did not go far enough.

She said the mayor should have set up the company without the help of Octopus Energy so City Hall could have greater power over the company’s energy resources.

Read more: Sadiq Khan has increased press office spending by 26 per cent in four years

“I’ve argued with him to set up a fully-licensed company – which means wholly owned byLondon – to get the best benefits for Londoners,” she said.

“The mayor seems cautious that there will be any profits to be reinvested, but a company owned and run by the Mayor would be able to support investment in green technologies and create green jobs.

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Conservatives focus on nuclear and EVs in net-zero vision for 2050

The Conservative Party has unveiled its manifesto for a net-zero carbon economy, which includes commitments to plant more than one million trees and sets aside £1bn for electric vehicle (EV) manufacturing, but fails to match Labour’s ambition in pushing the 2050 timeframe forward.

The Tory plans for achieving net-zero carbon emissions largely stick to the recommendations provided by the Committee on Climate Change (CCC), which claimed that a net-zero target could be achieved at the same cost that is put against achieving the old Climate Change Act, which is between 1-2% of GDP in 2050. The recommendations have since been enshrined into national law.

It was thought that the Tory Party conference would be used to provide more clarity on the net-zero target, specifically whether the new target would encompass all sectors – shipping and aviation are currently covered on a territorial basis – and how carbon capture and storage (CCS) solutions and hydrogen would be supported.

Despite no clarity on most of those measures, the plan does feature a commitment to build a £220m net-zero nuclear fusion plant by 2040. The first stage of the investment will cover the initial five-year development phase of the Spherical Tokamak for Energy Production (STEP).

Other commitments listed by the Tories include plans to plant up to one million trees between 2020 and 2024 to develop the Great Northumberland Forest, deliver £1bn in funding for EVs and hydrogen fuel cell development, and a new Future Homes Standard that will be introduced in 2025 to create “world-leading energy efficiency standards”. Interim regulations for the Future Homes Standard will be introduced from 2020.

Andrea Leadsom, the business, energy and industrial strategy secretary said: “Addressing climate change is a top priority for the Conservative Party, and today’s announcements will not only help us reach our Net Zero 2050 target, but will benefit communities and households – and improve wildlife and wellbeing – while doing so.”

A 20-year gap

The announcement follows last week’s news that Labour Party members had backed a pledge to reduce greenhouse emissions to net-zero by 2030 – two decades earlier that the Conservative target.

The motion also commits the party to take Great Britain’s energy networks and biggest energy suppliers back into public ownership, introduce a complete ban on fracking and make large-scale investments in renewable and low-carbon energy.

The Tory commitments have also been criticised by green groups for failing to strengthen commitments that could move the ban on petrol and diesel cars forwards or encourage reductions in meat-based diets and eating. Friends of the Earth’s chief executive Craig Bennett claimed that the measures were “nowhere near commensurate” to tackle the issues of climate change.

“For decades, we’ve been promised that nuclear fusion is ‘just a decade away’ and yet it’s never materialised,” Bennett said. “Why throw money away on tech-fix pipe dreams, at precisely the moment that onshore and offshore wind and solar are delivering better returns than ever before?

“If the government is serious about slashing climate pollution it needs to stop fracking, stop filling the skies with more planes, and stop funding oil and gas projects abroad and instead invest in public transport, renewable energy and doubling UK tree cover.”

Theresa Villiers, the environment secretary added: “The planting of one million trees will be fundamental in our commitment to be the first generation to leave the natural environment in a better state than we found it. They will enhance our landscape, improve our quality of life and protect the climate for future generations.”

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EU to pull plug on wasteful, unrepairable products

Newly adopted EU laws will make several products easier to repair and more energy efficient, saving people money while reducing pollution, NGOs in the Coolproducts campaign said.

For the first time, manufacturers will be obliged to make several home appliances easier to repair following the formal adoption of new laws by the European Commission today. The new rules will also cut the energy needed to power them.

As of 2021, all TVs, monitors, fridges, freezers, washing machines, washer-dryers, dishwashers and lighting products placed on the EU market will have to meet minimum repairability requirements aimed at extending their lifetime.

These products will also be made easier to recycle thanks to improved design and, in the case of displays, the removal of halogenated flame retardants.

The Coolproducts campaign brings together policy experts to ensure product policy benefits people and the planet. It’s led by the European Environmental Bureau (EEB) and ECOS.

Today’s announcement represents a turning point in the way we produce and use our products, according to NGOs.

Stephane Arditi, policy manager for the circular economy with the EEB, said: “This is the kind of innovation that we all need right now.

“Energy efficiency laws have already cut our energy bills and will continue to do so. Now, by also ensuring we get to use our products for longer, Europe can deliver further savings for people while cutting carbon emissions and waste.”

Chloé Fayole, Programme and Strategy Director at ECOS, said: “With these measures, Europe has just taken a big step towards a more circular economy, which should inspire the rest of the world.

“We now expect EU decision makers to replicate this approach to many other products and notably electronic products such as smartphones and computers, to minimise their environmental impact.”

The new measures are part of the EU’s Ecodesign Directive, which removes the most wasteful products from the market, replacing them with units that do the same job with less energy and resources.

They were previously agreed by all 28 EU governments in January, and are among the last few measures adopted by this European Commission before new officials take office.

Together with new energy labels adopted in March, the new energy efficiency requirements will help the EU save an additional 140TWh of energy a year, which corresponds to 5% of the EU electricity consumption. For consumers and companies, this means €20 billion saved on energy bills.

The repairability requirements can help deliver even more savings by slashing demand for new products and carbon emissions linked to manufacturing, distributing, using and disposing of new products.

Extending the lifespan of washing machines by just five years would save the EU as much emissions (CO2eq) as taking half a million cars off the roads annually, a recent study found.

Towards people’s Right to Repair

The new requirements have the potential to make our products last longer. Manufacturers will have to ensure that appliances can be easily disassembled with commonly available tools.

Spare parts and repair information will have to be made available to professional repairers for a minimum number of years.

The next EU officials should ensure that this approach is replicated across most product groups, the NGOs said.

Ugo Vallauri, policy lead of the Restart Project and a member of the newly formed Right to Repaircampaign in Europe, said: “This is an important step in the right direction, but we have a lot of work ahead of us.

“Next step will be to make spare parts and repair manuals available to all, not just professional repairers, and to extend repair provisions to many more products, starting with smartphones.”

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North Sea gas pioneer makes case for UK to maintain output

NORTH Sea-focused Cluff Natural Resources has said the UK must maximise the production of gas in its waters to minimise reliance on supplies from overseas amid efforts to tackle climate change.

The company’s chairman Mark Lappin noted the Committee on Climate Change had recognised oil and gas would account for the bulk of the country’s energy needs while efforts are made to reduce net carbon emissions to zero by 2050.

Mr Lapping said the Committee had produced a report that was generally thorough and thoughtful and that recognised ‘net zero’ did not mean the end of hydrocarbon production.

However, Mr Lappin observed: “ The key difference between the Climate Change Committee and our own view is that instead of becoming increasingly reliant on imports from overseas we should be focussing on national production and consumption of natural gas from the United Kingdom Continental Shelf.”

He added: “A domestic supply of natural gas is good for jobs, good for tax receipts and the balance of payments, as well as being better for the environment compared with importing gas from as far afield as the Middle East and South America.”

Mr Lappin made his comments on a day the Brent crude price surged 20 per cent in early trading after drone strikes on Saudi Arabian facilities at the weekend led to the interruption of 5.7 million barrels of crude oil production per day. That is equivalent to more than five per cent of the world’s daily supply.

Analysts said the long term impact of the events in Saudi Arabia on oil prices may be limited given the uncertain outlook for the global economy. The events could lead to renewed debate about the importance of UK production nonetheless.

An Australian firm yesterday showed belief in the potential of the United Kingdom Continental Shelf (UKCS) by agreeing to buy in to acreage west of the gas-rich Morecambe Bay.

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Fuel prices: A really simple guide to why they go up and down

When you pull up at the pumps, you’re probably not thinking about the knife-edge, geo-political tensions between Saudi Arabia and Iran.

You’re thinking about how much it’s going to cost to fill up and which bag of sweets to get for the glove box.

But what’s happening thousands of miles away in the Middle East has an impact.

So here’s a really simple guide on what causes the price of fuel to go up and down.

Tax is the big one

An attack on Saudi oil facilities has knocked out 5% of the world’s oil supply.

It’s got people worried we’re about to see a big jump in the price of petrol and diesel.

Not necessarily.

“The biggest thing isn’t what’s going on in Saudi or Iran, it’s the Chancellor of the Exchequer,” says Phillip Gomm from the RAC Foundation.

That’s because around 60% of the price you pay for fuel is tax – a mixture of fuel duty and VAT. So just because the price of oil doubles, that doesn’t mean we’ll see the same jump at the pumps.

It’s too soon to say how much the price will go up

The wholesale price is how much the oil costs when it leaves the refinery – that’s the price retailers pay for it.

When supply is disrupted – such as an attack on an oilfield – wholesale prices go up.

“We’ll see the wholesale price go up quite quickly but then it takes a couple of weeks for that to get passed on to drivers,” says Philip.

But because we don’t know how long the supply will be disrupted, it’s impossible to predict how much fuel costs will increase, or for how long.

The exchange rate is important

Oil is priced and traded in dollars. So if you have a weak exchange rate – how many dollars you can buy with sterling – it’s going to cost more in pounds to buy that fuel.

Instability doesn’t always mean big price rises

“If other suppliers think there’s a chance to sell more fuel because the Saudi supply has been interrupted, they will flood the market with more of their stock. If they’ve got spare oil, they’ll try and shift a bit more,” says Philip.

He says there isn’t a shortage of oil across the globe, it just depends what’s going on.

“The market has adjusted without blinking over the last two years to the loss for political reasons of over two millions barrels a day of production from Venezuela and Iran,” says Prof Nick Butler, who’s an expert in international energy policy.

Of course, if tensions in the Middle East spill over into conflict, it’s a different story.

Production facilities, trading routes and pipelines which thread through the region could all be vulnerable to future attacks – which could push up prices long-term.

The cost of a barrel of oil is soaring since the Saudi attack – roughly $65 (£52.20) a barrel, depending on when you read this.

But, according to Philip Gomm, “we’re miles off the $143 (£114) a barrel in 2008 – so we’re a long way from historic highs.

“It’s a brave person who’ll predict how much prices will go up.”

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French regulator puts EDF Flamanville nuclear plant on safety watch

PARIS (Reuters) – French nuclear regulator ASN said it has put EDF’s Flamanville 1 and 2 reactors under increased surveillance following a series of shortcomings in maintenance and contractor oversight.

The ASN’s action is the latest in a long series of technical and operational issues that have bedevilled EDF in recent months and raised new concerns about the state-controlled utility’s safety culture.

The regulator said in a statement there had been a high number of significant shortcomings in the Flamanville plant’s maintenance and in the oversight of contractors in the plant, as well as insufficient quality of documentation. It added that it had summoned the plant’s director and ordered him to submit an action plan to improve plant operation.

EDF (EDF.PA) did not dispute the ASN’s ruling.

“We accept the ASN’s diagnosis and we accept its decision. That is why we submitted an action plan in August to resolve the problems,” an EDF spokesman said.

EDF’s Belleville nuclear plant on the Loire river has also been under increased surveillance since 2017.

The problems at the Flamanville 1 and 2 reactors are not directly related to the many problems with a third nuclear reactor that EDF is building on the same site. Flamanville 3 is a decade behind schedule and its cost has tripled to nearly 11 billion euros and is likely to rise further.

Separately, EDF said on Tuesday it had found problems with weldings on the steam generators of some existing reactors, sending its shares down 6.8% on fears that the faults could lead to reactor closures.

The shares recovered some of the losses to rise 5% on Wednesday. They are down 28% over the past 12 months, making EDF the second-worst performer in the Stoxx European Utilities index .SX6P

SAFETY CULTURE

“There is a chain of control from reactor builder Framatome, to nuclear plant operator EDF and regulator ASN, but it has been demonstrated over and over again that this chain of control is malfunctioning. Every few months there is a new problem,” World Nuclear Industry Status Report author Mycle Schneider said.

Schneider said there had been no follow-up to a 2018 French parliament investigation into nuclear safety and security.

A parliament report reut.rs/2kE2IQ7 published in July 2018 concluded that France’s nuclear plants are a safety threat because of their excessive reliance on outsourcing, the risk of terror attacks and a lack of operational rigour.

Unlike the US, Russia and Japan, France has had no major nuclear nuclear accidents such as Three Mile Island, Chernobyl or Fukushima and its regulator ASN is seen as independent.

But EDF’s long series of problems – both at its existing fleet of 58 nuclear reactors and at the EPR reactors under construction in Flamanville and in Olkiluoto, Finland – have tarnished EDF’s image as a leader in nuclear technology and weighed on its ability to sell nuclear plants abroad.

While Russian rival Rosatom here has a $133 billion order book here reactors worldwide, EDF’s only foreign project is for two EPR reactors at Britain’s Hinkley Point, in a contract with its own UK arm, EDF Energy.

“Sometimes there are weak signals, but we are putting in place procedures. Safety is our number one concern, it is in our DNA,” the EDF spokesman said.

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Eversmart Energy collapses to leave 29,000 customers without supplier

A green energy firm with more than 29,000 customers has collapsed, becoming the sixth supplier this year to go bust.

Eversmart Energy confirmed it had ceased to trade in a short note on its website on Friday.

Industry regulator Ofgem said it would appoint a company to take on all of Eversmart’s customers, advising them not to switch to a new provider until this process was completed.

The collapsed firm supplied energy to 29,000 households and “a very small number” of businesses, Ofgem said.

 

Philippa Pickford, the regulator’s director for future retail markets, said: “Eversmart Energy customers do not need to worry, as under our safety net we’ll make sure your energy supplies are secure and domestic customers’ credit balances are protected.

“Ofgem will now choose a new supplier for you and whilst we’re doing this our advice is to ‘sit tight’ and don’t switch. You can rely on your energy supply as normal. We will update you when we have chosen a new supplier, who will then get in touch about your new tariff.”

Eversmart did not say why it had ceased trading, but the Energy Ombudsman said complaints about the Manchester-based firm had soared from 55 last year to 225 in the first eight months of 2019.

Energy Ombudsman chief executive Matthew Vickers said: “We have seen a significant increase in complaints about Eversmart Energy, receiving four times as many complaints so far this year as we did in the whole of last year.

“Billing and switching problems have been the main drivers of unresolved complaints about the company.”

Eversmart was named the second worst supplier for customer service in a report by the Energy Ombudsman last year.

Last year the firm was criticised for launching a low-cost tariff in which households had to pay about £1,000 for a year’s worth of energy up front.

Bosses said at the time claimed the tariff was “better value than an Isa or a high street savings account”, but Citizens Advice warned the rest of the industry would be forced to pick up huge outstanding debts if the supplier went bust.

It is not known if the supplier who picks up Eversmart’s customers will honour the 12 per cent interest they were promised, or how many of the 29,000 customers were on the tariff.

Eversmart is the 13th supplier to drop out of the UK market since the beginning of last year. Its collapse comes three weeks after competitor Solarplicity ceased trading.

Gillian Guy, chief executive of Citizens Advice, said: “Our research shows this unlucky baker’s dozen of failed companies has left behind at least £172 million in unpaid costs. These will be picked up by other consumers through higher bills.

“When a supplier goes bust, customer credit balances are protected. But all of us will eventually pay for honouring them through increased bills.

Ofgem warned last month more providers are to go bust or merge after a huge increase in the number of small firms entering the market in recent years. The regulator announced stricter tests on new suppliers’ financial health earlier this year under proposals designed to stem the rising number of failures.

Emma Bush, energy expert at price comparison service uSwitch, added: “With yet another supplier going out of business, Ofgem needs to press ahead with its reforms for regular health checks on existing energy companies to ensure each and every one can finance its operations while upholding a high level of customer service.

“Regular stress-tests for suppliers and ongoing fit-and-proper person assessments would help that.”

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Energy firms plan UK’s first carbon-neutral ‘industrial cluster’

Energy companies have ignited multibillion-pound plans for the UK’s first carbon-neutral “industrial cluster” in the Humber.

An alliance of companies including National Grid, Drax and Norway’s state energy company, Equinor, are leading a campaign to shrink the carbon footprint of Britain’s most polluting industrial zone.

The cluster includes hundreds of refineries, factories and the Drax coal-fired power plant near the Humber estuary, safeguarding 55,000 jobs and a local industrial economy worth £18bn a year. However, it is also responsible for the highest concentration of industrial emissions in the country, undermining the UK’s goal to become a carbon-neutral economy by 2050.

The alliance plans to trial world-leading technology to capture and store carbon emissions from factory and power plant flues before they enter the atmosphere. It also hopes to use carbon capture while breaking down natural gas to create hydrogen, which can be used in industry, heating and transport without creating climate emissions.

Lord Haskins, the chair of the local enterprise partnership, said it planned to work with businesses across the Humber “to make this ambitious plan a reality”.

“This is a huge opportunity to accelerate clean growth in the Humber while also supporting significant industries to adapt for the future. If we can achieve this goal of becoming carbon neutral on the Humber it would make us a brilliant example not just for the rest of the country, but the rest of the world,” said Haskins, a former Labour adviser and boss of Northern Foods.

UK urban centres are also vying for investment to become the country’s first carbon-neutral city. Bristol has joined the race by vowing to cut its carbon emissions to net zero by 2030 through a £1bn climate scheme. The UK’s first European Green Capital hopes to maintain its green lead by attracting investment from major companies and investors to create a carbon-neutral city.

Marvin Rees, the mayor of Bristol, said its City Leap programme was “a world first” that would lead the way on reducing carbon emissions. “We are creating a decarbonised local energy system that Bristol can be proud of. City Leap is leading the way on carbon reduction, while at the same time addressing important social and economic challenges,” he said.

Bristol council voted unanimously in favour of establishing a net zero-carbon city, meaning any climate emissions must be neutralised by schemes that absorb carbon, after becoming the first to declare a climate emergency.

City Leap aims to bring together international organisations, investors and tech companies to help develop low-carbon solutions that can drive down the city’s greenhouse gas emissions.

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UK shale gas driller mulling sale due to fracing challenges

LONDON (Bloomberg) – Investors backing closely-held Cuadrilla Resources, which pioneered UK shale gas drilling before becoming mired in red tape, are exploring options including an outright sale of the company.

Shareholders including private equity firm Riverstone Holdings LLC, which has a direct 45% holding, and Kerogen Capital, which holds an indirect stake, have hired the Royal Bank of Canada to study ways to cash out of their investment, said people familiar with the matter, asking not to be named because the information is private.

The bank has been working with the investors for months, they said. No final decision has been made and the deliberations may not lead to a transaction.

Cuadrilla has struggled to produce and sell any natural gas due to widespread opposition to its hydraulic-fracturing technology, also known as fracing. Investors have been waiting for it to finish work on a well in northwest England, which is currently suspended after causing an earthquake registering 2.9 on the Richter scale last month.

Cuadrilla declined to comment. Riverstone and RBC didn’t return requests seeking comment, while an external spokesman for Kerogen wasn’t immediately able to comment.

Kerogen owns 53% of Australian energy-service company AJ Lucas Group Ltd., which holds 48% of Cuadrilla, according to data compiled by Bloomberg and Cuadrilla’s website. Kerogen’s stake in AJ Lucas, built up since late 2011, is now valued at about A$58 million ($40 million). The value of AJ Lucas’s shares has fallen almost 90% over that period.

AJ Lucas, based in Australia, didn’t respond to a request seeking comment outside of business hours.

Cuadrilla has been trying for more than a decade to prove Britain has commercially viable quantities of shale gas. If it does, the country could partly replicate an energy boom seen in the U.S., which reversed its status as a major net fuel importer. However, local opposition in the UK and different regulations governing fracing have made it almost impossible for Cuadrilla to appraise the country’s gas reserves.