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Strong winds in Europe boost Innogy’s H1 renewables profit

Above average winds in most of continental Europe coupled with higher electricity prices have boosted earnings in Innogy’s renewables segment during the first half of this year, ahead of the likely re-incorporation of the German utility’s green generation business into parent RWE.

Adjusted earnings before interest, taxes, depreciation and amortisation in renewables rose to €415m ($464m) in the first half of 2019, compared to €322m in the same period a year earlier.

Innogy’s renewable generation business together with that of rival E.ON will be bundled under a new RWE, while Innogy’s grids and retail segments are slated to go to a beefed-up E.ON if a complex share and asset swap deal wins final approval by competition authorities – a move expected in September by E.ON.

Wind levels in North-Eastern, Central and much of Southern Europe – regions where most of Innogy’s onshore wind farms are located – during the first half were higher than the long-term average, more than compensating for lower winds in the UK, Ireland and the Netherlands.

That helped the utility’s output from renewable sources to rise to 5.5TWH, from 5.3TWh in the year-ago period.

Rising electricity prices in the UK and Germany also pushed earnings higher, although some 60% of Innogy’s renewables earnings are quasi-regulated due to fixed feed-in tariffs (FITs) in Germany.

A positive contribution to earnings came also from operational improvements of the existing portfolio in part from a bonus for timely, on-budget completion of the Galloper offshore wind farm in the UK and higher earnings at the Belectric project development subsidiary.

“In Renewables, the fact that we extended our scope to international markets right from the outset has paid off,” said chief executive Uwe Tigges.

“We currently have three large-scale projects simultaneously under construction: the Limondale solar plant in Australia, the Triton Knoll offshore project in the UK, and the Scioto Ridge onshore wind farm in the US.”

Earnings were also bolstered by onshore wind farms commissioned in 2018 and 2019 in the UK, Ireland and Italy.

Innogy’s overall adjusted Ebitda fell to €2.14bn during the first half compared to €2.25bn in the same period in 2018, while net profit went down to €488m compared to €662m during the first half of 2018, as lower grids and retail earnings pulled results down.

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The UK’s shift to clean energy is about to get really, really tough

Renewable electricity in the UK has had a great year, but with our homes and transport still almost totally reliant on carbon the hardest part of the zero-carbon future is still ahead

It’s been a bad year for fossil fuels in the UK. In May, Great Britain went two weeks without burning any coal for electricity – the longest stretch of coal-free electricity since the first coal-fired power station came online in 1882. In late June the National Grid confidently predicted that in 2019, fossil fuels would make up less than half of the total electricity mix for the first time ever.

Fossil fuel, it seems, is entering its twilight years. In 2009, 75 per cent of Great Britain’s electricity was produced by burning coal or gas. In the first five five months of 2019, that portion fell to just 44 per cent. In the same time period, wind has soared from providing one per cent of total electricity to just under a fifth.

But the decline of high-carbon energy might not be as imminent as the headline make things seem. In the UK, heating is still overwhelmingly reliant on fossil fuel. And on the electricity front, the UK is due to lose seven of its eight nuclear power plants in the next decade, leaving an energy production gap against the backdrop of increasing electricity demand from the rise of electric vehicles.

So are fossil fuels really on the way out in the UK? Not quite yet. While electricity production has been shifting fairly speedily towards renewables, heating – which makes up 40 per cent of the UK’s energy consumption – has been lagging way behind, says Martin Freer, director of the Birmingham Energy Institute. Some 85 per cent of UK households are still heated using fossil-fuel based natural gas. Cleaning up in-home heating would require switching to heat pumps, which run on electricity and draw warmth from the environment to heat homes, or burning biowaste.

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But heat pumps are only useful if homes are so well insulated that they only require a small amount of heating. And the UK isn’t doing well on that front either. According to the Committee on Climate Change (CCC), the UK’s 29 million existing homes aren’t being insulated fast enough to save on needless carbon emissions.

To push the government towards cleaner heating, the CCC – an independent body that advises the UK government on tackling climate change – has set a 2025 deadline, after which any new homes should not be connected to the gas grid at all. But homes aren’t being heated by gas, then they’ll need to be heated by electricity, and there’s no guarantee that electricity will come from renewable sources.

Although the UK’s dirtiest form of electricity generation – coal – has been on the decline, that gap has mostly been filled in by burning natural gas, which still releases about half the amount that coal does. While coal plummeted from 25 per cent to three per cent of the energy mix between 2015 and 2019, gas went up from 28 to 41 per cent. “You can’t build a low carbon energy strategy out of gas,” says Freer.

And nuclear is about to drop out of the energy mix too. Nuclear power plants – which are only slightly more carbon intensive than solar panels – currently supply 18 per cent of the UK’s energy. But by 2030, only one of the UK’s currently operational nuclear power stations will still be active: Sizewell B, which currently supplies around three per cent of the UK’s energy. Hinkley Point C, which is currently under construction and projected to come online in 2031, is expected to provide seven per cent of the UK’s electricity needs.

For Freer, this signals a big problem. Even if wind power continues to grow in popularity – and there’s every sign that it will – the UK will always need backup power plants. “Wind power is intermittent,” he says. “Nuclear power is always generating electricity.”

Batteries could provide a solution to our need for always-on energy production. Large-scale battery storage would let suppliers stock up on renewable energy and release it when the wind isn’t blowing. “Once you have cheap storage, then you can use all that variable power all the time,” says Catherine Mitchell, professor of energy policy at Exeter University.

In January, the Department for Business Energy and Industrial Strategy announced a £20 million initiative intending to fund large-scale energy storage solutions, but it’s not at all clear whether the UK’s storage capacity will scale up quickly enough. This could be partially remedied, Mitchell points out, by more flexible electricity demand that cuts down the amount of wasted energy generation that’s wasted, but that doesn’t solve the storage problem altogether.

Whatever happens, Mitchell is confident that our overall energy mix is only heading in one direction. “It’s always cheaper to take wind and solar, because they have zero marginal cost – so you always want to take wind and solar when it’s on,” she says. “The overall system, just because of the economics, is definitely decentralising and it’s a good thing for the environment and society – it’s going to be cheaper for everyone.”

Will things happen fast enough to meet the UK’s clean energy goals? In a swansong piece of legislation, Theresa May committed the UK to reaching net zero UK carbon emissions by 2050. Given our current trajectory, that might be a stretch. Of the 38.4 million licensed cars in the UK, only 226,000 of them are plug-in electric vehicles. The decarbonisation of heating, too, is far from resolved.

For Mitchell, this suggests that leaving things to market forces alone isn’t enough to secure a zero-carbon future quickly enough to meet the demands of climate change. A little – or a lot – of governmental nudging will be required. “The system is just inexorably moving that way, but it’s not moving that way quickly enough to meet those targets so it needs far more help from the government than we have.”

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Innovate UK and ENGIE launch £4m energy innovation competition

Innovate UK, part of UK Research and Innovation (UKRI), has joined forces with ENGIE to discover and fund innovative projects that can speed up the development of solutions to decarbonise, digitise and decentralise energy and help achieve a sustainable energy transition.

A £4m competition will link government grants from Innovate UK, awarded alongside and simultaneously with private sector investment from ENGIE.

It’s the first time an Innovate UK programme has private funding from overseas.

ENGIE, a French energy and services company, will work with Innovate UK to make joint investments and the competition’s aim is to allow organisations to form investment partnerships at an early stage.

To do this, ENGIE and Innovate UK are bringing together Innovate UK’s expertise in identifying promising innovations and using funding to materially change their risk profiles as well as ENGIE’s expertise in the commercial sector.

Ian Meikle, director of clean growth and infrastructure at Innovate UK, said: ‘We are seeking the very best of British ideas in clean growth innovation.

‘By teaming up with ENGIE we can multiply our funding and do even more to grow the industries, businesses and jobs of tomorrow by bringing in the private sector at an earlier stage through this investment accelerator programme.”

Nicola Lovett, CEO of ENGIE UK & Ireland, added: ‘We are delighted to be working with both Innovate UK and ENGIE’s Paris-based New Ventures team to directly assist innovative UK companies in the clean growth sector – in areas such as renewables, energy services and e-mobility.

‘This initiative also supports our own ambition to be a leader in making zero-carbon transition possible for businesses and local authorities.’

The first round of the competition closes on August 14.

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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.”

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Ofgem announces strategic review of microbusiness energy market

3rd May 2019
Information types

Policy areas

  • Ofgem is concerned some microbusinesses are struggling to engage with the market and paying more for their energy than they should.
  • Our evaluation of the impact of the CMA’s price transparency remedy suggests that wider issues remain in the £3.5 billion microbusiness energy market.
  • Ofgem presents its initial analysis on consumer harm and seeks further views and evidence on the challenges microbusinesses face.

Ofgem has announced its strategic review of the microbusiness energy market to better understand and address the issues faced by microbusinesses.

Our initial analysis shows that market information is often inaccessible, resulting in customers paying high prices and struggling to make informed decisions.

Microbusinesses play a central role in the UK economy. According to government data, there were over five million microbusinesses in the UK in 2018, accounting for a third of employment and 21% of turnover. Last year microbusinesses paid £3.5 billion in total in electricity and gas bills.

Ofgem has concerns that the energy market isn’t working as well as it should for these customers.

The complexity of the market with the wide variety of contracts and lack of accessible helpful information about prices means many microbusinesses find it hard and costly to engage in the market to find a better deal.

Ofgem has found that microbusinesses who do not engage in the market still pay a higher “loyalty penalty” than disengaged domestic consumers.

Following its investigation into the energy market, the Competition and Markets Authority ordered suppliers in 2016 to provide clear prices to microbusiness customers through a quotation tool on their websites or through price comparison websites to help them engage in the market.

Ofgem implemented the remedy in 2017 and today has published an evaluation of its effectiveness. The regulator has found while the remedy has improved the level of price information that is available to microbusinesses, it has had a limited impact on microbusiness engagement levels and has failed to address some of the fundamental problems in the market.

We will gather further evidence through the call for inputs and other evidence gathering activities before publishing our action plan in winter 2019.

Ofgem has already introduced a number of reforms to help microbusinesses get a better deal. This includes stopping suppliers from automatically rolling over microbusiness customers onto expensive deals, banning suppliers from backbilling microbusiness customers for energy used more than 12 months previously and introducing an overarching principle to treat microbusiness consumers fairly.

The review and any subsequent actions will complement other reforms being taken forward by Ofgem and government focused on micro and small businesses including smart meters, and the half hourly settlement and switching programmes.

Anthony Pygram, director of conduct and enforcement at Ofgem, said: “Microbusinesses are the backbone of the country’s economy. Yet too many are still finding it hard to navigate what is a complex and at times opaque market to get a better energy deal and are suffering significant consumer detriment as a result.

“Our review announced today, combined with our continued work with the government and industry, aims to deliver a properly functioning competitive retail energy market which works for all microbusinesses.”

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‘Zombie firms’ a major drag on UK economy, analysis shows

A rising number of underperforming “zombie firms” are creating a major drag on the UK economy and threaten to exacerbate a future downturn, says a new analysis by KPMG.

As many as one in seven UK firms are potentially “under sustained financial strain” and had been able to “stagger on” partly thanks to low interest rates, the accountancy firm warned. These struggling firms are crowding out healthy rivals, when under more normal economic circumstances they would probably have ceased trading.

In a report issued on Monday, KPMG warned that “the rise of zombie firms in the UK could spell trouble ahead”.

The authors said there were differing views as to what constituted such a firm, but that in their view it was a company where turnover was static or falling, profitability was persistently low, margins were being squeezed, cash and working capital reserves were limited, leverage levels were high, and there was a limited ability to invest for the future.

The authors looked at 21,000 UK companies, using information from their last three sets of annual accounts, and found that 8% of UK firms were displaying “zombie-like symptoms”. However, they added that based on the latest figures and other economic data, the proportion of such companies across the UK could be as high as 14%.

The highest concentrations of zombie firms were in the energy, automotive and utilities sectors.

In the energy sector, many firms will have been hit by the 2018 oil price slump, while carmakers and utility firms were facing fierce competition from start-ups and technological developments.

KPMG argued that in previous recessions, businesses that were not productive enough would have ceased trading, thereby eventually making way for “new dynamic companies” and ensuring capital was invested in high-growth businesses.

Construction group Carillion is a high-profile example of a UK firm that is said to have been in financial difficulty for several years prior to its collapse in January 2018, but which had managed to limp on, taking on contracts that could have gone to its financially healthier competitors during those years.

On 2 May, Bank of England governor Mark Carney warned that a modest recovery over the next three years would warrant higher interest rates than financial markets were currently anticipating.

KPMG said if interest rates were to rise further, some of these businesses might soon find their loans more difficult to repay, and if the economy continued to stutter, they would be left especially vulnerable to adverse market forces or a tightening of liquidity.

Yael Selfin, KPMG’s chief economist, said: “The threat that zombie companies pose to the wider economy is very real, regardless of what the post-Brexit environment looks like. Many unproductive businesses have been able to stumble on in recent times, generating just enough profits to continue trading but without the innovation, dynamism or investment necessary to sustain bottom-line growth. This has [created], and will continue to create, a drag on UK productivity.”

Britain’s productivity has been persistently poor since the financial crisis, and is about 16% below the average for advanced G7 economies. Business investment has been falling for the past year, according to the Bank of England, which predicts muted productivity growth in the near term.

 

Of the 21,000 private companies analysed by KPMG, 60% were said to display one or more of the symptoms associated with such underperforming firms, while 8% displayed three or more.

Blair Nimmo, head of restructuring at the firm, said that in the event of a liquidity squeeze, many of these businesses would fail. If that happened, “the potential for contagion is very real, creating broader challenges for an economy already struggling to deal with a plethora of issues”.

Others define a zombie firm as one that has been around for several years but is unable to cover its debt-servicing costs with its profits – a definition that, looking at well-known companies, could arguably be applied to firms such as Tesla, which recently announced it had lost $702m (£534m) in the first three months of the year and ended the quarter with about $10bn in debts.

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‘Zombie firms’ a major drag on UK economy, analysis shows

A rising number of underperforming “zombie firms” are creating a major drag on the UK economy and threaten to exacerbate a future downturn, says a new analysis by KPMG.

As many as one in seven UK firms are potentially “under sustained financial strain” and had been able to “stagger on” partly thanks to low interest rates, the accountancy firm warned. These struggling firms are crowding out healthy rivals, when under more normal economic circumstances they would probably have ceased trading.

In a report issued on Monday, KPMG warned that “the rise of zombie firms in the UK could spell trouble ahead”.

The authors said there were differing views as to what constituted such a firm, but that in their view it was a company where turnover was static or falling, profitability was persistently low, margins were being squeezed, cash and working capital reserves were limited, leverage levels were high, and there was a limited ability to invest for the future.

The authors looked at 21,000 UK companies, using information from their last three sets of annual accounts, and found that 8% of UK firms were displaying “zombie-like symptoms”. However, they added that based on the latest figures and other economic data, the proportion of such companies across the UK could be as high as 14%.

The highest concentrations of zombie firms were in the energy, automotive and utilities sectors.

In the energy sector, many firms will have been hit by the 2018 oil price slump, while carmakers and utility firms were facing fierce competition from start-ups and technological developments.

KPMG argued that in previous recessions, businesses that were not productive enough would have ceased trading, thereby eventually making way for “new dynamic companies” and ensuring capital was invested in high-growth businesses.

Construction group Carillion is a high-profile example of a UK firm that is said to have been in financial difficulty for several years prior to its collapse in January 2018, but which had managed to limp on, taking on contracts that could have gone to its financially healthier competitors during those years.

On 2 May, Bank of England governor Mark Carney warned that a modest recovery over the next three years would warrant higher interest rates than financial markets were currently anticipating.

KPMG said if interest rates were to rise further, some of these businesses might soon find their loans more difficult to repay, and if the economy continued to stutter, they would be left especially vulnerable to adverse market forces or a tightening of liquidity.

Yael Selfin, KPMG’s chief economist, said: “The threat that zombie companies pose to the wider economy is very real, regardless of what the post-Brexit environment looks like. Many unproductive businesses have been able to stumble on in recent times, generating just enough profits to continue trading but without the innovation, dynamism or investment necessary to sustain bottom-line growth. This has [created], and will continue to create, a drag on UK productivity.”

Britain’s productivity has been persistently poor since the financial crisis, and is about 16% below the average for advanced G7 economies. Business investment has been falling for the past year, according to the Bank of England, which predicts muted productivity growth in the near term.

 

Of the 21,000 private companies analysed by KPMG, 60% were said to display one or more of the symptoms associated with such underperforming firms, while 8% displayed three or more.

Blair Nimmo, head of restructuring at the firm, said that in the event of a liquidity squeeze, many of these businesses would fail. If that happened, “the potential for contagion is very real, creating broader challenges for an economy already struggling to deal with a plethora of issues”.

Others define a zombie firm as one that has been around for several years but is unable to cover its debt-servicing costs with its profits – a definition that, looking at well-known companies, could arguably be applied to firms such as Tesla, which recently announced it had lost $702m (£534m) in the first three months of the year and ended the quarter with about $10bn in debts.

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Share Watch: Balancing the rise of low-profit renewables with fall of fossil fuels

It took a while for the oil industry to hunker down and identify the new trends, but it is happening and especially in our target company this week, the UK giant British Petroleum (BP).

There is a lot that BP would like to leave in the past. Its origins as a tool of the UK empire is one, not to talk about the series of ecological disasters it has left in its wake over half-a-century and more.

It was a key part of the once fabled ‘Seven Sisters’ oil giants which controlled the world’s oil industry from the 1940s to the late 1970s.

The ‘Seven’ are now reduced to a ‘Supermajor Four’ but they still call the shots in this vast industry.

BP itself trades in 70 countries, has 11 refineries and 15 chemical plants producing petrol, natural gas, aviation fuel, employs 74,000 people worldwide and is valued by the stock market at $110bn (€97.35bn).

Its near collapse following a Gulf of Mexico ecological disaster nine years ago has faded and today the group is stronger than at any time in the last nine years.

Oil prices are at their highest since 2014 and its shares are at a level not seen in the last eight years.

Perhaps more importantly, BP has spotted that the energy business is in revolutionary mode.

Oil and coal, which were central to 20th century business, are now giving way to something different.

A recent study stated that within the next 20 years, solar and wind power (renewables) will account for more than half of global power generation.

Electric cars, vans and small trucks will be the vehicles of choice while oil and gas demand will decline.

Interestingly, this is not a study from environmentalists, but from a world renowned firm of consultants.

To calm worries as to its lack of investments in renewables, BP two years ago acquired Lightsource Solar, Europe’s largest developer and operator of utilities-style solar projects.

It has also invested in Store Dot, an Israeli quick-charging battery company.

However, BP’s alternative energy strategy is still relatively small, while it continues to expand its vast global network of petrol stations, investing in convenience stores and developing its new oil/gas discovery in Egypt.

The company’s strategy to rein in spending, pay for its enormous penalties/clean-up costs and focus on higher margins, has paid off.

Revenues for the year were $303bn with net profit of $9.6bn, a profit margin of 3pc propelling the shares to a yearly high but they have since retreated.

Unfortunately, the company has been unable to cut debt levels as it absorbs the cost of its recent purchase of US shale assets.

The problem facing BP is how to strike a balance between low-profit renewables and its very profitable oil and gas business while coping with investor and consumer pressures for climate change.

While the group has recovered from its near collapse, I wouldn’t be parking my cash on BP shares right now; other oil majors are more attractive.

Nothing in this section should be taken as a recommendation, either explicit or implicit to buy any of the shares mentioned.

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5 renewable energy developments to look out for in 2019

2018 was a record-breaking year for the UK, with renewable energy leading the charge. In fact, it was the greenest year on record for UK energy generation. 2018 was also a significant year for Opus Energy (you can read more about that here).

There were several record-breaking events in the world of energy. The UK’s renewable energy capacity exceeded that of fossil fuels; there were new generation records set for wind and solar over the summer months as the UK enjoyed a heatwave.

With such an impressive year behind us, we’re hoping to see more of the same in 2019 and beyond. Here are some of the other exciting prospects in the world of renewable energy that we’re hoping to see next year.

Storage becoming increasingly viable

With the growing demand for electric cars helping to drive the production of better batteries, prices are falling, and consumers are beginning to experiment with solar and storage solutions at home. Equally, storage is necessary for the consistent supply of energy to the Grid. Renewable sources can be intermittent, so saving the energy for when the weather isn’t favourable is important.

Drax is one of the companies at the forefront of this and has proposed the development of new gas generation assets at its Yorkshire power plant. This would be accompanied by two battery storage facilities, as well as a power station the stores energy from pumped hydro power.

Opus Energy, too, has signalled its intent to be a part of the storage revolution. We’re currently running a trial with one of our customers to explore the benefits of battery storage for our customers and our business.

The potential success of storage goes beyond the UK; it is expected to help prove the viability of renewable energy as a major player in the generation mix of many countries, including Egypt and Ireland. Watch this space.

Progress in Central and South America

South America is quickly catching up with the rest of the world, with continued economic growth driving increased energy consumption, and an ever-more urgent need to ensure that our demand for energy doesn’t cause stress to the planet.

However, the current energy landscape is failing to keep up with energy demand and consumption. In Argentina in 2015, fossil fuels were 87% of the energy mix (although some companies are trying to change this – for example, this wind  one this Argentinian wind power generator is expanding its portfolio from 100 MW to 250 MW over the coming years.

The story is the same for many South American countries, with the pressing need for an energy revolution driving change – but there is potential everywhere. Chile, for example, has limited fossil fuel resources but benefits from considerable hydropower, solar and wind resource. Making the most of these resources will be vital across the continent.

The continued drive towards energy efficiency

Using energy efficiently and reducing energy use where possible is just as important as using cleaner energy sources.

This is part of the logic behind the UK’s smart meter rollout, helping everyone to become more aware of their energy use and how using energy at different times can be both cheaper and more environmentally friendly.

National Grid, the UK’s energy system operator, has created a carbon-intensity toolwhich forecasts how “clean” or “dirty” electricity will be a few days in advance. Similarly, Drax’s Electric Insights tool provides a near-real time picture of the UK’s energy consumption and its sources.

According to Carbon Brief, an environmental organisation, reduced energy use and the rise of renewable energy sources have been the biggest reasons behind the UK’s reduced greenhouse gas emissions.

Increased efficiency, therefore, will be on the agenda for many businesses and households. Not just to mitigate any price increases – but to help reduce environmental impact.

The Middle East: Falling fossils and the renewable rush

The Middle East is better known for its rich fossil fuel resources, with plentiful oil and gas deposits. Some might say it falls behind the rest of the world in terms of renewable energy investment, but there are reasons to be optimistic.

Downward pressure on oil and gas prices has emphasised the importance of a diversified energy network, and self

As a large geographic region which spans continental borders, the climate of many of the countries is conducive to renewable energy generation.

For inland regions, there exists the strong potential for both conventional ‘photovoltaic’ solar power, and the less widely-used ‘concentrated solar power’, thanks to the high levels of solar irradiance across the region. According to the Renewable Energy Network, a number of solar projects are already in the planning or construction stages.

Electric vehicles hitting the highways

As battery storage technology continue to improve, one of the most visible applications of the technology is in electric vehicles.

In the UK, there are more than 130,000 registered EVs. This increase in the number of electric vehicles on the road has a twofold benefit in terms of energy consumption.

Firstly, it reduces fossil fuel use in the transport sector, which reduces the use of fossil fuels overall. While this electrification places greater demand on the energy sector, the continued reduction in fossil fuel use (in the UK, in particular) means that the average emissions associated with EVs has fallen by 50%.

Secondly, it makes a difference to local air quality. Concerns were repeatedly raised about the effect of diesel and petrol vehicles and the potential dangers caused by their exhaust fumes.

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Pioneering Orkney energy project offers glimpse of fossil fuel-free future

IT is the pioneering project that offers a tantalising glimpse of a cleaner, greener future free of mass pollution.

Experts have launched the first phase of a ground-breaking £28.5 million energy system which it is hoped will eliminate the need for fossil fuels in Orkney — and eventually the whole of the UK.

The scheme includes plans for a locally-powered electric bus and electric bike “integrated transport system” on the islands, as well as the mass roll-out of electric vehicles.

Meanwhile, up to 500 domestic and 100 large-scale batteries will be used to store renewable energy, allowing it to be pumped into the grid when winds drop or the sun disappears.

Dubbed the “energy system of the future”, those involved hope it will prove such a success it will eventually be rolled out across the UK and beyond – helping to create a future powered entirely by renewables.

Mark Hamilton from Solo Energy, one of the firms involved in the ReFLEX (Responsive Flexibility) scheme, said it was a “world-leading example” of how innovation can drive the transition to green energy.

He said: “In Orkney, we’ve got a very high level of renewable generation from wind and solar, and other forms of generation such as wave and tidal.

“All of these renewable generation sources are obviously low carbon, but they are intermittent – so the wind comes and goes, the sun comes and goes.

“The ReFLEX project involves deploying battery systems and smart electric vehicle charging to balance the intermittency of renewables.

“So what Solo does, we have a software platform which we use to control battery systems across the grid to respond to the intermittency of renewable generation.

“So basically, when there’s lots of renewables generating, we charge battery systems across the grid, store that low-cost renewable energy, and then release it back to the grid when renewable generation decreases.”

Mr Hamilton said 25 per cent of the UK’s current electricity needs are met by renewable energy.

He said it would realistically be 20 to 30 years before the country’s entire energy system could become fully reliant on renewables.

He said: “We can have all the wind and solar farms we want but unless we have the means to store and balance renewables we will never fully wean ourselves off fossil fuels and get to the root of the climate change problem.”

The Orkney scheme uses a “virtual power plant” model which sees rechargeable lithium-ion battery systems controlled remotely using special software.

This allows them to be charged when renewable energy – such as wind – is abundant. They can then release that energy when the supply drops.

Orkney is already a world-leader in wave and tidal technology and boasts a high uptake of electric vehicles.

The latest project aims to deploy up to 600 extra electric vehicles and 100 flexible heating systems, as well as a Doosan industrial-scale hydrogen fuel cell which produces eco-friendly energy and heat.

Once demonstrated in Orkney, experts hope the “virtual energy system” – which aims to link up local electricity, transport, and heat networks into one controllable, overarching system – will be rolled out across the UK and internationally.

To encourage uptake, electric vehicles will be provided through a low-cost leasing arrangement, while batteries will be provided free on the basis customers will benefit from lower energy bills.

“50% of the project is being funded privately indicating the appetite that exists within the partners to make this project work.

“Orkney has already demonstrated high commitment for local sustainable energy solutions and the county is well on its way to decarbonising each aspect of the energy system.

“The target for Orkney is to have a negative carbon footprint and this pioneering project will build upon the existing local energy system, local infrastructure and local expertise, to accelerate this transition to a fully sustainable and flexible energy system.”

The Scottish Government aims to generate 50% of the country’s overall energy consumption from renewable sources by 2030.

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