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Great Britain power system disruption review

Details

On Friday 9 August 2019 a power disruption resulted from the operation of Low Frequency Demand Disconnection relays on the Great Britain power system at about 4.54 pm. It impacted hundreds of thousands of customers, and caused significant secondary impacts in particular to the transport network. Though demand was fully restored within 90 minutes, the secondary impacts continued to be felt for much of the day.

The Secretary of State for Business, Energy & Industrial Strategy has commissioned the Energy Emergencies Executive Committee (E3C) to undertake a comprehensive review of the incident. The review should identify lessons and recommendations for the prevention and management of future power disruption events. In particular E3C will:

  • assess direct and secondary impacts of the event across GB electricity networks
  • Identify areas of good practice and where improvements are required for system resilience
  • consider load shedding in regard to essential service customers and prioritisation
  • consider timeliness and content of public communications during the incident
  • make recommendations for essential service resilience to power disruptions

E3C will submit a final report to the Secretary of State within 12 weeks, with an interim report within 5 weeks. These will be published here. BEIS will provide the secretariat for the review.

E3C is a partnership between government, the regulator, and industry, which ensures a joined up approach to emergency response and recovery.

Documents

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United Oil & Gas Confirms Award Of Four UK North Sea Blocks

(Alliance News) – United Oil & Gas Ltd said Monday it has accepted the formal offer from the Oil & Gas Authority for the awarding of four blocks in the UK North Sea in the UK 31st offshore licensing round.

The oil & gas company now holds a 100% interest in blocks 14/15c, 15/11c, 15/12a and 15/13c, which make up Licence P2480. The blocks cover an area of 500 square kilometres, and includes the Zeta prospect which United estimates could contain around 90 million barrels of in-place oil.

The blocks were awarded on the basis of a low-cost work programme involving the purchase of an existing high-quality 3D seismic dataset and detailed geological and geophysical analysis.

In the same licencing round, United Oil & Gas was provisionally awarded a 10% interest in blocks 98/11b and 98/12 in the English Channel. The company said it expects to receive confirmation on those licence in the coming weeks.

“We are delighted with these awards, which, based on extensive technical work carried out over the available acreage ahead of the application were our primary focus for the 31st round,” said Chief Operating Officer Jonathan Leather.

“This is our second successful UK licencing round and our largest award to date. United has done well to be included in the roster of companies which have been successful in this round, including Chrysaor, Equinor, Chevron and Total,” Leather added.

Shares for United Oil & Gas were untraded on Monday, last quoted at 4.07 pence in London.

By Dayo Laniyan; dayolaniyan@alliancenews.com

Copyright 2019 Alliance News Limited. All Rights Reserved.

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Wind and gas projects keeping the southern North Sea busy

It is arguably leading the energy transition way for the UK, with multi-hundred to gigawatt class wind farms rubbing shoulders with significant gas production.

“We’re very much in the ascendancy,” said Simon Gray, chief executive of trade organisation East of England Energy Group (EEEGR).

“We now have off the east coast of England something like 56% of the UK’s offshore wind generation capacity and this is expected to go on increasing through to 2030.

“As the UK’s offshore wind capacity increases, we’re set to remain around the 50%-plus level.

“The reasons for that are simple and include shallow waters, a decent seabed for installing turbines, a good wind resource and easy access to the largest electricity markets in Britain: London, the south-east and the Midlands.

“And of course considerable quantities of natural gas are still being produced from the Southern Gas Basin, where new field discoveries continue to be made, albeit those are tight resources and therefore harder to develop and produce.

“We still have some of the largest volumes of decommissioning on the UKCS.

“The SNS is where the UK’s offshore story began in terms of gas and a considerable number of the platforms still out there are 30, 40, 50 years old.”
Change is in the air for the membership of EEEGR, whose supply chain membership is probably the most diverse of any energy trade body in the UK.

“Transition is the word on everyone’s lips,” Mr Gray said. “And that’s exactly where we are.

“We’re the part of the UK that is experiencing the greatest migration from fossil fuels towards renewables. And that process in theory needs to have been completed by 2050.

“Although gas is currently on the back foot because of weak prices, it still accounts for 28% of UK electricity generation compared with 2.3% from coal, 20% from nuclear and wind nearly 30%.”

In terms of indigenous UK gas production, the SNS accounts for around 30% via the Bacton terminal in Norfolk.

A major operation is under way to protect this strategically important facility from being engulfed by the North Sea as sea levels rise.

The £20 million-plus “sandscaping” is intended to protect a 5.6km stretch of coast by rebuilding beaches using huge volumes of sand.

Bacton is absolutely vital to current gas basin production and future development potential. And it handles significant volumes of imported gas via the North Sea’s hugely important interconnector network.

Gas has a critical transitional role to play for the next couple of decades at least and the SNS current revival is being usefully stimulated by the Oil and Gas Authority’s Southern

North Sea Tight Gas Strategy published in June 2017.

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UK GAS-Prices jump as demand surge outstrips supply

LONDON, Sept 9 (Reuters) – British prompt wholesale gas prices jumped on Monday as a spike in demand due to colder weather and lower wind generation outstripped supply.

* Gas for immediate delivery rose 5.05 pence to 28.50 pence per therm at 0745 GMT.

* Day-ahead gas was yet to trade although the contract was bid at 27.00 pence, compared to a closing price of 25.10 pence per therm.

* The system opened undersupplied by 20 million cubic metres (mcm) with demand forecast at 186.2 mcm and supply seen at 167.7 mcm, National Grid data showed.

* The demand figure was very strong compared to the summer months and was 72 mcm above the seasonal norm, the data showed.

* Demand was boosted by falling temperatures prompting gas heating in some households to be switched on – residential demand is expected at 84 mcm, about 10 mcm higher than last week.

* Gas-for-power demand was also higher, after wind generation dropped off significantly to 3.2 gigawatts (GW) from close to peak capacity at 12 GW on certain days last week.

* Gas for power demand for Monday is at 57 mcm compared to levels of between 30 and 40 mcm on most days last week.

* On the supply side, flows from Norway through the Langeled pipeline remained low at 7 mcm/day, ahead of a shutdown expected on Tuesday for annual maintenance until Sept. 24.

* However, four liquefied natural gas (LNG) tankers are now expected to arrive in Britain in the next seven days, a relatively high number compared to recent weeks.

* Gas send-out rates from LNG terminals tend to increase in the days leading up to tanker arrivals as the facilities empty their storage to receive the new cargoes.

* In the Dutch gas market, the day-ahead gas price at the Dutch TTF hub was up 0.3 euro at 9.70 euros per megawatt hour.

* Benchmark Dec-19 EU carbon contract was 0.19 euro higher at 25.27 euros a tonne. (Reporting by Sabina Zawadzki; Editing by Susan Fenton)

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Octopus Energy buys out rival to propel it into the big time

Octopus Energy has struck a deal to become one of the UK’s fastest growing energy suppliers after agreeing to buy a smaller rival.

The energy challenger brand told its staff on Wednesday that it has agreed to buy Co-op Energy, which supplies gas and electricity to about 300,000 homes.

Octopus, which supplies 850,000 customers, is expected to confirm early on Thursday that the deal will nudge its business past 1 million customers after only four years in the market.

The deal, thought to be worth more than £30m, propels Octopus to within a whisker of rival supplier Bulb Energy, which supplies 1.4 million customers and is the UK’s fastest growing new supplier.

It follows a flurry of deals within the energy market which is beginning to consolidate after a flood of new suppliers joined the market in recent years, many of which have proved financially unstable.

Co-Op Energy snapped up 160,000 customers from GB Energy Supply after it collapsed in 2016, and then gained another 130,000 customers after its takeover of Flow Energy last year.

The company, part of the Midcounties Co-op, has since run into financial trouble. It revealed deepening losses earlier this year in the Co-op’s financial report, which hinted that the supplier might be sold to protect the wider business.

Octopus Energy, which is owned by Octopus Group, is also loss-making but has the full support of its investment fund owner which has ambitions to grow the business to compete with the big six.

Octopus Group was an early backer of the property site Zoopla and backs Big Gym, Secret Escapes and Eve mattresses through its investment arm Octopus Ventures.

Its fast-growing energy supplier bought smaller rival Affect Energy last September and took on the customers of failed energy start-up Iresa in December last year.

It also won a lucrative contract to supply energy to M&S Energy customers that was previously held by SSE for nine years.

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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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