Weekend press: U-turn on ‘interventionist’ energy efficiency campaign

Our latest roundup of national news coverage from the weekend includes more signs of in-fighting among the Conservative party over the cancelling of a public information campaign on reducing energy demand; a revenue cap for renewable generators moves closer to becoming reality; Octopus progresses its takeover deal for Bulb and The Rivers Trust accuses the Environment Agency of being missing in action.

Energy use advice campaign pulled due to cost, Zahawi says

A public information campaign to help people reduce energy bills this winter was pulled by No 10 on the grounds of cost, a cabinet minister has said.

The campaign to encourage household energy saving would have cost up to £15m, Nadhim Zahawi told the BBC‘s Sunday with Laura Kuenssberg programme.

The PM’s office raised objections to the plan, the BBC reported on Friday.

And asked about the possibility of winter blackouts, Mr Zahawi said these were “very unlikely”.

Amid concerns about rising household energy costs, the government has said it would limit average bill rises to £2,500 through government borrowing, at a cost of £60bn for six months.

To help people save energy and cut costs, the Department for Business, Energy and Industrial Strategy (BEIS) had been preparing a public information campaign.

But Prime Minister Liz Truss is reported to have been “ideologically opposed” to the campaign, fearing it would be too interventionist.

Cabinet minister Mr Zahawi, the Chancellor of the Duchy of Lancaster, told the BBC that the campaign would have cost up to £15m, and denied that it being dropped indicated the government was divided.

He said such a campaign was unnecessary because the National Grid, which distributes energy across the UK, and regulator Ofgem were running similar campaigns.

“What the prime minister quite rightly […] has done is to say: ‘We don’t need to spend £14m or £15m on another campaign, if National Grid and Ofgem are doing that work’,” he said.

Mr Zahawi said that information on saving energy was also already on UK government websites.

“That is, I think, being prudent with taxpayers’ money. It isn’t a divide,” he said.

Following a warning from National Grid that UK households could lose power for up to three hours at a time this winter, Mr Zahawi said that scenario was “very unlikely”.

“I’m confident that the resilience is there, that people can enjoy their Christmas,” he said.

Martin Pibworth, a managing director at energy firm SSE, said that investment the UK had made in renewables “gives us a little bit more security of supply compared with our European neighbours”.

He said the “weaponisation of gas supplies by the Putin regime is clearly quite a big issue in terms of the [market] volatility that is being caused”.

But he said there are other risk factors including French nuclear generation being lower than normal, and the drought affecting Europe this summer having had an impact on hydro-electric power.

However, he said “what protects the UK a bit more is renewable investments it has made historically, and actually this is a great opportunity to think how we can increase those investments to get better energy security going forward”.

Ms Truss has pledged to beef up the UK’s energy security by speeding up the deployment of renewables, although she is against solar farms on “productive agricultural land”.

Her government has also said it would launch new licences for North Sea oil and gas and has lifted a moratorium on fracking.

Ms Truss has insisted that fracking would only go ahead with “local consent”, and ministers are considering proposals from fracking firms to offer more money to communities to persuade them to give permission.

BBC 

France reassures UK on maintaining winter electricity flows

France has said it should be able to provide Britain with power at critical moments if electricity supplies come under strain this winter, despite problems with nuclear reactors that have forced it to rely on imports. Grid operators in France and Great Britain have been in discussions about energy supplies in recent months, with authorities on both sides of the Channel signalling they will need imports to avoid power cuts this winter.

France is Europe’s biggest power exporter. But a record number of outages and maintenance stoppages at its fleet of 56 nuclear reactors — which reached a peak in the middle of this year when more than half were offline — have for the first time turned the country into a net importer.

The problems in France have compounded western Europe’s energy crisis in the wake of Russia’s decision to shut off gas exports via the Nord Stream 1 pipeline at the end of August.

Fears about possible energy shortages this winter escalated last week when National Grid, the company that oversees Britain’s electricity and gas systems, warned of the potential for rolling three-hour blackouts in the worst-case scenario that is unable to secure sufficient gas and power supplies from the continent, particularly during prolonged cold periods.

However, French grid operator RTE told the Financial Times that France would probably still be in a position to export power to Britain at moments of extreme stress. “France and the UK don’t have their peak times at the same moment,” said Thomas Veyrenc, RTE’s executive director in charge of strategy.

“You can have a situation in which France is exporting to Britain but importing from all other countries. We can have a position as a net importer but still be an exporter to the UK at moments when [it] is running into difficulties,” Veyrenc added. France shares three subsea electricity power cables with Britain.

During a normal winter, the UK relies on imports from France to meet demand, particularly during the peak hours of 5pm-8pm. But the UK has been a net power exporter to France this year because of the problems with the French nuclear fleet. British officials are also cautiously optimistic that flows between the two countries can continue.

France’s electricity needs are generally greatest between 8am and 1pm rather than in the evening because of its large industrial base, UK officials said.

This could mean flows switch directions at different times of the day to meet peak demand in both countries.

Nevertheless, analysts remain nervous about whether energy supplies will continue to flow across borders in Europe this winter.

The FT 

Renewables companies warn UK revenue cap could deter investment

Renewable energy companies will tell UK ministers this week that a planned cap on the revenues they generate from sky-high wholesale power prices must not be more punitive than a similar EU policy — or they risk an investment exodus to Europe.

The UK government is drawing up plans for a temporary revenue cap, similar to one already outlined by the European Union as part of efforts to lower wholesale energy prices, which closely track those of gas and have surged since Russia’s full-blown invasion of Ukraine.

Legislation, which would be needed to institute a cap, is expected as early as this week. Energy industry officials involved in discussions with the UK government say negotiations over the level of a cap will continue this week, with a meeting expected as early as Monday.

The proposals could affect companies including EDF Energy, RWE, Octopus Energy, Scottish Power and SSE. Renewable energy companies warn that a UK revenue cap must not be set so low that it stifles investment in low-carbon technologies such as wind and solar, which will be needed to reach the country’s 2050 net zero emissions target.

“It should at least be closely aligned with [that of] the EU,” said one person with knowledge of the discussions. Otherwise, ministers risked “spooking investors” and sending a signal that Britain was a more hostile location to invest in than continental Europe, the person added. Another person involved in the discussions added that not all companies “would care about the cap if it was at a [relatively] high price”.

Under the EU’s plans, non-gas generators have to pay member states the “excess profits” they generate beyond a threshold of €180 per megawatt hour.

Energy companies say the UK government’s proposals effectively amount to a windfall tax — something prime minister Liz Truss has said she is ideologically opposed to, even though she has maintained an additional 25% “energy profits levy” on oil and gas producers introduced by the former chancellor Rishi Sunak in May. Owners of low-carbon schemes such as onshore wind and solar farms have made particularly big profits from the spike in electricity prices since Russia launched its war in Ukraine because they receive state subsidies on top of wholesale rates under a legacy “renewables obligation certificates” scheme that dates back two decades.

Newer technologies such as offshore wind are governed by a different system known as “contracts for difference” that already limits the price they receive for their output, although agreements cover less than 20% of total renewables capacity in Britain.

In a meeting between the UK government and electricity generators at the end of September, officials said they had been considering numerous possible benchmarks for setting a price cap, such as wholesale power prices before the energy crisis.

A price of £50-£60 per megawatt hour was mentioned as a starting point for negotiations although officials have since privately indicated that the final price would be substantially higher. No final decision on the level of the cap has been taken.

The FT 

Watchdog was missing in action, says nature charity

A charity has accused the Environment Agency of being “missing in action” at the height of the pandemic after figures revealed inspections of companies’ monitoring at sewage treatment plants dramatically.

Each year the regulator inspects the self-monitoring that water companies undertake for discharges into rivers from the 6,327 wastewater treatment works across England and Wales to ensure the data withstands scrutiny. Between 2015 and 2019 there was an average of 475 inspections a year.

However, statistics released under freedom of information rules show inspections more than halved in 2020, to 223, before increasing last year to 334. The lack of oversight coincided with a period of water pollution incidents in English rivers that led the Environment Agency to threaten water bosses with jail sentences.

Christine Colvin, from The Rivers Trust, said: “Self-monitoring by the water companies can only work in a highly transparent and accountable environment. This was missing in action during 2020 and 2021 with the low level of visits.

“It’s now clear that complacency cannot continue and the public want urgent action to stop sewage pollution.”

Political pressure on water companies to tackle sewage spills is intensifying. Last week Ranil Jayawardena, the environment secretary, vowed to increase maximum fines from £250,000 to £250 million.

Inspections have recovered this year. There have been 434 already, suggesting that figures will return to pre-pandemic levels by the end of the year.

A spokesman for the Environment Agency said: “Site inspections of wastewater treatment works ran at a reduced rate during the pandemic in line with government advice to minimise the risk to staff, water company personnel and the public. This does not mean that regulation decreased.”

However, sources said that inspections could have been prioritised. One insider at the regulator said: “The Covid excuse is nonsense as both agency and water companies were key workers, unless they class these inspections as very low priority. Also, inspections can always be made up over a year, and the agency chose not to.”

Most Covid-related restrictions were relaxed in spring 2021. In another sign that suggests the drop could have been avoided if given greater priority, The Times understands there were several attempts to make checks remotely.

One source at the regulator said resourcing was the problem. “The inspections side has been pared back to the bone. The reason [for the fall] was a reduction in resources to the agency.”

Colvin said: “We need strong regulation. We need a regulator equipped to do the job, and site visits are an essential component of that work.”

Philip Dunne, Tory chairman of the environmental audit committee, which published a damning report on the state of England’s rivers in January, said: “It is clear reliance on self-monitoring has been part of the problem of sewage discharges in recent years. It is therefore more important than ever that audits and inspections carried out by the Environment Agency are robust.”

The Times 

Octopus Energy reportedly closing in on takeover of Bulb

Octopus Energy is reportedly closing in on a takeover of its rival Bulb in a deal that will set the final bill to the taxpayer at an estimated £4bn.

Ministers at the Treasury and the Department for Business, Energy and Industrial Strategy (BEIS) have been informed that a sale of Bulb’s customer base of 1.6 million would be the most favourable outcome, according to Sky News.

Octopus Energy is said to be hoping to agree on a deal for Bulb, which has been under public ownership for almost a year after its collapse in November, by the end of the month.

Industry sources reportedly said the government and Teneo Financial Advisory, Bulb’s special administrator, were getting ready to sign an agreement to sell the company to Octopus by the end of October.

The transaction, which Sky reports has the backing of Ofgem, the industry regulator, would aim to be completed in December, an insider told the broadcaster.

Octopus Energy, which is run by Greg Jackson, has been reported to be pursuing a £1bn taxpayer package to secure a Bulb takeover. If the deal is completed, it would bring to an end months of uncertainty surrounding Bulb, which is the UK’s seventh-biggest residential power supplier.

The government has had to spend billions of pounds on gas to supply Bulb customers amid soaring wholesale gas prices and Russia’s invasion of Ukraine.

Octopus and Ofgem both declined to comment, while Bulb did not immediately respond to the Guardian’s request for comment.

A government spokesperson said: “The special administrator of Bulb is required by law to keep costs as low as possible. We continue to engage closely with them to ensure maximum value for money for taxpayers.”

The Guardian

My three-point plan to improve standards in the water industry

Sarah Bentley, chief executive of Thames Water, for The Times  

Recent reports of leaks and sewage pollution have shone a spotlight on the water industry. People have every right to be aggrieved when their expectations for water supply and waste management are not being met, especially when high inflation is exerting upward pressures on bills.

When I started at Thames Water two years ago, I found a business performing poorly for customers, with Victorian infrastructure struggling to cope with how we live today. My priority is to revitalise Thames Water and I have assembled a new leadership team with one clear focus: to fix the basics first.

The root cause of the water industry crisis today is an absence of resilience, borne of decades of neglect, failures to prepare for climate change and a growing population. In the past water companies did not invest enough in modernising their networks and the results of this short-termist approach are plain for all to see. Today, Thames Water is supported by patient shareholders who have opted not to take a dividend for the past five years and are underwriting a turnaround plan that will see us invest £2 billion more in the network than we will receive from bills. This programme aims to progressively cut incidents of sewage pollution, act more quickly on leaks and upgrade aged piping. Our progress in delivering the turnaround, leading to improving levels of service day-by-day, is how my leadership will and should be judged.

But this will not be enough. As we focus on fixing the problems of today, we must act now to build resilience for tomorrow. The scale of the challenge demands urgent and systemic reform with a shared undertaking that our industry needs to work better for customers.

This agenda for reform should focus on three key areas. First, we need to place sustainable water and waste management at the heart of our planning regime: reducing the amount of drinking quality water flushing toilets or washing cars; recycling rainwater from roofs, patios and driveways; and improving drainage to cut sewage pollution. Resolving these issues can reduce the risk of flooding and make water supplies more resilient. Water needs to be central to all new planning and housing development, including retro-fitting homes and businesses. We’ve woken to the climate crisis and we need to wake up to the importance of water. If we don’t take a more joined-up approach the problem of sewage pollution, flooding and water shortages will become more difficult and more expensive to fix.

Second, the regulatory environment has to encourage responsible long-term investment into our sector. The goal must be to drive a step-change in the supply of the services on which we all depend. To deliver this we need to move beyond short-termism and plan for future generations. That will require us all to think beyond the five-year regulatory cycles — an approach that will attract more patient investors, such as pension funds. Enduring improvements in customer service are the surest route to stable and dependable returns.

Third, we need a new co-ordinated approach to expedite critical national projects. The Thames Tideway Tunnel, which was started in 2016 and on course to be in use in 2024, is an example of how new infrastructure with huge societal benefits can be delivered at pace. The 15-mile super sewer will prevent millions of tonnes of untreated sewage from entering the Thames, protecting the river for at least the next century. It shows what can be achieved when the government articulates an ambition and regulators and planners work hand in hand.

The Times

Beach turned into crime scene at protest 

A beach has been turned into a crime scene as part of a protest against sewage releases by Southern Water.

An estimated 2,000 people showed up on Tankerton Beach in Whitstable to voice their anger at the private water utility company.

The demonstration was organised by SOS Whitstable. Co-founder Ed Acteson described the attendance as “incredible” and says the message of the demonstration was: “Enough’s enough”.

“Over the last year Southern Water has continued to pollute the sea, break promises and now they’re even hiding sewage releases on their interactive map,” he said.

As part of the protest, activists taped off a large portion of the beach as a crime scene, before putting down dozens of numbered markers under which they lay news articles reporting on Southern Water’s polluting activities.

“The impact the sewage releases have is three-fold,” explained Mr Acteson, 37.

“Firstly there’s massive environmental damage. Secondly, there’s the risk to public health – we get a lot of reports from people who have become ill after swimming, and thirdly there’s the economic harm to Whitstable.

Whitstable’s reputation as a seaside town has been damaged hugely over the past few years, not as many people want to come and visit here anymore and that impacts the whole high street.

“We’ve put together a petition calling for the entire industry to be put back into public ownership and just in the last month we’ve got 195,000 signatures.”

A spokesperson for Southern Water said: “We understand the concerns of those who have been protesting this weekend.

“Protecting the environment is a key priority for us and we are leading the water industry in developing solutions to reduce our reliance on permitted storm overflows.

“These are the combined sewage system’s pressure valve at times of increased rainfall, to avoid flooding people’s homes and communities – but we agree that these are not an acceptable measure.

“Working in partnership with councils and other stakeholders, we are finding ways to remove rainfall from the sewage network, utilising Southern Water engineering and nature-based solutions.”

Kent Online

Ministers hope to ban solar projects from most English farms

Ministers are planning to ban solar farms from most of England’s farmland, the Guardian can reveal.

The new environment secretary, Ranil Jayawardena, is understood to oppose solar panels being placed on agricultural land, arguing that it impedes his programme of growth and boosting food production.

To this end, say government sources, he has asked his officials to redefine “best and most versatile” land (BMV), which is earmarked for farming, to include the middling-to-low category 3b. Land is graded from 1 to 5, and currently BMV includes grades 1 to 3a. Planning guidance says that development on BMV land should be avoided, although planning authorities may take other considerations into account.

Currently, most solar farms are built on and planned for 3b land, so this move would scupper most new developments of the renewable energy source.

Extending BMV to grade 3b would ban solar from about 41% of the land area of England, or about 58% of agricultural land. Much of grade 4 and 5 land is in upland areas that are unsuitable for solar developments.

During her speech at the Conservative party conference last week, the prime minister, Liz Truss, reeled off a list of “enemies”, including green campaigners, who make up what she characterised as the “anti-growth coalition”. However, green campaigners say blocking the building of renewables would make her government part of such a group.

Chris Hewett, chief executive of the trade association Solar Energy UK, said: “The UK solar sector is alarmed by attempts to put major planning rules in the way of cheap, homegrown energy. Solar power is the answer to so many needs and policy demands: it will cut energy bills, deliver energy security, boost growth and help rural economies. Ranil Jayawardena’s opposition to solar farms must surely make him part of the anti-growth coalition.”

To get this policy over the line, Defra would have to get signoff from the Department for Business, Energy and Industrial Strategy (BEIS) and the Department for Levelling Up, Housing and Communities.

It is understood that BEIS ministers are against the move, as they are trying to show that they are not only deregulating the oil and gas industry and fracking, but also renewable energy.

However, No 10 is understood to be sympathetic to the idea, with Truss having vowed to block solar farms on agricultural land during her election campaign.

Dustin Benton, policy director at the thinktank Green Alliance, said: “It would be odd to redefine ‘best and most versatile’ agricultural land to include soils that aren’t of high quality, just to block solar farms. It sounds like a tactic that the ‘anti-growth coalition’ might employ.

“The UK desperately needs to expand renewables so we don’t have to pay the extortionate cost of gas. Solar is one of the fastest energy sources to be deployed, so we should move quickly to build more in light of the gas crisis.”

Andy Mayer, chief operation officer at the Institute of Economic Affairs thinktank, said: “The government cannot on the one hand declare war on ‘the anti-growth coalition’, while on the other enforcing a right to veto developments, or waste time and money with excessive regulation.

“Farmers and green entrepreneurs are itching to provide solutions to the false claim that energy and food security cannot coexist. The City of London is ready to fund them. Long-term solutions to grid congestion and storage are possible. Market reform can provide a level-playing field for competition. Communities can benefit through more personal rewards from permitted development.

“That is what a supply-side revolution to encourage growth while supporting a transition to a cleaner greener future looks like. Not rigid rules, plans and targets that confuse, contradict and encourage opposition to change.”

Ed Miliband, shadow secretary for climate change and net zero, said: “If the government goes ahead with blocking solar energy, it will be yet more unilateral energy disarmament from a government that has a 12 year record of driving up bills by blocking clean power.

The blame for this plan lies squarely with the prime minister who has repeatedly opposed solar energy, the cheapest, cleanest, quickest form of power–and it will be the British people who pay the price in higher bills, higher gas imports and energy insecurity.”

The Guardian

Electric cars won’t be cheaper to own than petrol motors until 2026

Petrol and diesel cars are set to remain cheaper to own than electric vehicles until well into the second half of this decade due to soaring electricity prices.

Soaring electricity prices mean the “tipping point” for electric cars when they become cheaper than petrol or diesel will now not be reached until 2026, according to analysts at EY. Their previous forecast was 2023-24.

“Higher energy costs are offsetting the reduction in vehicle [costs],” says Maria Bengtsson, partner and UK electric car lead at EY. “So the tipping point has moved further out and we are looking tentatively at 2026.”

The slipping threshold risks setting back the government’s ambition to phase out fossil fuel cars as part of net zero targets. The sale of petrol and diesel cars is set to be banned by 2030, potentially creating problems for drivers if the tipping point for value continues to be pushed back.

Ms Bengtsson said there is scope for drivers to cut costs by seeking out better deals or changing their charging habits. The range in cost for charging is much bigger than the range of fuel rates for petrol and diesel cars, and can add a large amount to the cost of running a battery-powered vehicle.

“It’s really important as a consumer that you consider your charging options and make sure you get the best rates,” Ms Bengtsson said. “If you do, that tipping point hasn’t really changed.”

EY’s analysis covers the total costs of ownership, both buying and running the car, over three years on a Personal Contract Purchase finance plan.

Currently, electric vehicles are more expensive to buy than petrol and diesel versions, although costs are coming down. Battery-powered benefit from less tax to pay, as no fuel duty is due, and lower maintenance costs.

Drivers typically try to charge at home where electricity is cheapest. Charging points on the street, at work or on the motorway can be far pricier.

EY looked at the cost of running an EV based on typical charging habits and predicted electricity prices, including the unit rates for the next two years set by the UK Government under its “energy price guarantee”.

It also looked at factors including the cost of the car, registration tax, insurance, maintenance and repair costs.

Ms Bengtsson estimates that the gap between the costs of owning an EV and a petrol car will narrow to single digit percentage points by 2025 , before closing in 2026.

The Telegraph

Utility Week’s weekend press round-up is a curation of articles in the national newspapers relating to the energy and water sector. The views expressed are not those of Utility Week or Faversham House.