Weekend press round-up: National Grid and SSE ‘go offshore’

This weekend's press round-up explores moves by SSE and National Grid to protect investors in the face of renationalisation threats; Scottish Power's plans for a major expansion of onshore windfarms and Dale Vince, founder of green energy supplier Ecotricity, donating to the Labour Party.

Power giants National Grid and SSE go offshore to escape Jeremy Corbyn’s clutches

The two leading power companies have quietly shifted ownership of their British operations into offshore companies to protect against Jeremy Corbyn’s threat of cut-price nationalisation, The Sunday Times can reveal.

National Grid and SSE, which together own Britain’s entire gas and electricity transmission spine, this weekend confirmed they had created overseas holding companies in recent months to seek shelter from Labour’s renationalisation agenda. SSE has put its UK business into a new Swiss holding company; National Grid has shifted its gas and electricity businesses into new subsidiaries in Luxembourg and Hong Kong.

The moves are designed to build defences against Labour’s sweeping renationalisation plans. Switzerland, Luxembourg and Hong Kong have “bilateral investment treaties” with the UK that ensure investors are paid properly in the event of any state asset grab.

Labour last week unveiled its most radical manifesto in decades, pledging to reverse the Tories’ privatisation push of the 1980s and 1990s by renationalising the rail, water and electricity industries, as well as Royal Mail and BT’s broadband infrastructure division, Openreach.

That would hammer investors, including pension, insurance and sovereign wealth funds, which have prized the utility giants for their dependable and inflation-linked returns.

In May, The Sunday Times revealed Labour plans to acquire the water industry at a huge discount, rather than market value, to take account of “asset stripping since privatisation”. Shareholders would be compensated in government bonds.

Water companies that have already created overseas holding companies include Anglian and Yorkshire. Severn Trent is contemplating a similar move.

While offshoring cannot prevent renationalisation, the utilities hope it would force Corbyn to pay much more to seize the assets, or face lengthy court battles. It could also protect directors from litigation by disgruntled shareholders. It does not affect their UK listing or operations.

SSE, which has a market value of £13.6bn, confirmed it had moved its electricity distribution business — which supplies 3.7m homes in northern Scotland and southern England — plus its high-voltage electricity transmission network in Scotland to a Swiss holding company.

“SSE has incorporated in Switzerland a direct and wholly owned subsidiary company to acquire, oversee and hold investments or other financial assets,” it said. “The company has become the holding company for SSE’s electricity transmission and distribution networks through a share-for-share exchange. This is intended to support long-term investment in low-carbon infrastructure in SSE’s core businesses.”

National Grid, which is worth £31bn, connects England and Wales’s regional power companies with big power stations via almost 6,000 miles of power cables. It also owns the main gas transmission pipelines. “Labour’s proposals for state ownership of National Grid would be highly detrimental to millions of ordinary people who either hold shares in the company or through their pension funds — which include several local authority pension funds,” it said.

“To protect their holdings, and in line with our legal fiduciary duty to our shareholders, we have established holding companies in Luxembourg and Hong Kong. This has no financial benefit to the company and does not affect its day-to-day operations. It is solely to protect our shareholders’ interests.”

The Sunday Times

Scottish Power plans major expansion of onshore windfarms

ScottishPower has begun plans for a major expansion of onshore windfarm projects across Scotland in anticipation of a government U-turn on support for wind power projects.

The renewable energy arm of the big six power supplier has already considered almost 100 sites for a new generation of windfarm, using a smaller number of more powerful wind turbines to generate clean electricity. Most of the sites are in Scotland, but the company is also considering plots in Ireland.

Scottish Power expects the Conservative party’s block on onshore generation to be cast aside in the next parliament due to the growing need for cheap, clean energy to power the UK towards its climate goals.

Lindsay McQuade, the chief executive of ScottishPower Renewables, said she expects to see the next government match the ambition of the UK’s legislated climate targets with support for renewable energy development.

The government’s official climate advisers, the Committee on Climate Change (CCC), has said the UK will need to build at least 1,000MW of onshore wind every year for the next three decades if it hopes to meet its target to create a carbon-neutral economy by 2050. This steady rollout is necessary, in addition to building offshore windfarms at four times the present rate.

McQuade said this meant renewable energy developers must start planning now to have a hope of meeting the target. She said Scottish Power had “a pipeline of energy developments across the UK, particularly in Scotland, where there’s excellent natural resource”.

“Scottish Power is developing an ambitious pipeline of onshore renewables that could deliver investment, create jobs and power our lives in the most economic way possible – if the commitment of net zero is to be a reality, I expect to see support from government to match it,” she said.

The Tory party is under pressure to reverse its block on government support for new onshore windfarms, which was put in place by former prime minister David Cameron in 2015.

The clampdown blocks onshore wind developers from competing for support contracts, and caused the rollout of new onshore wind capacity to fall by nearly 80% last year, to the lowest level since 2011.

The CCC has warned that the UK is unlikely to be able to develop enough renewable energy projects without government-backed contracts. Even “subsidy-free” projects would need a government deal to help negate the investment risk and reduce costs, the committee said.

McQuade said there was “broad political consensus to decarbonise our economy as rapidly as possible so that we live and work in a clean, green and sustainable manner. We expect cross-party commitment to deliver a viable route to market for onshore wind, the cheapest form of new electricity generation.”

The Labour party, Liberal Democrats, Green party and SNP have all voiced support for reinstating support for onshore wind, and evidence has emerged that Tory supporters overwhelmingly back it too.

A survey over the summer for the Conservative Environment Network showed that 74% of people who voted Conservative in the last election support onshore windfarms. The survey revealed that only a third of Tory voters support fracking, and within months the government called for an immediate halt to fracking across England.

The Guardian

Solar farms can keep UK’s lights on even at night

Solar farms could soon play a vital role in the energy system 24 hours a day, after a breakthrough trial proved they can even help balance the grid at night. National Grid used a solar farm in East Sussex to help smooth overnight voltage fluctuations for the first time earlier this month, proving solar farms don’t need sunshine to help keep the lights on.

Lightsource BP, the owner of the solar farm, said an inexpensive tweak to the project’s electrical equipment meant it could help balance the grid with only two seconds’ notice. Kareen Boutonnat, the company’s chief operating officer, said: “We have proven that solar plants can play a larger role across the electricity network. But this is only the beginning.”

The breakthrough could mean that UK solar farms will soon help stabilise the energy grid at night, which could save £400m on grid upgrades or building new power plants. “Inverters” at the solar farm are usually used in the process of converting solar energy to electric current. But at night, when the grid is often less stable, the same equipment can adapt grid electricity to a healthier voltage.

Chris Buckland, technical director of Lightsource BP, said the inverter acts like a distortion mirror by reflecting the energy network’s voltage back to the grid at a slightly different level.

On blustery nights with plenty of wind power but little demand, the solar farm could help prevent the energy grid’s voltage from rising too high. It could also prevent the voltage from falling too low during still nights in winter when demand is often high.

The Guardian

Green energy tycoon gives £15,000 to Labour days before its wind turbines general election pledge

A green energy tycoon donated £15,000 to the Labour Party days before the party pledged to build thousands of new wind turbines and “enough solar panels to cover 22,000 football pitches.”

Official figures show that Dale Vince, the founder of Ecotricity, is Labour’s largest individual donor so far in the election campaign, having given the sum to the party on Nov 12, through his firm.

Mr Vince attended the Labour manifesto launch in Birmingham on Thursday, where the party committed to building 7,000 new offshore wind turbines, 2,000 onshore turbines, and solar panels spanning the equivalent of 22,000 football pitches.

Ecotricity operates 24 onshore wind farms, with a further four either awaiting construction or planning approval, according to its website. Mr Vince’s firm also operates a solar farm in Lincolnshire, and received planning permission for a further four.

Mr Vince, who previously donated to Labour in 2015 and 2018, described Jeremy Corbyn’s speech as “really inspirational”.

Mr Corbyn’s pledges to build more turbines and solar panels mark a victory for the renewables industry. Labour’s 2015 and 2017 manifestos made no specific mention of such schemes, instead committing the party to “deliver the energy mix we need” and invest in “renewable energy production”, amid opposition to onshore projects at the time, on the grounds of appearance and cost.

Following the launch, Mr Vince tweeted: “Just leaving Birmingham now, really inspirational listening to Jeremy Corbyn, he’s so genuine, so real. Poles apart from the dodgy guy leading the Tories. I got a copy of the little red book, the Green Industrial Revolution is chapter number one, good start.”

Yesterday Glyn Davies, a former Conservative MP who has campaigned against onshore turbines, said: “Dale Vince is a good businessman and I don’t suppose he’ll be making big donations for no reason.

“But I know from my own experience that he is in a small minority. There are people who want to build a lot of onshore wind turbines but here in Mid Wales, where they will destroy the landscape, people disagree.”

The manifesto chapter entitled Green Industrial revolution sets out how Labour intends to fulfill its ambition to put the country “on track” to reduce net greenhouse gas emissions to zero by 2030. Its specific proposals include the significant expansion of wind and solar farms across the UK, and that Labour would “trial and expand” tidal energy schemes. Ecotricity has proposed building tidal schemes in the Solway Firth, between Cumbria and Dumfries and Galloway.

Mr Vince previously donated £10,000 to Labour last year and £150,000 to the party in February 2015, under Ed Miliband’s leadership. As The Sunday Telegraph disclosed at the time, Mr Vince appeared to have benefited significantly from a generous subsidy introduced by Labour to encourage renewable energy projects.

Subsidies for wind and solar farms were cut under David Cameron following pressure from Conservative grassroots and backbenchers, while a change in planning rules made it more difficult to gain permission to build new schemes.  In August more than 150 MPs, including 35 Conservatives, wrote to Boris Johnson calling for more onshore wind farms in Britain.

Labour’s manifesto pledges on wind, solar and tidal energy adopted proposals that were included in 30 by 2030, an “expert briefing” commissioned by the party and published on Oct 24

On Nov 1 Mr Vince told a Labour event: “I’m really excited that we get the opportunity in this election to vote for a party that does get the climate crisis. Right now the biggest thing that any of us can do to fight the climate crisis is vote Labour.”

Following the manifesto launch, RenewableUK, which represents renewable energy firms, said: “We welcome Labour’s ambition to build much-needed new capacity by rolling out more onshore and offshore wind using our two cheapest power sources, as well as their championing of innovative tidal power and the expansion of energy storage and local community projects.”

Last month Mr Vince, who is also chairman of Forest Green Rovers football club, backed legal action intended to force Mr Johnson to delay Brexit. Yesterday he said: “Labour’s stance on green issues has been in the public domain for a long time. The manifesto launched this week only confirmed that.  “I support Labour because they have the only sensible Brexit policy, the greenest environmental and industrial policy and they are the only party focussed on social justice and greater equality in our country – and in whose hands the NHS is truly safe.”

Separately, Jeremy Corbyn has pledged to launch a £57bn scheme to compensate more than three million women who were born in the 1950s and were impacted by the increase in the state pension age from 60 to 65 since 2010.

The Telegraph