Weekend press round-up: Boiler tax set to be scrapped

In our latest review of sector coverage in the national media, the government is set to row back on targets forcing boiler manufacturers to produce more heat pumps. Meanwhile, Octopus Energy founder Greg Jackson warns that investment in energy infrastructure is being stifled in the UK; concerns are raised about cyber attacks on water companies and the UK registers its one millionth electric car sale.

Boiler tax set to be scrapped

The energy secretary is planning to scrap the so-called boiler tax in a move that will be welcomed by homeowners facing the prospect of having to spend money to replace an old appliance.

Under the government’s “clean heat” strategy, targets had been drawn up to help phase out gas boilers and deliver 600,000 eco-friendly heat pump installations a year by 2028.

The target was due to come into effect in April, when boiler manufacturers would be required to match, or substitute, 4 per cent of their boiler sales with heat pumps or face a fine of £3,000 for every installation they fell short by.

Even though the target had not come into force, manufacturers were already increasing prices on their gas boilers to counter the impact of the fines, with prices set to increase by up to £120 this year.

Claire Coutinho, the energy secretary, accused manufacturers of price gouging, which is when businesses heavily inflate the price of products that are in high demand.

She is preparing to scrap the 4 per cent target and fines after concluding that any government intervention was unlikely to prevent consumers from being hit with additional costs.

A government source said: “Boiler manufacturers have saddled families with indefensible price hikes — this is not right. We’re looking again at the policy, and expect manufacturers to do the right thing and remove their price hikes immediately.”

A formal decision has not been announced, Coutinho has held discussions with officials over several weeks on scrapping the “boiler tax”.

The Sunday Times

Octopus chief threatens to shift billions in energy investment overseas

British energy giant Octopus has warned that grid connection delays and planning hold-ups could force it to shift billions of pounds in investment overseas.

Chief executive Greg Jackson, who met with Chancellor Jeremy Hunt last week, as well as policymakers in France and Germany, said the UK must overhaul its electricity grid if it wants to boost domestic investment.

Long delays in the time it takes to get connected to the National Grid mean Octopus is facing waits of more than a decade to develop some projects. While the company waits, its investment is likely to go overseas, Mr Jackson said.

He told The Telegraph: “We have got access to billions of pounds of capital. We’d like to deploy that here in the UK but capital goes where it can be deployed.

“At the moment, it is easier to build a lot of infrastructure in France and Germany than here in the UK.”

As well as Britain, Octopus operates in France, Italy, Germany, Spain and Japan.

The company powers seven million UK households and is now valued at £6.2bn. It is spearheading Britain’s green energy revolution by rolling out thousands of solar panels, wind farms and heat pumps.

However, Mr Jackson said his business is being held back by a bureaucratic electricity grid.

“There’s a solar farm we want to build in County Durham and we won’t get a grid connection until 2037. That’s 13 years where that capital can’t be deployed.

“At the same time, we can deploy capital in other countries.”

Mr Jackson’s warning on investment comes days after Octopus’s energy arm posted its first-ever profit since its launch in 2015, a milestone that will prompt him to take a proper salary after limiting himself to the minimum wage since the energy crisis.

He refuses to say what his annual salary will be once it is reinstated in the coming weeks but it is likely to be in the region of £180,000 – £30,000 higher than what he was paid three years ago.

However, Mr Jackson, 52, said he will not be taking a bonus.

He said: “Octopus is not really a bonus culture. Very few people get bonuses and I think they drive short-term behaviour.”

This concession sets Mr Jackson apart from Chris O’Shea, chief executive of British Gas owner Centrica, who controversially received £3.7m on top of his annual salary of £790,000 in 2022. That was despite British Gas’ involvement in the prepayment meter scandal

The Sunday Telegraph

‘Elevated’ risk of hackers targeting UK drinking water, says credit agency

The credit rating agency Moody’s has warned that water companies face an “elevated” risk from cyber attackers targeting drinking water, as suppliers wait on permission from the industry regulator to ramp up spending on digital security.

Moody’s said, in a report to investors, that hackers are increasingly zeroing in on infrastructure companies, including water and wastewater treatment companies, and the use of AI (artificial intelligence) could accelerate this trend.

Last month, Southern Water, which supplies 4.6 million customers in the south of England, said the Black Basta ransomware group had claimed to have accessed its systems, posting a “limited amount” of data on the dark web. The same group hacked outsourcing firm Capita last year.

Separately, South Staffordshire Water apologised in 2022 after hackers stole customers’ personal data.

Moody’s warned that the growing use of data-logging equipment to monitor water consumption, and the use of digital smart meters, made companies more vulnerable to attacks. It said systems used in water treatment facilities were typically separated from the rest of the companies’ IT – including customer databases – but some systems had been more closely integrated to improve efficiency.

After a hack, companies typically have to employ specialist cybersecurity firms to repair systems, spend on communicating with customers, and face potential penalties from regulators. The UK’s Information Commissioner’s Office can fine firms up to 4% of group turnover, or €20m (£17m), whichever is higher.

Moody’s said that the cost of fixing systems, including resecuring and strengthening existing cyber defences and paying potential fines, will typically result in only a “modest increase” in debt levels if the incident is short-lived.

However, Moody’s cautioned: “The greater risk for the sector, and society, is if malicious actors are able to access operational technology systems to impair drinking water or wastewater treatment facilities.”

The agency said that water suppliers, the government and regulators had acknowledged the need to bolster cyber defences “given the growing sophistication of attacks on critical infrastructure, with state-aligned actors a recent but growing class of cyber adversary”.

The Guardian

Inside Amazon’s British wind power grab

When Amazon announced it was buying up half the output from one of Britain’s newest and biggest wind farms last week, it appeared like good news for Britain’s net zero ambitions.

The US giant committed to buying energy from Scotland’s Moray West wind farm before it was even built, bolstering its bid to power all operations with 100pc renewable energy by 2025.

However, amid the positivity, some industry sources claim Amazon and other global firms are embarking on an energy “power grab” that draws resources away from decarbonising Britain’s homes and businesses.

The deal completed by Amazon comes after Vodafone bought up the output from five solar farms last year, located in Norfolk, Nottinghamshire, Staffordshire, Buckinghamshire and Dorset.

Similar deals have also been struck by accountancy giant EY and Tesco, both of which have acquired energy from UK wind and solar firms.

Amazon, though, has gone further.

The tech company’s first Scottish wind farm, made up of 15 turbines on the Kintyre peninsula in Scotland, came online in 2021.

Moray West is the latest addition to its portfolio north of the border, where it is involved in 26 solar and renewable energy projects with a total capacity of around a gigawatt.

That is roughly the size of a large gas-fired power station and enough to power more than 600,000 UK homes.

This all means that Amazon’s operations, including both distribution and data centres, will become a lot greener.

Overall, the company’s carbon footprint is huge and its activities and products generated around 71 million tonnes of CO2 in 2022, although the bulk of that was produced by customers using its products.

Lindsay McQuade, director of energy at the company’s booming data centre division, Amazon Web Services (AWS), says: “Projects like Moray West will play a critical role in decarbonising Amazon’s operations and the UK grid, with this agreement demonstrating Amazon’s commitment to this ambition.”

Amazon is not alone in pursuing a corporate green energy strategy, as noted by Nathan Bennett, a director at trade body RenewableUK: “The market for renewable energy corporate power purchase agreements is growing at an extraordinary rate.

“Europe hit a record high last year with over 16 gigawatts of new renewables capacity, a 40pc increase on the year before.

“The appetite among companies is enormous, as they want to cut their electricity bills and support decarbonisation.”

The Daily Telegraph

Give clear view of net zero emissions plan, CBI tells chancellor

One of Britain’s biggest business lobby groups has called on the chancellor to set out a clear net zero emissions investment plan in the budget to give companies an incentive to spend money on the green transition.

The CBI has written to Jeremy Hunt ahead of his pre-election budget on March 6, demanding that the Treasury highlights gaps in green spending throughout the economy as part of a wide-ranging investment plan to ensure that Britain meets its legally binding commitment to reduce emissions.

The call comes as the Labour Party has begun to walk away from its promise to set up a green investment fund worth £28 billion, instead committing to additional climate spending only if it is consistent with the party’s planned fiscal rules.

In its letter, the CBI said that “it is acknowledged that the majority of investment needed to reach net zero will come from the private sector. But to date, there has been little policy clarity on a plan to incentivise investment.”

It said the government’s adoption of a “net zero investment plan” should “identify where green investment gaps lie and where private finance can be crowded in to close sectoral financial gaps, address market barriers and hit our net zero targets”.

The Times

Boost for Ben Houchen as Teesworks wins £100m wind farm deal

One of the world’s biggest wind farm developers has agreed to invest £100 million to build a 70-acre plant on Teesside to assemble the wind turbines for a vast new offshore project.

Danish developer Ørsted is building the factory on land at Teesworks, Europe’s biggest brownfield site and the location of the former Redcar steelworks which shut down in 2015.

The investment is seen as a boon for local Tory mayor Lord Ben Houchen days after he was cleared of corruption.

The assembly plant will play a crucial role in the construction of the Hornsea 3 project off the Yorkshire coast, part of the world’s biggest offshore wind farm.

Copenhagen-listed Ørsted, one of Denmark’s largest companies with a £19 billion market value, could announce the deal as early as this week.

Its Teesworks plant is expected to initially create about 200 new jobs, but will unlock hundreds of millions of pounds of investment once up and running, according to industry sources.

The Sunday Times

One million electric cars sold in the UK since 2002

The UK registered its one millionth electric car last month, despite a big drop in sales, new figures suggest.

New EV registrations by private buyers fell by a quarter in January, threatening to undermine the UK’s net zero promises.

Overall new car sales to private customers fell by 16% in the same period, the Society of Motor Manufacturers and Traders (SMMT) said.

The figures have sparked more calls for tax cuts to boost uptake among buyers.

More than 20,000 battery electric cars (BEVs) were registered in January, up by a fifth year on year and helped by generous tax incentives for company car users. It means that since 2002, one million of these cars have reached the road.

Fleet buyers – companies purchasing more than 25 units in one go – have been entirely behind the increase, with demand for BEVs growing by more than 40%.

But falling private registrations mean electric cars accounted for 14% of new vehicles sold in the UK in January — below the 2023 figure of 16.5%.

It has led to calls from the SMMT to renew calls for the government to use the upcoming budget to halve VAT on electric vehicles in order to boost demand from private buyers.

“It’s taken just over 20 years to reach our million EV milestone – but with the right policies, we can double down on that success in just another two,” SMMT boss Mike Hawes said.

“Manufacturers have been asked to supply the vehicles, we now ask government to help consumers buy the vehicles on which net zero depends,” he added.

According to the latest SMMT figures, the overall new car market grew in January, pushed by a large increase in fleet sales, which were up by a third.

This was despite a fall in in overall registrations of new private cars last month, which fell by 16%.

BBC News

Funds to help schools install subsidised car chargers and sell energy to drivers

Schools in England will be able to apply for grants to buy and install electric vehicle chargers, and then sell the energy back to motorists.

The Department for Transport (DfT) has announced that state-funded schools and other learning institutions will have access to a grant providing up to 75% of the cost to install chargers, with funding available for up to £2,500 per socket, up from the previous £350 limit.

The chargers can be used for staff and visitors, but the DfT officials said it could also help schools to generate revenue by making the power outlets available to the public.

The proposals are part of the UK Government’s Plan for Drivers which is seeking to accelerate the rollout of electric vehicle (EV) chargers as more drivers make the switch from petrol and diesel cars.

The Evening Standard

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.