Weekend press round-up: Centrica looks to convert Rough to store hydrogen

In our latest round-up of weekend’s papers, Centrica looks to spend £1.6 billion to convert the Rough gas storage site to hold hydrogen and it’s revealed the government’s new green bonds will not be used to invest in nuclear energy.  

Centrica ready to put £1.6bn into hydrogen storage site

Utilities giant Centrica is preparing to press the button on a £1.6bn overhaul of its Rough gas storage site in the North Sea so it can store hydrogen instead of methane.

The FTSE 250 owner of British Gas says repurposing the site roughly 18 miles off the coast of Yorkshire could create 3-4,000 jobs during construction and help develop the market for hydrogen to help meet climate goals.

Greg McKenna, managing director of Centrica Business Solutions, said the company is waiting for clarity on the Government’s strategy around hydrogen and what subsidy guarantees will be given to help the hydrogen industry scale up, before knowing whether to progress.

He said: “If we could get a decision this year, I think we could be up and running by 2025/26.

“You’re talking about a £1.6bn investment which will create thousands of jobs and help roles in the oil and gas industry move into the green economy.”

The Telegraph

Yes to wind, no to nuclear: the green bonds investment plan

The money raised through the Treasury’s new green savings bonds will not be used to fund any nuclear energy projects, despite the power source being a crucial part of the government’s ten-point plan towards net zero.

The term net zero means achieving a balance between the carbon emitted into the atmosphere and the carbon removed from it.

Investors might be able to help fund the government’s plans to “build back better and greener” as early as September, when it is expected that the first tranche of bonds will be launched.

Farnam Bidgoli, the head of environmental, social and governance (ESG) solutions at HSBC, said that the nuclear energy aspect had been scrapped in the process of working out suitable investments. “When doing our market research, we learnt that a lot of ESG and green investors exclude nuclear entirely,” she said.

The green savings bond, which was announced in the budget in March, will be launched by NS&I, the Treasury-backed savings bank. The bonds have a three-year fixed term, will be available for savers over the age of 16 with a minimum investment of £100 and maximum of £100,000 per person. The rates are not yet confirmed.

It will be the first time this type of product is available to retail (non-professional) investors. The government will launch two green bonds this year for institutional investors and raise a minimum of £15 billion by April next year — the largest initial amount raised by a green gilt.

These will form a key part of the government’s aim to “build back better and greener” after the Covid-19 pandemic and Brexit.

With the Cop26 climate conference of more than 200 countries being hosted in Glasgow this year, the green bond also shores up the UK’s green credentials. Ministers have drawn up plans for a carbon reduction scheme that could increase gas and petrol prices as part of an attempt to decarbonise the economy. The government will consult on the scheme before the conference.

The Times

Only batteries have the power to save British carmaking

The British government’s £100m-plus commitment to secure Nissan’s battery gigafactory for Sunderland has been like gadget-shopping on Amazon writ large: splurging on some new technology that has suddenly become essential – and then being immediately prompted to buy another six.

This time, though, duplicating the spending looks more sensible. More gigafactories – or plain old big battery factories – are not essential for the UK to transition to using electric vehicles (EVs). But they certainly will be if Britain hopes to keep making, selling and exporting its own cars.

While Britain is regarded as advanced in battery science and research, that is not the case in manufacturing. The only existing EV battery facility in the UK is already Nissan’s, supplying thousands of its bestselling Leafs. The £1bn investment announced last week, from the Japanese carmaker, its battery partner Envision and the taxpayer, heralds a first gigafactory, with almost five times the capacity and potentially much more.

The industry says that is welcome, but nowhere near enough. Nissan’s deal could create 6,000 new jobs, but the Society of Motor Manufacturers and Traders (SMMT) says 90,000 jobs are at risk without more gigafactories.

Driven by climate policy and Brexit, the industry is repurposing itself and jostling for position. Batteries, the fundamental component of electric cars, are mainly produced in Asia, which adds cost and subtracts value for European manufacturers.

David Bailey, professor of business economics at Birmingham Business School, says: “The industry is electrifying very quickly – we will see very rapid change over the next five to 10 years.” The cost of batteries is more than 80% lower than a decade ago, when they averaged $1,000 a kilowatt hour. “Once the cost gets down to about $100 a kWh, you’ll get parity with the cost of the internal combustion engine.”

That tipping point should be reached three to six years before the government enforces a switch away from new petrol and diesel cars in 2030, meaning electric vehicles become a cheaper – as well as greener – option for consumers, who buy some 2 million cars a year in the UK alone.

“We’re going to need a lot of batteries,” says Bailey. “They’re very heavy to move around, so transport costs are significant and car assembly is likely to gravitate to where batteries are being made.”

The other pressing factor is Brexit: the trade agreement with the EU means that by the end of 2026 the battery will have to be made in the UK or EU for an electric car produced in the UK to avoid tariffs. “Given that there is massive investment in gigafactories in the EU, the UK is lagging behind.”

By 2025, the SMMT forecasts the UK will have only a fraction of the production of other countries: 12 gigawatt hours of lithium-ion battery capacity. That compares with 91 GWh in the US, including the giant Tesla facility in Nevada, 32 GWh in France, and 164 GWh in Germany.

The Guardian

New Manchester park to use Victorian wells to water greenery

Manchester’s first public park for more than a century will use recently uncovered wells from the Victorian era to provide a sustainable source of water.

The 2.6-hectare (6.5-acre) Mayfield Park will sit behind Piccadilly station and provide play areas and floodable meadows. The £1.4bn development’s greenery will be watered using three Victorian wells that were discovered while archaeologists were on site to catalogue historical features of the site.

The area has been mainly derelict since the 1980s but is being redeveloped as part of a “transformational” 5.7-hectare regeneration scheme that includes plans for 1,500 new homes, retail, leisure and office space.

The water produced by the well has been declared safe for irrigation use, meaning it can be used to sustainably keep the park’s trees and plants lush, thereby reducing the burden on the mains supply.

The wells are among several important discoveries made at Mayfield, including a large Victorian bathhouse, as work on the redevelopment gains momentum.

In total, 12 wells have been located across the site but many were backfilled or damaged, with only three wells remaining viable. The largest of these was used originally to supply the Britannia Brewery, which was based on the east of the site in the late 19th and early 20th century.

The Guardian

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.