Weekend press round-up: Consultation on automatic switching due next month

In our latest review of sector coverage in the national newspapers, ministers are expected to lay out details of an automatic switching plan in July. Meanwhile, BP and Orsted are said to be locked in a battle over conflicting green energy projects in the North Sea, and there is an interview with the head of the new UK Infrastructure Bank.

Families will save on energy bills by being automatically swapped to cheapest tariff

Families will save hundreds of pounds on their bills by automatically being swapped onto the cheapest energy tariffs – as early as 2023.

Ministers will next month lay out the details of their radical plans, which will ban gas and electricity companies from whacking up bills when consumers don’t shop around for better deals.

The new ‘opt out’ system will effectively kill the ‘standard variable tariff’ and slash bills for millions of loyal customers who can’t or don’t switch.

It would automatically switch them on to a lower or equivalent tariff, and won’t penalise them if they forget their contract has ended and see their energy bills soar.

Standard tariffs tend to be more expensive as firms try to lure Brits away from their current supplier when their fixed-term deals end.

A consultation will launch in July to weigh up how best it will work.

The Big Six firms won’t be expected to keep rolling over customer deals without a green light forever, but ministers will fire the starting gun on a “competitive process” to help consumers get a better deal.

The shake-up will take considerable planning but officials believe the new regulations could be in place as early as 2023.

One insider warned: “It’s 25 million households, it’s quite a complex thing to set up.”

The consultation was originally scheduled for March 2021 but has been pushed back.

The Sun

Oil major BP and Danish power giant Orsted locked in battle over conflicting green energy projects in North Sea

Oil major BP and Danish power giant Orsted are locked in a battle over conflicting green energy projects in the North Sea.

The two companies want to use the same stretch of sea around 40 miles off the Yorkshire coast.

Orsted’s Hornsea Four scheme plans to build up to 180 wind turbines. Meanwhile, BP is leading a consortium that is developing a carbon capture project to store CO2 produced by heavy industry on Teesside and Humberside.

Industry sources said the two firms have clashed because BP has proposed to monitor the giant Endurance reservoir using vessels towing a series of enormous seismic ‘streamers’ around 400 yards wide and more than half a mile long.

The streamers – essentially buoyant marine cables that send and receive pulses to and from the seabed – would be too large to manoeuvre between Orsted’s turbines.

Insiders fear Orsted could have to scale back the number of turbines it plans to build from 2024 unless BP can come up with an alternative solution.

There have been discussions at a senior level between the two energy firms in recent weeks as they try to reach agreement on how the two projects can both operate successfully.

In the worst-case scenario, Orsted could have to scrap Hornsea Four and claim compensation from the taxpayer for licence fees it has spent on the project.

Orsted confirmed discussions with BP had taken place, but said it is confident that a solution would be found. A BP spokesman said conversations had been ‘constructive’.

Orsted will submit a development consent order to build Hornsea Four by September this year.

A significant part of the development overlaps with the stretch of seabed that needs to be monitored for the Endurance reservoir, which is operated by BP as part of the Northern Endurance Partnership that also includes Shell, Total, ENI, Equinor and National Grid.

Other industry partners for the NEP include Centrica, British Steel and Associated British Ports. frustrated by BP’s apparent reluctance to conduct trials of newer and nimbler survey technology that would allow carbon capture and storage projects to be monitored even if windfarms are built on top.

An industry expert said: ‘In general, if you insist on using conventional long seismic streamers, you can’t have wind turbines over them, as the risk of entanglement is too great. But there are other seismic techniques and technologies available which could alleviate this issue.’

Industry experts say the clash between windfarms and carbon storage projects is set to increase as the Government ramps up development of both technologies to

Orsted executives are said to be meet its climate goals of net zero emissions by 2050.

One renewables industry veteran said: ‘It’s going to become a common problem, because energy companies would like to consider most of the southern North Sea for carbon storage at some point, and it’s already got these wind sites all over it. This interference is going to become a bigger headache.’

Orsted said: ‘We absolutely believe that both projects can co-exist and have been working closely with BP to highlight and discuss the various options available to move forward. Effective planning and use of the seas is key to realising the potential of ocean-based renewable energy and it’s vital this is done sensitively and sustainably.’

BP said: ‘These projects are ground-breaking and complex and we are working closely and constructively to satisfactorily resolve these detailed issues with the Crown Estate – who license both these activities – Orsted, the UK Oil & Gas Authority and the Department for Business, Energy & Industrial Strategy.’

Mail on Sunday

Nicola Sturgeon’s independence dream shattered after Scots warned bills could soar by £189

The leader of the Scottish National Party (SNP) sent a warning to Prime Minister Boris Johnson for “picking a fight with the democratic wishes of the Scottish people” over a second independence referendum. Mrs Sturgeon said another vote “is the will of the country” and reaffirmed that it is a “matter of when not if”. It comes after Mrs Sturgeon, who served as Deputy First Minister during the 2014 vote, had her independence dream shattered when the country voted to remain part of the UK.

Electricity formed a key part of the battle as Scotland boasts one of the most favourable conditions in Europe for harvesting wind energy.

The Scottish government’s independence proposal stated that a single UK-wide market for each of electricity and gas should continue.

But the Government argued that it saw no basis to justify continued cost-sharing of a single integrated market and stated the arrangement “could not continue in its current form”.

They warned that household energy bills would increase by at least £38 per year and annual household bills could increase by up to £189 if the full cost of supporting renewable energy projects fell to Scottish bill payers.

At the time, the Scottish Government’s former Secretary for Rural Economy, Fergus Ewing, warned that England’s lights “would go out” without Scotland’s renewable energy.

The SNP said that a single UK-wide market for each of electricity and gas was the only logical step forward.

They also argued that their policies to tackle fuel poverty and improve energy efficiency would be funded by the Scottish Government, rather than energy companies.

They stated that this would allow companies to reduce bills by around five percent, or approximately £70, every year.

But, according to a report by Herbert Smith Freehills, the UK may not be as reliant on Scottish energy as Mr Ewing insinuated.

They said in April: “In 2019 Scotland produced 15 percent of the UK’s electricity, but only used 10 percent of it, while England used 82 percent having produced 73 percent.

“More importantly, net exports from Scotland are largely a function of its high proportion of wind power capacity so only when these are generating electricity Scotland exports.

“At such times the main impact on the rest of the British market is for gas-fuelled power stations and other flexible capacity to reduce generation.

“Without the more diverse continuing British electricity market to draw on, Scotland’s reliance on intermittent wind generation might become more challenging.

“In this regard, we note that the Scottish government proposes to make substantial use of carbon capture and storage which could be a low carbon route to maintaining flexible fossil fuel generation and also making use of North Sea related assets.

“It would appear to be in the interests of both an independent Scotland and the UK to continue cross border trade in electricity for the sake of security of supply and lower costs for consumers.”

Daily Express

Scottish government provides £26m to help green energy transition

An energy transition zone in Aberdeen is being allocated £26m by the Scottish government to help the transition from oil and gas jobs to green energy.

This almost matches funds provided by the UK government.

The zone aims to transform the area into a hub for cleaner energies such as offshore wind and hydrogen.

Planned projects include manufacturing for floating offshore wind farms, a skills academy and facilities for testing hydrogen power.

The Aberdeen Energy Transition Zone (ETZ) is being built south of Aberdeen harbour and is expected to directly support 2,500 green jobs by 2030, alongside a further 10,000 transition-related jobs.

The Scottish government money comes from its five-year £62m energy transition fund.

The fund has already provided £6.5m for a global underwater hub as well as £4.65m to Aberdeen City Council to expand its hydrogen bus fleet.

Further funding announcements are expected to be made in the coming months.

Net Zero, Energy and Transport Secretary Michael Matheson said: “The Scottish government is wholly committed to ending our contribution to climate change by 2045, and doing so in a way that ensures a just transition to net-zero, making sure no-one is left behind.

“One year ago, we launched the £62 million energy transition fund, recognising the impact of Covid-19 on the energy, but also the need to support our energy sector to grow and transition in a fair way.”

He said urgent, collective action was needed to ensure transition to a net-zero economy.

“By capitalising on our strengths in energy, innovation, and our skilled workforce, Scotland can show the rest of the world how it’s done – and ensure our people, businesses and communities are at the forefront of our new green economy,” he said.

BBC News

The new bank with £22bn to spend on levelling up and turning Britain green

A shiny plaque is still being glued to the wall and wiped clean in the lobby of a Leeds office as the finishing touches are put in place ahead of a visit from Rishi Sunak, the Chancellor. It’s day one of the new UK Infrastructure Bank (UKIB) and Chris Grigg, its chairman, is well aware of the symbolic importance of taking big investment decisions here in the Yorkshire city rather than 170 miles south in London.

“It’s important not to be in London because of that statement about being focused on the whole country,” says the former boss of commercial property giant British Land.

“That difference in perspective of where people live [and] the broader community you will inevitably interact with … I think that will be helpful to get a different perspective, yes.”

Grigg has £22bn of firepower at Britain’s first infrastructure bank and two key missions: financing projects to drive levelling up, and helping the transition to a net zero economy.

It is one of two major Treasury projects in the North announced by Sunak; the other is the new “Treasury North” campus based an hour up the A1 in Darlington.

Grigg says the bank must be part of a wider infrastructure push but adds that UKIB can help fill funding gaps the private sector may be reluctant to close.

The UK has one of the most privatised infrastructure markets in the world; riskier and early stage ventures, such as carbon capture and electric car charging infrastructure, will most likely need a nudge from the public sector to get under way.

“If we can involve the private sector in the projects they wouldn’t have been willing to do or able to do, we will make a difference,” the ex-Barclays banker says.

“It’s better to think about it in that micro sense rather than believing you can cure world poverty in a single act because history tells you that is quite hard.”

The government-backed bank will be able to deploy an initial £12bn for investments in equity and debt, and a further £10bn in government guarantees to persuade private investors to take the plunge.

UKIB expects to take the total investment amount it can unlock to £40bn by tapping the private sector and working with local councils, targeting projects in clean energy, transport, digital, water and waste.

It will help to make up for funding lost from the European Investment Bank after Brexit and is part of efforts to boost overall public investment to £600bn over the next five years, the highest level as a share of GDP since the 1970s.

Doubts remain over whether the bank itself can move the dial on its twin missions, however. Experts argue that major upgrades to transport infrastructure are needed in the big cities outside London. Others warn the investment in infrastructure needed for the climate transition are far higher than current levels.

The Office for Budget Responsibility has noted that under the Government’s current plans, funding from UKIB will “be equivalent to around a third of the financing that was provided by the European Investment Bank (EIB) prior to the EU referendum”.

The budget watchdog also said the initial capabilities of the bank – which admittedly has a smaller scope than the EIB – would have a negligible impact on the economy’s growth prospects. Does Grigg lack the firepower to help solve the two biggest post-Covid challenges facing Boris Johnson’s administration?

Grigg admits that his new bank “is never going to be the whole solution” and says private sector money is needed “to move the dial sufficiently”. He insists there is “plenty of capacity available” and the funding will represent a “material amount” after drawing in additional private investment. But he is eyeing a bigger role for the bank after the initial five-year plan outlined by the Treasury.

“There’s enough to make a difference. Like any other organisation over time if we’re successful, which I very much hope and expect that we will be, that puts us in a position where we would expect to contemplate the possibility that the Government will go ‘do you know what, we might give you a bit more money’.”

Grigg says the steps forward will be “obvious” to ministers but the bank first must deliver on its initial firepower. If successful, “history tells you that we’ll find a way” of boosting funding, he adds.

“We will be able to point to a bunch of things that we have done where we’ve made a difference … If we haven’t done that, frankly they shouldn’t give us any more money.”

Grigg also believes the bank’s role goes beyond basic growth calculations and can “make a difference at the town and city level”, as well as advancing its climate and levelling-up goals.

“We want to be able to say we have created something that’s made a difference.”

Sunday Telegraph

As part of its Times Earth series, The Times has profiled the potential for mini nuclear reactors, floating wind turbines and low-carbon heating options. Subscription required.

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.