Weekend press round-up: EDF warning of plant closures limits Britain’s nuclear options

In our latest review of sector coverage in the national newspapers, EDF admits that more nuclear power plants are at risk of early closure. Meanwhile, there is a report on the investment boom in energy technology companies and suggestions that sewage is being discharged into rivers at a scale at least 10 times greater than Environment Agency prosecutions indicate.

EDF warning of plant closures limits Britain’s nuclear options

EDF’s announcement last week that it was closing the Dungeness B nuclear plant in Kent seven years early punched an unwelcome hole in Britain’s low-carbon power supplies. Now, The Times can reveal that further such blows are likely to follow as EDF admits that two other plants are also at risk of early closure.

The French energy giant is bracing for safety issues at Torness in Scotland and Heysham 2 near Lancaster that could force both to shut years before their planned 2030 closure dates.

The disclosure shines a spotlight on the failing health of the nuclear fleet, raises questions about Britain’s ability to keep decarbonising electricity supplies this decade and adds renewed impetus to the debate over new nuclear plants.

Dungeness is one of Britain’s eight nuclear plants, which until recently had together generated about a fifth of the country’s electricity needs. EDF acquired them in 2008 and secured regulatory approval to significantly extend their lifespans. Only the most modern plant, Sizewell B in Suffolk, has ever been expected to keep running beyond 2030, but EDF aimed to keep all seven of the older, advanced gas-cooled reactor (AGR) stations running until at least 2023, bridging the gap until new plants such as its Hinkley Point C project were supposed to be built.

“Existing nuclear can hand over directly to the next generation of nuclear power stations without the need for more fossil fuel generation,” it claimed in 2014.

The plan has not worked out. The new-build programme has faltered with only Hinkley Point C under construction, and that delayed until 2026. Now it is proving unattainable to extend the life of some of the old plants. EDF has already announced that Hinkley Point B and Hunterston B, the first two AGR plants to open in 1976, will shut by next year rather than 2023 as planned because of cracking in the graphite cores that has already caused prolonged safety outages.

Dungeness B, which has been offline since 2018 for maintenance, will not restart and run until 2028 as planned, despite investment of more than £200 million. Richard Bradfield, chief technical officer at EDF, said it faced insurmountable risks stemming from poor decisions during the plant’s uniquely troublesome 18-year construction. Steel boilers have corroded and cannot be replaced, and there are problems with components in the part of the reactor that holds the fuel. “The risk associated with that component is, ultimately, we could drop fuel,” he said. “That’s an unacceptable position and a contributing factor to our decision.”

How long can the other four AGR plants last? That depends on when cracks in the graphite cores emerge, as they did at Hinkley and Hunterston. EDF has ploughed £200 million into studying that issue to establish what level of cracking can be tolerated safely. Another two plants, Heysham 1 and Hartlepool, are expected to start cracking soon and are due to shut by March 2024 — although Bradfield said EDF was “reviewing the possibility” it could run them slightly longer if they did not develop cracks by 2023.

The two newest AGR plants, Torness and Heysham 2, are not due to shut down until 2030, but Bradfield warned that the likelihood of cracking meant “it could be earlier”. They have already generated almost as much power in running for 33 years as Hinkley and Hunterston have in 45 years. “That’s important because it’s the irradiation or the amount of electricity that’s generated that effectively is the input to when the graphite cores will start cracking,” he said. When cracks emerge, the plants will have only three or four years left. EDF is bracing to see cracks soon and “the probability will increase over the next few years”.

Even without more early closures Britain faced a looming gap in nuclear power supplies, said Tom Greatrex, of the Nuclear Industry Association. Losing five plants by March 2024 meant nuclear capacity would fall by more than half. Greatrex predicted that this would stall the process of decarbonising the electricity system, arguing that although Britain was building more wind farms, with nuclear plants shutting “you’re not actually making any progress, you’re standing still at best”.

Iain Staffell, senior lecturer in sustainable energy at Imperial College London, estimated that the loss of Dungeness “will add 6 per cent to the country’s electricity sector emissions in 2022” with more electricity from gas-fired plants filling the gap.

“It’s not as though we haven’t been saying for a long period of time that this fleet is coming towards the end of its life and if you want that firm low-carbon capacity you need to do something about it,” Greatrex said. “The failure is in public policy in enabling that fleet to be replaced quick enough.”

The Times

UK ‘energy tech’ draws backing at home and overseas

As the pandemic triggered record plunges in UK energy demand last year, some electric car drivers were making money from surplus supply.

A new breed of electricity tariffs allows customers using “vehicle-to-grid” chargers to top up their batteries when electricity consumption is low and sell it back at a profit when demand is higher.

“Best performing customers are making a net benefit of over £500 a year and the extreme examples quite a bit beyond that,” said Conor Maher-McWilliams, head of flexibility at energy supplier Ovo’s technology arm Kaluza.

Bristol-based Ovo and London’s Octopus are the biggest of a small group of energy suppliers whose “intelligent” software platforms underpinning such tariffs are attracting attention from international investors, with a flurry of deals helping them pass billion-pound valuations.

The rise of companies specialising in energy technology, or “entech”, as rivals seek access to their software marks the latest front in a radical shake-up of the European utility sector.

A series of acquisitions and asset sales over the past decade has transformed energy groups, which once owned everything from oil and gas production arms to household supply businesses, as they navigate the global shift away from fossil fuels.

A series of market reforms to improve competition in the UK household supply market has led to an explosion of new entrants since 2010, although not all have survived in an industry where margins are notoriously thin.

“Flexible” or “agile” deals that incentivise off-peak electricity consumption are expected to become commonplace as weather-dependent renewables’ share of generation capacity increases and consumers gain access to storage via electric vehicles or home batteries.

Flexibility services, where companies can profit by using their vast customer bases to help grid operators smooth out variations in electricity supply and demand, are viewed by many utilities and analysts as a strong source of future revenues as energy systems become more complex.

Toby Ferenczi, director of Ovo’s international business, said “there aren’t really many equivalents” to the UK energy tech companies that are now expanding internationally. He said the UK market had become a test bed for energy technologies because it was one of the first in the world to liberalise.

“There’s been a few companies like Ovo and Octopus that have had the time to build up the scale and the technology necessary . . . to enable this [energy] transition to happen.”

While the expanding UK scene has drawn praise — including from Prime Minister Boris Johnson during a visit to Octopus’s London office — some observers question whether software licensing deals will be as profitable as investing in renewable generation.

“Entech branding can help companies boost their valuations. However, I don’t expect it to be a huge money spinner,” said Elchin Mammadov, senior utilities analyst at Bloomberg Intelligence. “The addressable market is just not as big as building solar and wind farms or supplying energy to customers,” although he added that taking the business overseas could “increase the size of the potential market”.

But Octopus chief executive Greg Jackson insists that “in terms of gross profit”, energy supply and technology licensing “are almost equivalent to each other”.

Octopus is yet to release accounts for years that cover its latest licensing deals. Results for the year to April 2020, released in recent weeks, show it made a £47m net loss on revenue of £1.2bn, a number it put down to “continued investment in rapid growth”.

Jackson says Octopus’s revenue this year will be “over £3bn” and “a good chunk of that is software revenues”. Octopus spoke to 43 potential investors as part of its fundraising last year, Jackson said, highlighting the global interest in so-called UK entechs.

“Any time we chose to drive profit” instead of reinvesting in the businesses, Jackson said, “we would be making a nine-digit profit figure”.

See Utility Week’s deep dive report into the future of the energy retail market here

The Financial Times

Ban on home gas boilers threatened by heat pump shortfalls

The government’s plan to tackle climate change by banning gas boilers in new-build homes is likely to be hampered by a shortage of heat pump installers, limited domestic manufacturing capacity and a lack of consumer awareness, a report has found.

The future homes standard will require low-carbon alternatives to gas boilers, such as electric heat pumps, in all new homes by 2025. But EY, the consulting giant, found that there were only about 1,200 qualified heat pump installers in the UK, while almost 10,000 will be required by 2025.

Heating and powering homes accounts for about 22 per cent of the UK’s greenhouse gas emissions and must be cut to meet the government’s target of net zero emissions by 2050.

Most heat pumps are made in Asia, which means a significant increase in domestic manufacturing capacity could be required to meet the government’s aim of installing 300,000 heat pumps a year within four years, the EY report found. Heat pumps typically cost between £6,500 and £8,600 more than a new energy efficient gas boiler, with running costs of £95 to £110 a year.

Nicola Pitts, of the Independent Networks Association, which commissioned the report, said: “No public awareness and engagement campaign has taken place with consumers so far. It is clear that one size does not fit all for consumers and this could lead to a lack of demand for the first homes delivered under this standard.”

A workable cross-government plan was needed with “a clear planning framework, timely and ‘right sized’ utility connections, a developed low-carbon heating system supply chain and sufficient numbers of skilled fitters”.

The policy is being phased in with a consultation due in 2023 on the full technical specifications of new homes, focused on insulation, glazing and low carbon heating, including heat pumps. The policy is not set to be finalised until 2024, less than a year before it is due to be implemented.

Utility Week covered the INA report here

The Times

Illegal sewage discharge in English rivers 10 times higher than official data suggests

Water companies are being allowed to unlawfully discharge raw sewage into rivers at a scale at least 10 times greater than Environment Agency prosecutions indicate, according to analysis to be presented to the government.

The number of prosecutions of English water companies for unlawful spills from sewage treatment plants in 10 years are just a tiny fraction of the scale of potentially illegal discharges, the research presented to the environment minister, Rebecca Pow, this week will suggest.

Prof Peter Hammond, visiting scientist at the UK Centre for Ecology and Hydrology, will tell Pow that weak regulation, underreporting by water companies of potentially illegal discharges and a failure to hold companies to account mean there has been unchecked dumping of untreated sewage which would have resulted in ecological damage.

His analysis covers a 10-year period from 2010, when the regulations changed to allow water companies to self-report spills from storm overflows which might be illegal.

The Environment Agency issues permits to wastewater companies to allow them to discharge untreated sewage into rivers after heavy rainfall to relieve pressure in the system.

The conditions include a requirement that water treatment continues to a minimum level set down in the permit, while raw sewage is being released into rivers.

Hammond has examined the scale of breaches of this permit requirement and he believes there is gross under-reporting by water companies.

His data has been drawn from environmental information requests (EIRs), examination of permits issued by the EA to sewage treatment works, analysis of the rates of flow of untreated and treated sewage at treatment works, and the stop and start times of raw sewage discharges which are recorded on telemetry known as event duration monitoring.

In response to an EIR, the EA catalogued 174 prosecutions of water companies between 2010 and 2020 for breaches of this condition across more than 1,000 sewage treatment plants.

But Hammond’s analysis snapshot of 83 sewage treatment plants suggests in the same period there were at least 2,197 potential breaches.

The permits do not require the companies to measure or record that they are continuing to treat a minimum amount of effluent. This was a “calamitous error”, which suggests water companies were allowed to carry out potentially illegal discharges of raw sewage on a scale 10 times greater than the Environment Agency has prosecuted, said Hammond.

Growing pressure on the government and the EA as a result of investigations by the Guardian and Panorama led to the creation of a storm overflow taskforce by Pow. She has asked for Hammond to present his findings to her at a meeting next week.

“The evidence suggests that in the last decade, ‘early’ dumping of untreated sewage to rivers has been at least 10 times more frequent than EA monitoring and prosecutions suggest,” said Hammond.

“For rivers, wildlife and environment there has been unchecked dumping of untreated sewage which would have resulted in ecological damage.”

Temporary permits issued by the EA to water companies to allow them to discharge raw sewage are 11 years old, in some cases. For example, the Oxford sewage treatment plant owned by Thames Water has had the same temporary permit since September 2010.

The wording reveals how the watchdog allows the company to release solid waste into rivers – including faeces, sanitary towels and condoms – as long as they try to clean up afterwards.

The permit reads: “Where the discharge … results in unsatisfactory solid matter being visible in the receiving waters, or on the banks of the receiving waters, beach or shoreline … the permit holder shall take all reasonable steps to collect and remove such matter as soon as reasonably practicable after the discharge has been reported.”

Pollution from raw sewage discharges by water companies directly into rivers, chemical discharges from industry and agricultural run-off are key sources of pollution, according to data released by the EA last year. Only 16% of waterways – rivers, lakes and streams – are classed as in ecological good health, the same as 2016. Recent research by Prof Jamie Woodward has suggested untreated sewage is the main source of microplastics found in river sediment.

The EA said: “Where there is evidence, the Environment Agency uses a full range of enforcement options ranging from advice and guidance through to prosecution.

“We know the impact major pollution incidents can have and, while water quality has improved dramatically over the last decade, we are committed to improving it further – so far in 2021 the EA have concluded 2 prosecutions against water companies with fines of £2.3m and £4m.”

The Guardian

Britain must put words into action over emissions, CBI warns

The director-general of the CBI has urged the government to put its green rhetoric into action so companies can reap the benefits of moving to net zero.

Tony Danker wants environmentally friendly buildings and transport strategies, battery gigafactories and incentives for green businesses.

He said that international efforts to decarbonise were “way off track” and that Britain must move from “ambition to action” to achieve net zero by 2050.

Before Cop26, the UN climate conference in Glasgow this year, the government is under pressure to lead the world by example.

Danker, 50, said that accelerating the UK’s transition would lead to economic prizes but that companies were waiting for blueprints from the government to unleash a wave of business innovation, investment and delivery.

The government aims to install more than 600,000 heat pumps a year by 2028 as part of a green buildings drive. Danker said that a new delivery body that managed a national deployment plan for heat decarbonisation was needed as Britain lacked the financial, regulatory or delivery frameworks to meet the 2028 target.

Announcing timeframes for the next round of offshore wind leasing by Cop26 would demonstrate commitment to the investment and growth of green technologies, he added.

Danker also said the government’s electric vehicle plan should be published by the end of the year and that ministers should commit to seven gigafactories for battery production.

Nissan is said to be progressing with plans to build a battery factory in the UK in 2024. It is said to be in advanced talks with the government and is expected to make an official announcement in the coming months about the outcome of the discussions.

Last year the government outlined a ten-point plan for a green industrial revolution that it said would mobilise £12 billion of government investment, and potentially three times as much from the private sector, to create and support up to 250,000 green jobs.

Opening the CBI’s Road to Zero virtual conference this morning, Danker will say: “The world has no room for failure. The climate crisis is worsening and currently we’re way off track.”

The Times

Pub chain fined £90k for contributing to fatbergs in Oxfordshire

One of the country’s largest pub management companies that owns Toby Carvery and Harvester, has been ordered to pay more than £90,000 after allowing huge amounts of fat and oil to get into the Thames Water sewer network in Oxfordshire.

Mitchells & Butlers Leisure Retail Ltd, which owns pub and restaurant chains including Toby Carvery, Harvester and Miller & Carter, was accused of failing to prevent cooking fat, oil and grease entering the sewers at The Turnpike pub in Yarnton, dating back to 2017.

The pub management company appeared at at High Wycombe Magistrates’ Court on May 28.

The company pleaded guilty to breaches of the Water Industry Act 1991 and was fined £75,000, which is the highest amount handed out for this section of the Act. The company also had to pay £3,000 in compensation and costs of £13,000.

Anna Boyles, who oversees Thames Water’s sewer protection team explained that a build up of fat can cause blockages.

She said: “Fats, oils and greases from cooking are hugely damaging if they go down sinks and into the pipe network because when they cool, they congeal and form disgusting blockages – known as fatbergs.

“These blockages risk sewage backing up through the system and can even flood properties and cause catastrophic environmental damage in the form of pollution, so they’re something we take extremely seriously.

“We work closely with thousands of food outlets to help them install the right grease management equipment in their kitchens and, while the majority try very hard to put things right, we have no option but to take matters to court if issues are not corrected.

“Our network protection team is now working with the Mitchells & Butlers head office to ensure training, grease management and communication is improved throughout the whole estate.”

It is the second time Thames Water has prosecuted a company for allowing fat to enter the sewers, after a landmark case in March which saw a Henley-on-Thames pub and its landlord fined more than £16,000.

Oxford Mail

Prices for new cars rising five times as fast as wages

New cars have become increasingly unaffordable, with prices rocketing up to five times faster than wages over the past decade, according to research.

A study has found that some car prices have more than doubled since 2011, whereas earnings have risen by one fifth over the same period.

The rise is believed to have been driven by an increase in the use of technology and safety features. A switch to electric and hybrid vehicles is also believed to have pushed up production costs, leading to an increase in prices for cars generally.

The increase may push some car owners into holding on to older, more polluting, cars for longer rather than buying new models. It has also led to a sharp rise in the number of motorists buying cars using finance deals, where a vehicle is leased for a monthly charge, plus interest.

More than nine in ten cars are now purchased using finance, despite concerns over the system. In January the Financial Conduct Authority introduced a ban on commission deals where brokers get more cash for signing up drivers to high-interest-rate plans, in effect rewarding them for achieving a poor deal for the consumer. The change could save motorists £165 million a year, it said.

However, Moneybarn, the vehicle finance company that produced the study, insisted that the system enabled drivers to have cars they might not be able to buy outright.

The research analysed the prices of cars in 2011 and compared them with the cost of the same models this year. It found that 79 out of 86 models had increased in price more quickly than the relative rise in wages, which was 22.2 per cent.

The Jeep Wrangler, a 4×4, had the biggest rise, the study said, increasing by 117.3 per cent, from £22,515 to £48,920 — more than five times the rise in wages. The price of a Peugeot 3008, an SUV, rose by 117 per cent to £37,310. The Peugeot 508 saloon increased by 95.2 per cent to £36,010, and the Mercedes-Benz V-Class, a people carrier, rose by 93.1 per cent to £54,660.

The two cars with the lowest price rises were both Nissans. The price of the electric Leaf has remained unchanged for a decade at £25,990, and the Navara 4×4 pick-up increased by 9.2 per cent to £22,975.

The Times

Kwasi Kwarteng: Britain bangs the drum for greener global future

This weekend the UK brought the world’s democracies together to the beautiful Cornish coastline to discuss and address the most pressing global challenges of our time.

One message at the G7 summit has been made loud and clear – building back greener is our best chance to build a brighter future for all. As we rebuild our cities and towns after the pandemic, we cannot afford to miss this opportunity for the UK to lead the charge and pursue a global green recovery. The UK is already a world leader in this space, with our renewable energy sectors thriving – creating new industries and thousands of long-term jobs across the country, with plenty more to come.

While coal may have powered our country’s first industrial revolution, it is wind energy that will power our economic recovery.  Last year, we were coal-free for over two months – and just two weeks ago, we broke a new record, with wind power making up nearly half of Britain’s electricity grid for the first time.

Take Teesside and the Humber: two, true British industrial success stories. We recently invested £95 million into two new offshore wind ports to be built along the East Coast, creating 6,000 new jobs and a huge export boost for the country.

And as of March this year, sales of electric cars have skyrocketed by nearly 90 percent with plug-in hybrid sales up by a staggering 152 percent.  The government’s steps to accelerate and support the uptake in eco-friendly vehicles is set to support 40,000 jobs by 2030, at the same time as slashing carbon emissions.

All these show how the UK is going green, but also creating jobs and growing the economy. We have shown the world that green and growth can go hand-in-hand.

Our strong expertise and position at the cutting edge of the latest advances in new technology – powered on by private enterprise, competition and the free market – will play a huge part in how we meet our legal commitment to eliminate our contribution to climate change by 2050.

And these key factors – investing in renewables; switching to electric vehicles and creating new jobs – are all at the heart of the Prime Minister’s ambitious Ten Point Plan for a green industrial revolution.

But as we all know, the UK cannot do this alone. We, as the G7, have a moral responsibility to support other smaller and developing nations in going green. This is in Britain’s national interest.

If we want other countries to shift away from the polluting technologies such as coal, we have a responsibility to support them to do that.

The UK has already led by example. In 2019, we committed to doubling our investment into international climate finance to £11 billion and since June 2020, the UK has committed £350 million directly to support green recoveries across Africa and Asia and Latin America.

But we know there is more to be done to build on this progress ahead of the UN Climate Change summit, COP26, in Glasgow later this year.

That’s why this weekend, the G7 leaders have kicked off a new initiative, investing high quality, private finance into vital infrastructure around the world, from railways in Africa to wind farms in Asia.

This programme will ensure developing countries have access to better and faster finance, while encouraging the global shift to renewable energy and sustainable technology.

The decisions made this weekend by the G7 and all world leaders at the COP26 conference later this year will be absolutely crucial in the global fight against climate change, having a major impact on whether the world’s nations can ultimately meet their climate goals and turn the tide on global warming.

As we look to reopen, recover and rebuild the global economy, we will not miss this once in a lifetime opportunity to build back greener together, putting green growth at the heart of the worldwide COVID-19 recovery.

Daily Express

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.