Weekend press round-up: EVs ‘will be cheaper to produce than fossil fuel vehicles by 2027’

In our latest review of sector coverage across the national newspapers, there are new estimates around the falling costs of electric vehicles. Meanwhile, Scottish Power chief executive Keith Anderson is interviewed and a trial by Northumbrian Water to extract hydrogen from waste byproducts is profiled.

Electric cars ‘will be cheaper to produce than fossil fuel vehicles by 2027’

Electric cars and vans will be cheaper to produce than conventional, fossil fuel-powered vehicles by 2027, and tighter emissions regulations could put them in pole position to dominate all new car sales by the middle of the next decade, research has found.

By 2026, larger vehicles such as electric sedans and SUVs will be as cheap to produce as petrol and diesel models, according to forecasts from BloombergNEF, with small cars reaching the threshold the following year.

The falling cost of producing batteries for electric vehicles, combined with dedicated production lines in carmarkers’ plants, will make them cheaper to buy, on average, within the next six years than conventional cars, even before any government subsidies, BloombergNEF found.

The current average pre-tax retail price of a medium-sized electric car is €33,300 (£28,914), compared with €18,600 for a petrol car, according to the research. In 2026, both are forecast to cost about €19,000.

By 2030, the same electric car is forecast to cost €16,300 before tax, while the petrol car would cost €19,900.

The report’s timeline for cost parity is more conservative than other forecasts, including one from the investment bank UBS, which has predicted that electric cars will cost the same to make by 2024.

However, forecasters are in agreement that the cost of new batteries will continue to fall in the coming years.

The new study, commissioned by Transport & Environment, a Brussels-based non-profit organisation that campaigns for cleaner transport in Europe, predicts new battery prices will fall by 58% between 2020 and 2030 to $58 per kilowatt hour.

A reduction in battery costs to below $100 per kWh, is viewed as an important step towards greater take-up of fully electric vehicles, and would largely remove the financial appeal of hybrid electric vehicles, which combine a battery with a conventional engine.

The Guardian

Wind groups fall back from giddy heights

A difficult quarter for the world’s biggest wind companies has taken the shine off several renewables darlings amid an accelerating sell-off in clean energy shares.

Many have suffered stock declines over the past two weeks after bad news in first-quarter earnings including unexpected cable damage for Orsted, missed profits by Vestas, and lowered earnings guidance from Siemens Gamesa.

Wind and solar companies were among the best stock market performers last year, defying pandemic turmoil in the broader energy market thanks in part to government climate pledges and big inflows into new clean energy exchange traded funds.

Observers say the sector is normalising after steep gains last year.

“When you fly really high, you can fall further down, and they were really on fire last year,” said Casper Blom, analyst at ABG Sundal Collier. “There is probably a recalibration under way.”

The decline comes amid a broader fall in clean energy stocks over the past three months, which analysts put down to fears over profitability, rising interest rates and increased competition.

“For these companies that are expected to see high growth for many years, the interest rate really matters because it means a higher cost of capital,” said Blom.

Meanwhile, inflows into clean energy ETFs have slowed in recent months, with the funds’ market capitalisations falling 26 per cent from their February peak, according to analysis of 10 large clean energy ETFs by Berenberg.

The 10 funds reported inflows of $13.7bn over the past 12 months, primarily late last year and early this year, but outflows have increased during the past two months.

“ETF flows were one of the drivers of the strong share prices last year, and those have perhaps slowed,” said Henry Tarr, analyst at Berenberg. “The flows into clean energy are more neutral at the moment.”

Concerns about profitability and competition have also risen for several of the biggest clean energy stocks, which typically trade at much higher multiples than the rest of the energy sector.

The Financial Times

Sewage waste to become green hydrogen fuel in water company trials

The cars of the future could be powered by hydrogen extracted from waste in a process being tested by UK water companies.

A new trial led by Northumbria Water is taking ammonia in sewage and using to create hydrogen, which could be used to fuel green buses, boilers and even aeroplanes.

Ammonia, a toxic substance, is currently processed into nitrogen which can be safely released into the atmosphere, but the water company hopes the more useful hydrogen could make its sewage treatment cheaper and more sustainable.

Working alongside scientists at the Universities of Warwick and Cranfield, researchers are beginning a trial to test the process on a small amount of the sewage coming through the company’s plant in Howdon, on Tyneside.

The process works by first stripping the ammonia out from the sewage stream and then “cracking” the ammonia at high temperatures.

Each tonne of sewage could provide two grams of green hydrogen, Northumbria Water estimated. The hydrogen could then be sold to fuel vehicles.

Buses and lorries are the most likely to be widely reliant on the experimental fuel in the shorter term, though Hyundai and Toyota already offer hydrogen cars and several companies including BMW and Mercedes Benz have models in development.

The plant treats sewage from around a million people, with around 230,000 tonnes flowing through on a dry day.

Clive Surman-Wells, innovation partnerships manager at Northumbria Water, said the process was still relatively experimental. “We’re not really aware that it’s being done anywhere in the world.

“Producing hydrogen from ammonia is not a brand new thing, but doing it in the water industry is, from waste byproducts,” he said.

Researchers at the company said they hoped the new process would be more sustainable because the current system requires waste liquids to go through an energy-intensive process to remove ammonia.

They hope to also use waste heat from the plant to reduce the energy-intensity of the hydrogen process.

Another trial taking place this year will see Coventry University and Severn Trent collaborate on similar technology.

The Daily Telegraph

UK grid installs new kit to stop green power going to waste

National Grid Plc is installing new technology on the U.K. network that will remove bottlenecks of renewable power and free up enough power to supply a million homes that would otherwise be wasted.

When it’s very windy, too much electricity is sometimes being supplied to the network in one place, with parts of the system reaching maximum capacity while others are below their limit. The so-called smart valves will automatically route power to parts of the grid where there is available capacity.

Reaching carbon neutrality in the grid by the middle of this decade will cost the industry 3 trillion pounds ($4 trillion), according to the network operator. That makes it essential to maximize existing power lines and to use all of the electricity generated from the nation’s wind farms.

The smart valves will allow the company to “harness the full potential of renewable generation and lower costs for the end consumer – all helping toward our ambition of being able to operate the system at zero carbon by 2025,” said Julian Leslie, Head of Networks at National Grid’s electricity system operator unit.

The majority of the U.K.’s wind capacity is in the North Sea. The network can’t always cope with moving all the electricity at once to where it’s needed so National Grid is sometimes forced to pay operators to stop turbines spinning.

National Grid is installing 48 smart valves on five of its circuits at three substations in northern England, making 500 megawatts of new network capacity available at each site. The work will be completed by the end of the year. The company is also considering rolling out the same technology at two more sites in the autumn, which would unlock a further 500 megawatts.

Bloomberg

Keith Anderson: ‘This year is our showcase. Get it right and money will flood into the country’

On the surface someone who trained in accountancy and works in a heavily regulated industry would appear to be an unlikely revolutionary.

Yet Keith Anderson is urging the incoming Scottish government to rip up the old way of doing things and be bold in creating the right conditions for a post-pandemic recovery.

Scotland’s cluttered public sector, with agencies, authorities and taskforces in abundance, is one area where he advocates a “bonfire of the quangos”. The Scottish Power boss has a reputation for plain speaking in a corporate world where personality can often be dampened by media training and public relations.

This year he also took on the position of chairman at CBI Scotland and it was in this guise that he spent 45 minutes talking through what he would love to see our elected leaders do in the next parliament.

For Anderson, 56, the main focus should be on ensuring a strong economic recovery but he strongly feels there is a chance to do things differently. “We need to rip up the rule book and start again. And we need to do it really, really quickly,” he said. “This is not about government interfering in independent regulation or doing away with due process. It is about making sure [these processes] are right for this world, not the one of 10 to 15 years ago.

He describes his ideas for economic recovery as “really not difficult” to implement. For one, he would like to see a collated list of every major infrastructure project in Scotland. Then he believes we should find ways to accelerate those in order to create jobs and investments right now rather than five to ten years down the line.

Scottish Power said in November that it would spend £10 billion by the middle of this decade as part of the UK’s green recovery. It has a number of things in its pipeline, including building the largest green hydrogen production facility in the UK. That would be adjacent to its Whitelee wind farm at Eaglesham, south of Glasgow, which is also the largest in these islands. The development there would also include a 62,000-panel solar farm and battery storage.

Hydrogen burns cleanly and has been identified as having the potential to play a central role in reducing emissions. Scottish Power estimates that the Whitelee electrolyser, which could be ready in 2023 subject to planning permission, could produce eight tonnes of green hydrogen a day. That would be enough to fuel 550 buses travelling from Glasgow to Edinburgh and back again.

The company is also involved in a project to create a hydrogen hub at the Port of Cromarty Firth in the Highlands, which may see the fuel used for transport and industrial processes such as heating up stills at whisky distilleries.

Anderson and a group of colleagues in the energy sector recently took about a month to put together a detailed framework of the large projects that are likely to go ahead within the next two years. He would love to see a similar exercise replicated across all industries as a way for the Scottish government to highlight the investment opportunities which are available.

He said: “In every way, whether you look at Scotland within the UK or the UK within Europe, there is a big competition for projects, finance and supply chain. The faster you move and the bigger you make the prize, in terms of the number of projects, the more likely you are to be at the head of the queue and win the game.

“The biggest challenge for this country just now is we are not creating a big enough, attractive enough pipeline.” As an example he points to the recent licensing round to build offshore wind farms in English and Welsh waters. It was widely hailed as a success, with the six projects selected likely to lead to billions of pounds of investment and thousands of jobs.

Read the full interview (subscription required) here 

The Times

Aquila Energy Efficiency Trust lists in London to raise cash for green schemes

A German fund management group is planning to raise as much as £150 million on the London stock market by listing a trust that will invest in street lighting and other energy-saving schemes.

Aquila Energy Efficiency Trust will join a queue of companies waiting to float when it announces its plans today.

It has already identified a €211.5 million pipeline of assets to invest in, including projects to install solar panels on the roofs of warehouses and other large industrial buildings.

The trust, which will be managed by Aquila Capital, based in Hamburg, is also examining energy-efficient street lighting as well as smart meters that measure hot water and heating consumption in multi-occupancy buildings. Other areas include charging points for company fleets of electric vehicles. The aim is to find schemes that deliver contractual cashflows and stable returns.

Alex Betts, senior investment manager at Aquila Capital, said the trust would target an area that typically receives less attention than other initiatives to cut carbon emissions. “A huge amount of capital has been going into renewables but actually much, much less into energy efficiency,” he said. “A politician can’t go and cut a ribbon at an energy efficiency investment whereas they can on a big wind turbine or a large-scale solar plant.”

Aquila, which was set up 20 years ago, runs about €12.5 billion in assets and has more than 450 employees around the world. It focuses on sustainable investments and its portfolio includes hydropower plants and wind parks.

The Times

Mr Biomass: how MP Nigel Adams was bowled over by Sanjeev Gupta

The MP for Selby and Ainsty in North Yorkshire took to the stage at the Fontainebleau hotel, a luxury resort on the Miami beachfront, to address the crowd on his favourite subject: biomass.

“It is a tragedy that so much of the UK’s support for renewables has been spent on technologies that are more expensive and far less reliable than biomass,” said Nigel Adams at the gathering of almost 500 energy executives in October 2014.

Adams was preaching to the converted. It was his annual jaunt to the US Industrial Pellet Association conference — and as usual, someone else was picking up the tab. This time it was Eggborough Power, owner of a coal power station in his constituency that was frantically trying to win government funds to switch from burning coal to using biomass wood chips. Flights and accommodation for his five-day trip came to £7,177.41.

Since joining the House of Commons as a Conservative MP in 2010, Adams, 54, has become an enthusiastic cheerleader for the fuel. Yet his interests are not limited to burning woodchips. His support also helped the ascent of one of the most toxic figures in business: Sanjeev Gupta.

The Indian-born commodities trader emerged from obscurity to buy scores of tired industrial assets across the globe during a five-year acquisition spree under the loosely defined GFG Alliance. Along the way, Adams opened the door to some of Britain’s most senior politicians, including Boris Johnson.

Now a minister in the Foreign, Commonwealth & Development Office, Adams oversees a constituency atop the Selby coalfield. It was once one of Britain’s biggest and supplied the power stations that dot the landscape. But as coalmines closed, its coal-fired power stations became an endangered species. A plan for their survival has hinged on a bold promise to go green: instead of burning coal, their furnaces would be converted to burn wood pellets, aided by generous doses of state subsidy.

As chairman of the all-party group on biomass until 2017, and with hundreds of local jobs at stake, Adams was more than willing to help. His lobbying for the fuel, and criticism of other forms of renewable power, paid dividends for some of those giants. Drax power station in North Yorkshire, the UK’s single biggest polluter and a substantial donor to Adams, reaped £832 million in subsidies last year for burning biomass. Analysts reckon that it will collect more than £10 billion of subsidies between 2012 and 2027, when guaranteed government support ends.

Gupta wanted some of the action. In 2014 Simec, his father’s trading and commodities business, bought Uskmouth B power station in Newport, south Wales, from SSE. Gupta’s plan was to convert it from coal to biomass, reaping subsidies. He also had plans for another green energy wheeze: putting used cooking oil through old diesel generators to earn renewable power subsidies.

Adams and Gupta share something else: both have employed the services of the political activist Malin Baker Bogue. The American, 31, who has close ties to the Republican Party, worked for Adams between October 2015 and February 2018 as a senior parliamentary researcher, before going on to work for Gupta. The Sunday Times has revealed how Gupta paid her wages while she worked on Johnson’s leadership campaign in 2019.

It can also be revealed that during the entire period Bogue worked for Adams, she was actually employed by NDH Associates, a Yorkshire management consultancy owned by a biomass lobbyist.

Under a highly unusual arrangement that has never been publicly disclosed, Bogue’s wages were paid by NDH, rather than directly by the MP. NDH is owned by Nigel Hildyard, 66, a lobbyist who has worked on most of the UK’s big biomass projects including Drax and Eggborough. NDH billed Adams for Bogue’s services and the MP claimed taxpayers’ money to reimburse NDH.

Hildyard was employed as a consultant by Drax in 2010, worked on the conversion of Lynemouth power station in Northumberland and was director of biomass development for Eggborough, which has donated more than £24,000 in flights and hospitality to Adams.

Typically, MPs employ staff directly, other than for short-term projects such as IT work. Lawyers for Adams did not say why he employed Bogue via this indirect route for almost two and a half years.

They said: “These arrangements were approved and paid by IPSA [the Independent Parliamentary Standards Authority], and entirely within the prevailing rules and guidelines. Mr Adams is an advocate for his constituents and makes no apology for speaking up for his constituents and the sectors which remain one of the largest and most important employers in his constituency.

“No benefit was received by Mr Adams under this arrangement therefore there was no interest to declare.”

Adams’s lawyers said that at the time NDH employed Bogue, Hildyard did not hold any biomass directorships — while failing to mention Hildyard’s work for big biomass projects prior to that.

Drax said: “Drax power station is the largest employer in Nigel Adams’s constituency and because of this he is a key advocate for the facility and its efforts to deliver a more sustainable and cost-effective energy system.” It added that Hildyard worked for it as a technical consultant in 2010 and had not been employed by it since then.

Read the full article (subscription required) here

The Sunday Times

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.