Weekend press round-up: Gas levy gets green light

Energy dominated the headlines across the national media this weekend, with the government under pressure to act amid continued volatility in wholesale gas prices, with warnings that more energy retailers could exit the market imminently. Meanwhile, ministers are said to be weeks away from announcing plans to move green levies from electricity to gas bills.

Gas levy gets green light as factories warn of closures

Ministers will announce plans for levies on gas bills to fund low-carbon heating within the next fortnight despite rising prices, The Times has been told.

The government will publish a new strategy with a carbon pricing scheme that could push gas bills significantly higher.

The strategy, which will be published before the Cop26 climate conference in Glasgow next month, commits the government to cutting the price of electricity, which is significantly higher than gas. It will seek to end “price distortions” by removing green levies from electricity bills over the next decade and imposing new charges on gas bills.

The government said the volatile nature of global gas prices in recent weeks highlighted the need to move away from fossil fuels. It said that the switch to low-carbon alternatives to gas boilers would take place over the next 15 years.

The government will release a series of consultations on the plans before deciding next spring how to proceed. The Times has been told that the carbon reduction scheme is likely to start in 2023. Internal government estimates suggest that it could add £170 a year to gas bills. The strategy will include measures to boost the sale of heat pumps, which extract heat from the ground, water and air. They cost about £10,000, compared with £2,000 for a gas boiler.

Ministers set out plans to ensure “cost parity” between heat pumps and gas boilers by 2030, with costs falling from £10,000 to £5,000 within three years. A £400 million scheme in the spring will offer grants of £5,000 towards an air source heat pump and £6,000 towards a ground source heat pump.

Craig Mackinlay, head of the Net Zero Scrutiny Group of more than 40 Tory MPs, said: “This plan should be discounted and discarded immediately. We are rapidly approaching energy poverty in this country. This would only add to it.”

Jonathan Brearley, chief executive of the energy regulator Ofgem, warned that families faced “significant rises” in their gas and electricity bills next April. A spokesman for the Department for Business, Energy and Industrial Strategy said: “We’ll set out our upcoming heat and buildings strategy shortly. No decisions have been made.”

The Times

Kwarteng clashes with Sunak over bailout for UK companies struggling with energy costs

Kwasi Kwarteng has clashed with chancellor Rishi Sunak over a possible financial bailout for British companies struggling to cope with soaring energy costs over the winter.

Speaking on Sunday, the UK business secretary said he was “working very closely” with Sunak after promising representatives of the heaviest industrial energy users at a meeting on Friday that he would explore “practical solutions” to protect them from further shocks in the coming months.

But Treasury officials were quick to dispute the claim that any such talks had taken place with Sunak or his department. In an unusual intervention, one official insisted: “The Treasury have not been involved in talks.”

Some government insiders are concerned the UK is on the brink of an industry crisis. Unless gas prices start to drop, some within government fear companies will struggle to get through the next few weeks without some sort of government assistance.

Executives from heavy industry users have warned ministers that continued high energy prices would force some factories to close and push up the cost of goods.

Tensions are mounting inside government as Sunak seeks to hold a firm line ahead of a tight spending review later this month even as the industry and consumers struggle with higher energy bills and food prices.

Kwarteng, however, denied a report in the Sunday Times that he had asked the Treasury for billions of pounds in support. He told the BBC’s The Andrew Marr Show: “I’ve not asked for billions, we’ve got existing schemes. I’m working very closely with Rishi Sunak, the chancellor, to get us through this situation.”

Ministers have been urged to introduce so-called winter cost containment measures on gas, electricity and carbon prices to ensure factories could continue to operate through the coldest months.

Specifically, industry has demanded a price cap, similar to the one already in place for households, to reduce the impact of the recent price surges. Executives also want the government to reduce network costs for energy-intensive users, similar to measures taken by some other European governments.

Speaking to Sky News, Kwarteng did not rule out a price cap for businesses but cautioned: “I can’t come on your programme and say we are going to have a price cap, because we’ve got to try and work out what the nature of that support might be.”

He added: “What I am very clear about is that we need to get them through this situation, it’s a very difficult situation.”

UK Steel has also suggested the government provide a fixed amount of capacity at a competitive price for an interim period, offering large industrial consumers the chance to buy electricity at competitive prices via a virtual cross-border trade if they invest in new interconnection capacity.

The Financial Times

BP-backed energy supplier Pure Planet faces becoming latest casualty of industry crisis

A residential renewable energy supplier backed by BP is nearing collapse, joining the growing list of industry players which have found themselves unable to weather surging wholesale prices.

Sky News has learnt that Pure Planet, which is 24%-owned by the FTSE-100 energy giant, has commenced discussions with Ofgem, the industry regulator, about entering the Supplier of Last Resort (SOLR) process set up to transfer the customers of failing companies.

Industry sources said on Sunday that an announcement about Pure Planet’s fate could be made as soon as this week, although they cautioned that a final decision had yet to be taken.

The company has 250,000 customers, according to a company spokesman.

Pure Planet was established in 2015 as Tulip Energy and was rebranded after striking an investment deal with BP – which includes BP acting as a wholesale supplier of gas and power to the start-up – two years later.

A source close to BP said it had decided not to continue funding Pure Planet, which is understood to owe it an unspecified sum of money, amid the current crisis.

It was unclear this weekend whether the small supplier was in any talks about alternative means of continuing to fund itself that could preserve its future.

Sky News

Ovo boss hints more energy companies will fold

More energy companies will have a “hard time” due to rising gas prices, the chief executive of Ovo has said.

Stephen Fitzpatrick told the BBC this morining: “There are a lot of companies in the market that have sprung up quite recently, there’s been some great competition in the UK market, consumers have benefitted.

“But I think over the past couple of years it’s become too easy to get into the energy market, it’s a very complicated industry and I think some people have underestimated the risks and how complicated it is.

“There are a lot of companies having a hard time, there’s probably going to be more to come.

“There are lots of different scenarios and at the moment the big issue is not about the temperature and how cold it is, because we can look back in time and say this is how much energy we use at different temperatures and so on.

“The big uncertainty we’ve got at the moment is around price – prices are up 1,000 per cent already in twelve months.”

City AM

Thames Water sewage data show hundreds of illegal spills

Thames Water, the UK’s biggest water company, illegally discharged untreated sewage into rivers on two out of every three days over the past three years, according to analysis of the company’s spill data.

The Environment Agency allows water companies to discharge some untreated sewage into rivers via storm overflows when rainfall runoff from roads and roofs overloads a sewage works. This is partly to avoid sewage backing up into homes.

However, they are prohibited from making “dry spills” of untreated sewage when there is no rainfall or “early” spills of sewage discharged when a works fails to maintain a minimum rate of treatment.

A detailed analysis of sewage treatment and spill data over the past three years showed that the environmental regulator has recorded just 33 “dry” and “early” breaches by Thames Water over the past 11 years, even though the analysis claims there were dry and early spills on 735 days at 13 of the company’s sewage treatment facilities in West Oxfordshire and the Cotswolds between 2018 and 2020.

The data, collected by the Windrush Against Sewage Pollution Campaign Group in Oxfordshire, suggests that 95 per cent of dry and early sewage spills go unrecorded. Since 2008 the government has relied on water companies to report any unauthorised discharges. By the Environment Agency’s own admission many go unrecorded.

Thames Water said it regarded all discharges of untreated sewage as “unacceptable” and was trying to “accelerate work to stop them being necessary”. “Our planned investment in our sewer network and the upgrading of sewage treatment works across our region . . . will help improve the situation,” it added.

The Financial Times

House builders urged to install rainwater toilets to stop river pollution

Developers must install rainwater toilets when building new homes to stop river pollution, campaigners have said.

Britain’s Victorian water system is already struggling to cope, with sewer systems frequently overflowing, making England’s rivers the dirtiest in Europe.

Now there are calls for tougher restrictions on developers, limiting their ability to connect new homes to sewers and requiring new homes to meet water efficiency standards.

Water companies can dump raw sewage in rivers and the sea when rainfall mixed with waste water from households overloads the system, something which is only supposed to happen on rare occasions but in practice happened 400,000 times last year.

Campaigners said measures such as reusing rainfall to flush toilets as standard, reducing the volume of water going into sewers, would stop the system becoming overloaded.

The system works by capturing rainwater and filtering it into a tank where it is kept at a suitable temperature to avoid bacteria. The water is then pumped through the plumbing system when a toilet is flushed.

By diverting rainwater from sewer systems into household plumbing, sewers become less overwhelmed, decreasing the likelihood of river pollution.

It comes as figures show not one of England’s rivers passes pollution tests, with wildlife and swimmers both harmed by sewage releases and agricultural runoff.

The calls, backed by countryside campaigners and water industry groups, also come ahead of the Government’s much-anticipated planning bill, which has faced criticism over plans to build thousands of homes in England’s already densely populated south.

Mark Lloyd, chief executive of the Rivers Trust, called for water sustainability measures to become compulsory in new housing developments, particularly in the water-stressed south east of the country.

“If you’re going to do that kind of development, you have to make it absolutely brilliant for water efficiency and sustainability, both in terms of the water use of the properties, but also building in sustainable urban drainage systems as standard, and grey water recycling so that you’re capturing rainwater and using it to flush toilets or capturing the sink water and using that to flush the toilet,” he said.

“We could take that leap, and the cost of them would come down enormously, and it would have huge benefits for the rest of society and for water bills, and the other costs that are heaped on society from pollution and restrictions on supply.”

Sunday Telegraph

Kwasi Kwarteng accused of misleading claims over power cable project

A cabinet minister has been accused of making misleading claims about a £1.2bn cable project linked to a Conservative donor.

Almost one in 10 Conservative MPs had taken money from firms linked to Viktor Fedotov, revealed in the Pandora papers to have secretly co-owned a company once accused of participating in a massive corruption scheme. One of those firms included Aquind.

Labour highlighted that the business secretary, Kwasi Kwarteng, had said he was supportive of the project in a 2019 letter released under freedom of information, despite Kwarteng saying on Sunday he had never voiced support.

A source at the Department for Business, Energy and Industrial Strategy said the letter was part of a proposal for cross-border infrastructure schemes to the “EU projects of common interest” (PCI) register, which included Aquind as one of four interconnector projects. The source said the planning decision was separate and quasi-judicial and proposing the project to the PCI did not mean it would be approved.

Kwarteng is due to decide whether to approve the project this week. Aquind and other businesses owned by Fedotov have given £700,000 to the Conservatives. Another donor, Alexander Temerko, who is the public face of Aquind, has also publicly donated over £700,000 to the Conservatives.

Kwarteng told the BBC’s Andrew Marr show that he had “never commented on this specific project” and said he would rely on official advice from civil servants as to whether to approve or reject the application.

“I am very much in favour of more interconnectors because they can actually get electricity, sources of power, cheaply from the continent, and in many cases it helps with our decarbonisation because certainly in France a lot of that power is generated through nuclear power,” he said. “So broadly, I’m in favour of interconnectors, I haven’t said anything about this particular project.”

In a letter to Temerko in October 2019, Kwarteng, then the minister of state for business, energy and clean growth, said: “We have written to the commission to reiterate our support for a number of projects including, of course, the Aquind project.”

The Guardian

Start-up Zest to expand electric car charging network

The government has backed a start-up aiming to overhaul the UK’s vehicle charging infrastructure amid the electric car boom.

Zest, which plans to rapidly develop a network that makes fast charging available anywhere people regularly park for more than 30 minutes, has secured £30 million with participation from the government’s Charging Infrastructure Investment Fund.

While there is a marked drop in sales of conventional cars, linked to a global shortage of computer chips, sales of electric cars are rising rapidly and September was the best month ever for new battery electric vehicle uptake.

Zest says that today’s electric vehicle infrastructure supports “early adopters”, prioritising home driveway and rapid en-route charging, but needs to be expanded to make an electric car “a realistic option for everyone”. It is estimated that up to half a million destination and public charge points will be needed by 2030, yet there are fewer than 30,000 today.

The start-up says it will handle planning, installation and maintenance of chargers for the likes of businesses, parking operators or local authorities, which are eager to attract more visitors.

Zest is led by Robin Heap, former head of electric vehicles at Engie, the French utility business.

The charging infrastructure fund is managed by Zouk Capital, a private equity firm which is a specialist investor in vehicle charging and has built similar companies with experienced management teams before, such as InstaVolt, which was set up in 2016 and is now a market leader in rapid charging.

The Times

Tesla batteries power UK energy storage plan

Britain’s energy problems could be alleviated by a new scheme to build power-storage sites across the UK using batteries produced by Tesla, the electric carmaker.

An investment trust plans to raise £230m in a stock market listing to fund a string of battery-storage facilities in largely rural locations.

Harmony Energy Income Trust has a pipeline of six sites that are designed to sell back energy to the grid at times of high demand when, for instance, the wind drops and supply from renewable sources falls. The sites lined up will have a total capacity of 625MWh.

The trust has struck a partnership with Elon Musk’s Tesla to use its Megapack batteries, which charge up in just two hours and provide energy for two hours. The sites are “shovel ready”, with planning permissions granted and contracts signed. They typically consist of low-rise 40ft containers and vary in size from about half an acre to five acres.

Once built, they will be operated by Tesla using its Autobidder software, which automatically manages the trading of energy with the grid. It is thought to be the first time that Autobidder has been used in the UK.

The Sunday Times

National Grid in talks over plan for energy island in North Sea

The prospect of an energy island in the North Sea surrounded by windfarms with the ability to power British homes has taken a step closer after National Grid, the UK energy company, revealed that it is in talks about helping to build the project – and claimed it could be done before 2030.

“We are in tripartite discussions over an energy island that the UK would likely connect to,” Nicola Medalova, the company’s managing director of interconnectors, told New Scientist. She declined to name the two other parties in the talks.

The scheme would involve significantly larger offshore windfarms than existing ones, which would be connected to underwater cables that would direct the energy to participating countries.

As a key developer of long-distance cables – including the recent completion of the world’s longest undersea power cable, between the UK and Norway – National Grid’s potential involvement could signal a positive step towards the project becoming a reality. It could also offer a boost to Boris Johnson’s plans, announced this week, to eliminate fossil fuels from UK electricity generation by 2035.

Medalova envisages the energy island being able to combine several technologies. “You could have wind, hydrogen, battery storage, all the rest of it, and that can be connected to one country, two countries,” she said, adding that the project in discussion could have “three connection points”. It could be built as soon as by 2030, she said.

A National Grid spokesperson confirmed there were discussions but said they were not tripartite.

Medalova said she expected that all new interconnectors would be hybrid, with the ability to connect to offshore windfarms, and there was an expectation for windfarm developers and interconnector companies to take a “collaborative, sharing approach” to take pressure off coastal communities.

The Guardian

Eggborough Power Station’s remaining towers demolished

The last four remaining cooling towers at the former Eggborough Power Station in North Yorkshire have been demolished.

They were brought down just after 09:00 BST on Sunday.

Four of the eight concrete structures, which stood 300ft (90m) high, were demolished in August as part of plans to redevelop the site after the plant closed in 2018.

The towers have been a landmark for more than 50 years in an area where all four Yorkshire counties – North, South, East and West – meet.

BBC News

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.