Weekend press round-up: Households pay £250m to avoid power blackouts

In our latest review of sector coverage across the national newspapers, it is reported that National Grid is paying out £250 million a year to procure extra back-up power stations. Meanwhile, the future of both nuclear energy and battery storage in the UK are discussed.

Households pay £250m to avoid power blackouts

Consumers are paying £250 million a year for National Grid to procure extra back-up power stations to prevent the risk of blackouts from tens of thousands of small plants with faulty old settings.

The settings cause the plants to shut down too easily when they detect a fluctuation in the frequency or voltage of electricity on the network, typically because of a problem elsewhere.

The issue contributed to the August 9, 2019 blackout when more than a million homes were cut off. On that day many small power plants automatically shut down when they detected a dip in frequency caused by the initial failure of two larger plants, so exacerbating the electricity shortage.

The issue affects a wide range of plants that connect directly to local networks, including wind turbines, solar arrays and fossil fuel engines.

A programme offering funding to the owners of about 50,000 small plants to fix the settings had started shortly before the 2019 incident, and reports into the blackout concluded that remedial work should be accelerated.

However, a year and a half later only about 6,000 sites have applied for the funding and 4,000 have done the work, according to figures from National Grid’s electricity system operator division. It says these are typically the larger sites and account for just over half of the affected capacity but it estimates that another ten gigawatts still need to be fixed.

The operator division is responsible for balancing supply and demand and its costs are ultimately funded by household and business energy bills.

It is understood that while the issues with the faulty settings, known as “loss of mains” persists, the division is having to pay £250 million a year to procure additional back-up plants.

The electricity system operator is now offering more funding through a “fast-track scheme” as an incentive to plant owners to fix the settings before a formal deadline of September 2022.

The Times

Nuclear winter for Britain as power plants close

Hitachi president Hiroaki Nakanishi had a grand dream when the Japanese giant paid £696 million for the right to build two nuclear power stations in the UK. “Today starts our 100-year commitment to the UK and its vision to achieve a long-term, secure, low- carbon and affordable energy supply,” declared Nakanishi in 2012, as he signed a deal to buy the Horizon nuclear project from Germany’s RWE and Eon.

Nakanishi’s plan was to use the UK as a shop window for its reactors, installing them at Wylfa on Anglesey in north Wales and Oldbury-on-Severn in south Gloucestershire. Wylfa would provide enough power to supply the whole of Wales. Together, the two sites could power about 10 million homes.

Last week, that bold vision lay in tatters as Hitachi pulled down the shutters on Horizon, which it will wind up by the end of March. It has cancelled its application for a development consent order — a formal process needed to secure planning permission — for the £20 billion Wylfa Newydd plant, despite having spent £2 billion exploring every aspect of the project, from the rock strata on the island to the location of Roman ruins.

A last-ditch effort is being made to find a buyer — but with just two months left before shutdown, the chances are slim.

Hitachi’s defeat follows the collapse of several other nuclear projects and the gradual retreat of companies, first European, then Japanese, from the UK’s nuclear industry. A succession of big players, some backed by governments, has tried to make it work — but, spooked by the huge risks and ambivalence from Westminster, they have concluded it is not worth the trouble and walked away.

That leaves just one new nuclear plant under construction: Hinkley Point C in Somerset, a joint venture by the state-owned power companies Électricité de France (EDF) and China General Nuclear (CGN). But that project has been beset by delays and budget increases, with EDF last week admitting that the cost had risen by another £500 million, to £23 billion, and it would not begin supplying power until the summer of 2026.

Another planned EDF plant, at Sizewell in Suffolk, has been given encouragement by the government, but EDF faces years of negotiations with ministers over the financial structure of a deal. CGN hopes to install its home-grown reactor, the Hualong One, at Bradwell-on-Sea in Essex, but must overcome opposition from Tory MPs and the United States.

In November, EDF — led by Jean- Bernard Lévy — announced that Hinkley Point B would shut earlier than expected, in July next year.

For a government that has made eliminating carbon emissions by 2050 a central policy, those closures are a huge problem. The switch to renewable sources of energy has been one of the great successes of the past decade, their use rising fourfold while that of fossil fuels has more than halved. Last year, in a run of sunny, windy weather, the UK enjoyed 67 consecutive days of coal-free power generation. But underpinning that low-carbon streak was a substantial slice of nuclear, and when the worst-case scenario arrived in November and wind turbines stopped turning, the country had to revert to gas and coal to keep the lights on.

Tom Greatrex, chief executive of the Nuclear Industry Association, said the power system was highly vulnerable to price spikes when renewables struggled. He cited the £1,500-a-megawatt hour hit during this month’s cold snap. “We’re nowhere near where we need to get for net-zero or even the 2030 decarbonisation target. It has also meant that at times, prices have gone up massively.

“The reality is that nuclear capacity will come off before it is replaced, which means carbon emissions will go up or won’t come down. There is a fallacy at the heart of this debate that assumes everything that’s currently available will be available in 2050. It won’t.”

Greatrex said the idea that nuclear power would be replaced by plugging huge batteries into the grid to release stored renewable power when needed was fanciful. “Batteries will be incredibly helpful for dealing with short-term variations and to help to manage those peaks. But ones that can give you two or three weeks’ worth of storage don’t exist.”

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The Sunday Times

On the charge: Britishvolt tries to head off doubters of its gigafactory plan

Orral Nadjari has spent the past two weeks sitting out his quarantine in a Dubai hotel. The 38-year-old has battled off Covid but is waiting for a negative test before he can return to his family in Abu Dhabi. “On day two, when I wanted some fresh air, I realised there was not a single window I could open,” he says. “I haven’t seen my family for a while.”

Much also awaits him in the UK, where his start-up company Britishvolt has announced plans to build a £2.6bn factory to pump out 300,000 lithium-ion electric vehicle batteries each year.

It wants to start building at the site in Blyth, Northumberland by this summer and be in production by 2023 – promising 3,000 jobs on site and 5,000 more in the supply chain.

The development of battery manufacturing in the UK is widely recognised as crucial to the future of the carmaking sector.

Can the business, founded one year ago with £223,554 in assets, live up to its promise?

Nadjari is not a well-known name in the industry. Having spent his career with Swedish corporate bond-seller Jool Capital Partner, he set up Britishvolt with friend Lars Carlstrom as money started pouring into the sector. The Cardiff University graduate reckons the UK’s expertise in battery development has been overlooked by established players such as LG Chem, who have started to set up in Europe amid uncertainty over Brexit terms.

The pair got off to a bumpy start. Carlstrom, who had in the past worked as a representative for former Portsmouth FC owner Vladimir Antonov, stepped down in December after the Press Association reported details of a more than 20-year-old tax fraud conviction in Sweden.

Now setting up a separate battery factory venture in Italy, Italvolt, Carlstrom “doesn’t have a bad bone in his body”, says Nadjari, recalling his friend’s first words on the conviction resurfacing: “This is something that has been haunting me for decades.” The company is winding down Carlstrom’s shareholding.

Nadjari says he looked at more than 200 sites for his factory before alighting on a former RAF site in Bro Tathan, Wales.

He signed a short-lived MOU with the Welsh government that was abandoned by December when he opted instead for Blyth and the site of a former coal-fired power station, with good transport, shipping and clean power links, and hoped-for freeport status.

Both the Welsh government and Britishvolt said the breakdown was “primarily due to timing”.

Having applied in September for a government grant to get the project off the ground, Britishvolt hopes its experienced team will make up for its relative youth.

Britishvolt has so far raised in the “two digits” millions, Nadjari says, mainly from Scandinavian, American and Middle Eastern investors.

He insists that financing the rest of the massive project as and when required is the “least of my concerns”.

“Every time I needed to do a capital raise, I have always been oversubscribed – last time by three-fold,” he says. “So we are turning investors away.” He speaks of feeling like the “prettiest girl on the dance floor”, given the surge in interest in the sector, who can “get to choose who I want to dance with”.

Still, investment is much more likely to be available if the project is de-risked, with a government grant and a deal with a carmaker. Nadjari says Britishvolt is in “advanced discussions” with manufacturers – and rejects the suggestion its lack of track record and product in development puts it at a disadvantage. “There are not too many developed propositions in the market,” he says.

Daily Telegraph

‘Gas company broke into our flat’

An elderly couple have been shut out of their flat for more than three months after one of Britain’s biggest power companies broke in and changed the locks because of someone else’s debt.

Jonathan Webb, 80, and his wife Anne, 76, have not been able to move into their new home in Finchley, north London, after the blunder by SSE Energy Services in October.

SSE locksmiths broke in to the flat on October 27 to install two prepayment gas and electricity meters because the previous client had not paid his bills.

SSE, the household energy business owned by Ovo, now admits that Jonathan told it in a call on October 14 that he was the new owner of the flat.

It had been repossessed by the previous owner’s lender after the owner failed to pay his mortgage and bills, and the Webbs were getting ready to move in. Jonathan’s message was not properly registered by the customer services team and SSE got a warrant using old information and broke in two weeks later.

The locksmiths picked the lock on the front door and Jonathan said they changed the locks on a glass bedroom door and a kitchen door.

After admitting in an email that it had made a “major error” and apologising, SSE offered Jonathan and Anne £200 in compensation but said it would not change the lock.

After The Times started looking into Jonathan and Anne’s case, SSE agreed to change the kitchen lock and replace the meter.

A spokeswoman said the company paid for a locksmith as a goodwill gesture, although it still insists it changed only one of the locks and issued a statement saying it was very sorry for breaking into Jonathan and Anne’s property, because of human error. However, it refused to pay more than the £200 compensation it had already offered, which Jonathan has declined.

“We were approaching the warrant stage with the previous owner, and unfortunately this process wasn’t stopped in time,” a spokeswoman said.

The Times

Sunak to strengthen Bank of England’s green remit amid oil bonds outcry

Ratesetters at the Bank of England will be asked to reflect climate change risks in their decision-making for the first time under Treasury plans.

The chancellor is expected to introduce environmental clauses into the Bank’s mandate when he updates it at the budget in March. Treasury officials have been in talks with the Bank on the design of a green monetary policy but a final decision has yet to be taken. Climate change considerations are already in the Bank’s financial stability mandate, which includes stress testing lenders against global warming risks, but monetary policy remains strictly focused on price stability and supporting economic objectives.

The Treasury has put the environment at the heart of its economic plans and recently launched the first green sovereign bond. Sources privy to the discussions said it was unclear how strong the green remit will be, with discretion possibly left to the Bank.

The plans come amid an outcry over the Bank’s backing of oil and gas companies through its quantitative easing corporate bond scheme. The £20 billion portfolio is in line with warming of 3.5C above pre-industrial levels by 2100. The Paris agreement, against which the Bank measures financial institutions, seeks to limit warming to below 2C. The Bank first pledged to adjust the portfolio over a year ago but is unable to do so without political approval. Andrew Hauser, executive director for markets, said in October: “The framework is determined by the remit given by the chancellor. But, subject to the government indicating a willingness to update this remit, we will be considering how to incorporate climate factors into decisions on the mix of financial assets.”

The Times

Electric cars surge in popularity after manufacturers’ late dash

https://www.ft.com/content/e9a6aa4f-4a8b-4c80-a89b-13e8fbde2c43

Last January, Europe’s carmakers were gearing up for their most challenging year in recent memory — one in which they would be forced to vastly expand their sales of electric and hybrid cars or fall foul of tough new emissions regulations and risk hundreds of millions of euros in fines.

Then came Covid-19, and lockdowns that brought assembly lines to a standstill for weeks, delaying for several months the rollout of key emissions-free models, such as Volkswagen’s flagship ID. 3.

The result was a late dash, as manufacturers saw their finely honed strategies torn up by events.

Of the nearly 730,000 battery electric vehicles sold in western Europe during 2020, over 300,000 were delivered in the last three months of the year, according to research by Bernstein.

Some carmakers, such as Daimler, only crossed the line after a concerted effort to drive sales right at the end of the year.

Volkswagen narrowly missed its target, despite teaming up with over-compliant rivals such as MG and the London EV Company.

Jaguar Land Rover was also forced to pay penalties, despite a late push that saw its electric Jaguar I-Pace account for 69 per cent of the brand’s western European sales in December.

Carmakers were aided in their electric efforts by governments that ramped up incentives for battery-powered cars in an attempt to boost economic activity.

Sales in Germany, which tripled year on year, were supercharged by Angela Merkel’s government deciding to double subsidies for electric cars, resulting in customers being able to avail themselves of a €9,000 discount per new vehicle.

Impending bans on the sale of traditional cars also stimulated the market last year.

The number of UK consumers searching online for an electric car doubled overnight after the government’s announcement of a phaseout of petrol sales by 2030, according to Auto Trader.

During the year, one in six new cars bought in the UK was electric or hybrid, official figures show.

For legacy carmakers, the year was an opportunity to plant a stake in ground previously dominated by Tesla.

The mass-market brand with the highest proportion of electric sales across Europe last year was Hyundai at 13 per cent, due to the popularity of its electric Kona model.

European president Michael Cole told the FT he expects new plug-in hybrid variants of its flagship SUVs, the Tuscan and Santa Fe, as well as a new battery-only vehicle will see its electric mix increase.

Yet it was Renault’s eight-year-old Zoe model that finished as the most registered model last year in western Europe, accounting for some 95 per cent of the carmaker’s full-electric car sales and surpassing both Tesla’s Model 3 and the ID. 3, according to research by analyst Matthias Schmidt.

In fact Tesla was the only carmaker to suffer a fall in pure electric sales with its market share falling by 16 percentage points to 13.4 per cent in 2020 — though analysts attribute this fall to the impact of Covid-19 on its distribution channels to Europe.

The Financial Times

Labour demands ban on North Sea gas flaring

https://www.ft.com/content/a20fc5e4-b02b-4e39-a68c-bf48a2c55968

The Labour party has called for a ban on UK North Sea oil operators burning or releasing gas “except in dire safety emergencies” after data showed the contentious practice of “flaring and venting” in the region is responsible for a coal plant’s worth of carbon emissions each year.

Campaign group Greenpeace UK will on Monday publish a report that for the first time names and shames the oil operators in British waters that are responsible for the most emissions from flaring and venting.

A joint venture between Spain’s Repsol and Sinopec of China is identified as the operator responsible for the most emissions, followed by France’s Total and Royal Dutch Shell.

Norway outlawed non-emergency flaring 50 years ago — but the practice of burning off gas produced together with oil from reservoirs is still common in UK waters.

This is especially the case at older oilfields where the original operators were not concerned about capturing the less valuable gas and in other locations where there are no nearby pipelines to export it, although many of the larger producers such as Shell, Repsol and Total have in recent years committed to tackle the problem as part of net zero targets.

It is also done for safety reasons or for non-routine operations such as testing wells, although Britain’s energy regulator found in a report last year that only about 10 per cent of gas flared in the UK North Sea in 2019 was for emergency reasons only. The World Bank is campaigning for routine flaring to end globally by 2030.

The report by Greenpeace’s investigative unit Unearthed shows that total venting and flaring by oilfield operators in the UK North Sea released emissions equivalent to 20m tonnes of carbon dioxide between the start of 2015 — the year of the Paris climate accord — and the end of 2019. It is based on data obtained via environmental freedom of information requests from the National Atmospheric Emissions Inventory, part of Britain’s business department.

Shadow business secretary Ed Miliband said the government must “stop turning a blind eye” to venting and flaring in anything other than “dire safety emergencies”, adding that it “undermines our international credibility” as the UK prepares to host the UN COP26 climate summit in Glasgow in November.

The UK Oil and Gas Authority, which is responsible for policing North Sea companies, insisted it was taking a “robust stance” on venting and flaring.

It published a report last year that found volumes of gas vented and flared fell between 2018 and 2019, but the regulator added there were “clear opportunities for industry to go further to advance cleaner production”.

The business department said it was working alongside regulators “to ensure this practice is eliminated as soon as possible”, pointing out the UK had signed up to the World Bank’s plan for a 2030 ban.

The Financial 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.