Weekend press round-up: Hunt under pressure to cancel energy bills support cut

In our latest review of sector coverage across national media, there are renewed calls for the Chancellor to maintain the Energy Price Guarantee at its current level. Meanwhile, big wind farm developers have warned their UK projects could be at risk without tax breaks and the boss of Thames Water has said she is “heartbroken” by the impact of sewage spills.

Jeremy Hunt under pressure to cancel planned cut to energy bills support

Jeremy Hunt is under increasing pressure to cancel a planned cut to energy bill support as research showed that paying for heat and power will “eat up” nearly 10% of workers’ wages after the move in April.

The chancellor has so far resisted calls to ditch the change to the energy price guarantee, which will push up the cap on the typical annual household bill from £2,500 to £3,000.

However, analysis by the Trades Union Congress shows that monthly bills are expected to hit £250 from April – almost 10% of the £2,589 UK monthly salary – up from £208 a month at present.

After the cut in support the amount of monthly earnings spent on energy would be more than double the £107 a month typically paid in March last year.

The TUC’s general secretary, Paul Nowak, said: “The government must cancel its imminent hike in household energy bills at next month’s budget. Families across Britain are being pushed to the brink by sky-high bills.

“That means imposing a larger windfall tax on greedy oil and gas suppliers. And it means boosting wages across the economy.”

The TUC joins the consumer champion Martin Lewis and 70 organisations in calling for the rise to be dropped. In a letter to Hunt sent earlier this month, Lewis said: “The damage to people’s pockets and mental health of another round of energy price rise letters is disproportionate.”

On Monday, Ofgem will confirm the level of its price cap for the three months from 1 April. It is expected to fall by about £1,000 to just under £3,300. The energy price guarantee means typical bills should not reach this level but the cap is used to calculate the cost of covering bills for government.

The Guardian

Tax energy bosses’ bonus ‘bonanza’, say Lib Dems

Oil and gas bosses should face a one-off “bonanza bonus” tax on the millions they have made from high energy bills, the Liberal Democrats say.

The party is also calling for a £500 hike in household energy bills to be dropped and for them to be cut instead.

The government’s Energy Price Guarantee goes up from £2,500 to £3,000 in April.

Chancellor Jeremy Hunt has said extra support is unlikely because the government does not have enough “headroom” with the public finances.

Mr Hunt has rejected calls to halt the increase in energy bills when he delivers his Budget on 15 March.

Labour has called on the government to freeze energy bills through to July. to be funded through an increased windfall tax on energy company profits.

But the Lib Dems are arguing that bills should be cut, with leader Sir Ed Davey saying further increases would be a “hammer blow” for struggling families.

The party has previously called for a windfall tax on what they called the “super-profits” of oil and gas companies, which they say would raise at least £15bn more than the government’s current Energy Profits Levy.

They are now arguing for a one-off-levy on the bonuses awarded to oil and gas executives, similar to the bankers’ bonuses tax in 2009/10 in the aftermath of the financial crisis. This taxed bank bonuses over £25,000 at 50%.

According to the party, senior executives at BP and Shell received more than £17m in salaries, bonuses and pensions last year, and BP chief executive Bernard Looney received bonuses and benefits totalling nearly £3m.

BBC News

Wind farm developers demand UK tax breaks to offset rising costs

Several big wind farm developers, including Sweden’s Vattenfall and Denmark’s Orsted, are seeking tax breaks from the UK government or enhanced subsidies as a sharp rise in costs puts British projects at risk.

Several companies that won contracts in a large UK government auction last year to build new renewable power generating capacity from 2024 have warned ministers the projects will be difficult to deliver at the prices agreed, according to people involved in the talks.

Supply chain inflation over the past year has led to a big increase in wind turbine prices, while rising interest rates have pushed up financing costs.

“There is a real jeopardy right now with that capacity [secured last year in the government auction],” said one person involved in the industry talks with ministers.

Any delays or cancellations to projects that were procured through the auction would represent a big setback to the UK government’s efforts to meet climate targets and improve security of supply by increasing domestic energy sources following Russia’s invasion of Ukraine.

Last year’s subsidy auction was the UK’s biggest to date and secured enough capacity to provide 12mn homes with cheap, low carbon power. Offshore wind dominated, with about 7GW of the total of almost 11GW contracted.

The UK has 13.7GW of offshore wind capacity operational but is seeking to increase that to 50GW by 2030 as part of an energy security strategy drawn up by ministers last year, shortly after the full-scale invasion of Ukraine.

But some wind farm developers that secured contracts in last year’s auction have either delayed or are hesitating to take final investment decisions on those projects.

This reflects how cost increases of between 20 and 30 per cent over the past 12 months made it more difficult to justify that spending without extra government incentives, said the people involved in the discussions between the industry and ministers.

The Financial Times

Octopus seeks £100m funding boost for electric vehicles arm

The electric vehicles arm of Octopus Energy’s parent company is seeking a £100m funding boost to accelerate its growth amid soaring production of greener cars.

Sky News has learnt that Octopus Electric Vehicles (OEV) is working with bankers on plans to raise new funding from external investors during the coming months.

OEV is part of Octopus Energy Group, which secured a $5bn valuation just over a year ago and is now one of Britain’s residential energy suppliers.

This week, a judicial review brought by rival groups including Centrica, the owner of British Gas, will challenge the government’s handling of the sale of Bulb, the energy group which collapsed in 2021 and was recently sold to Octopus Energy.

The fundraising for OEV comes as data published by the Society of Motor Manufacturers and Traders showed that the number of EVs produced in the UK in January rose by nearly 50% compared to a year earlier.

Sky News

I’m heartbroken by sewage spills, says Thames Water boss

The chief executive of Britain’s largest water company has said she is “heartbroken” by the impact of sewage spills.

Announcing plans to spend a record £1.6 billion over the next two years on upgrading sewage treatment works and sewers, the chief executive of Thames Water, Sarah Bentley, said levels of pollution in rivers today were the result of “decades of underinvestment”.

She said: “We are absolutely ramping up. I’ve been the first to say Thames Water’s performance has not been acceptable. Sewage discharges are unacceptable. We need to make the investment.”

Last month Thames Water released a near-live map of storm overflow spills, becoming the first company to do so before it becomes a legal obligation in 2025. It shows that Hardwick Brook, a small stream in Oxfordshire, was polluted by sewage spilt for thousands of minutes in one week, making it the worst in Thames Water’s area.

Bentley said the map showed why more investment is necessary — something The Times’s Clean it Up campaign is calling for. “No, I don’t regret [publishing the map],” she said. “Yes, it’s not a pretty picture. And yes, I’m heartbroken [by the impact].”

The money will be split, with £1.12 billion going on improving capacity at 135 sewage plants, including one at Beckton, east London, and £470 million on the wider sewer network to reduce the risk of spills. The company was responsible for 14,000 spills from storm overflows in 2021.

The funding comes from equity the company’s board agreed to raise last summer as part of the 2020-25 period of regulated spending by water firms. The company typically has a capital expenditure of about £1 billion a year.

The chief executive said the new money amounted to a “huge programme” and spending it had become possible only since the company recruited 150 senior engineers to oversee projects. One focus will be increasing capacity at sites, such as more storm tanks, but Bentley said the most important element of the plan was spending money to keep rainfall out of sewers where possible.

On an upcoming government consultation on new civil sanctions of between £250,000 and £250 million for serious pollution incidents by water companies, she said: “If we do things wrong we need to be held to account and penalised for it.” But she insisted “headline stats on big numbers and big fines” would not fix the problem of the state of England’s rivers. Instead, she said, the solution was different sectors, campaigners and government working together.

The Times

Ministers told to get a grip on scale of ‘forever chemicals’ pollution in UK

The UK government must get a grip on the scale of “forever chemicals” polluting rivers and seas and threatening human and animal health, the Green MP Caroline Lucas has said.

The Guardian has revealed that high levels of per- and polyfluoroalkyl substances (PFAS), known as forever chemicals, have been found at thousands of sites across the UK and Europe in a major mapping project.

The map shows drinking water sources in the UK have been contaminated with PFAS. Water companies say the pollutants do not make it into the final tap water because they are blended with another source to dilute the chemicals, or they undergo a specialised treatment process to be removed.

But Caroline Lucas, the MP for Brighton Pavilion, said: “A cocktail of toxic persistent chemicals is polluting our rivers and seas, infecting our food and water supply, and posing a severe threat to human health, marine and animal life. Yet the UK’s chemical pollution limits are nowhere near international standards, and water companies’ claims that blending chemicals with other sources to dilute the pollutants simply won’t wash.

“The government urgently needs to get a grip on this chemical crisis and adopt tougher regulations now.”

Data obtained from water companies and the Environment Agency by the Guardian and Watershed shows that since 2006 about 120 samples of drinking water sources have been found to contain concentrations of perfluorooctane sulfonate (PFOS) or perfluorooctanoic acid (PFOA), collectively known as PFAS, at above the 100ng/l level. This is the level at which the Drinking Water Inspectorate (DWI) guidelines say water companies should take action to reduce the concentrations before supplying people’s homes. Until 2009, the DWI guideline limit was much higher, at 3,000ng/l. The guideline limits for PFAS in drinking water are much lower in the US.

Forever chemicals are one of the reasons no river in England passes biological and chemical pollution tests.

Philip Dunne, the Conservative chair of the environmental audit committee, led an inquiry into river water quality that concluded a chemical cocktail of pollutants was pouring into waterways. His committee has called on ministers to carry out a UK-wide survey to understand better the chemicals we are being exposed to in everyday life.

“The stark fact is that we are blind to the harmful pollutants coursing through our waterways because they are simply not being routinely monitored,” said Dunne. “Monitoring for these persistent pollutants absolutely must be improved if we have any hope in turning the tide: not a single river in England has received a clean bill of health for chemical contamination.”

He added: “It was disappointing the government did not accept the committee’s recommendations in the toxic chemicals report it made in 2019, and in the water quality in rivers report of 2022, that a UK-wide survey be undertaken to understand better the chemicals we are being exposed to in everyday life. I trust the government’s current work to address water quality will prioritise the systematic monitoring of forever chemicals.”

The Guardian

Grass-powered gas to heat homes for the first time

Grass-powered gas is set to heat thousands of homes for the first time in the coming weeks.

Green energy firm Ecotricity is expected to begin supplying 5,300 homes from its plant near Reading in April.

Research has estimated that the grass biogas can reduce greenhouse gas emissions by nearly 90 per cent.

It is hoped the scheme can be scaled up to supply fuel to more homes around the country.

The £11 million mill uses bacteria to break down grasses and herbs, which absorb carbon dioxide while growing, in an anaerobic digester.

This produces biogas which is then “scrubbed” to remove some carbon dioxide and upgraded to biomethane for use in the gas network.

An organic fertiliser, which is intended to help grow more grass, is also produced.

Homes in Berkshire will be supplied through the distribution company Southern Gas Networks.

Ecotricity owner Dale Vince hopes to expand across the country, building mills which minimise the use of fossil fuels while avoiding damage to the environment, and boost energy security.

Mr Vince, 61, said: “We are ready to go and once the gas supply company’s measuring and checking equipment is in place we expect to start in April.”

Green gas has previously been made from food waste or “high energy” crops such as maize, but both face sustainability issues and problems with a lack of scale.

Maize, for example, is fertiliser-hungry, attracts birds that struggle to survive in it, and is harvested around autumn, leaving topsoil run-off.

“Our mix of grass with herbs and clovers makes carbon neutral gas, pulling carbon out of the atmosphere,” said Mr Vince. “It’s a cycle of carbon rather than a net emission.

“When you burn fossil fuel it’s carbon from millions of years ago that gets released into the atmosphere.

“We’re buying the grass from farmers. Instead of them using it to grow for animals, they’re selling it to us.

“It’s better for farmers, they get a better price and more security because animal agriculture is a super marginal business. It only exists with massive subsidies.”

The Daily Telegraph

Britishvolt’s Australian rescue deal runs into delays

A deal by an Australian start-up entrepreneur to buy the assets of the collapsed battery project Britishvolt has been delayed to give administrators more time to scrutinise his plans.

Administrators at EY said on February 6 that they hoped to complete the sale of Britishvolt to David Collard’s Recharge Industries within seven days.

Glen Sanderson, leader of Northumberland county council, which is an interested party in the talks, said checks were being made into whether Recharge had the required funds to complete the deal.

Recharge was founded in 2021 by Collard, a former PwC partner, and was granted “preferred bidder” status for the proposed plant this month. It has not disclosed the size of its bid but it was reported to be about £30 million.

Recharge’s only other project is a scheme to build a gigafactory in the Australian state of Victoria. Its parent company is Scale Facilitation, also founded by Collard, which says its mission is to “create companies”. In 2019 it acquired Sanitex Global, which went on to pick up contracts to supply PPE during the coronavirus pandemic. Recharge’s bid for Britishvolt has been championed by Lord Botham, the UK’s trade envoy to Australia.

Britishvolt collapsed in January after failing to secure funds to build a gigafactory on a site near Blyth in the northeast.

Sanderson said the council was considering easing the terms of a condition on the land at Blyth that allows the local authority to buy it back if there is no gigafactory built by the end of 2024. That deadline is unlikely to be met given the lead time involved in building a factory.

Sanderson said: “We want to bring jobs and continue the fantastic growth that we’re seeing locally in the economy in Northumberland. But on the other hand, we have to remain ultra-cautious, because we’re using taxpayers’ money. So we will definitely be prepared to look at the buyback clause.”

The Sunday Times

Investors back UK-France subsea cable, says Ukrainian born tycoon

The funding to build a £1.4bn undersea electricity cable between the UK and France has been lined up, according to the Ukrainian born tycoon behind controversial plans being reviewed again by the government.

Last month, the High Court in London overturned a government decision to block the cable, which could supply up to 5 per cent of the UK’s energy from the French grid.

Alexander Temerko, a former Russian government minister under Boris Yeltsin and one-time director of the country’s oil company Yukos, told the Financial Times he had secured “notices of intent” for the £1.3bn construction costs from a consortium of investors including banks, hedge funds and pension funds.

These investors, which he declined to name until the project has received approval to go ahead, would also be likely to take over ownership of the scheme in future.

The scheme is still not guaranteed to proceed, however, with fierce local opposition from both residents and politicians over the plans to build the 2,000 megawatt subsea and underground electric power transmission between Portsmouth in Hampshire to Normandy in France. It will have the capacity to transmit up to 16mn MWh of electricity per year.

Although the government has decided not to appeal the court judgment, it has two months in which to ask questions about the proposal and then a further three months to hand down a new decision based partly on the judgment by the High Court.

Temerko, a longstanding donor to the Conservative party, said he had also lined up tenders for the construction work, which would mean the pipeline could be ready as early as 2025 if the government granted consent.

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.