Weekend press round-up: Pandemic drives UK towards greenest year for electricity

In our review of sector coverage in the national press over Christmas and new year, there is optimism that 2021 will be a landmark year for tackling climate change. Projects profiled include significant offshore wind projects and a village that will be the UK’s first public gas grid to be heated partially by hydrogen. There are also reports on green investment and an interview with Octopus Energy’s founder Greg Jackson.

Pandemic drives UK towards greenest year for electricity

Britain’s electricity system is on track for its greenest year after the shift to renewable energy gathered pace and the pandemic suppressed power demand.

Data from National Grid shows that in the first 11 months of the year the “carbon intensity” of Britain’s electricity system — a measure of how polluting it is — has been lower than any year on record.

National Grid’s electricity system operator division said that by November the measure stood at an average of 181 grams of carbon dioxide emitted for every kilowatt-hour of electricity generated.

For the whole of last year that figure averaged 215g, having fallen every year since 2013 when burning coal was still Britain’s biggest source of electricity and the carbon intensity stood at 529g per kilowatt-hour.

The Climate Change Committee, the independent body that advises the government, has said that Britain’s power system will need to be decarbonised by 2035 to put the country on track for its goal of net zero emissions by 2050.

The huge decline in the carbon intensity of the power system over the past decade has been driven by the phasing out of ageing coal-fired power stations. Many shut under environmental legislation or after becoming uneconomic due to carbon tax and the rise of subsidised wind, solar and biomass plants.

Green energy records have tumbled this year aided by unusually low power demand due to the pandemic. During the first lockdown, the shutdown of factories and offices resulted in electricity usage falling by about 20 per cent compared with usual levels. That helped to deliver a record 68-day period without using coal-fired power plants, ending on June 16.

The combination of warm weather and lockdown in May led to the lowest monthly carbon intensity on record, of 143 grams per kilowatt-hour of electricity, and the greenest day on record on Sunday, May 24 when the intensity fell to 46 grams of carbon dioxide.

Even during the second lockdown with more industry still operating, National Grid reported that power usage was about 7 per cent lower than usual. This may have helped to reduce the need to run additional coal plants.

Britain’s renewable power generating capacity has also grown: as of the end of June it stood at 48.5 gigawatts, according to government figures, up 5.4 per cent on a year earlier. Most of the increase has been driven by new offshore wind farms.

On December 18 wind power delivered a record of almost 17.3 gigawatts of electricity output between 1pm and 1.30pm. That equated to 43.2 per cent of supplies. In the summer a record was set for wind’s share of the output at 59.9 per cent on August 26.

Solar power also delivered record output in April of 9.68 gigawatts.

Rob Rome, interim head of national control for National Grid’s electricity system operator, said: “The grid continues to transform at an astonishing rate as we harness the growth of renewable power sources.

“[December 18’s] wind record is the latest to illustrate this changing nature of electricity in Britain.

“Reduced reliance on coal and an increase in energy coming from zero carbon sources is a trend we expect to continue as we move towards our ambition of being able to operate the system carbon free by 2025.”

The Times

Dogger Bank’s giant turbines herald a wind of change in UK industry

Beyond the horizon off the coast of North Yorkshire, a quiet revolution is emerging from the waves of the North Sea.

More than 80 miles from land, hundreds of the world’s most powerful wind turbines have begun reaching into the air as construction progresses on the biggest windfarm ever built. Almost 200 turbines, each almost as tall as the Eiffel tower, will soon rise above the submerged Doggerland to populate an expanse of sea as large as North Yorkshire itself.

The Dogger Bank windfarm is an engineering feat that marks a step change in the growth of renewable energy. Each steel structure, weighing 2,800 tonnes, has been designed to soar more than 250 metres from where their heels are buried in the seabed to the top of each 107-metre blade. The staggering scale of the turbines means that each one can generate enough electricity to power 16,000 homes, at less than the average price of electricity in the wholesale energy market.

This offshore windfarm, and others like it, promises to power a surge in clean electricity – which will soon be needed in vast volumes to charge cars, heat homes and produce green hydrogen gas for factories and transport. It is a central part of the government’s plan to make the UK carbon neutral by 2050, and to reimagine Britain’s global role in what will be an industrial revolution for the low-carbon age.

And it is already playing a significant role: on Boxing Day, Storm Bella ensured that more than half of Britain’s daily electricity came from wind turbines for the first time.

The construction of the Dogger Bank farm will fall to one of the UK’s few major renewable energy companies, SSE. Built on the legacy of some of Britain’s earliest renewable energy projects – its roots are in Scotland’s hydro-electricity board – SSE will construct the windfarm in three phases through the 2020s. Each phase represents a multimillion-pound investment, hundreds of jobs in the north-east of England, and enough clean electricity to power millions of homes.

Alistair Phillips-Davies, SSE’s chief executive, announced a £6bn financing deal – involving 29 banks and advisers – last month to support the cost of building the first two phases, and the third deal could be announced by this time next year.

“For SSE, and for all our staff, there’s definitely nothing that we could be more proud of at the moment than reaching financial close on what will ultimately be a £9bn project,” he said.

“It will be the world’s biggest, most innovative offshore windfarm. It will generate more energy per turn of those rotors than any other project, enough to power a house for two days. But the amazing thing is, we’re going to do more. We’re going to see more and more [offshore wind] on the back of the prime minister’s 10-point plan.”

Boris Johnson’s plan for a green industrial revolution relies heavily on offshore wind power, which he hopes to increase threefold to 40GW by 2030. This is important for two reasons. The first is the rapid expansion of the renewable energy industry to help generate enough clean electricity to displace fossil fuels in the energy system, as the UK works to create a net-zero-carbon economy by 2050. The second reason is to spur a supply-chain boom that can help to drive the UK’s green economic growth and create substantial numbers of “green-collar” jobs.

The Guardian

Orsted’s Hornsea Three offshore wind project granted planning consent

Orsted’s Hornsea Three wind project off the coast of Britain has been granted development consent, the UK’S Planning Inspectorate said on Thursday.

The project, in the North Sea off the Norfolk coast, will have a capacity of 2,400 megawatts when built and could generate enough electricity to power around 2 million homes.

Yahoo News

UK village to be first on public gas grid to use hydrogen

More than 650 homes in a small village near Newcastle will this year become the first on the UK’s public gas grid to be heated partially by hydrogen, as energy companies test ways to slash emissions from one of the most polluting parts of the economy.

Up to 20 per cent hydrogen will be blended into the natural gas network that serves the village of Winlaton in Gateshead towards the end of the first quarter of 2021.

It will mark a key milestone in tests to see if hydrogen — which does not emit carbon dioxide when burnt — could help reduce the climate impact of buildings in the UK, which were last year the third biggest emitters of greenhouse gas emissions, behind industry and surface transport. Currently about 85 per cent of homes and 63 per cent of public and commercial properties are heated with polluting natural gas.

Energy companies such as Northern Gas Networks and Cadent — which own local gas infrastructure in Britain — have been researching whether gas could be replaced with hydrogen to help the UK meet its legally binding 2050 net zero emissions target.

UK ministers in December set out plans to effectively ban the installation of new gas boilers in properties “by the mid-2030s” and replace them with low carbon heating systems such as electric heat pumps or hydrogen appliances.

Several hydrogen trials are already under way in the UK but they are in properties that are either uninhabited or on a closed private network. A small number of purpose-built, uninhabited houses on a secluded RAF base in Cumbria are being heated on 100 per hydrogen, while 20 per cent hydrogen has been blended into the enclosed private gas network at Keele University in Staffordshire.

Tim Harwood, who oversees hydrogen projects at Northern Gas Networks — whose infrastructure covers Winlaton — said the Gateshead experiment was the next key stage before public trials could begin using 100 per cent hydrogen heating. Another gas network, SGN, recently secured funding from the energy regulator Ofgem that would allow it to proceed with a trial in 2022 to heat homes in Levenmouth in Fife, Scotland, with 100 per cent hydrogen, while Northern Gas Networks is planning a similar project.

In Winlaton, all appliances will remain the same and have been checked by engineers but a switchover to 100 per cent hydrogen will require new boilers.

“The hydrogen blend is sort of a stepping stone towards a 100 per cent world and it will teach us a lot about how we need to do things and also helping the public acceptance as well,” Mr Harwood said.

The Financial Times

Number of households struggling in energy poverty reaches five-year high during pandemic

The number of householders struggling to keep on top of their energy bills rose to a five-year high during the pandemic.

Some 777,000 people were in debt to their electricity supplier between July and September last year – the most since 2015.

Increased energy use during lockdown, rising energy prices and pressure on finances from job losses and furlough have left customers struggling with bills.

The number in energy debt rose in the first three quarters of last year on the same time in 2019, show figures from a Freedom of Information request to regulator Ofgem by comparison firm energyhelpline.com.

It rose 12% from January to March, 5% April to June and 7% July to September.

Wholesale energy prices, which make up around half of domestic energy bills, have continued to increase since last spring, helping raise the cost of the cheapest fixed-rate tariff by 8%, or £63 a year, since April – with the average cost up from £758 to £821 a year.

Energyhelpline predicts the Ofgem price cap – the maximum suppliers can charge for their standard variable tariffs – is likely to be increased at its next review early this year, leading to higher bills for millions.

Tom Lyon of energyhelpline.com said: “Not only are consumers facing higher bills as a result of having to use more energy at home, but the pandemic is leading to the prospect of more expensive energy.”

Daily Mirror

Energy needed a digital revolution – and we are it’

Greg Jackson, chief executive of Octopus Energy, wears the unassuming combination of jeans and trainers one might expect from the founder of a wildly successful startup. There’s also a vast open-plan central London office, easy camaraderie with staff, lots of plants. He has the enthusiasm and world-changing idealism too. With all these markers of a tech unicorn – a deal last month with Tokyo Gas valued it at $2bn (£1.5bn) – it’s easy to forget that Octopus is an energy company. Jackson, 49, says the distinction is increasingly irrelevant.

Octopus is a new breed of energy supplier, built on cutting-edge technology and unencumbered by the creaking billing systems and fossil-fuel plants that plague the UK’s “big six”. Set up just five years ago, it has been free to view the energy market as a tech startup would: ripe for disruption. This has made Octopus Britain’s fastest-growing energy supplier, and helped it agree that Japanese deal – under which it will supply energy to homes in Japan, while Tokyo Gas takes a near-10% stake in Octopus.

“When we started the company a lot of people asked how we planned to take on the big six. They looked like big companies. But on a global scale, they’re not that big,” Jackson said in an interview shortly before the Tokyo Gas deal was announced.

Octopus Energy is backed by investment firm Octopus Group and has more than a million UK energy customers. But Jackson’s vision goes well beyond Britain. A serial tech entrepreneur (and former coffee shop owner), he believes Octopus Energy could become the first home-grown energy supplier to reach 100 million homes. And he plans to reach this ambitious milestone within a few years.

“If we look downhill, we’ve come a long way and can be incredibly proud,” says Jackson, whose stake in Octopus is now worth £115m. “But the global energy market is worth about $2 trillion a year and will grow to $4tn as we run more of our transport and heating on electricity. This means our global market share is about 0.2%. We’ve a long way to go.”

The beating heart of this ambition is Octopus’s energy software, now known as Kraken, which helps it run a super-efficient energy operation, and has helped unlock the future benefits of low-carbon energy.

“When we set out, we knew a lot about technology,” said Jackson. “We didn’t know about energy, but we could see that the sector had not yet had a digital revolution. From windfarms to household, it ran on systems that were two decades old.”

Fossil fuel plants are turned on and off to meet fluctuating demand. But in a world where cheap and abundant renewable energy is charging millions of batteries in homes and cars, consumers can become active participants in the energy system.

Octopus made headlines earlier this year by paying its customers to use electricity when Britain’s renewable energy reached record highs. It’s one example of a future hi-tech energy system that empowers individuals. “Electricity is becoming a tech sector,” said Jackson.

Kraken’s “elec-tech” software could facilitate a new way of using energy, and underpin Britain’s green industrial revolution. “When a customer comes home and plugs in their electric car,” he says, “Kraken will automatically charge when electricity is cheap, and sell energy back to the grid when it’s expensive. By morning you’d have a fully charged vehicle at the lowest possible cost.”

In future this could be extended to entire districts: neighbourhoods full of batteries quietly acting as virtual power plants.

“This could be the backbone of the green industrial revolution. But we need to empower people to make the most of ‘green electrons’ when they are available. That’s what Kraken does.”

Already 17 million customers are plugged into Kraken software. British energy suppliers including E.ON and Good Energy use it to run their own businesses and there are Octopus Energy outposts in Germany and the US. Earlier this year it struck a deal with Origin, Australia’s leading energy supplier, which agreed to take a 20% stake in Octopus and license the Kraken software.

It is no surprise, then, that Jackson regularly refers to the tech giants that have used digital tools to build a global business. Amazon and Uber used technology to trigger a fundamental global shift in sectors which are arguably far more local and personal than energy supply. “A big cab company used to be one with more than one office. Today, Uber operates in thousands of cities across the world. So why hasn’t anyone taken a global view of energy?” he asks.

“I realised I needed to be honest with myself and the team about what we can achieve if we set our minds to it. I didn’t dare say it before, but I realised that if I’m not honest, we’ll definitely fail. So now we’re wearing our ambition as a T-shirt.”

Would the T-shirt in question read “world domination”? It would be a good fit with jeans and trainers either way.

The Guardian

Scottish Power hits out at ‘unsustainable’ pricing among rivals

Energy supplier Scottish Power has hit out at “unsustainable” pricing among smaller rivals and called on regulators to protect payments made by customers in advance.

More than 20 small to mid-sized energy companies have collapsed since September 2018, with several owing millions of pounds to customers for energy not yet delivered, as well as other industry payments.

Under regulator Ofgem’s procedures for supplier failure, a rival company is appointed to pick up failed suppliers’ customers and pay them back, and can then recoup the costs from the rest of the industry.

Scottish Power was appointed to take on Extra Energy’s 129,000 domestic and business customers when the latter collapsed in November 2018. It is now applying to Ofgem for £6.5m to help cover remaining customer credit balances, after funding the first £10m.

Andrew Ward, chief executive of Scottish Power’s retail unit, said: “We’ve raised our concerns time and again that the pricing position of small suppliers is not sustainable and recently called again for Ofgem to require suppliers to protect and ring fence customer credit balances and government obligation payments to ensure customers were protected if companies get into difficulty.”

He added: “We want to build a competitive and fair energy system for all energy consumers and to do that we need to see real action taken by Ofgem.”

The Daily Telegraph

Green body gives verdict on Boris Johnson carbon-cutting policies

The prime minister’s bold promises to protect the climate are not yet backed by policies and cash, says an end-of-year report by a think tank, Green Alliance.

It says there’s a “significant gap” between Boris Johnson’s world-leading plans and what’s needed to meet the UK’s carbon-cutting targets.

The government admits that low-carbon policies are a work in progress – but insists they will be published in coming months.

Green Alliance says current government plans add up to less than a quarter of the emissions cuts needed to achieve its 2030 climate goal.

Its report estimates that £22.7bn of additional spending will be needed to tackle the climate and nature challenge. This annual sum includes:

• £9bn on accelerating the transition to electric vehicles, and on walking, cycling, bus and rail infrastructure
• £2.3bn on making buildings efficient and kickstarting the roll-out of electric heat pumps
• £400m on establishing a resource efficiency programme for industry
• £6.6bn on nature restoration and the food and farming sector
• The authors say: “During 2020 there have been many signals of intention to act on climate and nature.

“But policy and spending has fallen short of what’s needed to achieve these aims. There’s an immediate spending shortfall in meeting the UK’s climate and nature goals to the end of this parliament in 2024.”

The authors note that the UK has the chance to lead the world on climate policies at the vital global climate conference hosted by Glasgow next year. But they say: “The UK can only lead if it has its own house in order.”

A government spokesperson didn’t deny the gaps in policy and funding but insisted that forthcoming strategies would show how carbon emissions would be reduced in every economic sector.

“Building on the prime minister’s ambitious ten point plan, the recently published energy White Paper provides concrete measures to fully decarbonise our electricity system by 2050 and build back better, while ensuring reliable and affordable energy for consumers.

“This is part of a suite of bold plans across key sectors of the economy which the government will be publishing in the run up to COP26 (the Glasgow conference), culminating with a comprehensive net zero strategy.”

Net zero means that any emissions not cut by 2050 will be offset by activities such as tree planting to soak up the remaining CO2.

See Green Alliance’s full assessments here https://www.bbc.co.uk/news/uk-politics-55426155

BBC News

UK banks to launch wave of green products

British banks are launching a wave of climate-change products and tightening lending standards amid criticism over their slow response to global warming.

The UK’s largest lenders, HSBC, Barclays, Lloyds and NatWest, have failed to impress campaigners, despite ambitious statements about their commitment to reducing carbon emissions in 2020.

“UK banks have talked the talk on climate, but their actions have fallen short,” said Simon Youel, head of policy and advocacy at Positive Money, which promotes a fairer financial system.

Although critics have homed in on HSBC and Barclays over financing fossil fuel companies, retail-focused lenders are also grappling with how to cut their indirect carbon footprint linked to mortgage lending.

Dutch bank ABN Amro says its mortgage book causes more greenhouse gas emissions than its lending to mining or industrial companies.

Lloyds and NatWest have both pledged to halve the emissions linked to their loan books, but have yet to work out how high their emissions are.

“The government wants disclosure to be mandatory across the whole economy by 2025 anyway, [so] banks should have done this already,” Mr Youel said.

Some bankers admit the industry has some catching up to do after years of complacency.

Speaking at the Financial Times global banking summit, Barclays chairman Nigel Higgins said: “If you wind the clock back, we along with lots of other people . . . have been slower than, with hindsight, we should have been to address the climate challenge.

“Nobody can be happy looking at where we are today and be pleased with the amount of progress we’ve made since this topic first moved centre stage.”

With the UK preparing to host the UN COP26 climate summit in Glasgow at the end of 2021, scrutiny of the banks is likely to intensify with campaigners and politicians already stepping up the pressure.

Bankers for Net Zero — an initiative backed by an influential group of MPs — in December started pushing banks to sign up to a list of climate commitments that it says would be “the most ambitious in the world”.

A month earlier, in his first big speech on financial services since taking over as chancellor, Rishi Sunak said the industry should be a “critical enabler” of the country’s shift toward net zero carbon emissions.

But bankers warn there are limits to how much banks could do alone.

“The UK needs to put in place the right infrastructure and environment to allow companies to do the things they need to do,” one executive said.

Still, banks are optimistic they can accelerate progress in meeting climate goals as they gear up for a series of announcements and new product launches in 2021.

Barclays said a new “carbon limit” on the amount of activity it finances will force it to lower emissions, despite its refusal to halt lending to fossil fuel businesses completely.

The limit is designed to come down gradually each year, but the bank said it would be tight enough to force immediate “difficult decisions” about who to lend to.

NatWest made combating climate change a key pillar of its rebrand under new chief executive Alison Rose, and launched the UK’s first “green mortgage” in November, offering lower interest rates to borrowers if they bought a more energy-efficient home.

In 2021, however, it aims to target a much larger customer base by allowing customers to fund green home improvements at cheap rates through their existing mortgage.

Lloyd Cochrane, NatWest head of mortgages, said: “The green mortgage for new customers was the first priority because it was a relatively simple change, but we’re working on how we can help our 1.2m existing customers.”

Lloyds is active in funding the renewable energy sector, but early efforts in retail banking have been more limited, focusing on online tools to encourage homeowners or property developers to take action themselves.

However, the group plans to reveal more detailed emissions data and explicit targets in February.

As well as being the UK’s largest mortgage lender, Lloyds is one of the country’s biggest providers of car finance and is looking to expand its lending for electric vehicles, according to a person familiar with its plans.

The Financial Times

Macquarie confirms £3bn financing of UK green projects

Infrastructure investor Macquarie has written to UK ministers to confirm it has financed billions of pounds of environmentally friendly projects as part of an agreement in its purchase of the Green Investment Group from the government three years ago.

The Australian company promised to finance £3bn in green energy projects in the UK and Europe over the three years following its £1.6bn acquisition of the group, which was then known as the Green Investment Bank, in August 2017.

Macquarie said that, by October 2020, the group had agreed £4.7bn in financing in the UK and Europe, and £6.9bn worldwide. About £3.1bn of this financing is in the UK.

In a letter to Kwasi Kwarteng, the UK minister for energy, Daniel Wong, global co-head of Macquarie Capital and chair of the Green Investment Group, said it had “remained true to its original mission”.

The letter added that its growth reflected the “objectives of the UK government, in allowing GIG the freedom to increase the sectors and technologies in which it operates, commit ever greater levels of capital to green projects, and expand its operations internationally to export this UK success story overseas”.

The bank was set up under the coalition government in 2012 to draw private capital into offshore wind farms, waste-to-energy plants and energy-saving projects.

It launched a sale process three and a half years later to reduce public debt. The government had also concluded there was enough private capital in the market and a risk that the bank was adding to competition in the sector, according to a National Audit Office report on the sale.

By the time it was sold in 2017, the bank had invested in 100 projects with a total transaction value of £12bn, committing £3.4bn of its own capital.

However, the NAO concluded that not enough information was available “to assert the degree to which the GIG was the cause of the growth in the green economy since 2012”.

More than half the investment capital went to wind farms, where the UK is now the global leader in offshore capacity, according to a recent Global Wind Council Work Energy Report.

The Financial Times

Roman road remains uncovered in Northumberland

Remains of a Roman road which pre-dates Hadrian’s Wall have been uncovered in Northumberland.

The find, which is almost two thousand years old, was made during work on the water network near Settlingstones.

They are thought to be from the road’s foundations and built by Agricola or his successors about AD80, although no evidence of its exact date was found.

Archaeologists said given its location it was an “important part” of the early northern Roman frontier.

The ancient remains were discovered by Northumbrian Water when it began improvement works at the site of The Stanegate road, which linked Corbridge and Carlisle.

Philippa Hunter, from Archaeological Research Services Ltd, which worked on the site, said: “While monitoring the excavation pit, our archaeologist identified a deposit of compacted cobbles thought to be the remains of the Roman road’s foundations.”

The route was constructed using “rounded cobbles” set in a layer which measured around 15cm (6in) deep, with around 25cm (10in) of gravel surfacing laid on top.

“Unfortunately no dating evidence or finds have been recovered to confirm the precise date of the archaeological remains,” Ms Hunter added.

“However, given the location of the cobbles along the projected route of the Roman road and its depth below the modern road surface, we are confident the remains identified form an important part of the early northern Roman frontier.”

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.