Weekend press round-up: Sizewell B forced to stay shut over safety concerns

In our latest review of sector coverage across the national newspapers, EDF confirms its Suffolk nuclear power plant will be offline for three months longer than expected. Concerns are also shared about the impact of the UK Emissions Trading Scheme, which comes into force this week. Meanwhile, there are warnings that an acceleration of electric vehicle production could be hampered by a lack of supplies and skills.

Sizewell B nuclear plant forced to stay shut over safety concerns

Steel components in the heart of Britain’s most modern nuclear power station are wearing out more quickly than expected, forcing EDF to carry out lengthy unscheduled repairs.

The French energy giant is having to keep Sizewell B in Suffolk offline for three months longer than planned to deal with the safety issues.

The outage at the plant, capable of producing enough electricity for 2.5 million homes or about 3 per cent of Britain’s needs, will further restrict low-carbon nuclear power supplies amid prolonged shutdowns at older reactors.

EDF said it had found wear to some of Sizewell’s stainless steel “thermal sleeves”, which form part of the mechanisms that insert control rods into the reactor core to shut it down. Experience at a reactor in France has shown that extreme wear could eventually result in parts of the thermal sleeves coming loose and obstructing the control rods.

EDF is assessing the cause and extent of the wear at Sizewell and how many components need to be replaced before it seeks permission to restart the plant. It insisted the damage was “nowhere near” the stage where it would prevent control rods functioning, and that in any event the reactor could still be shut down safely.

The Times

UK carbon trading system likely to lead to government intervention, traders warn

The UK’s effort to put a price on carbon pollution through a new trading system that launches this week is likely to lead to government intervention to reduce the cost to companies within months, traders have warned.

Pent-up demand and the UK’s strict emission targets are expected to lead to a sustained rally in the price of carbon credits on the UK Emissions Trading Scheme (ETS) when it goes live on Wednesday.

Under its rules, the government must consider measures to reduce the cost of allowances that companies have to buy to offset their emissions if they consistently trade at more than double their average price of the previous two years.

Because there is no domestic carbon price, the government has used the established EU emissions trading scheme, which British companies were part of for almost 15 years, to set the trigger price for intervention.

The government last week set the threshold at £44.74 a tonne, or about €52 a tonne, based on EU prices between May 2019 and December 2020. But this is below the current cost of EU allowances, which hit a record of €55 a tonne last week, after a strong, sustained rally this year prompted by governments upping their climate commitments. When the UK left the EU system five months ago the price was closer to €30 a tonne.

Carbon traders and analysts said UK prices were likely to rise sharply when trading began — driven by strong demand and the limited number of allowances initially set to be auctioned — to close to or above that of the EU market. The government raised the price floor, the minimum that credits can

The British system had been closely modelled on the EU carbon market, but there are key differences, analysts said. The UK has a stricter national emissions reduction target and while the EU system also has a market intervention mechanism, it is based on prices rising to three times, rather than twice, the rolling average.

The UK reduced the trigger limits for the first two years of the scheme to address concerns that as it serves a smaller market than its EU counterpart it could suffer greater volatility.

“The EU price will be a reference point for the UK ETS . . . [and] is not showing any signs of weakness,” said Ingvild Sorhus, lead analyst at Refinitiv Carbon Research. If EU prices continued “skyrocketing”, the UK’s intervention mechanism was likely to be triggered, she said.

The carbon price “is going in one direction”, said Matt Finch, UK policy manager at campaign group Transport and Environment.

The government declined to comment on the possibility of intervention.

The Financial Times

Ex-Ofgem chief joins North Sea carbon capture firm Storegga

A former chief energy regulator is embracing the shift to greener technologies in the North Sea, joining an emerging carbon capture and hydrogen business as chairman.

Alistair Buchanan, who was head of the regulator Ofgem for a decade to 2013, has been appointed non-executive chairman at Storegga Geotechnologies.

The private company led by former oil and gas producer Ophir Energy’s Nick Cooper is backed by major global investors Macquarie, Mitsui and Singapore’s sovereign wealth fund GIC.

It is behind the Acorn project to stash carbon dioxide emissions under the North Sea off the Scottish coast and produce hydrogen, as well as other carbon removal efforts.

Mr Buchanan helped devise the regulatory system for the offshore wind industry and onshore electricity networks while chairing Ofgem.

Storegga said that experience would be helpful as the Government and Ofgem develop carbon and hydrogen markets.

Dr Cooper, chief executive of Storegga, said he was delighted that Mr Buchanan was joining.

“Our board and senior team have the skillsets and experience to play a leading role in meeting the UK’s net zero commitments and in delivering shareholder returns,” he said.

Mr Buchanan said Storegga was pioneering carbon reduction and removal, and positioning the UK as a global leader in carbon capture solutions. He is also chairman of Electricity North-West and on the board of WH Ireland.

In a new investment round in March, GIC and Mitsui both took a 15pc stake in Storegga, with both getting a board seat.

Cornerstone investor Macquarie has a 21.5pc stake and two board seats. The funds will help Storegga’s Acorn project get to a final investment decision.

Daily Telegraph

Jump in switching electricity supplier after energy price rise

About 657,000 households switched electricity supplier last month, the second highest figure on record, after rising prices prompted people to shop around.

The surge follows Ofgem’s decision to allow suppliers to raise prices for 15 million households on standard or prepayment tariffs from the start of April.

Energy UK, the industry body, said that more than 2.1 million households had switched supplier so far this year, slightly ahead of this stage in 2019, when switching hit a record high.

Ofgem controls how much suppliers can charge 11 million customers on default tariffs through the energy price cap, introduced by the government at the start of 2019. The regulator updates the level of the cap twice a year.

It authorised suppliers to increase default tariffs by about £96 a year from April in light of rising wholesale gas and electricity, taking a typical dual fuel bill to £1,138 a year.

Prices for four million households with prepayment meters, governed by a separate price cap, were also increased by £87 a year.

The increases were passed on by all the largest suppliers and appears to have prompted a surge in switching, in search of cheaper deals.

The Times

UN climate summit organisers consider vaccine drive for delegates

The UK and the UN are exploring the possibility of a special vaccination programme to ensure the global climate conference in Glasgow can proceed face-to-face in November.

Pressure is building on the UK to find a way to safely host the UN COP26 in person as climate ministers say face-to-face discussions are imperative, while a further postponement of the meeting already delayed by a year due to coronavirus risks drawing the ire of developing countries.

Alok Sharma, COP26 president, confirmed on Friday that vaccines were among the options being considered.

“We are exploring every possible covid security measure, and that includes testing, vaccines and other measure, to keep COP26 covid-free,” he said in a speech in Glasgow.

He also renewed his call to end coal financing. “Glasgow must be the COP that consigns coal to history,” he said, adding that this it was a “personal priority” for him.

Last week he said his COP team was “proceeding on the basis that this event is happening in November”, adding, “no one is actually looking for a delay”.

While a formal proposal about a special vaccination drive for delegates has not been made yet, the issue has been raised in planning discussions and is a particular concern for countries that lack vaccine access.

About 30,000 people attend the UN climate conference in a normal year. However, UK organisers are zeroing in on a “hybrid model” that would allow national delegates and negotiators to meet in person while almost everyone else attends online.

Decisions around the logistics and format for the conference must be approved by the Bureau of the COP, a UN body composed of delegates from 11 countries, which next meets in early June.

Even a “hybrid model” would involve thousands of people meeting — typically attendance includes about 9,000 national delegates from nearly 200 countries.

Inger Andersen, head of the United Nations Environment Programme, said a faster global vaccine rollout would enable the COP. “I find it outrageous that we have the vaccines ‘haves’ and the vaccine ‘have nots’, so the more and the quicker we roll it out, the faster we will overcome the pandemic — and have a successful COP,” she told the Financial Times.

The uneven access to vaccines and a specific COP vaccine programme has become a sticking point. “The issue has been raised informally and bandied about,” said one source familiar with the discussions. But the UK might not be able to pull off a special programme, the person said. “It’s simply too politically explosive and sensitive.”

The Financial Times

Electric shock for the UK’s car industry

Every few minutes, a Mini gets the electric treatment at BMW’s pre-war car factory in Oxford.

A robot pushes a black, T-shaped battery pack into a chassis that glides above on an aerial production line. The battery fills the space where the gearbox, transmission and exhaust would normally go.

The “stuff-up”, as this is known, says much about the challenges and opportunities facing Britain’s car industry. Oxford builds about 35,000 electric Minis a year — but unlike the petrol engine in the conventional Mini, the battery and electric motor come from Germany.

That poses an existential question for BMW’s Hams Hall factory near Birmingham, which for the past 20 years has made petrol engines for the Mini and employs more than 1,000. And it underlines the challenge facing the broader UK automotive industry. In a petrol Mini, about 40 per cent of the parts by value come from the UK. In an electric Mini, that drops to about 20 per cent. There are also far fewer parts in an electric car.

The industry is racing to make the switch from combustion engines to electric cars — a switch that has huge implications for the 2,500 suppliers and 180,000 staff who work in their factories. Many of those suppliers are set up for a world of exploding fossil fuels rather than electrons. And many are in areas such as the West Midlands, which, after decades of deindustrialisation, the government now plans to “level up” by creating jobs and pouring in investment.

“We are arguably among the best in the world in internal combustion engines,” said Mike Hawes, head of the Society of Motor Manufacturers and Traders (SMMT). “But if you are a supplier making a part that goes into an internal combustion engine, the writing is on the wall. It’s just a question of when.”

Dame Julia King, chairwoman of the Climate Change Committee’s adaptation committee, said the industry needed help to make the transition. “We’ve had that hi-tech, skilled manufacturing base that has made brilliant diesel engines,” she said. “We need to replace that. These people, these communities, they need jobs.”

Part of the future lies in battery factories. Efforts to woo the likes of Panasonic to establish gigafactories in the UK, able to build tens of thousands of electric car batteries a year, have dragged on for years. Yet on the Continent, carmakers, governments and investors are spending heavily on gigafactories from Sweden to Germany to Poland — aware that without them, their car plants face extinction.

“If we are going to keep car assembly, the Nissans and Toyotas, we are going to need the battery production because otherwise they are going to say, ‘Shipping the batteries all the way to the UK just to assemble them into cars is not very sensible; we might as well assemble the cars somewhere else,’ ” said King. “We need those big investments.”

The Faraday Institution, a state-funded organisation that researches batteries for the car industry, reckons eight gigafactories will be needed by 2040 — without which 114,00 of the UK’s automotive manufacturing jobs will go. But it says investing in gigafactories could boost employment by 60,000 to 250,000.

The clock is ticking: under the terms of Britain’s trade deal with the EU, car- makers have until the end of 2026 to source batteries from within the UK or EU. Failure to do so will mean tariffs — potentially making production unviable.

To see the full article (subscription required) click here

Sunday Times

Caldera Warmstone heat battery offers ‘game changing’ low-carbon technology for homes

Homes could be kept warm with giant “heat batteries” developed by a British start-up that has won backing from the government and external investors.

Caldera, based in Hampshire, uses cheap off-peak power and electrical elements to heat a huge highly-insulated block of material called Warmstone, made from recycled metals and aggregate. A coil of water pipes pass through the block, heating up water that can then be used in a conventional central heating system with radiators and a hot water tank.

Weighing 1.7 tonnes and measuring 1.7 metres tall by 1 metre diameter, the heat battery is intended to be installed outside a property and to be used primarily as a replacement for oil or LPG boilers. They are used in more than a million of the homes that are not on the gas grid.

Oil heating systems are due to be phased out in coming years to meet climate targets but switching to electric-powered air-source or ground-source heat pumps is likely to prove challenging in older properties with solid walls and poor insulation.

Heat pumps can cost anywhere from £5,000 to more than £15,000 to install depending on type but insulation and other changes to make them work efficiently could increase the total bill to more than £27,000 in some solid wall properties.

Caldera claims its heat battery, which will retail at about £12,000, offers a cost-effective low-carbon alternative and can be swapped in to replace an oil tank and boiler without the need for further renovation.

The proposition hinges on using smart meters and variable electricity pricing to heat up the battery at cheap off-peak rates, such as when there is excess wind power. Caldera says several companies are offering off-peak power at rates that would make the running costs comparable to or cheaper than an oil boiler.

The 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.