Weekend press round-up: Starmer pledges faster transition from fossil-fuel electricity

In our latest review of sector coverage in national media, the Labour leader sets out his target for a fossil-fuel free electricity system by 2030. The party is also set to call for tougher penalties for water company bosses who allow the most serious sewage leaks. Meanwhile, newly released accounts for Ovo show the energy retailer feared breaching its financial covenants earlier this year.

Starmer pledges faster transition from fossil-fuel electricity

The UK would have an entirely carbon-free electricity system five years earlier under a Labour government, party leader Keir Starmer announced on Sunday.

Starmer also pledged that he would “put a stop” to new long-term exploration for oil and gas in the North Sea, in contrast to the current Conservative administration.

The Labour leader said that, if elected prime minister, he would set a target of a fossil-fuel free electricity system by 2030 to make the UK a net exporter of clean energy. That would require a faster rollout of renewable energy schemes, such as wind farms and solar panels, as well as new nuclear power stations.

That target compares with the Conservative government’s aim of reaching the same target by 2035, and generating 95 per cent of electricity from carbon-free sources by 2030.

“The British people are sick and tired of rocketing energy bills and our energy system being exposed to dictators,” Starmer said. “They want long-term solutions to cut bills for good. That is why I am proud to announce that a central mission of my Labour government will be to turn the UK into a clean energy superpower.”

Jonathan Reynolds, Starmer’s shadow business secretary, claimed that hitting the clean energy target would save British households £93bn over the rest of the decade — given the sky-high wholesale price of gas.

Decarbonising the electricity system, however, is only one part of reaching the government’s existing “Net Zero 2050” target, which also requires shifting transport and heating systems from gas to electricity.

Labour said it would hit the 2030 electricity target by quadrupling offshore wind, accelerate the use of floating offshore wind farms, tripling solar power and doubling onshore wind capacity.

On Friday, the Conservatives quietly gave the go-ahead to new onshore wind turbines in England, after a lengthy moratorium imposed by former prime minister David Cameron.

The Labour plan also envisages the completion of new nuclear power stations at Hinkley Point and Sizewell, as well as backing new “small modular reactors”.

However, Starmer said a Labour government would keep a “strategic reserve” of back-up gas-fired power stations to guarantee security of supply. He added that it would invest in hydrogen and in carbon capture and storage schemes, to ensure there is zero-emission back-up power when there is no wind or sun.

The Labour leader said he would end the awarding of new oil and gas licences and oppose fracking, arguing that Britain’s reliance on fossil fuels has left the country “vulnerable to Putin’s manipulation of international markets.”

But an aide clarified that production from existing North Sea oilfields should continue to play an important role. “New long-term exploration isn’t the right option for price and climate reasons,” the person explained.

The Financial Times

Water bosses who allow serious sewage leaks ‘should be sent to prison’

Water bosses who allow the most serious sewage leaks should be sent to prison, Labour will say this week.

The party wants to introduce tougher penalties to prevent raw sewage overflowing into rivers and the sea after more than 100 beaches were polluted this summer.

In a speech on Tuesday, Jim McMahon, Labour’s shadow environment secretary, will call for a new target to reduce overflows by 90 per cent by 2030 and new powers for the Environment Agency to enforce existing rules.

In the most serious cases, directors who preside over sewage leaks from unlicensed pipes should be sent to prison, he will say.

He will also call for water companies to be fined automatically if they release sewage into rivers, by installing new monitoring stations they will have to pay to install.

Labour says any fines could be used for long-term investment in Britain’s water infrastructure, but would not lead to higher bills for consumers because of regulations that prevent them rising without consent from Ofwat, the water watchdog.

The call comes after the Environment Agency backed custodial sentences for water bosses in the most egregious cases, such as after repeated interventions from the regulator are ignored.

The Sunday Telegraph

Energy group Ovo warned of financial peril before UK government help

Ovo Group, the owner of the UK’s third-largest energy supplier, feared breaching its financial covenants in the months before the government announced unprecedented support for British households and businesses to pay soaring energy bills.

Newly released accounts for Ovo show it was at risk of not being able to meet its lending requirements this year, as it feared a sharp rise in bad debt if households were unable to afford record electricity and gas bills.

The business warned that it expected to breach banking covenants during 2022 because of soaring prices, according to accounts filed for 2021 and published by Companies House on Sunday.

“High energy prices resulted in [an] over 50 per cent increase in bills in April 2022, which means that millions more households will struggle to heat their homes in winter”, the company said, with “a further increase in bad debt” expected during the year.

Breaching its covenants would risk putting the viability of the business, whose core operations are still lossmaking, in “material uncertainty”, Ovo said in its accounts.

In a statement on Sunday following the release of its accounts, Ovo said: “We have not breached any covenants and we do not expect to breach any covenants in the next 12 months.

“At the time of signing our accounts [in June 2022], Russia’s war on Ukraine sent energy prices rising even further and our auditors were right to flag concerns about the impact of these market uncertainties.

“Since the end of our financial year, we have seen significant steps by the government and the regulator to create more certainty for customers and for companies.”

The company added: “Our auditors have made clear that despite the unprecedented challenges we face in the energy markets, they are confident in our ability to operate.”

The company reported a pre-tax profit of £370mn for 2021, compared with a loss of £176mn a year earlier, the accounts show.

However, the number was boosted by a £372mn revaluation of its energy derivative contracts, which do not reflect the company’s trading. Ovo said its underlying business made a pre-tax loss of £2mn, which compares with a loss of £66mn during 2020.

The 2021 accounts also showed that the highest-paid director — believed to be Adrian Letts, who stepped down as chief executive in February — received a 50 per cent pay increase, from £379,000 to £573,000.

The Financial Times

Nationalised energy company could save households £4,400 in two years, analysis finds

A nationalised energy company championing renewable and nuclear sources could save British households up to £4,400 over the next two years, new analysis suggests.

As the government steps in to freeze rocketing energy bills at £2,500 a year – an intervention that will cost tens of billions of pounds – research by the Trades Union Congress (TUC) suggests that Britain’s reliance on its fully privatised energy market has left households with higher costs and dependent on foreign technology and investment.

Conversely, the TUC found, a new British state energy generation company – along the lines of EDF in France or EnBW in Germany – would see the government receive between £63bn and £122bn in revenues over the next 24 months.

This equates to between £2,250 and £4,400 per household, according to the TUC, which has proposed spending £2.85bn to nationalise five of the UK’s largest energy suppliers – British Gas, Ovo, E.On, EDF, and Scottish Power.

If previous governments had not chosen to privatise the UK’s power plants, ministers could use such money to reduce bills and accelerate the rollout of home insulation, the TUC said.

The Independent

Nearly half of UK’s offshore wind capacity owned by state-owned foreign entities, analysis shows

Nearly half of all the UK’s offshore wind capacity is owned by state-owned or majority state-owned foreign entities, according to new analysis exclusively shared with Sky News.

Denmark’s Orstead, which is majority owned by the Danish government, and Norway’s Equinor come top of the list of public entities with the largest stake in UK offshore wind power, at 20% and 9% respectively.

They are followed by state-owned organisations in Sweden, Italy, China and France, according to analysis by the Common Wealth think tank and provided exclusively to Sky News.

Common Wealth’s assessment of publicly available data from the Crown Estate, which owns and leases much of the seabed around this country, found that the UK is twelfth on the list, behind United Arab Emirates, Ireland, Germany, Japan and Malaysia.

In large part this is because the UK government only owns a small renewable energy company called Offshore Renewable Energy Catapult, which is focused on research and innovation and holds a tiny percentage of capacity.

Director of Common Wealth Matthew Laurence said: “Public ownership of renewable power is already widespread in the North Sea – it just benefits other countries.

“It is time we correct that by creating a UK green energy generator: it would roll out clean power infrastructure faster, fairer, and more affordably than the status quo.”

Common Wealth’s report added that in 2021 alone, £2.5bn of energy bills paid by UK consumers went to foreign state-owned entities.

It also found that of the 58% of UK offshore wind capacity owned by private businesses, just a third are headquartered in the UK.

The largest private owners are Germany’s RWE, Scotland’s SSE, and Spain’s Iberdrola.

Sky News

Tax on energy profits to rake in £28bn as prices surge

Surging oil and gas profits mean the Government’s windfall tax will rake in money equal to half the cost of this winter’s £60bn energy support package for households and businesses.

The “energy profits levy” announced by Rishi Sunak earlier this year was originally expected to raise around £5bn a year by taxing the earnings of North Sea operations, or a total of £20bn by 2025/26.

But official estimates show the levy – charged in addition to corporation tax – is now expected to bring in £28bn overall, as surging oil and gas prices fuel a bonanza for the industry.

That includes £7.7bn in 2022/23, then £10.4bn, £6.4bn and £3.5bn in the following years, although the Government said volatile markets made it hard to give firm predictions.

It means the levy’s total haul could amount to nearly half of the cost this winter of Liz Truss’s gargantuan support package to help households and businesses weather rising energy bills.

Her intervention will involve freezing annual household energy bills at an average of £2,500 for the next two years, starting October 1, and reducing businesses bills by roughly half for an initial six months.

The cost estimate for the package was on Friday revealed to be £60bn for six months from October, including £31bn for households and £29bn for businesses.

Kwasi Kwarteng, the Chancellor, confirmed the Government will borrow the money, adding that the “heavy price of inaction would have been far greater than the cost of these schemes”.

Daily Telegraph

Government green-lights controversial Cambo oil field development

The controversial Cambo North Sea oil field development is among nearly 140 infrastructure projects the Government wants to get up and running “as fast as possible” as it bets the house on a dash for growth.

Five oil and gas developments have been named alongside road, rail, electric car, nuclear energy and other projects as being in line to benefit from major cuts to bureaucracy. Kwasi Kwarteng, the chancellor, said that infrastructure projects were “an essential foundation of growth”.

He added: “Our planning system for major infrastructure is too slow and fragmented. “The time it takes to get consent for nationally significant projects is getting slower, not quicker, while our international competitors forge ahead. We have to end this.

“We will streamline a whole host of assessments, appraisals, consultations, endless duplications, and regulations.”

The Government says it wants to get the “vast majority” of the named projects into construction by 2023 and is intending to fast track approval in order to deliver. Of the 138 projects published on the Government’s priority list, roads featured most prominently.

Some 86 different projects will be fast-tracked, from expanding A roads into dual carriageways to improving motorway junctions and building bypasses around villages such as Isham, Northamptonshire.

Seven offshore wind projects have also made the list, including floating projects that allow farms to put out in deeper waters.

Renewables, hydrogen, offshore wind and nuclear projects are a priority too. EDF’s Hinkley Point C and Sizewell C projects, set to be the first new UK nuclear plants in decades, are both named. Hinkley Point C is being built in Somerset while Sizewell C is still in funding talks.

Boosting domestic oil and gas supplies is another focus – with North Sea supplies set to play a key role – amid a greater effort to secure energy supplies in the wake of Russia’s war on Ukraine.

About 125km north-west of Shetland, Cambo has become a lightning rod for criticism from anti fossil-fuel campaigners, with oil major Shell pulling out of the project last year amid concern over delays.

The project is owned by Ithaca Energy. Other oil and gas projects named include BP’s Murlach oil field development and Harbour Energy’s Talbot field development.

Daily Telegraph

EV car charging rollout set to hit the gas

Talk to one of the 500,000 or so early adopters driving a fully-electric car and it is a fair bet that they are blessed with a driveway and a home charger. That means they can take advantage of rock-bottom night time electricity tariffs, which at one point this year meant it cost 1p a mile to power their vehicle.

Now it’s the turn of Aviva Investors to tackle the hard bit of the EV revolution. It is ready to spend £110 million building the public charging infrastructure without which the mass market transition from the internal combustion engine is in jeopardy.

The global asset management business of Aviva is investing in Connected Kerb, an electric vehicle (EV) infrastructure specialist, to help to install 190,000 on-street EV chargers by 2030.

That is a sizeable chunk of the 300,000 public charge points the Department for Transport expects the UK to have by 2030. At present there are just 33,693 — of which 6,208 are rapid, according to Zap-Map.

In March the DfT declared that the pace of the UK’s EV charger roll-out was “too slow… for a wholly zero-emission new car fleet in 2035”. It announced £1.45 billion in taxpayer funding, comprising £950 million to support 6,000 high-powered charge points and a further £500 million for local authorities to help boost chargepoint cover.

Chris Pateman-Jones, 40, chief executive of Connected Kerb, calculates that 62 per cent of the population will not be able to charge an EV at home. They include 34 per cent who can park only on the street and a further 28 per cent who have a parking spot, but lack a mains connection, or are tenants and reliant on a landlord to install a charging point. That is considerably higher than official estimates.

Pateman-Jones said: “Of the 500,000 EV drivers who are there now, the vast majority have driveways. Those people who don’t, predominantly live in urban areas, where air quality is poorest, so this is a social issue and this is why I get so animated by what we do.”

Connected Kerb’s network is based in residential streets, sites such as supermarket car parks and workplaces.

“I would love, as a measure of success for people who have the ability to charge at home with a £1,500 charging point on their drive, to decide not to do so because our public charging network is so good,” he said.

The Sunday Times

Cost of using electric car charging point in UK up 42% since May

The price of charging an electric car using a public rapid charger has jumped by almost £10 since May because of soaring energy costs after Russia’s invasion of Ukraine.

The increased price of wholesale gas and electricity has pushed up the price to charge an average family-size car by 42% to above £32, according to analysis by the RAC. That was £9.60 more than in May, and £13.59 more than a year earlier.

The UK plans to ban the sale of new fossil fuel cars after 2035, but many in the industry have expressed concerns about barriers preventing some people from switching. The price and availability of public chargThe recent surge in electricity prices has diminished the cost advantage that electric cars have over polluting internal combustion engines, and particularly for people who rely solely on public chargers because they do not have private parking at home.

The RAC said the average cost per mile for someone limited only to rapid and ultra-rapid public chargers that are typically used at motorway services had risen to 18p, compared with 19p for petrol cars and 21p for diesel.

For those able to rely on home charging, the average cost per mile will be limited to 9p, after the Conservative government this month introduced price controls on energy. The energy price guarantee means drivers who can charge their cars at home will be protected from much of the price increase.

Simon Williams, the RAC’s electric vehicle spokesperson, said charging away from home was still cheaper than the equivalent refill for a petrol or diesel car, but “the gap is narrowing as a result of the enormous increases in the cost of electricity”.

“These figures very clearly show that it is drivers who use public rapid and ultra-rapid chargers the most who are being hit the hardest,” he said.

The RAC argues that users reliant on public chargers unfairly pay VAT of 20%, compared with only 5% VAT on home energy use.ers are key concerns, particularly in cities.

The Guardian

Hydrogen could ‘nearly double’ cost of heating a home compared with gas

Ministers’ plans to pin the UK’s energy hopes on hydrogen could nearly double the cost of heating a home by the end of the decade compared with natural gas, research has shown.

Using hydrogen for home heating could prove much a more expensive option than natural gas, according to the leading energy analysts Cornwall Insight. Between now and 2050, when the UK is legally bound to reach net zero greenhouse gas emissions, using hydrogen would add about 70% to home energy bills compared with using gas, according to the report, commissioned by renewable energy charity MCS Foundation.

Jitendra Patel, senior consultant at Cornwall Insight, said: “While hydrogen does have a part to play in the decarbonisation pathway, through for example use in the industrial sectors and in the use of surplus electricity, current and forecast costs all show it is simply uneconomical to use 100% hydrogen fuel for heating our homes.”

Ministers are poised to allow hydrogen to be blended with fossil fuel gas in the UK’s gas networks, as a way of reducing carbon emissions from home heating. They are also considering a potential large-scale rollout of hydrogen to supply gas boilers in homes from 2026.

In the mini-budget unveiled by the chancellor, Kwasi Kwarteng, on Friday, there was a promise to boost five hydrogen infrastructure projects.

Hydrogen supporters argue that the gas could be used with little need to upgrade the UK’s existing network of gas pipes and gas boilers, which make up the vast majority of home heating systems in most parts of the country.

But serious concerns have been raised over the use of hydrogen, with some experts warning that it faces technical difficulties that could prove insurmountable.

Michael Liebreich, chair of Liebreich Associates and founder of the analyst firm Bloomberg New Energy Finance, has hit out at “boiler-slingers” – the UK’s existing network of gas companies, plumbing firms and engineers – who see hydrogen as a route to maintain as much of the status quo as possible, rather than moving to heat pumps and other proven low-carbon technology.

Liebreich tweeted: “Heating with hydrogen from renewable energy is six times less efficient than using the same electricity in a heat pump. I don’t know a single serious energy analyst not affiliated with the gas industry who thinks hydrogen heating will be a thing.”

The Guardian

Flood gardens to combat drought and biodiversity loss, says Natural England

This year has seen one of the driest summers on record, with most of the country still officially in drought. Millions of people in England are under hosepipe bans because of water shortages, and reservoir and river levels remain low.

The solution to this? People should flood their gardens and create bogs in order to stop the effects of drought and reverse biodiversity loss, according to the head of Natural England.

Tony Juniper, who leads the government quango, said that concreted-over front gardens, and backyards which do not hold much water, could contribute to sewage spills into waterways as surface water runs off the hard or dry surfaces.

He recommended that people turn their gardens into wetlands, which can hold water and prevent run-off. This would also create habitats for many creatures.

“I was in a conversation the other day with a couple of colleagues in the water industry,” he told the Gathering nature festival at Wild Ken Hill in Norfolk. “Everyone knows about combined sewage outfalls, with sewage going into the rivers. Part of the problem there is rapid runoff coming off hard surfaces, where you’ve got a lot of water being put into the drains, which also get the sewage, and they overflow.”

He said that one of the measures water companies are now thinking about is catching water in gardens, and part of this could be about creating a miniature wetland in our backyards.

“It’s looking at the extent to which you might be able to interrupt water flow before it gets to the sewage and into the rivers,” said Juniper.

“And that’s an interesting way of engaging people who actually don’t see a connection between their house and the river – by going down this route of making gardens wilder to hold more water.”

The Observer

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.