Weekend press: RWE boss says lack of offshore wind bids must be ‘wake-up call’

In our latest round-up of the weekend’s industry news, the boss of RWE has raised serious concerns about the UK’s failure to attract offshore wind developers in the latest Contracts for Difference auction. Meanwhile there is a report concerning a large loan received by Ovo’s founder from its parent company, and there are calls from one union for Labour to shift its position on key issues including energy nationalisation.

Offshore wind auction’s lack of bids must be ‘wake-up call’ for UK, says RWE chief

The UK’s failure to attract offshore wind developers in its latest renewable energy auction must be a “wake-up call” for the country, the head of one of the world’s biggest renewable energy companies has warned.

Markus Krebber, chief executive of RWE, said “the entire industry” had been vocal about what it saw as the insufficient support offered for offshore wind by UK authorities in an annual round of contracts for new projects. The round generated no bids for new offshore wind contracts.

“I think the current framework has not recognised the higher inflation environment,” Krebber told the Financial Times, adding his voice to similar complaints from across the sector.

RWE generates more electricity than any other company in Germany, having produced a quarter of all power sold in the country in 2021, the last full year for which figures are available.

Krebber, whose company has one of the largest pipelines of offshore projects under construction in the UK, said RWE was among the developers that decided against bidding for offshore sites during the round. The company nevertheless won a string of contracts for onshore wind and solar projects.

“Hopefully this is now a wake-up call for necessary adjustments and the framework will be reconsidered,” Krebber said. “It is, of course, concerning because the UK climate targets cannot be achieved without offshore wind.”

The lack of interest struck a blow to the UK’s aim of more than tripling its offshore wind capacity to 50 gigawatts by the end of the decade — a central plank of a drive to meet its target of net zero carbon emissions by 2050.

Krebber expressed bemusement at the UK’s strategy, drawing a contrast with its support for nuclear energy.

“I struggle to see [why there is] a support scheme, for example, for new nuclear power at much, much higher pounds per megawatt hour than offshore wind,” Krebber said. “Offshore wind, if it is supported in the right way, is built in time. And, when you follow the news on nuclear, it is totally unclear when and at what price it will come.”

The UK government has responded to criticism by highlighting the success in this year’s auction of onshore wind and solar, with a total 3.7GW of onshore wind, solar, tidal and geothermal generation awarded contracts.

The RWE chief said clear long-term direction from governments in fields such as offshore wind was crucial to ensuring Europe could meet its ambitious targets for reaching carbon neutrality.

Financial Times

Ovo Energy’s parent company lends billionaire founder Stephen Fitzpatrick and ally £36m

The parent company of Ovo Energy has lent £36 million to founder Stephen Fitzpatrick and a close ally, new documents reveal.

Billionaire Mr Fitzpatrick and Ovo’s chief investment officer Vincent Casey borrowed the sum from Imagination Industries last year, accounts show.

The pair have now been loaned more than £50m by Imagination, which owned Ovo Energy until March of this year, since 2021.

The loans last year came despite scrutiny of the company’s finances in light of Ovo’s position as Britain’s fourth largest energy supplier.

Last year, Mr Fitzpatrick was grilled by MPs about £40m worth of intercompany loans and payments. They urged him to “open the books” to shed more light on the company’s finances.

Alan Brown MP also questioned whether the loans were “appropriate”. Union Unite has also said there were “a lot of questions that need answering about Ovo’s accounts”.

Mr Fitzpatrick told MPs last year he did not recognise the £40m figure and insisted Ovo’s business dealings were routine.

There is no suggestion of any wrongdoing regarding the loans and Imagination has said all of it has since been repaid. A spokesman for Imagination declined to say what the loans were for.

The financial health of gas and electricity suppliers has come under mounting scrutiny in recent years after 30 firms collapsed during the energy crisis.

This led to regulator Ofgem introducing tougher checks to shore up suppliers’ balance sheets.

Last year it emerged that Ovo feared breaching its lending requirements as the price of wholesale gas soared.

Director loans were paid out by Imagination Industries in 2022 at which time it still owned Ovo, Britain’s fourth-largest gas and electricity supplier. Imagination has just two directors: Mr Fitzpatrick and Mr Casey.

After cutting ties with Imagination in March 2023, Ovo is now owned by a standalone entity called Energy Transition Holdings, of which Mr Fitzpatrick is also the majority owner.

Ovo reported a loss of £1.65bn last year, down from a £370m profit in 2021.

It said it was a “challenging” 12 months for the sector and blamed the surge in losses on a change in the value of energy it had bought to hedge its supply commitments.

Ovo was contacted for comment.

The Telegraph

Unite launches ‘red wall’ campaign in push for radical Labour policies

Labour’s biggest union backer, Unite, is launching grassroots campaigns in scores of industrial constituencies across the UK demanding more radical policies on energy, steel and green jobs.

Unite’s leader, Sharon Graham, who has been publicly critical of Keir Starmer, said funding earmarked for Labour would instead be funnelled into stoking public pressure for the party to shift its position on key issues including energy nationalisation.

“What we are doing is, we are diverting some of the money that we would probably have given to Labour, to have three major campaigns that we are starting, in the ‘red wall’ seats where these are the issues for those constituents,” she said.

“There will be billboards, there’s wraparounds, there will be one-to-one conversations: so when they come into those towns, people will be saying, that’s what’s important to them – and if Labour don’t pick the baton up, I think that will be difficult for them.”

Unite still pays significant affiliation fees to Labour, amounting to almost £1.1m in 2023 so far, but Graham said additional resources from the union’s political fund would now go into campaigning on specific policies.

She cited energy nationalisation, oil and gas, where Unite wants Labour to reverse its decision not to grant new North Sea licences, and government support for steelmaking.

“In Wales, in Scunthorpe … there’s 16 steel towns where we are taking our policies to the people of those towns and saying: ‘Whoever comes in here needs to give this commitment to steel,’” she said.

Unite is calling for Labour to allocate some of its £28bn a year of green investment funds to greening the steel industry – and promise to use British steel in all public infrastructure schemes.

Similarly, the union will target Scottish constituencies where there are oil and gas workers, calling for energy nationalisation, and a continuation of North Sea extraction until workers can move into new green jobs through a “just transition”. “I don’t think there’s a family in Scotland that’s not connected to the oil and gas industry,” she said, claiming that many are “absolutely furious” about Labour’s policy on energy.

“I’m not saying, vote Labour, vote Tory, vote this or vote that – I’m saying, this is a core issue,” she said.

“Somebody asked me the other day: ‘How will you move Keir Starmer on these issues?’. For me, it’s the electorate: they’re the decision-makers. That is the reality. And so if the electorate moves, he moves – it’s as simple as that.”

In her speech to union delegates at the TUC Congress in Liverpool last Monday, Graham conceded that renationalising energy, including the National Grid, would cost £90bn but insisted a future Labour government could afford it.

Some of Labour’s green policies, spearheaded by the shadow energy secretary, Ed Miliband, have proved controversial with trade unions representing oil and gas workers.

Some fear their members could face the fate of coalminers in the 1980s unless the shift away from fossil fuels is carefully managed. The GMB shares Unite’s scepticism about halting new North Sea licences – but its general secretary, Gary Smith, said he would continue to make that case directly to Starmer.

“Labour are just wrong on this: they’re wrong on oil and gas, and we will continue to argue and debate on it,” he said.

Smith, many of whose members work in the energy sector, rejected the idea of nationalisation, however.

“There is an argument for public ownership of some parts of strategic infrastructure; but the idea we were ever going to nationalise retail energy is nonsense: there’s not a lot of money in it,” he said, pointing to the fact that some energy providers have recently had to be bailed out.

A Labour spokesperson said: “A Labour government will change the lives of working people for the better, and everything we do is focused on that.

“A core part of our plans is our new deal for working people which will strengthen workers’ rights and tackle insecure work. That is good for workers and good for employers.”

The Guardian

Sunak to defy Tory net zero sceptics and bring in strict electric car targets

Rishi Sunak is set to defy Tory MPs who want to water down net zero climate targets by sticking with a strict timetable to phase out petrol and diesel cars.

The PM has come under pressure from some in his party to scale back plans to enforce electric car production rules as part of the 2030 ban on the sale of petrol and diesel vehicles.

The government is said to be ready to set out its final plan for the forced transition to electric cars within weeks – with binding targets on UK carmakers to produce more in the immediate years ahead.

Despite being urged by net zero sceptics to relax the rules, No 10 and the Department for Transport confirmed Mr Sunak would stick with both the 2030 ban and interim targets set to begin in 2024.

It will require 22 per cent of all new cars sold next year to be electric vehicles, increasing to 50 per cent in 2028. Manufacturers who fail to comply with the targets face fines of up to £15,000 per car.

Mr Sunak vowed to be “pragmatic” about net zero plans after the surprise Uxbridge byelection win in July, with London mayor Sadiq Khan’s ultra-low emission zone (Ulez) charging scheme widely credited with handing the Tories victory.

The PM told drivers he is “on their side” and ordered a review of controversial low-emission schemes aimed at phasing out high-polluting vehicles.

Business secretary Kemi Badenoch has reportedly lobbied along with senior Tory backbenchers for greater flexibility on the interim targets in the so-called Zero Emission Vehicle (ZEV) mandate.

Senior Tory Craig Mackinlay, chair of the Net Zero Scrutiny Group, told The Independent that the targets would be mean that “we enter a new strange and dystopian pathway” that defied capitalist choice.

“The government’s intention to ban internal combustion engine cars and vans from 2030 looks increasingly isolationist as the USA and EU push targets to 2035 and beyond. The beneficiaries will be Chinese carmakers whilst further putting the battery supply chain in the hands of, at best, an unfriendly power,” he added.

But British carmakers are largely comfortable with the rules because they want to boost the electric car market and allow investors to create more charging points.

Mike Hawes of the Society of Motor Manufacturers and Traders (SMMT), said: “Carmakers are committed to the decarbonisation of their products … Manufacturers have invested billions of pounds into this transition and now need the market to accelerate.”

The Independent

France is more supportive of us than Britain, says UK nuclear startup

The chief of a British nuclear power plant developer has complained he is being shut out by the Government, even as France courts his business.

Stefano Buono, chief executive of London-based Newcleo, said the UK had frozen his company out of its recent competition to support small modular reactors (SMRs).

Former energy secretary Grant Shapps launched Great British Nuclear in July and the agency promised to back two to four SMR designs with support from a funding pot of up to £20bn.

SMRs are mini-nuclear reactors that can be factory made, making them far cheaper to deploy than traditional reactors. They are seen as the future of nuclear power.

Companies bidding for support from Great British Nuclear include the UK’s Rolls-Royce, which secured £210m of taxpayer money to advance SMRs under prime minister Boris Johnson.

Newcleo is working on a novel design to burn plutonium as fuel, helping countries like the UK dispose of its stockpile of the dangerous waste, which is expensive to manage.

However, Mr Buono said the Government had declined to consider his company’s Advanced Modular Reactor (AMR) for support under the Great British Nuclear programme because of the AMR’s lead cooling system and exotic fuel.

Great British Nuclear is “not considering advanced modular reactors like ours,” he said.

However, France, by comparison, is “extremely proactive”, he said, and providing “incredible support”. The country has handed Newcleo a grant to develop its reactor from a €1bn fund.

Mr Buono added: “They are planning to provide free land for the first reactor.”

He added of Britain: “We hope that we’ll be able to invest in this country. So we focus again on asking for the land to develop our first commercial reactor.”

Mr Buono said his company had been requesting permission to use land in Britain for its SMRs for two years “but there is not a decision of any kind on this”.

A Department for Energy Security and Net Zero spokesman said: “Great British Nuclear is assessing the bids received as part of the latest phase of the technology selection competition launched earlier this year. An announcement is expected in the autumn.

“We launched a fair and transparent competition to select the best small modular reactors (SMR) technology that can be operational by the mid-2030s and could help release billions in public and private sector investment for the UK.”

The Telegraph

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.