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31/01/2022 - No easy answers to Europe’s gas crisis

“The European energy crisis is not over yet” said Goldman Sachs in a research note this week.  The bank’s analysts think that gas prices could remain twice as high as normal until 2025.  British wholesale gas prices, which are heavily influenced by Europe, are currently about four times higher than they were a year ago, at 218p a therm.  An escalation in Ukraine could see prices top their highs of last December.

It might not come to that, says Bloomberg.  Germany, which is highly dependent on Russian gas, has long argued that Moscow is a reliable supplier: it “kept sending gas to Europe all through the Cold War” and during the 2014 Crimean annexation.  Russia is thought to be unlikely to want to damage that reputation.  It is also economically dependent on the revenue from energy sales.  Still, if the US throws Russia off the Swift payments system, then energy transactions could become impossible.  Nord Stream 2, a new energy pipeline to Germany that bypasses Ukraine, could be hit by new sanctions.  Finally, a war could damage key Ukrainian pipelines that deliver gas to the West.

Liquefied Natural Gas (LNG) cargoes have been diverted from Asia to Europe in response soaring prices, but LNG is no silver bullet, says Deutsche Welle.  EU gas storage facilities are just 47% full, compared with a more normal level of 60% at this time of year, according to a report by Commerzbank.  If Russian supplies are disrupted, “LNG would not be able to fully compensate”.  There is “a lack of free short-term capacity among exporters such as the US and Qatar”.  If things get very tight then governments may be forced to “ramp up coal power stations … environmentalists will not like that … but that really is the only possibility in the short term”.

Source: Money Week

11/01/2022 - Turning up the heat on worldwide gas prices

Pressures on supply range from Russian manoeuvres to a fierce global bidding war.  The recent turmoil in global gas markets has left even seasoned observers reeling.

“During the past couple of weeks, the gas market has witnessed an extreme rollercoaster ride,” Ole Hansen, of Saxo Bank, said.

“Before Christmas, very cold weather across Europe and the UK helped to send EU benchmark gas to a level that was ten times higher than the long-term average. This was followed by a 65 per cent price collapse in response to news that multiple liquefied natural gas ships had changed course from Asia and South America to Europe in order to sell their gas at the highest price on the planet.”

With a sudden spell of milder weather over the festive period also helping to ease supply crunch concerns, Britain starts the new year with prices down from those all-time highs of more than 450p a therm reached before Christmas, but still above 200p. “These are incredibly high prices,” Nathan Piper, of Investec, said. “They’re still four times the ten-year average.”

Experts are warning that the roller-coaster ride may not be over yet. There are two key variables in the short term, according to Biraj Borkhataria, of RBC Capital Markets. “One is weather: if we have a cold snap, Europe is highly exposed to a spike in prices. The second is geopolitical factors: at the start of this year, Russian supply into Europe took another leg down. That can be quite material, given Russia supplies 25 per cent to 30 per cent of European gas.”

With Russia amassing troops near the Ukrainian border and America threatening sanctions, the potential fallout for energy markets is under close scrutiny. RBC analysts note that the US government is already contingency planning for “a possible Russian invasion in the coming weeks and for Russia weaponising energy exports in response to western sanctions.  “We think that Moscow could take a page from its 2009 playbook and cut gas supplies into Europe from already lower levels in response to stepped-up western financial sanctions,” they warned in a note last week. Borkhataria believes that “in an invasion scenario, all bets are off with regards to gas prices”.

Of course, it’s hard to predict how Moscow would react. Piper argues that “Russia supplied gas to Germany throughout the Cold War — so they have been through some very tight geopolitical events and maintained supply to Europe”. Yet even if a worst-case scenario with Russia is averted, analysts appear increasingly united in their view that high gas prices are here to stay for the next few years.

Gas markets are increasingly global: neither Asia nor Europe is able to meet its gas needs domestically, so are reliant on imports of LNG, with cargoes sailing to the highest bidders. Piper said last year’s rally began with a cold snap in Asia last winter that “drew a lot of gas, a lot of LNG resources to Asia very quickly, unexpectedly”. That winter in Europe also lasted longer than usual, depleting storage supplies.

“That was then combined with the underperformance by wind in Europe and hydro in Asia as well, so there was increased gas demand for power,” he said. “All the way through the summer of last year, gas prices were too high to incentivise putting gas into storage.”

The result was that Europe entered this winter with storage at record lows. At the same time, “we’ve seen China outstrip Japan as the biggest importer of LNG, particularly because they want to make sure they’ve got blue skies for the Winter Olympics and burn gas rather than coal”, according to Piper.

As well as heightened demand, there have been disruptions to supply. LNG facilities in countries including Nigeria, Trinidad and Tobago and Equatorial Guinea are producing less than expected and Shell’s huge Prelude floating LNG plant off Australia, which alone produces about 1 per cent of global LNG supplies, has suffered repeated problems and is out of action. North Sea production has fallen, too, in part because of pandemic-induced delays to maintenance.

The tightness in supply and demand is not expected to ease in the near future. “Demand is likely to continue to increase as people shut down coal-fired power and nuclear, so the only thing you’ve got to back up intermittent renewables is gas,” Piper said. There was likely to be “incremental new supply, but it’s not like there’s a new flood of gas coming into the market”.

Russia’s new Nord Stream 2 pipeline, which could bolster supplies to Europe, is not expected to start up until the summer at the earliest — politics permitting.

Investec predicts that prices will remain at more than 100p a therm throughout 2022, which is in line with an industry-compiled consensus of forecasts — but with “risk to the upside”: forward gas markets are already pricing gas well above that level.

“You want cheap gas in the summer to refill European storage,” Piper said. “That’s probably not going to happen this year because the gas price is still very high, so you’re going to have that same set-up going into next winter.” He predicts “a prolonged period of high gas prices for at least 18 months”, with prices likely to ease significantly only in the summer of 2023 if renewables deliver and storage can be replenished, putting Europe in a better position for the winter of 2023-24.

Borkhataria also believes that gas prices will remain “elevated for a few years because of low storage and Europe structurally reducing its baseload power capabilities from nuclear and coal and adding more and more intermittent renewables.

“For the periods where the wind doesn’t blow or the sun doesn’t shine, you’re still going to need gas, and with declining production the region is highly reliant on imports, leaving it exposed to events outside Europe. There is enough gas resource globally, but it requires capital to be developed. If you don’t invest enough and try to wean yourself off fossil fuels without renewables hitting critical mass, we end up [with] problems like this. You can’t turn around the entire global energy system overnight.”

Piper echoed that warning: “The inconvenient truth is that we want to perform an energy transition and a lot of the focus has been on cutting supply. If you don’t invest in supply and your demand keeps going up because you’re shutting coal-fired and nuclear power stations, this is the unintended consequence.”

Source: Times

21/10/2021 - Price capping doesn't work.

The boss of Spanish energy giant Iberdrola has told the BBC the UK's energy price cap is not working and the country is now paying the price.

Ignacio Galan, the chief executive of Iberdrola, which owns Scottish Power, was speaking on the sidelines of the government's Global Investment Summit in London, which is aiming to attract more foreign investment in the UK, particularly in green technologies.

"The price cap decision was made in a very particular situation, to protect the consumer," he told the BBC.  "But when the situation changes, it doesn't work," said Mr Galan.  "We are paying the consequences for it now. When you intervene in the market, you can resolve a temporary issue, but you cannot change things in the future.  The price cap was made on a temporary basis, and I don't know why it has been maintained."

The energy price cap is designed to protect domestic consumers by limiting how much energy providers can charge them per unit.  But with global gas prices soaring, a number of firms have gone bust because the policy is requiring them to charge less for gas than it costs them to buy it.

Asked if the price cap was a short-term political decision that has caused long-term damage to the market, Mr Galan replied: "Yes, exactly."  'You have to be very careful. The market has its own rules and if you change something in one place, you never know what is going to happen elsewhere. The world is global and people are affected in different ways."

Mr Galan said it was not up to UK regulator Ofgem to look at companies' profit margins, adding: "If there is enough competition, the market will fix the problem."

He said he thought the current high gas prices were relatively temporary and that any decisions made to deal with the energy crisis should be made for the long term.  

"I've been in the industry a long time and from time to time, we face this sort of crisis. The first thing is not to become nervous and to take decisions for a temporary situation," he added.  "There is a difficult situation right now, but it will probably disappear in a few months. The reason it's happening is because of a shortage of gas supply, but that's not going to last forever. So we have to be very consistent in our approach."

Mr Galan called on the UK to be "much more dynamic" in moving to a low-carbon future, including speeding up the planning process for approving new power plants.

"Let's have a long-term view, a long-term vision, which I think the UK has, to accelerate the construction of new green power plants and distribution networks to be less dependent on fossil fuels and more dependent on the natural resources the country has."

Mr Galan said the UK was an attractive place to invest because of "stability, predictability, rule of law and a reasonable return on the investment". 

Source:BBC

16/09/2021 - U.K. Gets Closer to Blackouts After Fire Knocks Out Cable

Winter blackouts are now a real possibility after a fire took out a cable that ships electricity to the U.K. from France. 

Electricity is now so scarce in Britain that any more grid mishaps or unexpected plant outages could leave millions without power. Even before the fire, National Grid Plc’s buffer of spare winter capacity was set to be the smallest for five years. 

“If anything goes wrong, we might not have anything left in the back pocket,” said Tom Edwards, a consultant at Cornwall Insight Ltd., an adviser to the government and utilities. “If a nuke trips offline or something else big, that could cause issues because we might not have anything to replace it.”

Beyond the immediate chaos a blackout would cause, a prolonged shutdown could have severe economic consequences. Just as Britain emerges from the pandemic, power outages would send energy prices even higher, compounding concerns about inflation and adding to the rising costs businesses are already shouldering for raw materials. 

Britain imports and exports power along six huge cables, and two of them are connected to France. The electricity flows to the market with highest price. On average, about 7.5% of U.K.’s demand has been met by power from France’s 56 nuclear plants this year.

France is the biggest source of U.K.'s imported power this year.  Now supply from France is set to be diminished. With half of the cable’s capacity set to be cut off until the end of March 2022, the shortage will impact prices well into next year. The rest of the capacity is set to come online Sept. 25, but that will depend on the extent of the damage and whether the cable can be operated safely. 

Power prices have sailed through records this month as a period of calm weather reduced wind generation at the same time as nuclear outages were extended. The unprecedented rally in gas prices in the U.K. and Europe also pushed up the cost of using the fuel to make power.   National Grid sounded an early warning back in July that the U.K.’s ability to meet peak demand would be more strained this year. For now, the situation looks manageable.

“We’ll have a clearer view on any longer-term impact of the IFA-1 outage in the coming days,” a spokesman said. “Currently we’re still forecasting that we’ll have sufficient margin to continue securely supplying electricity over winter.”

The interconnector outage doesn’t necessarily mean a blackout today but as the weather gets colder and demand picks up in October and November, the system will get even tighter, Andreas Gandolfo, an analyst at BloombergNEF said.

What National Grid will do to keep the lights on:

1. Electricity Margin Notice

A warning to the market from the control room that the buffer of spare capacity isn’t as big as it would like. It’s a request to producers to ramp up output.

2. Capacity Market Notice

These are automatically published four hours in advance as a warning that there may be less generation available than the grid expects to need to meet demand. The notice signals that a system stress event is more likely than normal.

3. High Risk of Demand Control

This is a warning that demand for electricity is greater than the levels of supply available.

4. Demand Control Imminent

National Grid is instructing local grid operators to start cutting demand by reducing voltage, which may not affect supply, or in more severe situations they might temporarily disconnect some consumers for a short period of time to reduce demand. This is “extremely rare and unusual” according to the National Grid website.

Source: Bloomberg

14/09/2021 - Britain’s last coal power stations to be paid huge sums to keep lights on

Owners of the UK’s last remaining coal power stations are in line to be paid record sums to keep the lights on as energy prices reach fresh highs and could be pushed even higher by lower wind power.

Coal plants have been called on to supply power steadily in recent months, through one of the least windy summers on record since 1961 and sharply rising prices in the wholesale energy market.

The UK’s electricity system operator (ESO) spent more than £86m last week alone to keep the lights on, which involved making payments of up to £4,000 per megawatt-hour for fossil fuel power stations to generate electricity at short notice, including the West Burton plant in Nottinghamshire and a coal unit at the Drax site in North Yorkshire.

Britain has largely been weaned off coal power in recent years, but the remaining plants are available on standby to accept eye-watering offers from National Grid ESO in times of need, such as during cold spikes or low wind conditions. The Ratcliffe-on-Soar coal plant near Nottingham is also in line to benefit from record power prices this week.

The price of electricity on the UK’s main power auction rose above £400 per unit for the first time on Monday, while the price of gas surged to a record of 150p per therm.

The increases follow market highs last week. Experts predict that UK wholesale energy prices will climb higher in the days ahead owing to forecasts of low wind speeds, which will limit the country’s renewable energy generation.

The price of electricity during Tuesday evening’s peak power demand hours has reached a new record of £1,750 a MWh, more than 2,900% higher than the average price over the last decade, according to Bloomberg data.

Prices have soared in recent months owing to a global gas market surge, which followed a cold winter in the northern hemisphere that left gas storage facilities depleted. The record gas price has made electricity more expensive in the UK, where almost half of all electricity is generated in gas plants.

In addition, the UK has faced a “perfect storm” of power plant outages and low wind speeds that has forced energy prices higher despite demand “not being very high at the moment”, according to Rajiv Gogna, a partner at LCP Energy Analytics.

Phil Hewitt, a director at the energy consultancy EnAppSys, added that Wednesday and Thursday looked even more volatile than the start of the week, “so we suspect that this is not the end of the high prices”.

Source:The Guardian

15/07/2021 - Record-breaking summer European gas prices signal an expensive winter

European gas prices vaulted to record highs this summer, driven by factors ranging from low inventories and outages to an Asian buying spree, and signalling further rises in coming months that could mean higher household bills this winter.

The front month contract at the Dutch TTF hub, a key European benchmark, hit 38.65 euros ($45.77) per megawatt hour on Tuesday, its highest since Refinitiv Eikon records began. The British front month contract reached a record 93.35 pence per therm on Monday.

A cold winter at the beginning of this year prompted large drawdowns in storage stocks, which would usually be replenished during summer months when demand tends to be weaker. But a series of unexpected supply disruptions, coupled with a rebound in demand as economies recover from COVID-19 restrictions, has led to a scarcity of gas.

Data from the IEA published last week showed European gas consumption rose by an estimated 25% in the second quarter of 2021, its largest year-on-year quarterly increase since at least 1985.

"This exceptionally strong recovery has been driven by the combination of an extended heating season due to lower than average temperatures, higher gas burn in the power sector and economic activity recovering to close to pre-COVID-19 level,” the IEA said in its latest gas report.

Maintenance in Norway has curbed exports from its gas fields and Russia's Gazprom has held off booking additional capacity for gas supplies to meet demand, a sign that it is waiting for the commissioning of the Nord Stream 2 pipeline, which runs from Russia to Europe.

Prices of liquefied natural gas (LNG) have also soared in Asia as buyers in the region sought to replenish stocks before winter. Although European prices are high, the spread has not been high enough to attract tankers to Europe.

"The Japan-Korea-Marker (JKM) price for LNG will continue to drive the TTF higher but the TTF needs to rally much faster than the JKM (to attract LNG to Europe)," said Samer Mosis, team leader of global LNG analytics at S&P Global Platts.

"The general theme that Europe has to fight with Asia for LNG will stay for the next three years," he said.

Gas scarcity this summer is already affecting winter gas contracts. Britain's winter 2021 contract hit 100 pence per therm on Tuesday, the highest for that contract since Refinitiv Eikon records began.

Price spikes in the wholesale gas market, if prolonged, can drive up retail gas prices for households. In Britain, wholesale prices make up around a third of consumer energy bills.  A cap on the most widely used British electricity and gas tariffs rose in a review in April and is expected to rise further in the next review this autumn as wholesale prices rise.

"A rise in gas and power retail tariffs will come as a shock to users this winter. Wholesale prices are still rising along with other generating fuels globally so there is no clear end in sight yet," said Glenn Rickson, head of European power analysis at S&P Global Platts.

Source: Reuters

06/06/2021 - Dungeness B nuclear power station ‘beyond repair’

The Dungeness B nuclear plant in Kent is to be closed permanently seven years earlier than planned after problems including corrosion rendered it beyond repair.

The decision by EDF, its owner, means that Britain will lose five of its eight nuclear plants within the next three years, removing low-carbon generation capable of supplying ten million homes.  Pro-nuclear groups said that Britain would be forced to rely on gas plants with higher emissions to keep the lights on and warned of an “energy gap” if new reactors were not built.

Dungeness B was capable of powering about two million homes, but it has been offline for maintenance since September 2018 when problems with its pipework were discovered.  EDF has since spent £200 million trying to repair the plant. Although it mended the pipework, it discovered further issues, including corrosion to its boilers, which cannot be replaced.

EDF was repeatedly forced to delay its restart and yesterday said that “new detailed analysis has further highlighted additional station-specific risks within some key components, including parts within the fuel assemblies . . . As a result, EDF has taken a decision not to restart the plant but to move it into the defuelling stage.”

The plant employs about 500 staff and 250 contractors, but EDF said jobs were not at risk at this stage as it would begin defuelling the plant, a process expected to take several years.

EDF, the French state nuclear group, operates all eight of Britain’s nuclear plants, which used to account for about a fifth of energy supplies. That proportion declined in recent years amid safety problems at several plants, including cracks in the graphite cores at Hunterston B and Hinkley Point B that will force both to close by next year, earlier than planned. Two other plants, Heysham 1 and Hartlepool, are due to close by March 2024.  EDF is building a new nuclear plant at Hinkley Point C, but that has been delayed and is not due to start generating until June 2026. It wants to build another new plant at Sizewell in Suffolk.

Dungeness B started generating in 1983 after a difficult construction that began in 1967. Originally due to close in 2008, the plant’s lifespan was initially extended until 2018 then extended once more to 2028.

Tom Greatrex, chief executive of the Nuclear Industry Association, said that the decision “underscores the urgency of investing in new nuclear capacity to hit net zero”.

Source: Times

24/03/2021 - National Grid backs Britain’s electric future with £7.8bn power play

National Grid has placed a big bet on Britain’s electric future by agreeing to pay £7.8 billion for the country’s biggest power distribution company and proposing to sell a majority stake in the national gas network.

The FTSE 100 group said yesterday it would buy Western Power Distribution from PPL, its US owner, acquiring cabling networks that supply almost eight million customers in the Midlands, south Wales and the southwest.

It will also sell part of its American business to PPL for £2.7 billion and start a sale of Britain’s gas transmission pipes in deals that it said would be “transformational” and would “strategically pivot National Grid’s UK portfolio towards electricity”.

It said the transaction, announced yesterday, would “strengthen National Grid’s long-term growth outlook” with billions of pounds of investment expected to be required in upgrading the distribution networks to enable electric vehicle charging and electric home heating as Britain aims for net-zero carbon emissions by 2050.

National Grid operates the high-voltage electricity transmission lines in England and Wales as well as Britain’s high-pressure gas network, a series of gas and electricity businesses in North America and ventures including interconnectors. Its pre-tax profits in the 2019-20 financial year were £1.8 billion.

PPL launched an auction for Western Power Distribution last year. The business has 6,600 employees and manages 90,000km of overhead lines and 135,000km of underground cable.

National Grid will sell the Narragansett Electric Company, which supplies electricity and gas in Rhode Island and has about 780,000 customers, to PPL.

It said it intended to start the sale of Britain’s gas transmission network of 7,660km of high-pressure pipelines in the second half of this year.

Analysts at Bernstein, the research group, suggested the gas network could have an enterprise value of £8.2 billion including debt, and that National Grid could net £2.1 billion for selling a 51 per cent stake.

Source: Times

27/01/21 - Ofgem wants to split up National Grid

Management of Britain’s electricity system should be taken away from National Grid and given to a new independent body, the regulator has recommended.  The FTSE 100 group should be broken up to avoid potential conflicts of interest between its role as operator of the electricity system and its other business, such as its ownership of the physical power transmission cables network in England and Wales, Ofgem said.

The regulator said that the full separation of these roles from the rest of the company was necessary as Britain worked to reach its “net zero” emissions target, which would require “greater strategic planning and management of our energy system”.

An independent system operator could take on new responsibilities, such as planning a new offshore power grid to connect offshore wind farms to shore, and balancing supply and demand at local as well as national level.

Full separation would “help ensure future decisions on how to manage the energy system are taken in the interests of consumers, helping to keep costs as low as possible”, it said.

Ofgem said that it estimated that separation could save consumers between £400 million and £4.8 billion between 2022 and 2050.

National Grid reported operating profits of £2.8 billion last year, primarily from regulated power and gas network businesses in Britain and America. It also has commercial operations developing subsea electricity interconnectors.

The ESO is its most prestigious and influential role but accounts for only a small proportion of its profits. Ofgem said that the ESO’s revenues had averaged £199 million or only 1.3 per cent of group revenues over the past five years, while operating profits for the division had averaged £60 million or 1.6 per cent of group total.

There have long been concerns about potential conflicts of interest, which resulted in the ESO becoming a legally separate part of the company in 2019.

The government said in an energy white paper last month that the ESO might need to have “greater independence from the current ownership structure” and that it would consult this year on institutional arrangements in a future energy system.

A spokeswoman for National Grid said that it was “working closely with the government, regulator and industry to explore what changes will be needed to achieve net zero, and the role and potential divestment of the Electricity System Operator is an important part of that discussion”.

“An industry structure that enables long-term thinking and allows the system operator to take on new roles as part of the energy transition is an important step in the market and regulatory reform necessary to deliver net zero. Significant further work is needed to determine the detail of that structure,” she said.

Souce: Times

14/01/21 - UK electricity prices hit record level as Britain's big freeze looms 

Britain’s electricity prices have soared to an all-time high with gas also surging to a three-year record ahead of sub-zero temperatures forecast for much of the UK next week.  Energy prices have jumped as markets brace for freezing temperatures that are expected to boost demand for heating and electricity.

The UK’s market price for electricity has risen to a new record of almost £1,500 a megawatt hour for Wednesday evening’s peak in demand after a string of power plant outages and low levels of renewable energy generation.

The UK price of gas for next month has jumped by a fifth to 80p a therm, its highest in almost three years, ahead of the cold snap which may keep temperatures low across Europe until early next month.

Higher energy market prices typically lead to higher energy bills. Millions of households already face the risk of rising rates because the energy regulator has warned it may raise the cap on standard variable tariffs from April this year to help energy firms cover the cost of unpaid bills during the coronavirus crisis.

Tim Dixon, an energy market expert at Cornwall Insight, said cold weather has been a driving factor in the UK’s rising demand for gas this year, which is 40% higher than the same period last year.

“This is driven by increased heating demand but also by high demand from gas-fired power stations, a consequence of low wind power output and greater electricity demand,” he said.

The UK’s growing reliance on fossil fuels has been made more expensive by a global boom in gas markets which has lifted the price of gas imported into northern Asia – on giant super-chilled tankers as liquified natural gas (LNG) - to a record high of $20.705 per million British Thermal Units last week.

National Grid’s electricity system operator (ESO) has relied heavily on gas and coal plants in recent weeks to meet the UK’s demand for electricity.

The control room issued an official warning that its buffer of spare electricity supplies would fall short by around 1,100MW on Wednesday evening, double the shortfall last week.

Source: Guardian

17/09/2020 - Carbon prices to climb 50% over next decade following raised EU climate targets

Carbon prices across the European Union (EU) could increase by more than 50% over the next decade, with the bloc's proposed 55% reduction in emissions set to shape renewables and fossil fuel markets in the long-run, according to new analysis from the Refinitiv Carbon Research team.

European Commission President Ursula von der Leyen confirmed on 16 September that the EU would back the proposed 55% reduction. According to Refinitiv Carbon Research, if the EU does go ahead and increase its climate ambitions from a 40% reduction in emissions to 55% by 2030, carbon prices will increase as a result. The research suggests that the average carbon price between 2021 and 2030 will surpass €30. Beyond 2030, the price would increase again to beyond €50. In comparison, the EU carbon price reached €15 in May 2020, as a result of the coronavirus, its lowest level since 2018.

Ingvild Sorhus, lead analyst at Refinitiv Carbon Research said: “EUAs are trading around the all-time high of €30/t this week. With a 55% reduction target, elevated carbon prices will be needed to trigger more costly emission reductions in industry sectors as the fuel-switching potential fades when coal will almost disappear from the power mix.”

Earlier this week, more than 150 businesses and a group of investors with €33trn in assets under management called on the European Union (EU) to back the ambitions set out in its Green Deal by committing to reduce greenhouse gas emissions by at least 55% by 2030.

European Commission President Ursula von der Leyen confirmed today (16 September) that the EU would back the proposed 55% reduction. The target would align with the European Green Deal, which would include a climate law to reach net-zero emissions by 2050; and a transition fund worth €100bn and a series of new sector policies to ensure all industries are able to decarbonise. In comparison to Refinitiv’s predictions, the International Emissions Trading Association (IETA) predicts that the average carbon price in the EU throughout the 2020s will be €32 per tonne of CO2 equivalent. This is an increase on the €27 average recorded between June 2018 and June 2019 but falls short of the €50 which think-tank Carbon Tracker has concluded would be necessary to decarbonise the bloc’s most-emitting sectors and nations in line with its Green New Deal climate targets.

The EU looks set to revamp its Emissions Trading System as part of the new targets. Expected reviews and proposals are due in Summer 2021. In June, the UK negotiated its post-Brexit emissions trading framework with EU lawmakers, who had previously expressed concerns that the UK’s system would undercut the bloc’s own carbon market. An agreement has been struck to reduce the existing EU ETS cap by 5% within a year, with further reductions to be confirmed as the UK approaches its 2050 net-zero deadline.

However, the Zero Carbon Commission has published a report calling for the UK Government to increase its carbon charge to £55 per tonne (€60) by 2025 and £75 (€81) by 2030. Such a charge would be necessary to deliver against upcoming carbon budgets and should be adjusted on a sector-by-sector basis, the report states.

Source:Edie

01/06/2020 - National Grid pays out £50 million to turn power down as lockdown hits demand

The costs of keeping the lights on in Britain spiralled to more than £50 million in the four days from Friday to bank holiday Monday as National Grid had to pay surplus wind and solar farms to switch off and take a series of other measures to prevent blackouts.

The bill for what the company described as a “very expensive weekend” ultimately will feed through to businesses and households on their energy bills and is almost five times as high as the costs of balancing supply and demand during the same period last year.

National Grid said that sunny and windy weather and unusually low electricity usage owing to the lockdown had led to record low demand on the network.

The initial £51 million estimate, disclosed yesterday, compares with about £11 million in the same four-day period of 2019 and does not include further costs, including sums paid to Sizewell B nuclear plant under a £50 million contract for it to run at half-capacity this summer.

National Grid disclosed last week that it expected to spend £500 million more than normal keeping the lights on this summer because of low demand caused by the lockdown.

It spent about £19 million between Friday and Monday paying large-scale wind farms to switch off, according to the Renewable Energy Foundation, a group critical of green energy costs, a figure not disputed by National Grid.

National Grid said that it had spent a further £7 million paying small-scale wind and solar farms to switch off through a new scheme, as well as paying millions to the operators of gas-powered plants to fire up to keep the system stable. It also had to pay about £4 million to limit the use of its own subsea power cables, restricting the amount of surplus wind power that could be exported, because they carry so much electricity that if they failed it would destabilise the system and trigger blackouts.

The costs were further inflated by a fire below a transmission cable on Friday that meant it was unable to transfer some wind power output to where it was most needed.

Source: Times

14/05/2020 - UK windfarms to spur green job growth

The firms behind the world's biggest offshore wind farm Dogger Bank have outlined plans to create 200 new jobs at the Port of Tyne, while Scottish Power plans to use its wind farms as part of an energy cluster scheme that will support 600 jobs in Scotland.

The job growth delivered by these projects will be a welcome, albeit not immediate, respite to the economic downturn caused by the coronavirus pandemic.

Equinor and SSE Renewables, the two companies behind the world’s biggest offshore wind farm Dogger Bank, have confirmed plans to build a new Operations and Maintenance Base at the Port of Tyne.

The operations base will enable Equinor workers to run the wind farm, creating more than 200 jobs in the region. Recruitment activity will begin in early 2022, with the first phase of the wind farm due to start producing renewable electricity the following year.

Construction began on the Dogger Bank Wind Farm in January this year and the operations base will oversee the running of the windfarm for more than 25 years.

Dogger Bank consists of three 1.2GW phases, located more than 130km from the North East coast of England.

When fully operational, the windfarm will provide enough clean electricity to power more than 4.5 million UK homes and it is expected to trigger capital investments of around £9bn over a six-year period.

Secretary of State for Business, Alok Sharma commented: “This new facility is fantastic news for Tyneside and the North East of England. Renewable energy is one of the UK’s great success stories, providing over a third of our electricity and thousands of jobs.  “Projects like Dogger Bank will be a key part of ensuring a green and resilient economic recovery as well as reaching our target of net zero emissions by 2050.”

It is a timely boost to the UK’s green jobs sector, which has seen employee numbers fall by a third in recent years.

Offshore wind remains one of the UK’s most attractive markets. The cost of offshore wind has halved over the last two years to set a record low-strike price of £57.50 per MWh.

Source: Edie

07/05/2020 - Eon and Npower’s business energy supply units are to merge.

Npower’s business supply unit was originally left out of the deal which saw its domestic retail division being rolled into Eon after the German parent companies did an asset swap.

However, Eon said it now makes sense to bring everything under one roof.

“Bringing together our two successful Industrial & Commercial units into a single organisation creates one of the largest B2B energy businesses in the UK,” said CEO Mike Lewis.

“These are fundamentally two complementary companies that bring together wider expertise in different areas of the market. What this means for British business is an expansion of our abilities to offer a greater range of smarter and personalised support to help meet their business efficiency and zero carbon ambitions.

“This is the latest stage of a process to build a more sustainable business and to succeed in this extremely challenging market.”

Eon is hoping to integrate the two businesses, including migrating them to a single IT system, by the end of next year.

It is not yet clear how many roles may be at risk due to duplication.

Source: Edie

01/04/2020 - Fiddler’s Ferry and Aberthaw plants shut as firms ditch coal

The energy corporations SSE and RWE have shut the door on coal-fired power generation by closing the Fiddler’s Ferry power station in Warrington, Cheshire, and the Aberthaw coal plant in Wales after almost 50 years.

The Fiddler’s Ferry power plant began generating enough electricity to power 2m homes in 1973 and is officially closing on Tuesday. The Aberthaw plant, which is slightly smaller and first began helping to power the UK electricity system in 1971, is shutting on the same day.

The shutdown of SSE and RWE’s last remaining coal plants leaves only four remaining coal plants in the UK ahead of the government’s ban on coal-fired power from 2025.

SSE set out the “difficult decision” to close Fiddler’s Ferry last summer, saying the plant was losing about £40m a year and could not compete with the economics of modern gas-fired power stations and renewable energy.

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Stephen Wheeler, the managing director of SSE’s fossil fuel business, said the closure was a landmark moment for the company and the wider energy industry, as the UK moves towards a net zero carbon future.

“SSE is now the UK’s leading generator of renewable energy and we have committed to trebling our output by 2030,” he added. “We will back up this renewable generation with super-efficient gas-fired plants, which we are also looking to decarbonise through emerging carbon capture and hydrogen technology.”

The FTSE 100 energy company expects to report a 25% jump in operating profits from its renewable energy business for last year after its Beatrice offshore windfarm began generating electricity at full power.

All of the UK’s coal-fired power plants will need to shut by 2025 after the government called for a ban on burning coal for electricity, which typically produces double the carbon emissions compared with a gas-fired power plant.

Many of the UK’s remaining coal plants have decided to shut earlier than the deadline because the plants are considered uneconomic to run in the UK due to a government tax on carbon.

Coal-fired electricity made up only 2.1% of the UK’s total power mix last year, a dramatic fall from only four years ago when coal powered almost a quarter of the electricity system.

Britain’s dwindling fleet of coal plants still includes the West Burton A and Ratcliffe-on-Soar coal plants in Nottinghamshire, the Kilroot coal plant in Northern Ireland and two generation units at the Drax site in Yorkshire, which are earmarked for conversion to burn gas.

Source: Guardian

02/01/2020: Climate change hope for hydrogen fuel

A tiny spark in the UK’s hydrogen revolution has been lit – at a university campus near Stoke-on-Trent. Hydrogen fuel is a relatively green alternative to alternatives that produce greenhouse gases. 

The natural gas supply at Keele University is being blended with 20% hydrogen in a trial that's of national significance.  

Adding the hydrogen will reduce the amount of CO2 that’s being produced through heating and cooking. 

Critics fear hydrogen will prove too expensive for mass usage, but supporters of the technology have high hopes. Using natural gas for heating generates about a third of the UK emissions that are driving global warming. But the only product of burning hydrogen is water. 

As a fuel, hydrogen functions in much the same way as natural gas. So staff in the university canteen say cooking on the 20% hydrogen blend has made no difference to their cooking regime. The project – known as HyDeploy - is the UK’s first live trial of hydrogen in a modern gas network. Keele was chosen because it has a private gas system. Its hydrogen is produced in an electrolyser - a device that splits water (H2O) into its constituents: hydrogen and oxygen. The machine is located in a glossy green shipping container in the corner of the university’s sports field. 

The gas distribution firm Cadent, which is leading the project, says that if a 20% blend were to be rolled out across Britain, it would reduce emissions of CO2 by six million tonnes - equivalent to taking 2.5 million cars off the road. The hydrogen could be generated pollution-free by using surplus wind power at night to split water molecules using electrolysis. 

Some boiler manufacturers are already producing prototype boilers that use 100% hydrogen. Worcester Bosch, for instance, has a “hydrogen-ready” design. It can run on natural gas, but it’s capable of converting to 100% hydrogen following a one-hour visit by an engineer. The firm wants the government to stipulate that by 2025, all new boilers on sale should be hydrogen-ready. It says this would allow households to switch painlessly to clean boilers when existing boilers reach the end of their lives. The extra cost of the hydrogen-ready boiler would be about £50, it says. 

About 85% of homes have gas central heating, and some experts believe it will prove more cost-effective to switch boilers to hydrogen, rather than to install heat pumps which would require the UK’s aging housing stock to be highly insulated. A recent study for the government raised the possibility that homes could be warmed by a hybrid system using electric heat pumps, then topping up with hydrogen on cold days. Major drawbacks to hydrogen are cost and availability. The costs are much higher than for natural gas, although the differential will surely shrink as carbon taxes raise the price of burning gas to combat climate change over coming decades.

Source: BBC

02/01/2020: Zero-carbon electricity outstrips fossil fuels in Britain across 2019

 Zero-carbon energy became Britain’s largest electricity source in 2019, delivering nearly half the country’s power and outstripping fossil fuels for the first time. Following a dramatic decline in coal-fired power and a rise in renewable and low-carbon energy, 2019 was the cleanest energy year on record for Britain, according to National Grid, which owns and operates the electricity transmission network in England and Wales, and also runs the Scottish networks. 

National Grid’s latest data shows that wind farms, solar and nuclear energy, alongside energy imported by subsea cables, delivered 48.5% of Britain’s electricity in 2019. This compares to 43% generated by fossil fuels – coal, gas, and other carbon sources such as oil and diesel. The remaining 8.5% was generated by biomass, such as wood pellets.

This milestone comes as the UK enters the mid-point between 1990 and 2050, the year in which it has committed to achieve at least a 100% reduction in greenhouse gas emissions based on 1990 levels, and to become a net zero carbon economy.  A decade ago, fossil fuels generated more than three-quarters of all electricity, while zero-carbon sources accounted for less than a quarter (22.8%), with wind at 1.3%. Then, coal plants provided almost a third of the UK’s electricity. This has dwindled to 1.9%, and Britain set a new record for going without coal-powered energy altogether in summer 2019: it went for 18 days from May to early June without using coal to generate electricity, the longest such run since 1882.

 By the end of this winter, the UK will be left with only four coal fired power plants. EDF Energy’s Cottam coal plant in Nottinghamshire closed this year and two other coal plants, RWE’s Aberthaw B and SSE’s Fiddler’s Ferry, are due to close in March 2020.

 The National Grid figures show a dramatic shift in the last two decades. Wind farms, solar panels and hydro power now generate just over a quarter of Britain’s electricity, compared with 2.3% in 1990. Nuclear power accounts for 17%, compared with nearly 20% in 1990. However, the use of gas – a fossil fuel – also shot up to generate more than 38% of the country’s power last year, compared with just 0.1% in 1990.  Other recent government figures showed that the UK’s growing fleet of offshore wind projects generated more electricity than onshore windfarms for the first time in the third quarter. Since then, wind power reached fresh highs during blustery weather in early December to generate almost 45% of the UK’s electricity on one day. 

In December, National Grid unveiled plans to invest almost £10bn in the UK’s gas and electricity networks over the next five years. Of this, almost £1bn has been earmarked for the transition to a net zero carbon electricity system by 2025, including investments in new equipment and technology. A further £85m will support changes to the ways people heat their homes, switching away from gas boilers to technologies such as electric heat pumps and hydrogen boilers. National Grid estimates that more than 23 million homes will need to install new low-carbon heating solutions by 2050.

Source: Guardian

28/12/2019: Energy bills rise by 40pc despite battle to cut costs

Energy bills have increased by an inflation-busting 40pc in the past five years – saddling UK households with an average annual cost of £1,813, according to new research. If charges had risen in line with inflation, they would only be 11.6pc higher now than in 2015, data from the Office for National Statistics shows. It raises questions over whether market controls intended to cut energy costs are having any success.

A study from comparison website Comparethemarket found the rising cost of electricity and gas this year has led to larger energy bills for most homes. The study revealed that dual fuel bills, which cover both gas and electricity, come to an average of £1,813 a year. This is up from just £1,289 in 2015.

Following a cold winter and climbing oil prices, the so-called big six energy providers have all raised their prices despite the introduction of a price cap at the beginning of 2019. 

 The Government pushed back against claims the market is out of control, saying that 11 million customers across the country had saved as much as £1bn on their energy bills this year due to the cap, which is due to expire in 2023. Its research suggests that the cap saved families on default energy tariffs around £75 to £100 on dual fuel bills over the past 12 months.

The new year could bring with it cheaper gas bills for customers across the country, as market prices fell by more than half in 2019 after countries such as Qatar and Russia exported record amounts to Europe. Energy suppliers in the UK are expected to slash their prices as a result.

Source: Telegraph

25/11/2019: National Grid and SSE move offshore over Labour plans 

Two top energy firms say they have moved ownership of their UK operations overseas to protect themselves from Labour's nationalisation plans.  In recent months, National Grid has opened offshore holding companies in Hong Kong and Luxembourg, while SSE has incorporated in Switzerland. 

This move would not stop them being taken over but could protect investors.

Labour said the "rip-off" move showed the grid needed to be in public hands.  In its election manifesto, the party promised a radical plan to renationalise Britain's rail, mail, water and energy networks, along with broadband.

But energy companies have criticised the plan, with SSE and National Grid among those running ads on Facebook warning of the potential costs.

 Labour has previously said its plans would be cost neutral, help decarbonise the economy faster and create jobs.

But there are fears that it would try to renationalise the companies at a discount, compared to their current market value. Critics warn this would hit shareholders, including pension funds, who would be compensated with government bonds.

National Grid runs the electricity transmission network in England and Wales, as well as the main gas transmission pipelines. It has a market value of £31bn.

"Labour's proposals for state ownership of National Grid would be highly detrimental to millions of ordinary people who either hold shares in the company or through their pension funds - which include several local authority pension funds," a spokeswoman said.

"To protect their holdings, and in line with our legal fiduciary duty to our shareholders, we have established holding companies in Luxembourg and Hong Kong. This has no financial benefit to the company and does not affect its day-to-day operations," she added

SSE said it had moved its electricity distribution business - which supplies 3.7 million homes in Scotland and England - to a Swiss holding company. It has also moved its Scottish transmission network business. The firm, which has a market value of £13.6bn, said Switzerland was party to the Energy Charter Treaty which offered better shareholder protection.

"[This is] an additional safeguard, which SSE does not believe would be required in practice, should SSE's electricity networks businesses and interests... become the subject of proposed legislation for nationalisation," a spokesman said.

"In practice, SSE expects that precedent, the principle of fairness and the need to secure future investor confidence in the UK economy means it should be possible to secure fair value from nationalisation."

In a statement Labour said: "The UK's energy networks are vital strategic infrastructure on which we all rely. You cannot boil a kettle, heat your home or run a business without the grid. The idea that private owners, who have been ripping off the public, would move offshore in an attempt to prolong the rip-off illustrates just why we need the grid back in public hands."

Source: BBC

23/11/2019: Are electric vehicles really so climate friendly?

 EVs produce more CO2 than say diesel – it’s just they emit via the power plant not the exhaust pipe.

Germany’s automobile industry is its most important industrial sector. But it is in crisis, and not only because it is experiencing the effects of a recession brought on by Volkswagen’s cheating on emissions standards, which sent consumers elsewhere. The sector is also facing the existential threat of exceedingly strict European Union emissions requirements, which are only seemingly grounded in environmental policy.

The EU clearly overstepped the mark with the carbon dioxide regulation that went into effect on 17 April 2019. From 2030 onwards, European carmakers must have achieved average vehicle emissions of just 59 grams of CO2 per km, which corresponds to fuel consumption of 2.2 litres of diesel equivalent per 100 km (107 miles per gallon). This simply will not be possible. 

As late as 2006, average emissions for new passenger vehicles registered in the EU were around 161 g/km. As cars became smaller and lighter, that figure fell to 118 g/km in 2016. But this average crept back up, owing to an increase in the market share of gasoline engines, which emit more CO2 than diesel engines do. By 2018, the average emissions of newly registered cars had once again climbed to slightly above 120 g/km, which is twice what will be permitted in the long term.

Even the most gifted engineers will not be able to build internal combustion engines (ICEs) that meet the EU’s prescribed standards (unless they force their customers into soapbox cars). But, apparently, that is precisely the point. The EU wants to reduce fleet emissions by forcing a shift to electric vehicles. After all, in its legally binding formula for calculating fleet emissions, it simply assumes EVs do not emit any CO2 whatsoever.

The implication is that if an auto company’s production is split evenly between electric vehicles and ICE vehicles that conform to the present average, the 59 g/km target will be just within reach. If a company cannot produce electric vehicles and remains at the current average emissions level, it will have to pay a fine of about €6,000 (£5,150) per car, or otherwise merge with a competitor that can build electric vehicles.

But the EU’s formula is nothing but a huge scam. Electric vehicles also emit substantial amounts of CO2, the only difference being that the exhaust is released at a remove – that is, at the power plant. As long as coal- or gas-fired power plants are needed to ensure energy supply during the “dark doldrums” when the wind is not blowing and the sun is not shining, EVs, like ICE vehicles, run partly on hydrocarbons. And even when they are charged with solar- or wind-generated energy, enormous amounts of fossil fuels are used to produce EV batteries in China and elsewhere, offsetting the supposed emissions reduction. As such, the EU’s intervention is not much better than a cut-off device for an emissions control system. 

Earlier this year, the physicist Christoph Buchal and I published a research paper showing that, in the context of Germany’s energy mix, an EV emits a bit more CO2 than a modern diesel car, even though its battery offers drivers barely more than half the range of a tank of diesel. And shortly thereafter, data published by VW confirmed that its e-Rabbit vehicle emits slightly more CO2 than its Rabbit Diesel within the German energy mix. (When based on the overall European energy mix, which includes a huge share of nuclear energy from France, the e-Rabbit fares slightly better than the Rabbit Diesel.)

Adding further evidence, the Austrian thinktank Joanneum Research has just published a large-scale study commissioned by the Austrian automobile association, ÖAMTC, and its German counterpart, ADAC, that also confirms those findings. According to this study, a mid-sized electric passenger car in Germany must drive 219,000 km before it starts outperforming the corresponding diesel car in terms of CO2 emissions. The problem, of course, is that passenger cars in Europe last for only 180,000km, on average. Worse, according to Joanneum, EV batteries don’t last long enough to achieve that distance in the first place. Unfortunately, drivers’ anxiety about the cars’ range prompts them to recharge their batteries too often, at every opportunity, and at a high speed, which is bad for durability. 

As for EU lawmakers, there are now only two explanations for what is going on: either they didn’t know what they were doing, or they deliberately took Europeans for a ride. Both scenarios suggest that the EU should reverse its interventionist industrial policy, and instead rely on market-based instruments such as a comprehensive emissions trading system.

With Germany’s energy mix, the EU’s regulation on fleet fuel consumption will not do anything to protect the climate. It will, however, destroy jobs, sap growth, and increase the public’s distrust in the EU’s increasingly opaque bureaucracy.

 • Hans-Werner Sinn, is professor of economics at the University of Munich. He was president of the Ifo Institute for Economic Research, and serves on the German economy ministry’s Advisory Council.

Source: Guardian

04/11/2019: Fracking halted in England in major government U-turn 

The government has halted fracking in England with immediate effect in a watershed moment for environmentalists and community activists.

 Ministers also warned shale gas companies it would not support future fracking projects, in a crushing blow to companies that had been hoping to capitalise on one of the new frontiers of growth in the fossil fuel industry.

The decision draws a line under years of bitter opposition to the controversial extraction process in a major victory for green groups and local communities.  The decision was taken after a new scientific study warned it was not possible to rule out “unacceptable” consequences for those living near fracking sites.

 The report, undertaken by the Oil and Gas Authority (OGA), also warned it was not possible to predict the magnitude of earthquakes fracking might trigger.

Fracking, also known as hydraulic fracturing, involves pumping water, chemicals and sand underground at high pressure to fracture shale rock and release trapped oil and gas.  The government said it would not agree to any future fracking “until compelling new evidence is provided” that proves fracking could be safe. The UK’s only active fracking site at Preston New Road in Lancashire was brought to an immediate halt this summer after fracking triggered multiple earth tremors that breached the government’s earthquake limits. 

The moratorium marks a major U-turn for the Conservative party and the prime minister Boris Johnson, who once referred to fracking as “glorious news for humanity” and urged the UK to “leave no stone unturned, or unfracked” in pursuit of shale gas.  The government ended its support for the struggling industry less than a week after a damning report from Whitehall’s spending watchdog found its plans to establish fracking across the UK was dragging years behind schedule and had cost the taxpayer at least £32m so far without producing any energy in return.  The government revealed its fracking moratorium alongside plans for a major review of the UK’s transition to a green economy. The Treasury said it will assess how the UK can make the most of the economic green shoots which are expected to emerge while moving towards a carbon neutral economy by 2050.

Sajid Javid, the chancellor, said the review was a vital next step” in delivering the government’s 2050 climate target while “supporting growth and lancing costs” to avoid “placing unfair burdens on families or businesses”.  “We must all play a part in protecting the planet for future generations,” he added.

The interim report will be published in the spring, ahead of a final report in the autumn before the global UN climate talks, which will take place in Glasgow.

Source: Guardian

23/10/2019: Cheap energy storage for renewables in sight as Highview Power launches five UK plants

A British start-up company is to build Europe’s biggest energy storage plant, slashing costs to once unthinkable levels and marking a watershed moment in the quest for cheap renewable electricity around the clock. 

Highview Power has secured the go-ahead for a 50 megawatt liquid air plant in the North of England capable of offering days of fast back-up power for the grid when needed and for far longer periods than a lithium battery.

It is the first of five Highview plants to be constructed around the country on commercial scale that can step in with zero-carbon power during long lulls in output from the UK’s North Sea wind farms. It can also absorb surges of excess energy that would otherwise be wasted – or curtailed – at times of low demand. 

Javier Cavada, the chief executive, said the company’s steel storage towers can be scaled up exponentially to deliver power for much longer periods than normal battery systems, and do so at diminishing extra cost. “Days or even weeks are a piece of cake for us,” he said, speaking on the margins of the Bloomberg New Energy Finance (BNEF) summit in London. 

Mr Cavada said his technology is analogous to hydro-power storage in mountain rivers and lakes but can instead be done anywhere – in this case on the site of an old thermal power station – and with a much smaller footprint. “We’re like a hydro plant in a box,” he said.  

The “cryogenic” technology relies on a beautifully simple idea explored in academic papers as far back as the Seventies. What has made it suddenly relevant is the renewable revolution of the last decade, which is fast transforming wind and solar from niche plays to a dominant source of power. This has made the need for dispatchable back-up power an urgent global issue.  

The Highview system works by cooling air to minus 196 degrees centigrade, relying on the standard process used in the chemical industry. As the air is turned into liquid the volume is compressed 700-fold and stored in insulated tanks at low pressure with a very low loss rate. When the liquid is warmed again it re-expands with a blast of force and drives a turbine. The model is already proven and is producing power for the grid at a small pioneer plant near Manchester. The company is now moving into the next phase of global expansion extremely fast. 

The technology could help plug the intermittency gap as the UK doubles down on its new role as world leader in offshore wind power, with a target of 30 gigawatts (GW) by 2030 and 75 GW by the middle of the century. 

Renewable costs are falling so fast that the switch to a post-fossil energy system could theoretically raise productivity, galvanize investment, and act as an accelerant for economic growth.   

Highview’s Mr Cavada said the estimated cost for the first cryoenergy project is £110 per MWh. This is slightly below the levelised cost of “gas peaker” plants, which in the case of the UK rely increasingly on imported natural gas from Norway or Qatar.  

But this cost falls rapidly if the hours of storage are lengthened. “We can expand very easily by just adding more tanks. The economies of scale are gigantic. The costs don’t double if the storage doubles. They go up just 10pc,” he said.

Source: Telegraph

13/06/2019: UK to be left with five coal power stations after Fiddler's Ferry closure

The UK's race to increase renewable energy sources has intensified with the announcement of plans to close another coal-fired power station. 

The news on Thursday came as last winter was revealed to be the greenest yet for the country’s energy system, after strong winds produced more renewable electricity and coal-fired power dwindled.  SSE said Fiddler’s Ferry near Warrington, Cheshire, the energy company’s last remaining coal-fired power station, would close in March 2020, reducing the UK’s coal-fired energy fleet to five plants. 

National Grid said the UK relied less on coal power plants over winter, partly because it was the fifth-warmest recorded in the past 59 years. The milder temperatures dampened energy demand, making it easier to avoid using coal in favour of running gas power plants, which produce half the carbon emissions. Meanwhile, stronger wind speeds helped drive down carbon emissions by spurring higher levels of low-carbon renewable electricity from wind farms. 

Elsewhere in the world, severe winters and hotter than normal summers have had the opposite effect, driving up energy demand to run heating and cooling systems, increasing global emissions. 

National Grid said the UK’s carbon intensity was almost half the level of five years ago and was likely to fall further as coal plants shut down.

Fintan Slye, the head of National Grid’s system operator arm, said: “More renewable power generation and less coal is a trend that is here to stay, and this carbon intensity milestone shows the pace of change in the UK energy industry. “We believe that by 2025, we will be able to fully operate Great Britain’s electricity system with zero carbon.” 

Coal-fired power made up 5% of the UK’s electricity over the winter and will be phased out altogether by 2025 under a government ban. Wind power and nuclear plants each made up 18% of the power generation mix, while gas-fired power plants produced 42%. 

SSE’s announcement follows EDF Energy’s plan to close the Cottam coal plant in September, which it announced after a winter of record-low coal generation. 

Once Cottam and Fiddlers Ferry shut, the UK’s remaining coal plants will be Aberthaw B in South Wales, West Burton A and Ratcliffe-on-Soar in Nottinghamshire, Kilroot in Northern Ireland and two generation units at the Drax site in Yorkshire, which are earmarked for conversion to burn gas.

Source:edie

08/05/19: UK goes a week without coal-fired power for first time  

The UK has gone a week generating power without using coal for the first time since the Industrial Revolution.

The Electricity System Operator (ESO), which manages the country's supply and demand for electricity, said the record was hit at 1.24pm on Wednesday 1st May. It's the longest time the UK has been coal-free since the original coal power station launched back in 1882. Power was generated from a variety of sources including gas, nuclear, solar and wind. 

It marks an important step towards meeting the Government's green energy targets and its goal of phasing out coal entirely by 2025. The UK achieved its first coal-free day two years ago. This Easter, it generated 90 consecutive hours of non-coal electricity generation, breaking a previous record.

Fintan Slye, ESO director, said generating power from non-coal sources would increasingly become the "new normal" as more renewables come on to the grid.  "Coal-free runs like this are going to be a regular occurrence. We believe that by 2025 we will be able to fully operate Great Britain’s electricity system with zero carbon," he said.  Mr Slye said technology and higher investment in renewable energy would promote competition in the sector and reduce the overall cost of coal-free power generation for consumers.

There are six coal-fired power stations remaining in the UK.  Business Secretary Greg Clark said: “Going a week without coal for the first time since the Industrial Revolution is a huge leap forward in our world-leading efforts to reduce emissions.  “We lead the world when it comes to tackling climate change and we want to carry on breaking records. We’re now on a path to become the first major economy to legislate for net zero emissions."

Source:Telegraph

27/03/2019: Brexit – The impact on the energy markets of the possible outcomes. 

UK politics has been thrown into crisis recently, following continued Parliamentary deadlock over Brexit.

With no consensus on the Brexit withdrawal agreement and multiple potential outcomes, we have outlined below the possible impact that each eventuality may have on the energy market. 

Outcome 1 – No-deal Brexit:

If no withdrawal agreement is reached by 29th March and Article 50 is not extended, the UK will leave the EU with no-deal. In this instance, the Sterling would likely soften fuelled by short-term economic uncertainty, driving up costs associated to carbon allowances and increasing levies on power prices. The UK relies heavily on imports of gas, particularly at a time when domestic storage is restricted.

A depreciation of the Sterling would therefore be a bullish driver of gas and power. It would also follow that without adequate planning and exit from the customs union, imports of gas via continental pipelines and power via interconnectors may be subject to tariffs. Risks associated to gas and power imports may be offset however, as the UK remains a key exporter of these commodities to the continent, and any tariffs may be returned tit-for-tat.  

Outcome 2 – Current proposal is passed:

If PM May can pass her Brexit proposal with either minor amendments or assurances, one would expect much the same action on gas prices. Power prices driven by carbon allowances would likely experience volatility, as traded volumes increase following a week of market participants exercising caution. On the wider energy complex, increased crude oil volumes may be traded if the Sterling strengthens significantly against the US Dollar – a slight bullish driver for Brent as this would signify an increase in market demand.

Outcome 3 – New deal is renegotiated:

If the current proposal deadlock cannot be overcome, it follows that a new withdrawal agreement could be negotiated. The energy markets over the course of the renegotiation phase would experience volatility – particularly in the Euro-based carbon allowances, and for the US Dollar-based crude oil. Gas and power would at first glance be more heavily influenced by fundamentals rather than currency changes. The exceptions to this rule would be the cost of importing power/gas through continental interconnectors/pipelines, if the Sterling weakened against the Euro. The impact of increased import costs for power would be compounded by increased carbon allowance costs. Toward the longer term, the price action for energy markets would be heavily influenced by the state of the revised divorce agreement. 

Outcome 4 – New referendum is held:

Should no withdrawal agreement be agreed upon, the Government may opt to initiate another referendum, extending Article 50 to gauge public opinion on Brexit proceedings. In this case, energy markets would likely experience participant anxiety and therefore volatility during referendum debates. Trends would likely correspond to the volatile actions experienced during the renegotiation phase in Outcome 3. 

Outcome 5 – Article 50 is revoked:

If no withdrawal agreement is ratified, and the Government is not willing to (a) extend Article 50 or (b) follow through with a no-deal Brexit, Article 50 may be revoked. Should this come to pass, energy markets would likely follow the trends of Outcome 2. Markets participants would be likely to engage with the market following the lifting of UK-EU economic uncertainty.