Monthly Archives: September 2013

Green energy confusion ‘stalling UK investment’

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The investors, which include Hermes, Aviva Investors, Threadneedle, Schroders and the Methodist Church, have demanded a set decarbonisation target to be inserted into the Energy Bill to give investment certainty to power and manufacturing companies.

In June an amendment to aim to decarbonise the power sector by 2030 was narrowly defeated in the Commons. But in their letter to the Chancellor, who will today deliver his speech at the Tory Conference in Manchester, the investors warned that its omission in the Energy Bill is leading to a paralysis of investment.

The “lack of a meaningful 2030 decarbonisation target” is “exacerbating policy risk and investor uncertainty”, they said. “In many cases, this increases the cost of capital and deters major investors, manufacturers and project developers from investing in the UK and creating jobs.”

The letter, which is signed by investors representing £1trillion assets worldwide, comes amid intense focus on energy policy after Ed Miliband’s bombshell pledge to freeze gas and electricity prices.

The freeze, announced at the Labour conference last week, was condemned as “ill-thought out and irresponsible” by Michael Fallon, the energy and business minister. But the Tories are under pressure to come up with fresh solutions to mounting uncertainty as well as rising bills.

via Green energy confusion ‘stalling UK investment’ – Telegraph.

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SSE in talks to scale back on wave and tidal power projects

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Britain’s leading role in the development of experimental marine and tidal technology was under threat on Friday as it emerged that SSE, one of the major investors, is talking to partners about scaling back its investment in key schemes.

The move follows similar ones by other major players and comes in the middle of a fractious debate about renewables and the future of the wider power market following Ed Miliband’s promise to freeze energy prices and break up big power firms if Labour wins the 2015 election.

The lobby group that represents wave and tidal power said the difficult regulatory environment has depressed forecasts of how much capacity could be deployed and slowed the progress of the sector.

“Without a clear route to market and a coherent plan for attaining volume in the sector, the UK risks being overtaken in this global race for our next decade’s most exciting low carbon market,” said David Krohn, wave and tidal development manager at RenewableUK.

“Wave energy is still in the early years of its story and we need perspective and patience as our industry matures. It is never good when a major player pulls back, but context is important here.

“Wave developers are working hard to develop and refine the technology. To do this they need to have long-term support and volume. Wave array projects need to be in the water as soon as possible, not in five years’ time, so we can get the learning done now.”

SSE confirmed it was reconsidering its four major projects off the Orkney Islands and in the Pentland Firth off Scotland but denied it was pulling out. “We are reviewing our portfolio but we have not at this stage reached any conclusion,” said a spokesman.

via SSE in talks to scale back on wave and tidal power projects | Business | The Guardian.

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If Britain wants to cut energy bills it must get tough with the United States

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Heaven help the planet, because dealing with climate change is going to cost something (although a lot less than not dealing with it). The politics is getting more difficult, judging by the promises of Ed Miliband and David Cameron. They evidently think that voters are in no mood to pay even a modest insurance premium to stop what the latest Intergovernmental Panel on Climate Change report says is a 95% certainty that human activity is destroying our habitat.

The latest round of populism on energy prices began last October, when the prime minister said the government would legislate to put consumers on to the cheapest deal. Miliband joined in last week, with a call for a price freeze. The Tory right riposted with demands to cut support for low carbon generation, currently a small part of the total.

Energy comes with painfully large bills of typically £1,200 a year, probably the biggest bill after the rent or mortgage. Never mind the inconvenient fact that we have lower electricity and gas prices than most western European countries, and that the biggest impact on household bills is world gas prices – going up as Asia booms and Japan, Germany, and Italy abandon nuclear power. The polling shows energy prices hurt.

Both Miliband’s and Cameron’s proposals risk being counter-productive, which is why the government swiftly ditched the prime minister’s. Shopping around may be frustrating, but it is safer than telling companies to put people on to the lowest bill, which would mean they would only charge one tariff.

Miliband’s price freeze from the election until 2017 would have two effects: bigger price hikes between now and the election, and bigger catch-up price rises when the freeze comes off. Price controls do not work. In electricity, price caps were one of the toxic components that caused California blackouts in 2000 and 2001. Sharp rises in wholesale prices, combined with caps on retail prices, would simply cause companies to turn off the lights. Why sell at a loss?

via If Britain wants to cut energy bills it must get tough with the United States | Chris Huhne | Comment is free | The Guardian.

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Q and A: What determines our gas and electricity bills?

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Q My electricity bills seem pretty steep. Are they higher in the UK than elsewhere?

A In short – not really. Compared to the 15 countries that made up the European Union prior to the 2004 accession (known as the EU15), the UK had the fourth lowest prices in 2012 – when including taxes that each state imposes. Average domestic UK prices were 14.2 per cent lower than a median average across EU15 and G7 countries.

Q What about gas prices then, are they also lower than in other countries?

A Relatively, gas prices are even better for Brits, coming in second lowest in the EU15 last year – and 22.1 per cent below the median average across EU15 and G7 countries.

Q But hold on – you mentioned taxes. How do they affect these figures?

A The tax component added to domestic electricity and gas bills is low in the UK compared to other countries. Excluding all countries’ taxes, UK gas prices were only 1.1 per cent lower than the EU15 and G7 median last year. And electricity prices, excluding taxes, were the fourth highest in the EU15 last year.

Q So if tax rates were the same, would we be getting ripped off?

A Not necessarily. It’s hard to tell how prices would compare if tax rates were harmonised as underlying prices are partly influenced by how much tax is imposed. For example, on a pack of 20 cigarettes that costs £8, around £6.20 can be made up of taxes. But if there were no taxes, it is very unlikely that the same pack would only cost £1.80. In countries with higher rates of tax on energy, therefore, lower taxes would not necessarily see prices fall all the way down to the level one may expect.

Q I’ve heard about the feather/rocket claim – do utilities send our bills rocketing when wholesale prices rise, but then only lower them slowly when wholesale costs fall?

A Perhaps – this one is still open to debate. An Ofgem report in 2011 claimed there was “some evidence that customer energy bills respond more rapidly to rising supplier costs compared with falling costs” yet said the range of possible reasons meant that “the implication for consumer harm is not clear cut.”

Q I hear you, but sometimes my bills just shoot up. I have the copies to prove it!

So why does this happen?

A While energy costs in the UK, including taxes, are fairly low, they can be more volatile than in many peer countries. For example, in fiscal year 2010-11 UK electricity prices jumped 11.2 per cent – excluding taxes. This was among the highest price hikes in the EU, excepting Spain where prices rose nearly 14 per cent.

Q So they’re getting more expensive? Is this why Ed Miliband’s speaking up now?

A Well they haven’t been getting more expensive if you look over several years. In the 10 years to 2012, UK electricity prices went from 7.09p per kilowatt hour (kWh) to 13.9p per kWh. The EU15 and G7 median went from 8.6p/kWh to 16.2p/kWh. UK prices may be more affected by wholesale costs, but those can drop as well as rise.

via Q and A: What determines our gas and electricity bills? | City A.M..

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How EDF Energy saved £100 million by transforming IT

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In 2009, two of the UK’s largest energy companies, EDF Energy and British Energy, came together in a merger worth over £12 billion.

Under the name of EDF Energy, the two firms now produce around a quarter of the UK’s electricity, employing nearly 20,000 people across the country and supplying gas and electricity to 5.5 million businesses and homes.

Gilles Chauveau was chief operating officer of EDF Energy at the time. When he looked at the IT organisation of the combined company, he saw the need for a drastic overhaul.

“There was a heterogeneous sourcing landscape of internal and external suppliers, with no consistency between the two companies,” Chauveau said at Gartner’s recent Outsourcing and Strategic Partnership conference. “Some of the contracts were five to seven years old and had been through several extensions without competition.”

Meanwhile, the relationship between IT and the business was poor. “We had an ‘IT kingdom’ type of governance system,” Chauveau, who is now EDF Energy’s CIO, says. “We had only IT people around the table making major decisions around IT sourcing, and the rest of the business was kept out.”

via How EDF Energy saved £100 million by transforming IT | Information Age.

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UK renewables output up 56%

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Renewable generation in the UK grew by 56% to 12.8TWh in the second quarter of 2013 with its share of electricity generation up 5% from the same period in 2012 to a record 15%.

Figures from DECC’s Energy Trends report reveal biomass saw a 58% hike to 5.2TWh on the back of Tilbury’s return to operations and the conversion of Ironbridge and one unit of Drax coal stations to dedicated biomass.

Wind generation increased by 62% – with onshore up 70% to 3.8TWh – due to increased capacity and high wind speeds. Solar and wave & tidal saw a 22% increase while hydro was up 29%.

Renewable electricity capacity was 19.5GW at the end of the second quarter, a 38% or 5.3GW rise on the year-ago period.

via UK renewables output up 56% | ReNews – Renewable Energy News.

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Energy bills: Where does my money go?

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How much do we pay?

The average annual dual-fuel bill – covering gas and electricity – is £1,315 per household. This figure, published by regulator Ofgem in mid-September, is based on the latest assumption of the amount of energy a typical household uses.

Bear in mind, this is an average. The amount you pay depends on your energy consumption and the method of payment.

It is one of the largest regular bills that a household has to pay, behind mortgage or rent, and council tax. Prices have risen in recent years, and analysts predict another increase in the coming weeks.

via BBC News – Energy bills: Where does my money go?.

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Energy industry consultant Ichron sold for £12.5m

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ICHRON, a Cheshire firm that provides analytical services to the oil and gas sector, has been bought for £12.5m.The firm, based on the Gadbrook Business Centre in Northwich, has been sold by four shareholders to Oxfordshire-based environmental consultancy RPS Group in a cash deal.Established in 1995

via Deals/Restructuring  /  Energy industry consultant Ichron sold for £12.5m THEBUSINESSDESK.COM.

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Centrica warns Labour energy plan risks ‘ruin’ for firms

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Britain’s biggest energy firms have rejected Labour leader Ed Miliband’s plan to freeze energy prices.

He pledged to freeze gas and electricity bills for every home and business in the UK for 20 months if his party wins the 2015 election.

The chairman of British Gas owner Centrica told the BBC that Labour’s plan could potentially cause “economic ruin” for energy firms.

Sir Roger Carr said the plan would leave firms in a precarious position.

“When costs are outside your control, but someone is fixing your price and putting a ceiling on it, the risk of course is that it is potentially a recipe for economic ruin for a company.” Sir Roger said.

via BBC News – Centrica warns Labour energy plan risks ‘ruin’ for firms.

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Solar and Wind Power Cheaper Than Coal

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Earlier this week figures from a new study revealed that it is now less costly to get electricity from solar panels and wind turbines that from traditional coal-powered power plants for the first time in the US.Thanks to tax-breaks for ‘green’ power and taxes to help offset climate change the Journal of Environmental Studies and Sciences’ latest study into the commercial energy market has seen the two most widely-used forms of eco-friendly energy dip under coal for the first time in the North American market.

via Solar and Wind Power Cheaper Than Coal.

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