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Industry news
Brown expands nuclear ambitions
Wednesday, May 28, 2008
Gordon Brown has said the UK needs to increase its nuclear power capacity - raising the prospect of plants being built in new locations.
The prime minister said that with oil prices soaring, it was time to be "more ambitious" for nuclear plans.
No 10 sources said it was "open" as to whether new sites might be needed.
Ministers announced in January they backed new plants, but the focus was on replacing existing nuclear capacity as plants reached the end of their life.
And a review of possible sites published at the same time focused on 14 locations where there have been nuclear power plants before.
'Pretty clear'
Since then Business Secretary John Hutton has said he wants the nuclear industry to go beyond replacing its 23 ageing reactors, which provide 20% of the UK's electricity.
He has said no "artificial cap" will be put on the proportion of electricity to be generated by this or any other source of "low-carbon energy". But Mr Brown's comments are the first time he has said explicitly that building plans for nuclear plants should be expanded beyond merely replacements.
Speaking to oil industry representatives in Banchory, near Aberdeen, Mr Brown said: "We want to do more to diversify our supply of energy and that's why I think we are pretty clear that we will have to do more than simply replace existing nuclear capability in Britain.
"We will be more ambitious for our plans for nuclear in the future."
Downing Street sources said plans could involve expanding existing nuclear power stations or building plants on new sites.
Planning changes
Energy companies, rather than the government, build power stations and the January statement was important in encouraging private firms to invest in new plants.
The planning system is already being changed to make it easier for key infrastructure projects such as nuclear power to get planning permission.
French firm EDF has said it plans to construct four plants without subsidies in the UK - the first by 2017.
But critics of nuclear energy say it is expensive, creates radioactive waste and could become a target for terrorists.
Greenpeace claims that even 10 new reactors would cut the UK's carbon emissions by only about 4% some time after 2025.
Liberal Democrat environment spokesman Steve Webb said: "Gordon Brown is drawing totally the wrong conclusion from soaring oil prices. New nuclear power plants won't deliver any power for over a decade.
"Nuclear power is not the answer to today's energy crisis. The government should be focusing on greater energy efficiency, boosting renewables, and making sure that coal-fired power stations do not pollute the environment."
In January the Conservatives backed the building of new nuclear power plants as long as no public subsidy was involved.
Energy policy is not a devolved matter but Scottish First Minister Alex Salmond has said there is "no chance" of more nuclear power stations being built in Scotland.
No new plants have been built in the UK since Sizewell B, which opened in 1994.
This story was featured on The BBC News website.
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Gaz de France Faces EU Probe Over Pipeline Access
Friday, May 23, 2008
Gaz de France SA, operator of Europe's largest natural-gas network, faces a probe by European Union regulators into whether it harmed competition by restricting access to its pipelines.
The European Commission, the EU's antitrust regulator, said today that it will study whether Gaz de France limited capacity on its network and failed to invest in pipelines. Gaz de France, which is planning to merge with Suez SA to create the world's third-largest utility, said it would cooperate with the probe.
The EU has increased its scrutiny of companies in the bloc's 340 billion-euro ($535 billion) power and gas market. The EU is considering legislation that would require gas producers to sell their transmission networks, spin off that business or hand over operation of the grid to an independent company.
"This is part of the pressure being put on utilities by the European Commission to separate their distribution networks," Tannegui Bujard, a Paris-based analyst at Raymond James, said by phone. "The probe in itself won't affect operations", he said.
The French government is leading opposition along with Germany to the proposal, which the commission made in September to ease network access for companies such as the U.K.'s Centrica Plc without their own grids.
No Complaint
Gaz de France said in an e-mailed statement that it has accelerated investment in French infrastructure in recent years to 1.5 billion euros last year and would cooperate with the European Commission.
As many as 44 competitors have access to its infrastructure "under transparent and non-discriminatory conditions," the Paris-based company said. "No complaint for anticompetitive conduct has been lodged" with the French and other energy regulators, it said.
Gaz de France fell 35 cents percent to 42.34 euros in Paris trading. Suez fell 17 cents to 45.79 euros.
In 2006, the EU carried out raids at natural-gas firms in several countries in search of evidence that companies shut out competitors by restricting pipelines access.
"We found information during the course of those investigations which illustrated that there was deliberate underinvestment so there would be no increase in gas imports into the French market," commission spokesman Jonathan Todd said at a press conference in Brussels. "Where there is a deliberate policy of not investing, there could be an issue of the abuse of the dominant position on the market."
Transport Capacity
The commission said it's studying whether Gaz de France's actions may prevent or reduce competition in the natural gas market through "long-term reservation of transport capacity and a network of import agreements, as well as through underinvestment in import infrastructure capacity."
Under EU rules, companies can be fined as much as 10 percent of annual sales for antitrust violations. Companies can appeal decisions at European courts in Luxembourg.
The EU approved Gaz de France's merger with Suez in 2006, after the companies agreed to give up control of Belgian natural gas companies and a heating network in France.
This article was featured on the Bloomberg website
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Energy boss foretells future scarred by oil wars
Thursday, May 22, 2008
THE world's dwindling oil and gas reserves will become the main cause of global political tension if consumers continue to "run on empty", the head of one of Scotland's leading energy companies warned yesterday.
Ian Marchant, chief executive of Scottish and Southern Energy, told delegates at a renewable energy conference that world oil and gas production was rapidly reaching a plateau where demand would outstrip supply.
He said: "If we carry on, oil and gas reserves will be the biggest source by far of global political tension and potential conflicts.
"If we don't sort this out, there will be wars fought over oil. You can argue there already have been."
His warning came in a keynote speech on the opening day of All-Energy 08, an annual showcase for Britain's renewable energy industry in Aberdeen.
It also came on a day when the price for US light crude smashed through the $130-a-barrel barrier for the first time, reaching a new high of $132.08 a barrel, while the price of the benchmark North Sea Brent, traded in London, rose to $127.34 per barrel amid growing fears of a global oil shortage.
The price of oil on the futures market for delivery in 2016 also drove costs towards the $140 mark for the first time, fuelling inflationary pressures in the global economy.
Mr Marchant said global oil consumption had soared by 30 per cent since 1990.
He explained: "In the last 15 years, globally we have been using up more oil than we have been discovering.
"Already, 20 per cent of the barrels we produce every day comes from fields over 40 years old. No field that produces more than a million barrels per day has been discovered for over 30 years. Even the United States has got to the point where it realises maybe the oil is running out."
He added: "The days of cheap, easy oil and gas are rapidly coming to an end. We will reach a plateau in the amount of oil we can produce sustainably.
"Currently, oil demand is running at 86 million barrels a day. I can see us getting maybe 90 million barrels a day, but we have to fundamentally change how we think about oil and gas."
Mr Marchant stressed that dwindling supplies were also an issue for the UK, with the latest forecasts predicting a 14 per cent reduction in North Sea oil production and a 7 per cent cut in gas.
"The UK's oil is already clearly and demonstrably running out," he said. "The debate is how we maximise the last remaining reserves. It's a global problem and it's a local problem."
Mr Marchant said that Britain had a long way to go in harnessing the potential of renewable energy alternatives.
And he forecast that, by 2020, the UK would only be half way to achieving the European Union's target for 15 per cent of energy to come from renewable sources.
Last week, Scottish and Southern Energy announced plans to invest £1.3 billion in the Greater Gabbard offshore wind-farm, the world's biggest, a 500-megawatt development in the outer Thames Estuary.
But Mr Marchant warned: "We are going to need around 25 gigawatts of offshore wind. We need four Greater Gabbards to go ahead every year for the next 12 years to meet that.
"We need to get cracking on carbon capture and storage and marine energy, and we need to get research and development moving. We need pace, urgency and delivery. If we don't step up our game, we will not succeed."
This article was featured on The Scotsman website.
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UK Utility Watchdog Demands Competition Probe Into Energy Market
Tuesday, May 20, 2008
The head of U.K. utility watchdog Energywatch Tuesday demanded a Competition Commission inquiry into gas and electricity markets, which he said are structurally uncompetitive and moving in the wrong direction.
"I call on the Competition Commission to put the cleaners through this sclerotic market," Energywatch Chief Executive Allan Asher told a parliamentary inquiry into the energy sector.
Asher said the 'big six' U.K. utilities aren't competing fiercely enough with one another on prices, resulting in a gap between the highest and lowest dual fuel tariffs of just pence a week.
The vertical integration of the six companies, who own power generation and gas supply assets and have millions of retail customers, is shutting out new entrants, he said.
"No generator will enter this market...because vertically integrated companies own all of the customers," he said.
Equally, companies that may want to compete on the retail side can't do so because they would have to buy all of their power and gas from the incumbents, Asher said.
"We've seen 40 companies exit the market in the last 10 years and not one new entrant that has been sustained," he said.
In this situation, separating power generation and retail businesses would be "economically sensible", Asher said. He said the big six companies shouldn't be allowed to dominate the development of new wind and nuclear power, adding selling independent nuclear generator British Energy PLC (BGY.LN) to one of these companies would also hinder competition.
British Energy is up for sale and four out of the big six utilities - Centrica PLC, RWE, EDF and Iberdrola (Scottish Power's parent company) - are in the running for a takeover. The other two of the six are Scottish and Southern Energy PLC and E.ON.
Asher also said the current investigation into competition in the utility sector by regulator Ofgem is insufficient.
"Ofgem isn't set up to do big studies...their staffing, level of expertise and experience isn't up to it," whereas the Competition Commission is "ready, willing and able" to do a thorough inquiry, he said.
The Competition Commission would have the power to force renegotiation of anticompetitive gas and power contracts or force the breakup of the vertically integrated utilities if it wanted to, Asher said.
This article was featured on CNNmoney.com
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Iberdrola set for joint bid for British Energy
Friday, May 09, 2008
SCOTTISHPOWER owner Iberdrola looks set to team up with UK utility firm Centrica to make a bid for Scotland-headquartered British Energy.
An industry insider yesterday revealed that the Spanish company was unlikely to make a solo bid for the power plant operator and said Centrica would be a likely consortium partner.
But he added that today's deadline, set by investment bank Rothschild, which is advising British Energy, may not be met by a number of bidders, including Iberdrola.
The insider said: "The company is still considering its options on this and it understands that this may not be a final deadline in any case.
"Making a bid with a partner is very likely and, looking at the options around, Centrica would be an obvious choice."
However, broker Charles Stanley claimed Iberdrola, along with French nuclear giant EDF, were today expected to provide detailed offers to Rothschild. EDF, which earlier this week reported a 5.2 per cent rise in first-quarter sales as colder weather boosted demand for electricity, is tipped by some experts as a front runner in the field.
Industrial giant Suez, also from France, and Swedish power firm Vattenfall are believed to have dropped out of the race.
Charles Stanley analyst Tina Cook, said a full-blown bid from British Gas owner Centrica was unlikely, making a tie-up with Iberdrola even more likely.
The price could be between 600p and 700p a share, Charles Stanley said, which is at the lower end of analyst expectations and gives the company a market value of between £6.2 billion and £7.2bn. The range is below the current share price of 720.5p.
British Energy, which has its head office in East Kilbride and owns eight nuclear power stations, including Hunterston B in Ayrshire and Torness in East Lothian – as well as one coal fired power station – produces around one-sixth of the UK's electricity.
It confirmed it was holding a series of takeover discussions in March this year, as the UK government confirmed it was considering selling its 36 per cent stake in the business earlier this year.
Last year the government sold a 25 per cent stake in the company for £2.08bn.
British Energy is being eyed by a number of European rivals who want to take advantage of the UK's new drive towards nuclear power.
A spokesman for Iberdrola, which is the world's fourth-largest energy company and the biggest wind-generated power supplier, refused to comment.
This article was featured on The Scotsman website.
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UK aims for a million green collar workers
Thursday, May 08, 2008
The number of people working in the environmental sector is expected to top one million within the next twenty years - more than double today's figure of 400,000.
British Minister for Europe Jim Murphy gave the environmental industries a pep talk as he and his French counterpart Jean-Pierre Jouyet hosted a meeting this week to look at how an sustainable future could go hand-in-hand with economic growth.
At Towards a Green Collar Europe: jobs and growth in a low-carbon economy The Ministers invited repsresentatives from business, the public sector and trade unions to consider how Europe can keep the global lead on environmental action while boosting employment and remaining competitive.
Jim Murphy said: "Countries that take early action in developing green technology will have a competitive advantage as this boom industry grows in the future.
"The [British] Government is committed to making sure the UK is ahead of the pack - in the future we want an economy offering a mix of good blue collar jobs, good white collar jobs and good green collar jobs.
"Our aim is to have over a million UK workers in environmental industries within the next two decades. "
He said the economic case for an urgent shift to low carbon is compelling, citing the Stern Review which 'found that climate change will be more devastating than both of the World Wars and the Great Depression' and inaction was not an option.
Mr Murphy said he did not want to see the UK trailing behind its European partners.
"Renewable energy programs in Germany and Spain are just ten years old but have already created hundreds of thousands of jobs. Germany is known for car giants like BMW, Mercedes and VW - but by 2020 it will have more jobs in the field of environmental technologies than in its entire car industry.
"We need to match and exceed their efforts. The environment in general and climate change in particular demand effective international - and not just national - action, because pollution does not respect borders.
"As the world's largest trading bloc and a unique example of countries working closely together, the EU is ideally placed to promote green jobs and growth."
This article is featured on the Edie.net website.
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Renewable Energy - its role in the UK
Wednesday, May 07, 2008
by Malcolm Wicks MP, Energy Minister
The Energy Minister discusses the role of renewable energy in the overall energy mix strategy of the Government and highlights the economic opportunities that renewable energy brings to the UK. He confirms renewable energy as a key priority for the UK.
by Malcolm Wicks MP, Energy Minister
In March I visited one of the country's new generation of green buildings. Hampton Hill Junior School in Richmond, Middlesex, has installed 50 solar panels using almost £25,000 of Government funding. The school is already producing electricity and using the sun to heat its water supply – reducing its impact on the environment and potentially cutting its energy bills by up to 40%.
Hampton Hill has joined a growing list of public and private organisations generating their own 'green' power. Funding for their panels – through the Department for Business, Enterprise and Regulatory Reform's Low Carbon Buildings Programme – is just one strand of the Government's commitment to generate 10% of the UK’s electricity from renewable sources by 2010 and to meet our share of the European Commission's renewable target. Last year EU leaders agreed to generate 20% of the EU's energy from renewable sources by 2020 – the UK's proposed target is currently 15%.
The most up-to-date figures put our renewable electricity generation at 4.6% in 2006, up from 1.5% in 2002.
Renewable energy - using the sun, sea and wind to generate power - is a key component of the Government's overall energy strategy. It has never been more important. We have more evidence of the adverse effect of climate change. We are moving into an era when we'll be importing more of our energy, when relatively low energy prices are unlikely to be repeated and when global demand for energy will rise dramatically.
Renewable energy also has distinct economic advantages. World Energy Council projections indicate that cumulative investment in renewable technology will be worth between £500 billion and £1500 billion by 2020. Just a 5% share would mean a £25 billion market for the UK.
We've already established ourselves as world-leaders in the development and deployment of renewable technology, so I'm confident the market share could be even higher.
In the last year alone the Government has consented to a series of large-scale projects, set to make a real difference to the way we generate our power.
Throughout the UK onshore and offshore wind farms, one of the world's largest biomass plants and groundbreaking tidal demonstrators are all now in the pipeline. But we need to go further.
Since 2002 we have committed around £500 million to develop renewable and low-carbon technology. That's money for offshore wind farms, biomass technology – generating fuel from plants – and marine renewable technology.
As well as investing in new technology, it's vital to have real incentives for suppliers. Under the Renewables Obligation (RO), power companies have to provide an increasing percentage of electricity from eligible sources of renewable energy. The obligation for 2007/08 is 7.9% and rises each year to 15.4% in 2015/16.
Suppliers meet this target, pay a buy-out price or a combination of both.
There's no doubt the RO has stimulated growth in the development of renewable energy. Since its introduction in 2002 renewable energy generation has more than doubled. The UK is now the number one location for investment in offshore wind in the world and this year we will overtake Denmark as the country with the most offshore wind capacity.
But we need to go further. Denmark already generates approximately 20% of its electricity from wind power. If the UK wants to take advantage of emerging industries, as well as secure the environmental benefits, we need to do all we can to reach our 10% target and our share of the EU 2020 target.
So my Department has proposed changes to the RO to encourage developments in emerging technology. This includes increasing support available to the next wave of renewable generation such as offshore wind farms and dedicated biomass plants and those further from the market such as wave and tidal stream.
This is part of a raft of measures, including a major consultation on what we need to do to increase the amount of renewable energy generated in the UK. This will inform our new Renewable Energy Strategy due to be published in 2009.
My Secretary of State announced late last year plans for future offshore wind development which could generate a further 25GW of wind power. This is on top of 8GW already planned – if approved the wind farms could produce enough energy to power the equivalent of every home in the UK.
We're also addressing the issues that could hold us back.
Planning delays are recognised as a real obstacle to renewables deployment in the UK. The Planning Bill, if passed, will establish a new independent Infrastructure Planning Commission to deal with large-scale renewable planning applications more quickly. Smaller projects would benefit from the reforms too.
Another barrier has been the amount of time it takes to connect to the grid. We're working closely with Ofgem, National Grid and others to tackle this issue. The key challenges are to build new infrastructure on time and make efficient use of the available network. The Government is carrying out the Transmission Access Review to find ways to improve and speed up connections. We plan to publish our recommendations in May – following on from our interim report in January.
I've been talking about large-scale projects, but microgeneration – smaller projects like Hampton Hill School's solar installation – is crucial to meeting our renewable energy target. This is why we've allocated £86 million to the Low Carbon Buildings Programme, which has already helped nearly 200 organisations and over 4000 householders install their own renewable energy supply.
In March I announced higher grant levels for public sector and charitable organisations, which should boost the number of green buildings across the country.
The Government's renewable energy policy is part of a wider programme to secure a diverse, clean and competitively priced energy supply for the UK.
Our potential renewable energy resource is vast. We are surrounded by water, with one of the best wind profiles in Europe. And when I see the benefits renewable energy brings – both economic and environmental – I'm determined the UK will continue to be a world leader.
This article was featured on the eGov website.
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