Utility news
On this page you will find industry news about electricity, gas, water, fixed and mobile telecoms, and other stories. Our news is updated once per month. We cover items such as developing technologies, price changes in the utility markets, takeovers and company collapses, changes in tariffs, the results of investigations by the regulators and market trends.
Please take time also to visit our Business Cost Consultants news page, where we will keep you up to date with developments in Business Cost Consultants, and coverage we have had in news and trade press.
If you would like to be kept up-to-date with utility news, you can join our list of free monthly newsletter subscribers; just go to the Newsletter sign-up page. You can unsubscribe at any time.
- See the Newsletter sign-up page.
Industry news
Interview - Mark Powles: Stopping the trickle before it's a flood
Tuesday, July 08, 2008
Scottish Water's commercial arm is upping its game so it doesn't leak customers, its chief tells Terry Murden.
THERE are not too many businessmen who start their job with a 100% share of the market and a product that everybody wants.
It sounds like the perfect sector to be in, except that the water industry in Scotland is now open to competition, and for Mark Powles the battle is how to retain those customers he began with in March last year.
Powles is the first chief executive of Business Stream, the commercial wing of Scottish Water, that has yet to register much of a profile with the general public, probably because its customer base is restricted to businesses.
Three months on since the market was opened up Powles is planning a publicity drive, though his ready-made group of 100,000 customers and 130,000 billing sites includes every business in Scotland so getting the message over through word of mouth should not be difficult.
Even though we are only weeks into the new era of competition there has been criticism that not much switching has taken place. Powles says it's a bit early yet, and that the electricity and gas industries experienced the same level of apathy.
But he acknowledges that he lost only four businesses in 12 weeks. Out of 100,000 it is hardly a source of great concern, and at that rate we would be looking at only 16 in the first year. A thousand would have to switch supplier to knock 1% off market share and there seems little prospect of that happening. So, would the loss of 1,000 clients be regarded as success or failure?
"I won't be drawn on the level we would be happy with," says Powles, "and, yes, I am avoiding the question. Let's just say that losing a customer does not mean you have lost him forever."
Those who left fled to Berkshire-based firms Satec and Aquavitae. As Scotland on Sunday revealed last month, Aquavitae is no longer competing for business and its customers have now either returned to Business Stream or gone to Satec. Two other firms, Osprey, a division of Anglian Water, and Ondeo, are expected to enter the market shortly and could offer more serious competition.
"My model is to retain as many customers as I can and on merit, and look at where we can add value," says Powles. "We do not think of it as a monopoly, we have to think only about providing the right services at the right price, or the customer will go elsewhere."
While there is obvious comfort in having a clear advantage over his rivals, Powles admits he wants competition and gives the impression that he would feel let down if it didn't give him a few sleepless nights. "The threat of competition has forced us to raise our game. We didn't wait until April 1 (when the market was opened] to decide what to do. We were working with customer focus groups and finding out what they wanted."
It is likely to take some time for the changes to sink in, not least because the model that was introduced is a world first. Business customers of any size can choose their water and sewerage provider, overcoming the "one size fits all" approach of the previous regime. Its progress is being watched by Ofwat, the regulator for England and Wales, where a competitive framework has proved too restrictive to have any impact. In the 12-month run-up to the changeover Scottish Water achieved £10m in annualised savings.
Alan Sutherland, the chief executive of the Water Industry Commission for Scotland, the regulator, recognises that Business Stream is in pole position but the framework demands that it publishes its tariffs and gets no special privileges. It is not allowed to supply water at a loss. Sutherland believes it faces three options: managing its own decline; expanding into England and Wales to replace customers it loses in Scotland; or partnering with other firms for special projects.
Powles says the English option is being looked at. But at such an early phase of the competitive era he wants to focus on serving the core Scottish customer base and taking on the opposition – when it arrives.
"We set ourselves up for the rush of competition and it has been slow, but you cannot judge the success of the market on the number of competitors or on how many customers have switched," he says.
Powles was headhunted for the job after a career spent at a number of regulated businesses including Sealink, under the ownership of British Rail, and National Express, where he set up the hugely successful online retail division, Qjump. He spent 18 months as operations director at life company Aegon's independent financial advice business Origen and found the challenge of Business Stream fit with his fondness for being in at the start of something.
Since his arrival, he's set about trying to change the culture, aware that he inherited 130 staff with a public sector approach to the industry and many of them engaging with the competitive world for the first time. "There was a fear about what it was going to be like and whether their jobs were safe. But we seem to have got over that." He has brought in private sector hands from Scottish & Southern Energy, Standard Life, British Energy, Cap Gemini and Bupa, to add new skills that he hopes will rub off on the core staff.
Powles takes some satisfaction from the high ratings achieved in a staff engagement survey undertaken by Harris Interactive that shows how the staff are adapting to the new environment. "It tells me that people have made the transition and that we have made a good start," he says.
Powles still commutes weekly to his family home in Bishops Stortford, Hertfordshire and retains a link to his Birmingham roots through his support of Aston Villa football club. Otherwise, he's thrown himself fully into the day job and selling the message. His first act on opening the door to his office in Edinburgh's Fairmilehead is to offer a glass of water. Scottish tap water, of course, and he's quickly spouting the list of services that Business Stream will offer: network modelling, contingency planning, emergency cover, leak detection.
With firms facing cost pressures and requirements to meet environmental targets, he says the new regime's big advantage is being able to tailor a service to meet the individual customer, though for many, it's about providing a service that allows them to concentrate on their own business and run it more efficiently.
"For most business people water is just about taps and toilets," he says. "They just want us to make it simple for them."
This interview was featured on The Scotsman website.
Read the full article…
Permanent link for this article
CO2 emissions up by nearly a fifth in 12 years
Thursday, July 03, 2008
Carbon dioxide emissions caused by UK consumers increased by almost a fifth between 1992 and 2004, research revealed today.
A study by the Stockholm Environment Institute at York University looked at the carbon footprint of all the goods and services consumed by British residents, including those imported from other countries. The research found the amount of carbon dioxide emissions associated with consumption in the UK increased by more than 115 million tonnes in that time, from 646.8 million tonnes to 762.4 million tonnes.
Emissions grew because of an overall increase in the amount of products being consumed and a shift from manufacturing in the UK to other countries where production involved a higher carbon output, such as China. The study counted emissions created through the production and transport of products such as televisions and clothing abroad, as well as goods and services produced in the UK and consumed here including gas and electricity. But it subtracted the carbon footprint of products manufactured here but exported for consumption abroad, to give a clear picture of the emissions associated with consumption in the UK.
While "territorial" emissions - those created in the UK and measured under the UN's Kyoto Protocol on reducing greenhouse gases - fell by 5% from 1992 to 2004, consumer-related emissions rose 18%. Consumption emissions were 37% higher than the territorial emissions in 2004, the study said. Thomas Wiedmann, research associate at the Stockholm Environment Institute at York University, said the study drew up the "total carbon footprint of UK consumers" and provided an insight into the global impacts of consumption in Britain.
"It gives support for the view that in an increasingly globalised market all economies need to play their part in reducing greenhouse gas emissions," he said. Dr Wiedmann said the study included, for example, the electricity needed to make clothes in China which were then exported to the UK for sale. Much of the time, that energy was more carbon intensive because countries such as China relied heavily on coal, he said.
The study, using a new modelling approach, was commissioned for the Department for Environment, Food and Rural Affairs. Environment Secretary Hilary Benn said: "Under international climate change agreements, we only have direct influence over our domestic emissions - and they are, and will remain, the basis for these commitments. "But as we accelerate the move to a low carbon economy, we must help business and individuals to understand and reduce the environmental impacts of the products and services they produce, sell or consume, wherever in the world they are made."
He added: "These findings reinforce the need for a global approach to tackling climate change, based on a carbon market that stimulates action and investment in clean energy and energy efficiency in all economies."
This story was featured on The Independent website.
Read the full article…
Permanent link for this article
Growth in renewables bucks global slowdown
Thursday, July 03, 2008
Investment in renewable energy increased at a quickening pace last year in spite of the cooling in key economies.
Renewables and other forms of low-carbon energy bucked the economic slowdown, with nearly $150bn (€95bn, £75bn) invested in the technologies worldwide, according to a report from the United Nations Environment Programme.
Achim Steiner, executive director of UNEP, said: “[This] is a true cause for hope that rising concerns over climate change and energy prices are leading to a fundamental change in the way we produce and use energy.”
He said: “These figures show the finance sector’s forward view may be better at seeing the disruptive change of new technology.”
Last year’s total was an increase of 60 per cent on the previous year’s $93bn. The pace of growth was slightly higher than the 57 per cent increase in investment from $59bn in 2005.
Investment in low-carbon energy has risen more than fivefold since 2004, when it stood at $33.4bn globally.
The impact of the cooling economy was felt in early 2008, with fewer new public listings and the stock prices of sustainable energy companies down by about 18 per cent, according to the report, Global Trends in Sustainable Energy Investment 2008.
However, investors quickly recovered their nerve, probably under the influence of rising oil prices. Investment in low-carbon energy for the first half of 2008 was greater than in the first half of last year.
The report’s authors said this showed the sector was resilient to the slowdown elsewhere in the economy.
Europe took the lion’s share of renewables investment last year, followed by the US. But China, India and Brazil also saw an increasing share of investment.
This article was featured on the Financial Times Ltd. website.
Read the full article…
Permanent link for this article
Investors bet on oil at $300 this year
Thursday, July 03, 2008
Investors are betting that the oil price could surge to $300 a barrel by the end of the year, according to data provided by the New York Mercantile Exchange, the world’s largest energy market.
Nymex statistics show that investors for the first time placed a small bet this week that West Texas Intermediate oil futures would hit $300 a barrel – more than double Tuesday’s price of about $142.50 a barrel – by December.Previously the highest bet was $275 a barrel and $200 remains the highest bet with significant investor interest.
At a cost of 18 cents each, investors bought 1,402 call options – contracts that give holders the right to buy crude oil at a predetermined price and date – that would be profitable only if oil prices trade above $300 a barrel in December.
Traders said that call options with prices well above current market quotes resembled “lottery tickets” although some noted that call options at $150 a barrel had also looked highly unlikely last year yet they are now almost profitable.
This article was featured on the Financial Times Limited website.
Read the full article…
Permanent link for this article
Virgin rapped on broadband speeds
Thursday, July 03, 2008
A complaint lodged by BT about the speeds of Virgin Media's broadband service has been upheld by the Advertising Standards Authority.
The challenge centred on its advertisement Hate to Wait?, which ran in the national media and featured download times for songs and TV shows.
BT argued that Virgin's usage caps meant that downloads during peak times would be slower than advertised.
The ASA has agreed and ordered Virgin to make it clear that speeds will vary.
Confusing megabits
In its adjudication it said that the advert did not make it clear that customers on Virgin Media's lower speed packages would be able to download TV shows at the speeds advertised only during off-peak hours. It ruled that Virgin Media needed to clarify that download times would be restricted during peak hours.
Virgin Media argued that, for users of its M 2Mbps (megabits per second) package, a TV show downloaded during peak hours would take only a few minutes longer to download.
But it did admit that users would be subject to its so-called traffic management system, which caps data usage during peak hours.
It said that the issue would affect only users of the 2Mbps service.
Customers on its L 4Mbps package could download 60 songs and/or two TV shows before reaching caps while those on the XL 20Mbps package could download 614 songs or nine TV shows before their speeds would be subject to caps, Virgin said.
"We believe our Hate to Wait? campaign provided a simple and transparent comparison between broadband speeds for consumers looking to choose between Virgin Media's M, L and XL broadband packages," Virgin Media said in a statement.
On a secondary issue, Virgin admitted that it wrongly used the term "megabits" when referring to the size of the files being downloaded and agreed to change it to the correct "megabytes" term.
It also agreed to amend the ad to reflect the fact that it would take some customers longer to download a TV show than stated.
Very competitive
The issue of so-called traffic throttling, where internet service providers place limits on the amount of data users can download, has become more pertinent with the growth of video-sharing sites and TV catch-up services such as the iPlayer.
In the US some providers are banning access to file-sharing via programs such as BitTorrent and in the UK the British Phonographic Industry (BPI) is in talks with providers, including Virgin Media, about banning heavy users of file-sharing sites.
"ISPs are responding to the growth of online video services and capping is also a way of migrating customers onto faster and more expensive tariffs," said James Garlick, analyst with Screen Digest.
Virgin Media believes traffic-throttling is vital to ensure a good service.
"Our traffic management policy helps ensure the majority of customers receive the quality of service they expect from our fibre-optic broadband product by managing demand from the heaviest users at certain times of the day," said a spokesman for Virgin Media.
The broadband arena in the UK has become hugely competitive and the ASA has received a steady stream of complaints, sometimes from consumers but often from rival providers, about the speeds of both fixed and mobile broadband.
"There are lots of factors which affect speed. Consumers are concerned about it but often it is competitors keeping an eye on each other," said a spokesman from the ASA.
This story was featured on the BBC News website.
Read the full article…
Permanent link for this article
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
Read the full article…
Permanent link for this article
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.
Read the full article…
Permanent link for this article
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
Read the full article…
Permanent link for this article
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.
Read the full article…
Permanent link for this article
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.
Read the full article…
Permanent link for this article
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.
Read the full article…
Permanent link for this article
Opec head sees oil price hitting $200 a barrel
Wednesday, April 30, 2008
The president of Opec has warned that the price of oil could hit $200 (£100) a barrel, spelling more pain for the major crude-consuming economies.
Chakib Khelil said there was nothing that the oil producers' cartel could do to bring down the high price, which he blamed on geopolitical tensions and market speculators.
His comments, coming as oil touched a record $120 a barrel on Nymex at one stage yesterday, are seen as rejecting pleas from America and Europe for Opec to turn on the taps and help rein in the price. Mr Khelil, Algeria's energy minister, said there is no evidence of a shortage of oil on world markets.
He told El Moudjahid, Algeria's state-owned newspaper, that oil stocks in the US were at a five-year high.
The price is being pushed up by the weak dollar, investment funds speculating on a higher price, and fears over supply shortages created by events such as the Grangemouth strike in Scotland and another at ExxonMobil's operations in Nigeria.
In such circumstances, Mr Khelil said he could not rule out oil going to $200 a barrel.
While the power of Opec, which supplies about 35pc of the world's needs, is no longer as great as in the 1980s and 1990s, critics within the US government argue that its members could do more to increase supply.
The rising price of crude is not hurting the oil companies, however. Royal Dutch Shell is today expected to report record first-quarter profits, while BP should turn in one of its best quarterly performances for two years.
During the quarter being reported, oil reached $100 for the first time. Shell's Q3 profits are forecast to rise 5pc to around $6.88bn, with BP's rising about 32pc to $5.26bn. Profits from refinery operations will fall, however, as the cost of crude oil rises.
In February, BP estimated that output will rise 13pc during the next five years to about 4.3m barrels a day. Tony Hayward, the chief executive, said BP will sustain production of at least 4m barrels a day until 2020 even without new finds.
Oil prices came off their day highs, with Brent trading just 30 cents higher in late trading at $116.64, and Nymex 36 cents higher at $118.88.
This article was featured on The Telegraph website.
Read the full article…
Permanent link for this article
British Energy decision is pivotal for future of UK nuclear industry
Wednesday, April 30, 2008
The deadline for the next round of bids for British Energy (BE) has been brought forward, as the Government seeks a swift decision on the future of the UK's nuclear industry. Rothschild, BE's financial adviser, has told potential bidders that it would like to see detailed offers by May 9.
Some of Europe's largest energy companies are considering bidding for BE, which has a pivotal role in the Government's plans for a new generation of nuclear power stations.
France's EdF, Germany's RWE and Britain's Centrica, the owner of British Gas, have submitted indicative proposals.
The companies have under two weeks to firm up their offers, including if they intend to bid on their own or form joint ventures.
It was thought the next round of offers would not have to be filed until the end of May at the earliest. But a Whitehall source said yesterday: "We don't want this dragging on".
The Government, advised by UBS, has asked Rothschild to sift through the initial offers with a view to having a sale completed by early summer.
It is believed that Centrica has warned the Government it would resist strongly any attempt to exclude it from BE's sale.
It would struggle to muster the financial firepower to bid for BE on its own and favours teaming up with EdF, which runs France's nuclear industry. EdF has the money and expertise to go it alone.
John Hutton, the Secretary for Business and Enterprise, has said Britain's proposed new nuclear programme would create 100,000 jobs. But Centrica has told him this could only be achieved if there was direct involvement by a UK company, and one with some control over the intellectual property rights to the technology.
The Government, which owns 35pc of BE, has final say over the sale and is said to have become "hugely sensitive" to the potential controversy of a takeover.
"Basically, Number 10 does not want to get mired in another round of bad headlines," said a source.
BE owns eight nuclear reactors in the UK, sites on which some of the proposed new power stations are likely to be built. Last week, EdF was tipped as planning an 880p-a-share bid, valuing BE at £9.1bn. "That's a daft valuation," said an insider yesterday.
Meanwhile, Centrica is in talks with private equity firms, including Riverstone Holdings, about joint funding for a major wind farm off the coast of Lincolnshire.
Centrica warned earlier this year about the rising costs of the project, which may now be more than £500,000. The company is also in talks with Blackstone and Apax.
The construction of more wind farms is central to the Government's ambitious targets to cut greenhouse emissions by producing 33 gigawatts of electricity from offshore wind by 2020. But Centrica and other energy companies say costs are spiralling upwards because of higher raw material prices.
This article was featured on The Telegraph website.
Read the full article…
Permanent link for this article
Oil giants Shell and BP record combined profits of £7 billion
Wednesday, April 30, 2008
OIL giants Royal Dutch Shell and BP made combined profits in excess of £7 billion during the first three months of this year, figures showed today.
Shell reported first quarter profits of 7.7 billion US dollars (£3.92 billion) for the three months to March 31, while BP posted 6.59 billion dollars (£3.32 billion).
The figures have been buoyed by rising oil prices and come at a time when motorists are paying on average almost £5 a gallon at the petrol forecourt.
The figures from both firms were well ahead of the equivalent periods last year – 12% higher for Shell and up 48% for BP – while the figures were also much stronger than forecasts in the City.
Average oil prices in excess of 90 US dollars a barrel have boosted the firms' exploration and production arms and offset tougher conditions in refining and marketing.
Shell made a surplus of 27.6 billion US dollars (£13.9bn) in 2007, equivalent to more than £1.5 million an hour.
At the time of its annual results, the Anglo-Dutch company said the profits figure was matched by the amount of money it spent on securing new energy sources.
The company says most of its money comes from exploration and production, rather than from selling petrol on UK forecourts.
BP's profits fell by a more than fifth to 17.29 billion US dollars (£18.76bn) last year as problems with its US refineries continued to dog the business.
This article was featured on The Scotsman website.
Read the full article…
Permanent link for this article
Higher prices boost BG profits
Wednesday, April 30, 2008
BG Group boosted first-quarter pre-tax profits by 73 per cent to £1.35bn and forecast higher full-year earnings for its liquefied natural gas division.
The results were unveiled on Wednesday as the UK energy group confirmed a $12bn bid for Origin Energy of Australia, which would build on its recently completed acquisition of a stake in Queensland Gas.
Operating profits rose 70 per cent to £1.4bn on higher oil and gas prices and production volumes. BG said that even with constant prices and exchange rates, operating profit would still have risen 24 per cent.
The exploration and production division remains the driver of BG operating profits, accounting for two-thirds of the total. In the period it increased profits by 50 per cent, largely due to price increases as volumes only rose by around 4 per cent as the contribution from the Buzzard field in the North Sea entered the numbers.
The burgeoning LNG business more than trebled operating profits to £383m, driven by Asian demand. BG now estimates its LNG business will deliver full-year operating profit of £1.1bn. In 2004, it contributed less than £100m.
The smaller transmission and distribution business saw operating profits halve to £20m, largely due to changes in the exchange rate of the Brazilian Real. Power generation earnings fell slightly to £41m.
The earnings were well ahead of market forecasts but the share price slipped 3 per cent to £12.67 in early London trading as investors digested news of the bid for Origin.
This article was featured on The Financial Times Website.
Read the full article…
Permanent link for this article
