UK firms buy ‘green energy’ proof from Europe but burn fossil fuel
UK energy providers have turned to Eastern Europe to buy cheap green energy certificates that let them claim they provide 100 per cent renewable energy while continuing to rely on fossil fuels.
Such schemes are known in the industry as “dirty REGOs”, in reference to watchdog Ofgem’s Renewable Energy Guarantees of Origin (REGO) plan.
Under current government rules, suppliers can claim to sell 100pc clean electricity by purchasing REGO certificates from renewable generators such as wind farms.
So instead of paying for clean energy from the renewable sources, companies are buying paper certificates equivalent to a unit of green energy.
These certificates let firms market their tariffs as completely green, when they might actually be buying electricity from a coal-fired power station.
Now, industry insiders say that instead of buying these certificates from UK renewable generators, energy suppliers are purchasing them from Lithuania, the cheapest market for REGOs in the EU.
This is the first time that the existence of a European market for cross-border green certificates has been revealed.
It is unclear how many UK energy suppliers have engaged in this practice, although a source said that at least two companies they had worked for had bought dirty REGOs, and described how uncomfortable it made members of staff at the time.
Ofgem does not regulate the trading of REGO certificates. Consumer groups have called on the industry regulator in the past to provide greater transparency in to how renewable energy is defined, with the current system allowing suppliers to rely exclusively on REGOs, to ‘greenwash’ their tariffs and to do little to support new renewable electricity generation.
In an investigation last year, Which? analysed 355 tariffs offering renewable electricity in June 2019 and found 20 suppliers selling 100pc renewable electricity tariffs without contracts to buy any renewable electricity.
The Sunday Telegraph
Chairman Bickerstaffe steps away from SSE as it completes £500m sale to Ovo
Retail chief Katie Bickerstaffe’s short-lived career leading major energy supplier SSE’s household division is to end within weeks.
The former Dixons Carphone executive will quit her role chairing SSE Energy Services when the company’s sale to Ovo completes, which is likely to happen this month.
She was originally hired in 2018 to run a new energy business due to be formed out of a planned merger between SSE Energy Services and rival Npower.
But the 51-year-old was appointed as chairman instead when that merger fell through last year, tasked with helping the supplier split from SSE, either through a listing or sale.
Daily Telegraph
Octopus Energy looks for fresh funding to bankroll expansion plans
The energy challenger Octopus Energy is preparing to raise hundreds of millions of pounds of fresh funding to bankroll expansion in Scandanavia and as far afield as Japan.
Octopus Energy, which is one of Britain’s fastest-growing energy newcomers, hired KPMG last year to advise on the plans, which market sources said could secure a valuation approaching £1bn.
A funding round is one of several options being considered to support overseas growth alongside partnerships, the company said.
The loss-making business is eyeing opportunities to enter as many as four new markets over the next 18 months, Octopus Energy’s founder and chief executive Greg Jackson said.
He added that the company is aiming to have operations in up to 30 countries over the next five years, after thriving in the battle to take customers from Britain’s “Bix Six”.
City sources said that Octopus Energy is exploring a major fundraising to finance its ambitions at a lofty valuation yet to be finalised. The company said that nothing had been decided but confirmed its expansion plans.
Mr Jackson said: “The plan is to build a global energy business.”
He added that the Nordic countries of Finland, Norway, Denmark and Sweden could provide exciting opportunities in the near term, while Asian markets such as Japan could also play a major longer term role in its growth.
The Sunday Telegraph
EDF seeks funding to save Sizewell C nuclear plant
EDF is in a race against time to secure a funding deal for its proposed nuclear power station in Suffolk as delays risk making the project prohibitively expensive.
The French energy giant has hired Rothschild as financial adviser for the Sizewell C project and says it wants a “definitive way forward” from the government this year so it can start construction in 2022.
The company building the £22 billion Hinkley Point C plant in Somerset has promised it can significantly reduce the cost of the sister plant in Suffolk, including by transferring workers and equipment between the two.
Delays to funding that result in a hiatus between the projects would erode such savings and jeopardise Sizewell, which the government has said must be cheaper than Hinkley.
A senior executive at Sizewell recently admitted that if funding proposals ended up “outside an acceptable price range for the government, then the project probably won’t go ahead — it’s as simple as that”.
The comments were made at a meeting with Suffolk residents last month by Jim Crawford, EDF’s project development director for Sizewell, who has since retired.
An EDF spokeswoman said: “We hope to see a way forward on nuclear financing in 2020 ahead of COP26 . This would ensure we can maximise the benefits of replicating the design of Hinkley Point C at Sizewell C.”
The Times
Power upstart Utilita Energy dives
Utilita Energy has crashed to a £31.9m loss as the government’s price cap continues to squeeze household suppliers.
The news comes as regulator Ofgem launched an investigation into whether the challenger provider breached the cap by overcharging customers.
Utilita reported sales up 33 per cent to £717.8m in the 12 months ending last March, newly filed accounts show, but the impact of the price cap and poor performance in its commercial energy division pushed it deep into the red, compared with a £9.9m profit in 2018.
The impact of the pre-paid energy price cap, introduced in 2017, has upended the industry. The knock-on effect of capping pre-paid tariffs at £1,217 and others at £1,179 was at least partially responsible for the departure of Iain Conn, chief executive of British Gas owner Centrica, announced last July.
The Times
US private equity firm KKR in surprise bid for Viridor as sellers seek £4bn
South West Water owner Pennon is preparing to flush out buyers in the £4bn sale of its bin collection and incinerator arm after fending off a swoop by one of the world’s biggest private equity funds.
Investment bankers from Morgan Stanley and Barclays are understood to have been appointed to sell Viridor, which burns rubbish to generate energy, amid frenzied buyout interest.
City sources said that US private equity titan KKR attempted to jump start proceedings early last year with a knockout bid for Viridor.
The move is understood to have shocked a slew of interested parties queuing up to land one of Britain’s most sought-after investments of 2020. Advisers are in the process of formally kicking off the auction, having only taken informal soundings from prospective bidders to date, sources said.
The Sunday Telegraph
Community-generated green electricity to be offered to all in UK
UK homes will soon be able to plug into community wind and solar farms from anywhere in the country through the first energy tariff to offer clean electricity exclusively from community projects.
The deal from Co-op Energy comes as green energy suppliers race to prove their sustainability credentials amid rising competition for eco-conscious customers and “greenwashing” in the market.
The energy supplier will charge an extra £5 a month over Co-op’s regular tariff to provide electricity from community energy projects and gas which includes a carbon offset in the price.
Co-op, which is operated by Octopus Energy after it bought the business from the Midcounties Co-operative last year, will source the clean electricity for its new tariff directly from 90 local renewable energy generation projects across the UK, including the Westmill wind and solar farms in Oxfordshire. It plans to use all profits to reinvest in maintaining the community projects and building new ones.
Phil Ponsonby, the chief executive of Midcounties Co-operative, said the tariff is the UK’s only one to be powered by 100 per cent community-generated electricity and would ensure a fair price is paid to community generators too.
Customers on the Community Power tariff will be able to “see exactly where it is being generated at small scale sites across the UK, and they know it is benefiting local communities”, he said.
Co-op, which has about 300,000 customers, has set itself apart from a rising number of energy supply deals which are marked as 100 per cent renewable, but are not as green as they seem.
Consumer group Which? has found that many suppliers offer renewable energy tariffs but do not generate renewable electricity themselves or have contracts to buy any renewable electricity directly from generators.
Instead, the “pale green” suppliers exploit a loophole in the energy market by snapping up cheap renewable energy certificates, without necessarily buying energy from renewables projects.
The certificates are issued by the regulator to renewable energy developers for each megawatt generated, but these can be sold separately from the electricity for a fraction of the price.
The Guardian
Britain is ripe for a radical shift in energy policy
In Britain, a new government with a clear majority and no serious opposition is planning radical reforms to how public policy is made (writes Nick Butler). The initial targets, set by Prime Minister Boris Johnson’s chief adviser Dominic Cummings, include past failures such as defence procurement and the neglect of regions outside London. Energy policy should be added to the list.
The objectives of such policy are not in question. Energy security and decarbonisation to address climate change have been central issues for the past two decades. But the means being used to achieve those objectives are outdated, unnecessarily expensive and liable to damage competitiveness while delivering very little.
The main strands of current energy policy date back to 2013 and have not been seriously re-examined since. The conventional wisdom at that time was that energy supplies were scarce and likely to become ever more expensive. The result was an approach that supported the development of UK supplies, in many cases through direct subsidies, with little or no regard for cost and until recently with minimal competition.
A shale gas revolution was proclaimed with scant reference to the realities of drilling in well-populated areas where public resistance was inevitable. Renewable projects were given 15-year contracts at guaranteed prices of up to £140 to £150 per megawatt hour, without being subject to any competition. Consumers are still paying for those deals.
The most egregious excess was the agreement in 2013 to go ahead with the Hinkley Point C nuclear project at a cost of an index-linked £92.50 per MW hour for 35 years from the start of production. The project is years behind schedule, with further cost overruns of up £2.9bn reported last year.
The result is that while energy prices have fallen (oil and natural gas are both down by almost 40 per cent since 2013; and wind and solar by 43 per cent and 57 per cent respectively) consumers are paying more than is necessary, with even bigger bills to come. There is a good case for the new government to renegotiate the whole Hinkley deal, as well as many of the early renewables contracts.
The most important objective, though, should be to correct the approach before similar mistakes are made as the government tackles the priority of reducing emissions to limit the risks associated with climate change.
Mr Cummings may have a low opinion of the majority of civil servants, but when it comes to energy policy they are not the problem — many are dedicated and hardworking despite years of stagnated pay but frustrated by poor policies and weak leadership. What is lacking is a viable strategy to deliver the objective of reducing emissions at the lowest cost.
The Financial Times
EDF misses 2019 French nuclear power target
EDF’s French nuclear power generation fell by a more than expected 3.5 percent last year, the state-owned utility said on Friday.
The French company’s domestic nuclear output power dropped to 379.5 terawatt hours (TWh), missing a revised production target of between 384 TWh and 388 TWh.
EDF attributed the drop to a high volume of reactor outages, with nuclear power output tumbling in the final month of 2019 by 15.2% to 33 TWh.
The operator of France’s 58 nuclear reactors, covering about 75% of the country’s electricity needs, had revised its 2019 nuclear production target from 390 TWh to between 384 TWh and 388 TWh in November because of reactor maintenance and safety checks after an earthquake.
The dip took French nuclear generation to its lowest since 2017, when output stood at 379 TWh. When all its French reactors are up and running EDF can produce up to 420 TWh a year.
In Britain, the company’s nuclear power generation for 2019 fell 13.7% year on year to 51 TWh, with December output slipping by 2.1% to 4.7 TWh, but did not give any reason for the decline.
Reuters
Sir Jim Ratcliffe accused of North Sea price hike
Billionaire Sir Jim Ratcliffe has been accused of abusing his grip on the North Sea by hiking costs for a rival to use the main pipeline transporting oil and gas to the mainland.
American oil giant Apache claims Sir Jim’s company, Ineos, wants to double the fees due for use of the Forties Pipeline System (FPS) from next year and has called on the High Court to intervene. In documents seen by The Telegraph it claims Ineos is also refusing to commit to transporting all of the oil Apache wants to put through the pipeline from 2021.
Apache says Ineos is obliged to stick to the existing terms of its deal to use the Forties pipeline. It said: “The fact that Ineos FPS wished to negotiate a higher tariff for the services does not make its withholding of consent reasonable, nor entitle it unilaterally to vary or qualify its obligations to provide the services.”
Ineos is Britain’s largest private company with annual sales of around $60bn (£46bn), mainly from producing chemicals used in paints, plastics and medicines. Its success has made 67-year-old Monaco resident Sir Jim, who founded Ineos in 1998, one of the country’s richest people.
Ineos bought the 235-mile Forties pipeline from BP in 2017 for $250m (£191m). A key strategic asset, the infrastructure transports about 30pc of North Sea oil to the mainland, about 450,000 barrels per day, with an unplanned shutdown in late 2017 pushing up global oil prices.
The Sunday Telegraph