Sadiq Khan’s electricity experiment loses almost £1m in first year
Sadiq Khan’s venture into energy provision has made losses approaching £1m in its first year, amid questions over local authorities’ role in the market.
The Labour mayor set up London Power at the start of last year in an effort to tackle the “disgrace” of fuel poverty.
It is run by Octopus Energy based on tariffs agreed with the Greater London Authority (GLA), which says it now serves 5,000 households that save an average of £209 a year.
London Power, which manages the contract with Octopus, last week posted an annual loss of £880,000 for the year ending March 2020, reflecting the costs of launching and setting up the brand.
The GLA plans to spend £3.2m on it overall. Octopus pays a commission to London Power for the customers, which amounted to £29,000 for the three months from January to March 2020.
Mr Khan, who is seeking re-election next month, has said any profits City Hall makes will be reinvested into community projects.
Daily Telegraph
Sewage island: how Britain spews its waste into the sea
The pandemic has not been the only crisis we’ve been wading through over the past 12 months: 2020 was a banner year in much of Britain for sewage spills.
Last July a Guardian investigation revealed that raw sewage had been pumped into English rivers via storm overflows more than 200,000 times in 2019. In November, Surfers Against Sewage (SAS) published data showing that untreated wastewater was discharged on to English and Welsh beaches on 2,900 occasions in a year.
Then last month, under mounting pressure, the Environment Agency published, for the first time, full data on raw sewage discharges last year, showing a 37% year-on-year increase: 3.1m hours of human effluent flows, pumped via storm drains into English waters in some 400,000 occasions.
Not since SAS was founded in 1990 – when untreated wastewater piped directly into the sea and flowing back on to British shores caused a scandal – has so much untreated faeces spread so far. Hugo Tagholm, SAS’s chief executive, says the country is facing “a second wave of sewage pollution”.
The prevalence of raw sewage in British waters is not only about the horror of swimming amid human waste but about the health and environmental threats of microplastics (especially from laundry water), endocrine disruptors (chemicals that interfere with hormones found in plastics, detergents and cosmetics), phosphorus (which causes algae blooms), antibiotic-resistant bacteria and even Covid-19 – all spread through wastewater.
All overflows reach the same place. “All of our waterways are connected,” says Tagholm. “It’s one cycle: what goes into our rivers ends up in our ocean.”
The country is belatedly waking up to the crisis. New ideas are being proposed – sustainable drainage, use of artificial intelligence (AI), even doing away with sewers altogether. Meanwhile, communities and increasing numbers of wild swimmers, surfers and paddle boarders are piling on pressure, because the solutions do not only involve water companies and sewers but the fabric of our cities, towns and villages, as well as farms taking responsibility for their polluting runoff.
“Despite the progress that investment has made,” says Tagholm, “we still see thousands of sewage pollution events each year emanating from the combined sewer overflow network on our coastline, and particularly in our rivers.”
Read the full report here
The Guardian
Coal financing costs surge as investors opt for renewable energy
Coal financing costs have surged over the last decade as investors demand returns four times as high as the payoff required from renewable energy projects to justify the risk of investing in fossil fuels, as the world moves towards cleaner energy sources.
A University of Oxford study found that over the same period the cost of investing in renewable energy sources, such as windfarms and solar arrays, has tumbled as the clean energy technologies prove they can be cost-effective and lucrative investments.
The research analysed the cost of financing energy projects by tracking the “loan spreads” offered by lenders which determine how high they expect their returns to be to cover the risk of investing.
Investors typically require wind and solar energy projects to make returns of at least 10% to 11% to account for the low risk of the investment. But for investments in coal, returns need to rocket to 40% to justify the rising risk that a high-polluting project might be left stranded as governments ramp up their climate action ambitions.
Dr Ben Caldecott, the director of the Oxford Sustainable Finance Programme and a co-author of the report, said lower loan spreads for renewable energy projects means they could become “even cheaper for ratepayers and taxpayers”, which is a “good thing for rapidly decarbonising the energy sector”.
The report collated financing costs for renewable energy over a five-year period from 2010 to 2014 compared with loan costs between 2015 and 2020. It found that the cost of financing solar farms has fallen by 20%, while the cost of financing onshore and offshore windfarms has fallen by 15% and 33%, respectively.
While Europe led the way in falling costs for offshore windfarms, Australia took the lead in driving down financing costs for onshore wind, and solar financing costs fell fastest in North America.
But investors are demanding higher returns from coal projects, which has caused their financing costs to climb. Loan spreads for power stations and coalmines have increased sharply, at 38% and 54%, respectively.
Caldecott added that the steep hike in costs for coalmines and coal-fired power plants proves that the risk of investing in fossil fuels during the transition to cleaner energy sources, which are “sometimes viewed as distant, long-term risks”, was already “priced in today”.
“The challenge is that this isn’t happening evenly and certainly isn’t occurring at the pace required to tackle climate change. In particular, financing costs will need to rise for oil and gas projects,” he said.
The Guardian
Hydrogen or heat pump? The battle of the boilers is hotting up
As snow fell in Britain last week, gas boilers in 25 million homes fired into action. Though many of us would hope to have the heating off by April, the humble boiler has been the mainstay of domestic heating since the 1970s. But its days are numbered — and a lobbying war is raging as rivals jostle to replace it.
The decision on how your home is heated may soon be between a hydrogen boiler and an electric heat pump, and the manufacturers of both are positioning themselves as the successor to natural gas, an industry that sells 1.7 million boilers in the UK each year.
Which heating strategy is likely to succeed? How can we decarbonise Britain’s homes as smoothly and cheaply as possible?
On the face of it at least, hydrogen makes a very attractive prospect as an environmentally friendly fuel, and ministers have taken a keen interest because it offers the potential to extend the life of the ailing North Sea oil and gas industry and could bring investment to key “red wall” constituencies in industrial parts of the northeast.
The government is helping to fund a number of demonstration projects around the country it hopes will make the case for hydrogen as a fuel. In Gateshead, £250,000 of public money has funded the construction of two semi-detached houses fuelled entirely by hydrogen to demonstrate how it can work.
A similar, larger, programme is under construction in Fife, where hydrogen will heat 300 homes by next year. These projects aim to replace gas with hydrogen. That requires hydrogen boilers, similar to gas combi boilers, but with a few modifications.
But in Staffordshire, Keele University, working with Cadent and other distributors, has been trialling a blend of hydrogen and natural gas before increasing the hydrogen content later. On the university campus, for the last year, 100 staff homes and 30 university buildings have been supplied with this mix. Crucially, if hydrogen makes up no more than 20 per cent of the blend, gas boilers can be used without modification.
Preliminary results from the trial, which is due to extend to 650 houses in the northeast, found no safety issues. A forthcoming report into the trial concludes: “If rolled out to all UK homes, the 20 per cent blend would save the equivalent carbon emissions of removing 2.5 million cars from the road without any disruption or change for domestic consumers. This . . . proves the potential to unlock an annual six million tonne CO2 saving without needing consumers to change a thing — no other low-carbon heating solution offers this level of saving with no change/disruption for consumers.”
Dr Jonathan Marshall, head of analysis at the Energy and Climate Intelligence Unit in London, however, disagrees with the approach. “A hydrogen blend is not compatible with net zero,” he said. “Ultimately it has a shelf life, so you either have to switch to 100 per cent hydrogen or go in a different direction. So it raises questions about what the point of this is.”
Unlike hydrogen boilers, heat pumps have been around for some time. They work like a fridge in reverse, extracting heat from the ground, water or air and using it to warm radiators or underfloor heating systems.
Cost, however, is a sticking point. Buying and installing a hydrogen boiler is expected to cost roughly the same as a new gas combi-boiler — about £3,000. But heat pumps are far more expensive.
An air-source heat pump unit costs £4,000 to £5,000, and installation bills add £8,000 to £12,000. But Greg Jackson, founder and chief executive of Octopus Energy, says: “Today, heat pumps are a cottage industry. You don’t have the efficiencies of scale in manufacture or installation.” Indeed, only 27,000 heat pumps are now installed each year. The government wants that to increase to 600,000 by 2028, which will inevitably drive down price.
There are other hurdles. Heat pumps are very efficient — every kilowatt-hour of electricity is turned into up to four kilowatt hours of heat. But they struggle to get to the temperatures of a gas boiler, meaning they work best if a house is well insulated, which most of Britain’s draughty Victorian houses are not.
Jackson insists this is not a problem. “While we are installing we do the insulation, we just do it all at the same time,” he says. “Then you solve two problems in one.”
A further, perhaps more serious, hurdle, however, is that heat pumps require a tank to provide hot water as well as central heating. Up to 70 per cent of gas-heated homes in the UK have removed old water tanks in recent decades and installed combi-boilers. Engineers are working on ways to provide heat pumps without water tanks, but for now the prospect of reinstalling tanks in loft spaces — many of which have been converted to bedrooms and en-suites — or the corner of a bathroom could prove an obstacle for consumers.
So where does that leave us? Chris Stark, chief executive of the Committee on Climate Change, which advises the government, insists that the polarisation of the debate is unhelpful.
“This is a phony war,” he says. “These format wars are deeply counter-productive, because in reality we’re going to need a mixture of technical solutions. But the crucial thing is, how do we plan for that?”
Stark believes that solutions will be regional. On the east coast, for example, hydrogen is likely to play a key role in heating homes. In large cities, such as Glasgow, which have very particular housing types in the form of tenement flats, district heating systems would be better suited. And in rural areas, ground-source heat pumps may be the best option.
“It will be different locale by locale,” he says. “So I think the most important thing that is missing from the discussion at the moment is the question of how do we accommodate the specific circumstances of every city across the UK?” Stark wants the forthcoming government strategies to set out frameworks for regional bodies to start drawing up plans.
He says that research has shown that people want to be involved in any decisions about the transformation of heating. “When you ask them, they want two things,” he says. “First, they want to be involved in the decision about what is going on. And second, they want the minimum of fuss when the change takes place. But they aren’t bothered by what the technology is. People are not wedded to their boilers. They are wedded to being warm.”
Read the full article (subscription required) here
Sunday Times
Oil giants’ biofuel claims are just ‘greenwash’, claim activists
One of the world’s biggest oil companies is facing a legal challenge over its claims about biofuels as other fossil fuel companies are challenged by campaigners over “greenwashing”.
ExxonMobil claimed on social media that it was growing algae for biofuels that could one day “cut their greenhouse gas emissions in half”.
However, the campaign group ClientEarth claims the company spent almost twice as much on marketing its efforts to tackle climate change as it invested in biofuels.
ExxonMobil spent $30 million a year, or about 0.14 per cent of its annual capital expenditure, developing biofuels and $56 million on green marketing, ClientEarth said. The US company employs 2,200 people in the UK.
ClientEarth is calling for all fossil fuel company advertisements to be banned unless they come with warnings.
The group is considering filing a complaint with the Organisation for Economic Co-operation and Development (OECD), accusing the companies of breaching its guidelines that state that multinational enterprises should “not make representations or omissions, nor engage in any other practices, that are deceptive, misleading, fraudulent or unfair”.
Other companies have been accused by the group of heavily promoting relatively minor schemes to cut emissions while in reality focusing on extracting huge volumes of oil and gas.
Shell claimed in an ad that it was tackling emissions by “protecting forests under threat” but ClientEarth said its plans accounted for less than a tenth of its emissions.
Total advertised its investment in carbon storage schemes but failed to make clear its planned spending on them was less than 2 per cent of its investment budget, the group added. Chevron also promoted carbon capture as a solution despite its plans covering less than 1 per cent of its emissions, ClientEarth said.
Saudi Aramco claimed it conducted business “in a way that addresses the climate challenge” but ClientEarth said it was the world’s largest corporate greenhouse gas emitter and planned to continue oil and gas exploration.
The Times
Engineering giant adds its weight to energy developer
A British developer of hydrogen fuel-cell technology has received a £3.2 million cash injection from ABB and has expanded its partnership with the giant Swedish-Swiss engineer.
AFC Energy said yesterday that it had raised about £36 million altogether from an oversubscribed fundraising that would provide it with cash to develop products. The Aim-listed group is working on electric vehicle charging products alongside ABB, as well as alkaline fuel-cell technology that could power data centres.
AFC, which is valued at about £500 million, is based in Cranleigh, Surrey. ABB, one of the world’s largest engineers, is based in Zurich.
Hydrogen is an appealing alternative to fossil fuels because it is the most abundant element in the universe and emits only water when burnt. However, separating hydrogen from other chemicals is an expensive and energy-consuming process.
Adam Bond, chief executive of AFC, said: “Global markets for sustainable power systems continue to grow as timelines for delivering ‘net zero’ draw ever near.” He said that yesterday’s fundraising would “further strengthen our manufacturing capability and position AFC Energy to capitalise on these emerging opportunities”.
The Times
EU split over delay to decision on classing gas as green investment
The European Commission is split over whether to postpone a decision on classifying gas generated from fossil fuels as green energy under its landmark classification system for investors.
Brussels had planned to publish an updated draft of a taxonomy for sustainable finance later this week. The document is designed to guide those who want to direct their money into environmentally friendly investments, and help stamp out the misreporting of companies’ environmental impact, known as greenwashing.
The commission was forced to revamp its initial proposals earlier this year after the text was criticised by member states which want gas to be explicitly recognised as a low-emission technology that can help the EU meet its goal of becoming a net-zero polluter by 2050.
Now the publication of the draft rules could be postponed again as the commission seeks to resolve the impasse. According to a draft of the text seen by the Financial Times, the commission proposed to delay the decision in order to carry out a separate assessment of how gas and nuclear “contribute to decarbonisation” to allow for a more “transparent” debate about the technologies.
But officials told the FT that some commissioners were pushing for gas to be awarded the green label now, rather than delaying the decision until later this year.
“There are a sizeable number of voices in the commission who want gas to be included in the taxonomy,” said one official. A final decision on whether to approve the current text or delay it again for further redrafting is likely to be made on Monday.
The Financial Times
Wind energy production costs could be halved by 2050, survey suggests
The cost of harvesting wind energy could be halved by 2050, according to a new survey by American government scientists.
Experts at the Lawrence Berkeley National Laboratory said more efficient turbines combined with lower capital and operating costs could see reductions of between 17 and 35 per cent by 2035.
The savings could be between 37 and 49 per cent by 2050, according to the survey, published in the journal Nature Energy.
Researchers polled 140 wind experts — from fields including business and engineering — on the prospects for three forms of the renewable energy source: land-based sites, fixed-bottom offshore generators and floating offshore turbines.
The anticipated future costs for all three forms of harvesting wind energy were half what experts predicted in a similar study in 2015.
The survey, which included US Department for Energy contributions, also uncovered insights on the possible magnitude of and drivers for cost reductions, anticipated technology trends, and grid-system value-enhancement measures.
“Wind has experienced accelerated cost reductions in recent years, both onshore and offshore, making previous cost forecasts obsolete. The energy sector needs a current assessment,” said Ryan Wiser, senior scientist at Berkeley Lab.
“Our ‘expert elicitation’ survey complements other methods for evaluating cost-reduction potential by shedding light on how cost reductions might be realized and by clarifying the important uncertainties in these estimates.”
Berkeley’s survey, which was supported by IEA Wind Technology Collaboration Programme, is likely to boost President Biden’s climate agenda and broader efforts to tackle climate change.
In January, Mr Biden signed an executive order aiming to maximise offshore wind potential and identified wind power as a key component of the nation’s renewed efforts to reduce emissions.
The Independent
Utility Week’s weekend press round-up is a curation of articles in the national newspapers relating to the energy and water sector. The views expressed are not those of Utility Week or Faversham House.