Peter McCusker Energy & Climate

ONLY a dramatic policy shift will prevent further sharp rises in UK energy bills. Peter McCusker reports. DEPENDING on your news sources or beliefs it’s easy to jump to conclusions on one of the most pressing issues of today – rising energy bills. Whether it’s wholesale costs, greedy companies or green energy levies, one thing is certain; energy bills are on a rapid upward trajectory. Since 2007 annual energy costs for UK households have risen from around £950, to £1,250 now, and are expected to rise a further 20% to £1,500 by 2020. Wholesale energy costs currently account for 45 % of an average domestic bill – at around £550. But this is set to change as third party costs, such as network and transmission costs, supplier costs and green levies, markedly increase. Analysis by Norfolk-based industry experts Cornwall Energy for Journal Energy highlight how third party charges for large industrial users, such as the Teesside chemical and process industries, have ri...

WITH 60% of the UK’s 100GW of electricity capacity due to come off line in the next decade the Government is anxiously pressing for new capacity to fill the gap. The Energy Bill sets in place subsidies to support renewables technologies, such as offshore and onshore wind, to help with the transition from fossil fuels to a low carbon network. But at this point in the game there is no hope of renewable technologies filling the looming energy gap – with significant breakthroughs in energy storage still some way off. Hence the Government’s delight at securing the deal with EDF for a new nuclear power station at Hinkley Point, Somerset, which will generate 7% of the UK’s capacity when fully operational by 2020. Nuclear power is a low carbon energy source and unlike intermittent renewables, such as solar and wind, is a reliable base-load option. It therefore ticks two of the three boxes of what many in the industry like to call the ‘energy trilemma’ - it supports the UK’...

LABOUR’S plans to freeze energy prices threatens the security of the UK’s energy supply and will hamper the Party’s efforts to de-carbonise the sector. THE UK desperately needs new power generation capacity with EU emissions regulations meaning the on-going closure of the nation’s coal-fired plants and 20GW – or 20% - of capacity. Ofgem and the National Grid worry about the UK’s declining capacity and warn that from the winters of 2014/15 onwards we may face power cuts. The Energy Bill is set to unlock £100 billion of investment in new infrastructure spending. The Government is hoping the energy companies, most of which are producers as well as retailers, will invest in new gas-fired power stations in the short term. But there’s no hope of any of this new large-scale capacity firing up before 2017. Gas would be the quickest to come on line – it takes about 3 years. But the slow progress of the Energy Bill is already alarming investors, as is the prevarication of s...

FRACKING for gas and nuclear power are the answer to the UK’s looming energy crisis, says one of the North East’s foremost energy experts. Peter McCusker reports. WITH the National Grid and Ofgem warning of possible electricity shortages in the coming winters there is growing unease in North East business. Ian Burdon is chairman of the region’s Energy Leadership Council (ELC) and says its members are increasingly concerned at the direction of UK energy policy and its effects on business and families. He said: “If we continue to use energy in the way we will have to do something different to what we plan to do now. Life cannot continue the way we know it without energy. “The renewable technologies, such as wind, require substantial subsidies and are not of a large enough scale at present. “As things currently stand they will only peck at the edges of meeting the nation’s required demand. While the answer is not acceptable to everyone we have to focus on developing technol...

WILL de-carbonising the nation’s energy supply be good for the North East? OVER 260 MPs recently voted to decarbonise UK electricity generation. They have been backed by Lord Sugar and scores of prominent businesses. This Energy Bill amendment was effectively calling for the Government to remove all fossil fuels from UK electricity generation by 2030. However the amendment failed, with 290 MP’s voting with the Government, and no decision on a target will now be taken until after the next election. What’s all the fuss about?  It is estimated that over £110 billion of investment is needed over the next 20 years to allow the UK to generate low carbon electricity - representing a significant opportunity for British business. But there are concerns that if this process is not managed correctly then UK households and business will face rising electricity and gas prices and possibly power cuts. What does decarbonising the nation’s electricity supply mean? The Climate Change Act...

UK households and businesses face electricity blackouts in just a few years say two of the country’s leading energy experts. Peter McCusker reports. “THE situation is really quite serious. We will have to keep our coal-fired power stations open and get fined by the EU,” says Prof Ian Fells, one of the UK’s leading energy experts. He continued: “By 2015 we will be vulnerable. For the last four years the Government has been sitting on its hands doing nothing, and this is really unacceptable.” Back in 2004 Prof Fells warned of the UK’s looming energy crisis and he followed this up in 2008 with a 50-page paper elaborating on his views. Its publication was picked-up by various media outlets and he recounts: “I appeared on Radio Four with Lord Hutton (Government minister with responsibility for energy security issues) where I was accused of being an alarmist. “But now it’s not just me who’s saying it. It’s Ofgem and many others,” explains the emeritus professor of energy at Newcastle...

AMERICAN industrial gases giant Air Products is set to go-ahead with plans for a new £300m power station after winning a £500m contract to supply electricity to the Government. Earlier this year Air Products started work on its first 50MW advanced gasification plant in Billingham. Its plans for the second plant, on land adjacent to the first one, are currently being considered by Stockton Borough Council and if approved Air Products will press ahead with construction after winning the Government contract. In an unusual move, the Government announced it had agreed to a power purchase agreement with Air Products to buy 37MW of electricity from the plant, at a cost of around £25m a year, for 20 years. Air Products will receive a Government subsidy of around £70 per MW/h in addition to the price agreed between the two parties for electricity. The current wholesale price of electricity is around £50 per MW/h. The deal highlights the Government’s desire to support renewable energy p...

A MULTI-MILLION pound sweetener to soften the blow of new measures to cut carbon dioxide emissions will do nothing to alleviate concerns of further carbon leakage, say leading industry figures. The Carbon Floor Price (CFP), which came into effect last week, will net the UK Government over £4 billion in tax revenues over the next few years. Its introduction was announced in the Budget of 2011 and contributed to closure the Lynemouth aluminium smelter with the loss of 600 jobs.  Alcan said the CFP levy would wipe out the Northumberland plant’s annual £40m profit. In an effort to guard against further cases of carbon leakage the Government last month set up a £250m compensation fund to support energy-intensive businesses, but this hardly bears comparison to the £7bn the German Government is offering business to compensate for its renewable energy surcharges. Members of the London-based Energy Intensive Users Group (EIUG) are businesses where energy can account f...

CAN the American shale gas revolution be replicated in the UK, Peter McCusker reports.  LOWER natural gas prices are having a profound effect on American industry with many of the world’s chemical majors looking to build new US facilities after decades of investing elsewhere, particularly in the Middle East. The glut of shale gas has seen America become almost self-sufficient and this, combined with a lack of export facilities, has seen the price plummet. In Europe and the UK gas is trading at around $12 per mcf (thousand cubic feet), in Asia it’s over $14 per mcf whilst in the United States it is $3 per mcf  Consequently, over a dozen chemical majors are looking to invest in new US plant and take advantage of the substantially lower feedstock costs. Even Saudi Arabian-based SABIC (Saudi Basic Industries Corp), the world’s largest petrochemical company, is in talks about possible new US plant. In the UK there is much speculation about the extent of the UK’s s...