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StatoilHydro Reports Small Gas Leak From Kvitebjørn Pipeline
Thursday, August 21, 2008
During a routine inspection, a small leak was discovered in the gas pipeline between the Kvitebjørn platform and the Kollsnes gas treatment facility outside Bergen.
In the autumn of 2007, this pipeline was dragged out of position by a ship's anchor. In January this year, the pipeline was qualified for temporary use pending a permanent repair. This summer it was decided to make the permanent repair in 2009.
The leak which has now been discovered is in the same place as the pipeline was damaged last autumn, around 10 kilometres from the platform.
StatoilHydro will now consider various repair solutions for the Kvitebjørn pipeline. On this basis, it will be decided when operation of the pipeline and the Kvitebjørn field can be resumed.
Turnaround operations are presently being carried out at Kvitebjørn and Kollsnes and the pressure in the pipeline has accordingly been reduced. The pipeline will now be further depressurized and emptied via flaring at Kollsnes.
The Visund platform also normally utilises the Kvitebjørn pipeline for gas export, but has reinjected gas during the turnaround at Kvitebjørn and Kollsnes. Oil production from Visund is being maintained, but at a somewhat lower level than usual.
StatoilHydro’s gas customers are not likely to be affected by the incident.
StatoilHydro has standby vessels patrolling the area in the vicinity of the leak.
This story was featured on the OilVoice website.
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The falling oil price is a lull in the storm
Thursday, August 21, 2008
By Nick Butler of The Financial Times
Little more than a month ago the suggestion that Russian troops would be engaged in a shooting war in Georgia leading to the closure of the Baku-Ceyhan pipeline would have triggered a dramatic rise in oil prices. A barrel of crude was already trading at more than $140 and the loss of another million barrels a day of supply could have pushed the figure on and up towards the $200 predicted by some banks and by the chief executive of Gazprom.
In fact prices are almost 20 per cent below their July peak. The fall has come despite a month of assertive Russian nationalism, whose victims to date include not just Mikheil Saakashvili, Georgia’s president, but also Robert Dudley, chief executive of TNK-BP, who has been forced into exile in an undisclosed central European location. Other problems also persist – including civil conflict in Nigeria and the failure of the Maliki government in Iraq to agree on the legal structure through which international companies can invest in new oil developments.
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Companies face crackdown on electricity greenwash
Wednesday, August 13, 2008
Dozens of companies face having to report embarrassing sharp increases in their carbon pollution under government plans to crack down on "greenwash".
The move could undermine the environmental claims of firms such as BT, which have invested heavily in so-called green electricity tariffs to cut their carbon footprints.
Under the proposed changes, companies using such green tariffs, which are also popular with eco-friendly domestic customers, will no longer be able to claim massive carbon savings by using power coming from renewable sources.
BT, which could be forced to double its reported carbon emissions and to scrap an ambitious target to cut carbon 80% by 2020 under the plan, is lobbying heavily against the move, and says other companies back its position. Johnson and Johnson, Vodafone and several banks including HSBC also buy green electricity tariffs.
Hilary Benn, environment secretary, said the change was to make the system more transparent and to ensure that such tariffs brought genuine environmental benefits. "It is increasingly difficult to demonstrate that buying a renewable electricity tariff is offering additional carbon emissions reductions," he said. "Businesses signed up to green tariffs based on the evidence available at the time, but their choices have been producing only limited additional renewable generation capacity."
Individual consumers opting for green tariffs may also "not have been generating the environmental benefits they anticipated", he added.
Green tariffs have become a popular way for firms and individuals to cut their carbon footprints. They exploit the 5% of UK grid electricity generated from clean hydroelectric and wind sources, which suppliers claim they can effectively ringfence and sell separately.
In 2005, the government said companies buying such renewable electricity tariffs could report them as producing zero emissions. It hoped that wide take-up of green tariffs would drive investment in further renewable sources.
But environmental campaigners and energy experts have long questioned the benefits of some green tariffs. Harry Morrison of the Carbon Trust, which advises companies on climate issues, says the market in them has been "a bit cowboy" and needs clearing up. He compared the use of green tariffs to the sale of carbon offsets, with concern over transparency, double counting and additionality – ie whether they cut carbon emissions over and above what would have happened anyway.
He said: "Many companies bought these tariffs in good faith but there are no guarantees that they actually save carbon. They didn't pay much of a premium for the carbon savings they could claim in their marketing statements, so they have basically been given a free ride."
Morrison said many companies were concerned about how the government's changes would affect their green credentials and corporate image. It could also cost them money. From 2010, thousands of UK companies will be forced to calculate, publish and reduce their emissions as part of a domestic carbon trading scheme. "They're worried about being ranked badly. Nobody wants to come bottom of a table of their peers," he said.
Richard Tarboton, energy and carbon programme director at BT, said: "This is a serious problem for a number of companies who have followed the government's guidelines and gone out and purchased green electricity, and are now being told that green source is no longer valid."
BT, one of the country's largest users of electricity, has used the zero-carbon rating given to green tariffs to claim it has reduced its emissions 58% over the last decade. Tarboton said the new rules would see its reported emissions double, and that the increase would pose "communication" problems for the firm.
He agreed that the existing scheme was flawed but said the suggested solution put too much responsibility on energy suppliers and let customers off the hook. BT says the answer is better labelling, with different tariffs given a carbon rating similar to electrical appliances such as dishwashers. It held a meeting of 30 companies this week to discuss the idea.
Defra, the environment department, which announced the changes to the company reporting guidelines in June, now says it will launch a consultation on the proposal. A spokesman denied this was down to corporate pressure and said the department had always planned to consult.
This article was featured on The Guardian website.
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Rejected EDF has more irons in fire
Monday, August 11, 2008
British Energy still hopes to strike a takeover deal with EDF, but the cash-rich French utility has a number of other options it could pursue if negotiations with the East-Kilbride-based nuclear power generator collapse.
Top executives at Paris-based Electricité de France, which is controlled by the French state, are looking at other ways to build on the company's global nuclear leadership and develop lucrative new businesses such as gas.
EDF was expected to announce a full cash £12bn offer for British Energy on August 1, after a marathon round of talks and winning the approval from the UK Government, which owns 35% of the Scottish-based nuclear power plant group.
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But two key institutional investors in British Energy - Invesco and M&G - unexpectedly rejected a bid valued at around 770p to 775p a share for being too low, sending EDF back to the negotiating table and threatening to derail a deal that may be crucial for the development of new British nuclear power stations and EDF's expansion plans.
Both companies are still talking, but City power industry analysts and market players believe EDF is unlikely to increase its offer and risk overpaying for British Energy, the owner of most of Britain's existing nuclear power plants and whose land around existing sites is viewed as the location for new developments. Many of British Energy's plants are old and have been plagued by breakdowns. The company has proved hard to value because of the volatile price of electricity, which has both soared and eased off during the months of negotiations.
"EDF doesn't seem ready to make an acquisition at any cost and this is rather good news for investors," said Jacques-Antoine Bretteil, a Paris-based fund manager at International Capital Gestion.
However, failing to close a deal with British Energy would not mark the end of EDF's ambitious plans to expand in Britain. The company already owns London Electricity and other power companies in southern England, and claims to be luring customers in Scotland away from Scottish & Southern Energy and Iberdrola-owned ScottishPower.
"British Energy would have been an ideal entry point for EDF, and EDF may have regrets about the deal not happening, but this doesn't at all slam the British nuclear door in their face," said Colette Lewiner, an energy sector expert at French management consultancy Capgemini.
"If a deal does not materialise, British Energy will be encouraged to strike partnerships on (new nuclear) sites, so it will just involve a different scenario for EDF," she added.
EDF is the world's biggest single producer of nuclear energy, and is France's biggest power provider with 25 million household customers.
French power tariffs, which are set by the state, are among the lowest in Europe because EDF produces relatively cheap electricity from its 58 nuclear reactors.
It could still be at the forefront of Britain's nuclear power renaissance, but this time by agreeing joint ventures or building new-generation reactors on its own land.
In May, the French group bought land next to two nuclear power plants in Britain. One is located at Hinkley Point in south-west England, and the other is at Wylfa in north Wales. EDF acquired the land in the hope that it can build new reactors on the sites and use the grid connections and infrastructure around existing reactors in adjacent areas.
But the UK is only one of four countries that EDF targets for its international development. It has ambitious nuclear plans in the United States, South Africa and China, where it will run two new-generation reactors with China Guangdong Nuclear Power Corporation.
EDF has set aside 35bn for investments between 2008 and 2010, and if the cash is not used for acquisitions, it will be spent on industrial projects to spur organic growth.
In its core nuclear power business, Lewiner said EDF has "many irons in the fire" with its international development, and plans to flesh out its French fleet of 58 reactors with one, or maybe two, new-generation European pressurised reactors.
"They will need money for these projects. Just in Britain, they must buy land and build reactors. We're talking about a few billion euros for each one, which is not trifling," she said.
EDF has projects to build a gas business at a time when the newly merged GDF Suez group can offer a one-stop shop for electricity and gas, threatening to poach EDF customers.
On Thursday, EDF received a boost from the French government when the finance ministry proposed allowing regulated power rates for households to rise by as much as 2% and natural-gas tariffs by an average of 5%.
The government also said electricity charges may climb by 2% for small companies, 6% for mid-sized businesses and 8% for large consumers. The increase in gas rates will be the same for all customers.
"The rise in electricity rates is closely correlated to current inflation and this is better than what the market had in mind," said Peter Wirtz, a Dusseldorf-based analyst at WestLB Equity Markets. "The government is paying more attention to what EDF needs."
EDF, which produces continuous electricity from its reactors in France, also needs to invest in gas-fired plants, which can be switched on and off fast to meet peak electricity demand.
The utility, which in June got the green light to build one of Europe's biggest liquefied natural gas terminals in the port of Dunkirk in northern France, may seek to secure gas imports from producers such as Qatar, or invest in gas fields.
EDF has so much cash that it could afford to spend nearly 5bn to finance a thrust in the gas sector, roughly the price of Belgian gas firm Distrigas, which the French group lost to Eni (Ente Nazionale Idrocarburi), Italy's national energy corporation, in a bidding process organised by Suez in June.
"Distrigas was definitely a very interesting asset that was on the market. Gas Natural is another one, but with Union Fenosa now they will probably become too big," said analyst Koen Dierckx, a broker at KBC Securities in Brussels, referring to Spanish-based Gas Natural's recent deal to buy a 45% stake in Union Fenosa from debt-laden builder ACS (Actividades de Construcción y Servicios).
"They may just try to grow the gas business organically with not so much of a focus on acquisitions at this time," Dierckx added.
This story was featured on The Herald website
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Gas could be cheaper
Friday, August 01, 2008
Price rises from British Gas and EDF provide a further headache for households struggling to make ends meet. Thanks to the Government's dithering over new nuclear plants, British energy suppliers are reliant on competing globally for energy imports, which is likely to remain the case for the next decade.
Monday's report by the Business and Enterprise select committee argued that energy markets are "not functioning as efficiently as they should", in part because of short-termism.
Producers seem unwilling to sell gas into a forward market, which would enable suppliers to buy future supplies when prices are low. MPs have rightly called for the regulator, Ofgem, to investigate.
It is a pity, therefore, that Ofgem has been neutered, thanks to the Government's ironically-named programme of "better regulation".
Instead of the highly-accountable, single-person regulators that operated in the 1990s, who were able to speak powerfully for consumers, markets are now examined by faceless regulatory boards.
But, as Charles Clover argues elsewhere, it would be a mistake to deal with these state failures by imposing a windfall tax; the objective should be to cut bills, after all, not increase the size of the public sector.
Most vitally, the UK needs to build capacity for storing gas. Years of flowing North Sea supplies made this irrelevant, but now that we rely on imports, we are dramatically more vulnerable than our neighbours to short-term fluctuations in price. While the UK has capacity for 13 days' storage, Germany has 99 and France 122.
Perversely, mainland Europe buys our gas in the summer to cheapen their winter energy bills, but we then buy their gas during the cold months at higher prices. And, as the select committee points out, European suppliers can be remiss in lowering prices in line with the market when selling back to us.
This story was featured on the Telegraph website.
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Time to encourage biomass growth
Tuesday, July 29, 2008
Biomass energy is being touted as a key player in the push to green Europe's electricity supplies, says David Williams. In this week's Green Room, he argues that although there are promising signs, more needs to be done to encourage large-scale developments.
For some time, biomass has been seen as the emerging sibling of the renewable energy industry.
Despite much of the development behind the industry's technology worldwide, the UK's position at the front of the biomass revolution has been slipping.
Developers have naturally concentrated on cheaper forms of alternative energy, chiefly onshore wind, whilst other countries have stolen a march, with the Chinese particularly active by building hundreds of stations based on UK power plant models.
In recent months, however, we have seen something of a change in the UK, with a backlash against many more established alternative energy sources.
In the transport sector, biofuels have been attacked for their effect on food prices and actual carbon reductions, while wind has been criticised for its inability to produce a consistent stream of electricity and for its cost.
Many industry experts are now suggesting that biomass has to play the primary role in helping the EU to meet its challenging target of generating 20% of its energy from renewable sources by 2020.
Burning ambitions
Biomass works by converting (normally through burning) biodegradable matter such as wood, straw and agricultural wastes into heat or electricity.
Because it uses organic materials, any carbon dioxide released during the generation of energy is offset by that absorbed during the plant's life, so the process as a whole is broadly balanced, or "carbon neutral".
Crucially, it is an effective method of producing energy.
A single power station can produce around three times more energy as a windfarm for the same amount of generation capacity. It is also reliable and can be scaled up or down to meet consumer demand.
Of course, every technology has its drawbacks and there has been criticism of biomass because of its sourcing needs.
The requirements to power a single station can be extensive, particularly if it is using wood as its primary fuel source.
Some plants within the UK propose to import timber from as far away as Canada and Indonesia; this can potentially have a huge impact on the carbon footprint of the feedstock and the energy that it produces.
That's not to say that all biomass projects suffer from these issues. Some developers are now looking to generate energy by burning straw, which the UK has an abundant supply of and which, as a by-product of agricultural crops, does not have an impact on the food verses fuel debate currently engulfing the biofuel industry.
Supermarket giant Tesco has recently been given a green light to build Britain's first ever straw-powered Combined Heat and Power (CHP) plant to meet the electricity and heating needs of one of its distribution centres.
Utilising straw for biomass represents one of the most efficient methods for its disposal and pre-empts the need for it to be ploughed back into the land.
As a final, but vital, benefit, the UK can meet all of its requirements from domestic sources, cutting out the need to import supplies and allaying growing concerns over energy security.
Whereas heat for domestic-scale commercial installations could come from solar technologies or even heat pumps, it is widely acknowledged that the primary market can only be supplied by biomass.
After all, most heat comes from combustion of a fuel, and biomass is the only renewable and combustible fuel.
Red tape fears
So what next for the industry? More than £3.5bn ($7bn) was invested last year and this figure looks set to grow substantially, as green investment funds try to hedge against the credit crunch by diversifying their portfolio of renewables schemes.
UK Renewable Energy Strategy
Already a stream of projects are either coming online or expecting to do so shortly, including the world's largest plant near Port Talbot, South Wales.
Signs from government are also encouraging. Changes to its proposed Renewables Obligation Certificate (which offers incentives to suppliers to generate energy from renewable sources) will increase the value of energy generated by biomass in comparison with other sustainable technologies and make it more rewarding for investors to back.
In June, the Department for Business, Enterprise and Regulatory Reform (BERR) published its Renewable Energy Strategy that also made clear the important role that the industry could play, noting that there is a need to "develop a sustainable biomass market".
While this in itself is encouraging, there remains some concern over the detail.
The proposals mooted in the strategy have been primarily designed to make individual action more palatable, specifically a feed-in tariff to encourage microgeneration technologies in homes and a financial incentive mechanism to facilitate a general increase in use of renewable heat.
What they have not done, however, is to provide significant encouragement for commercial developers. There is a definite feeling by many in the industry that the current system is over-complicated and that applications are too frequently caught up in red tape.
By laying down a clear pathway that developers can follow, the government will be able to stimulate growth and at the same time provide the financial community with the confidence necessary for it to make the long-term substantial investments.
The result will be a step-change in the UK renewable sector as a whole, and the first step towards meeting the EU's 2020 targets.
This opinion piece by David Williams was featured on the BBC News website.
David Williams is chief executive of renewable energy business Eco 2. He is also a member of the government's Renewable Energy Advisory Board and chairman of the biomass sub-group
The Green Room is a series of opinion articles on environmental topics running weekly on the BBC News website
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Jenny Haworth: UK adding to energy problems with lack of gas storage
Monday, July 28, 2008
With more warnings of higher gas prices, industry sources are asking what needs to be done to avert a looming energy crisis.
Some are now calling on the government to do more to increase gas storage facilities in the UK.
A gas company source told The Scotsman that the UK currently has the capacity to store imported gas for only 19 days, compared with 99 days in France.
That means the UK is forced to sell surplus gas – usually to the rest of Europe. Then, when the supplies run out, UK gas companies have to buy it back for higher prices, pushing up costs, reducing stability in the market and putting the UK at a disadvantage in terms of energy security.
"It's absolutely imperative that we have more storage," the source said. "We could use storage in the North Sea but the planning needs to be speeded up dramatically in order to do that.
"We are now at a crisis point. The lights will start to go off in 2015. If we do nothing, by 2015 we won't be producing enough energy for the UK."
The industry insider said her company has had a planning application lodged for the past five years that would increase storage by 4 per cent, but said the government had been slow to act.
She said that in addition to the storage problem, only a quarter of all orders for gas placed by UK companies from countries such as Nigeria and regions including the Far East arrive because it gets diverted to countries such as Japan that are willing to pay more.
"There just isn't enough coming through at the moment and as we look to the future we are going to become even more reliant on gas," she said.
"We were importing 20 per cent last year, and it will be 40 per cent this year."
This story was featured on the Scotsman website.
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MPs warn of energy price impact
Monday, July 28, 2008
Rises in gas and electricity bills in the near future will have serious consequences for millions of households, an MPs' committee has said.
It also warned that thousands of jobs in manufacturing would be at risk if UK prices stayed higher than those faced by industry in the rest of Europe.
The Business and Enterprise Select Committee report said problems in the sectorneeded to be addressed urgently.
But it found no evidence that key firms colluded to keep energy prices high.
The committee's report, published on Monday, comes just a few days after EDF Energy became the first big supplier to announce widely-predicted summer price rises.
Competitors
The committee decided on an inquiry after the "big six" energy companies announced double-digit price rises at the start of 2008. The big six firms are: Npower, EDF Energy, British Gas, E.On, Scottish Power, and Scottish and Southern Energy.
The report voiced concerns that "the UK's energy markets are not functioning as efficiently as they should".
"Industrial consumers now face prices above European levels," the report added.
"If these price differentials are sustained, they will affect the competitiveness of the UK economy."
'No collusion'
The inquiry addressed the issue of why there was only a very small difference in prices charged by the major suppliers.
It said that nobody brought any evidence of price collusion among the big six, simply that it was easy for each to predict what the other five were going to do.
"Just because we have found no evidence of collusion does not mean we have given the big six energy companies a clean bill of health - far from it," said committee chairman Peter Luff.
"It is clear that there are very real problems in the energy markets at all levels ... which need to be addressed."
The committee was concerned about how the wholesale markets functioned, including why gas producers appeared unwilling to trade in the forward gas market.
The report was critical of the government for failing to act quickly enough to encourage investment in gas storage, as the UK becomes more dependent on importing gas.
It also warned that the potential takeover of British Energy could undermine the diverse market in electricity generation in Britain.
Fuel poverty
Energy regulator Ofgem, which is conducting its own inquiry into the market, was also criticised, with the committee demanding a "greater sense of urgency" in some areas.
On Friday, EDF raised gas prices by 22% and electricity prices by 17% for domestic and small business customers.
With all the major suppliers expected to follow suit in the coming weeks, the committee said there would be an inevitable increase in fuel poverty.
The government estimates that 2.5 million households are in fuel poverty - defined as when more than 10% of household income is spent on fuel bills - but watchdog Energywatch says the figure is more than four million.
"We believe that the time is right for a root and branch review of government policy on fuel poverty," the committee said.
It said social tariffs failed to reach the vast majority of fuel poor customers, were inconsistent and confusing.
The committee wants the government to define the criteria for these tariffs and identify the customers who should qualify for the discounts.
It also wants more focus on improving energy efficiency in homes, to help cut bills, and called for an reversal of the funding cuts in Warm Front grants.
This story was featured on the BBC News website.
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Reform UK's distorted power market, MPs say
Monday, July 28, 2008
Britain's energy markets need a radical shake-up to tackle inefficiencies as homes and businesses brace themselves to pay significantly more for power in the future, MPs warn today.
Consumers could be forced to pay more for their power than those in other countries, and if the discrepancies are not tackled it could hit the competitiveness of British manufacturing, the business and enterprise committee says in a report.
As well as measures to increase the markets' efficiency, the committee is demanding that government and energy companies change their approach to fuel poverty in the face of high and rising gas and electricity prices.
It states: "Gas and electricity bills for domestic consumers [will] rise significantly in the near future, over and above the increases already announced this year, with serious consequences for millions of households, especially the fuel-poor."
As part of a wide-ranging report into the UK's energy markets, the committee argues for more gas storage capacity to be built and more UK pressure for the liberalisation of continental European markets.
The committee began its inquiry in the wake of the rise in domestic energy prices earlier this year, and is publishing its findings as more increases are set to kick in.
EDF Energy said on Friday it would increase its gas prices by 22% and electricity by 17%, with other major suppliers likely to follow suit in the coming weeks.
In its report, the committee acknowledged that no one had produced any evidence suggesting collusion between energy suppliers in either the wholesale or retail markets. But it noted that in a retail market dominated by six big companies - British Gas, Scottish and Southern Energy, Scottish Power, EDF Energy, E.ON and npower - "it is easy for those players to make informed judgments about the behaviour of their competitors" and that "this alone can distort competition".
Committee chairman Peter Luff said: "Just because we have found no evidence of collusion does not mean we have given the 'big six' energy companies a clean bill of health - far from it.
"It is clear there are very real problems in the energy markets at all levels, and going beyond these six companies, which need to be addressed."
The committee said that while domestic measures could not keep prices down when they were high elsewhere, it noted: "We have concerns that the UK's energy markets are not functioning as efficiently as they should, and that UK prices may be higher than those of [other] countries."
The committee said a fundamental policy rethink on fuel poverty was required. Programmes were not sufficiently directed at those in most need, and efforts by the government and industry needed to be focused on improving the housing stock of the fuel poor as the most effective way of reducing bills and carbon emissions.
"It is very disappointing that ... the government has reduced the budget for Warm Front [energy efficiency grants] at a time when the need for it is greatest."
The fuel poverty charity National Energy Action described the report as a "breath of fresh air ... Its recommendations are bold but realistic."
The committee also expressed concern at the higher bills faced by businesses and said: "Industrial consumers now face prices above European levels. If these price differentials are sustained, they will affect the competitiveness of the UK economy, and put many thousands of jobs in manufacturing at risk."
The manufacturers' organisation EEF said: "Under our much-vaunted liberalised market, industrial consumers are now paying significantly more for their energy than their competitors in Europe. Government must act robustly on the committee's recommendations." The report calls on Ofgem to look at both the forward gas market and the supply of electricity to small and medium-sized companies.
This story was featured on The Guardian website.
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UK Lawmakers' Inquiry Sees Significant Flaws In UK Energy Market
Monday, July 28, 2008
LONDON -(Dow Jones)- A parliamentary inquiry concluded Monday there are significant flaws in the U.K.'s gas and electricity markets and called on the regulator, Ofgem, to conduct a thorough investigation and refer the sector to the Competition Commission if it can't come up with remedies.
The inquiry, conducted by parliament's Business and Enterprise Select Committee, also raised concern over the possible imminent takeover of nuclear generator British Energy PLC (BGY.LN) by Electricite de France SA (1024251.FR). The U.K.'s wholesale
electricity market, "may be undermined by market consolidation, such as the takeover
of British Energy," the committee said in its report. It called on Ofgem and the Competition Commission to, "ensure no single generator has excessive market power."
"It is clear that there are very real problems in the energy markets at all levels," said the committee's chairman, Peter Luff. "Our view is that changes can best be made through improving market design, by taking specific regulatory steps, and by continuing to work for liberalization of European markets."
"Ofgem, though, is going to have to demonstrate a rather greater sense of urgency than has been apparent so far," he said.
The committee said it found no evidence of anticompetitive collusion between the big six suppliers in the U.K. - Centrica PLC (CNA.LN); Scottish and Southern Energy PLC (SSE.LN); the U.K. arm of Germany's E.ON AG (EOA.XE); Npower, the U.K. arm of RWE AG (RWE.XE); ScottishPower, a subsidiary of Spain's Iberdrola SA (IBE.MC); and EdF Energy, the U.K. arm of Electricite de France SA (1024251.FR). However, it advised the regulator to remain watchful for companies that were, "abusing their market position to choke off new entrants," and refer the matter to the Competition Commission if they find any evidence of this.
"In a retail market dominated by six major players, it is easy for those players to make informed judgments about the behavior of their competitors...this alone can distort competition," the report said.
The inquiry also raised concerns about the day-to-day functioning of gas and electricity markets in the U.K. and the impact this is having on prices and competition.
The wholesale electricity market has, "a severe lack of liquidity," that is contributing to price volatility and dulling market signals for potential new investors in U.K. power generation, the report said. It also concluded that the liquidity on the forward gas market beyond a few months into the future, was lacking and recommended that "Ofgem investigates urgently why gas producers seem unwilling to trade on the forward market."
The committee also criticized the government for failing to spot and act on the growing need for gas storage as domestic U.K. production declines. "This is now an issue of national importance," the report said.
Ofgem should also investigate the rules governing the usage of the Isle of Grain liquefied natural gas import terminal, which it said could be contributing to the under use of the facility, the report said.
The committee predicted that, "gas and electricity bills for consumers (will) rise significantly in the near future, over and above the increases already announced this year." U.K. industry may struggle to compete with European rivals because they face comparatively higher energy bills, the report concluded.
EdF Energy raised its gas prices by 22% and its electricity tariffs by 17% Friday, blaming rising wholesale energy costs. Other suppliers are widely expected to do the same shortly.
-By James Herron, Dow Jones Newswires; +44 (0)20 7842 9317; james.herron@dowjones.com
This story was featured on the EDF website.
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Consent secured for largest onshore wind farm in Europe
Friday, July 25, 2008
Scottish and Southern Energy plc ("SSE") has been granted consent by Scottish Ministers to develop in southern Scotland a wind farm with a total capacity of up to 456MW. The wind farm will be built in two phases and, on completion, will be the largest onshore wind farm in Europe.
The wind farm, known as Clyde, is located between Biggar and Moffat. It became part of SSE’s development portfolio when it acquired Airtricity earlier this year. Scottish Ministers’ decision to award consent follows a Public Inquiry into the development, which was concluded in 2006.
As a result of their decision, SSE now has almost 1,500MW of onshore wind farm capacity in operation, in construction or with consent for development in the UK and Ireland, which compares with 875MW when the agreement to acquire Airtricity was announced in January 2008.
The wind farm will eventually have up to 152 turbines and construction work is expected to begin later in this financial year. First commissioning is scheduled for 2010 and completion of both phases scheduled for 2011. Its development is expected to require the investment of around £600m, which is included within SSE’s existing plans to invest £2.5bn in renewable energy in the UK and Ireland over the next five years.
It is estimated that around half of the total investment (around £300m) will be placed with Scottish companies and over 200 full time jobs will be created during the three-year construction period. Discussions have been held with South Lanarkshire Council and Scottish Enterprise Lanarkshire to maximise local supplier involvement in the construction and ongoing maintenance of the wind farm.
SSE is also committed to a community fund to enable local communities to benefit from the development of the wind farm. Discussions with regard to the provision and management of these funds, which are expected to be around £1m a year and centre on a long-term education and skills programme, are currently taking place with South Lanarkshire Council and other representatives of the local community.
Any proposal to construct, extend or operate an onshore wind farm in Scotland with a generation capacity in excess of 50 Megawatts (MW) requires the consent of Scottish Ministers under Section 36 of the Electricity Act 1989. Consent is generally granted with conditions and in this case they include completing ongoing work with NATS on air traffic control radar-related issues.
Including hydro schemes and offshore wind farm developments, SSE now has around 3,500MW of renewable energy capacity in operation, in construction or with consent for development. In addition to Clyde, SSE (including Airtricity) has submitted to planning authorities applications for consent to develop wind farms in the UK and Ireland with a total capacity of around 600MW.
Ian Marchant, Chief Executive of SSE, said: "I am very pleased that the Clyde wind farm has received consent. It is another example of the value of the Airtricity portfolio of renewable energy projects which we acquired earlier this year and provides us with another major investment opportunity.
"Projects like Clyde are essential if Scotland and the UK are to have any hope of meeting legally-binding EU targets for renewable energy. Scottish Ministers aim to make Scotland the green energy capital of Europe, and giving the Clyde wind farm consent is evidence of a willingness to take decisions which are consistent with that ambition.
"Clyde is clearly going to be a major project, with significant economic opportunities for the local community. Our priority is to satisfy the conditions relating to the consent, including completing our constructive discussions with NATS. We will also ensure that work at the site is carried out in a professional manner, sensitive to the needs and concerns of the local community."
This story was featured on the Scottish and Southern Energy website.
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Oil prices fall to six-week low
Tuesday, July 22, 2008
Oil prices have fallen to a six-week low as US energy demand fell and a hurricane in the Gulf of Mexico appeared to be missing oil facilities.
US light sweet crude fell as low as $125.63 a barrel, well off its 11 July peak above $147 a barrel.
Petrol consumption in the US is 2.2% below last year's levels, according to a MasterCard survey, suggesting that higher prices are hitting demand.
But oil prices are still almost 30% above their level at the start of 2008.
$20 decline
London Brent crude fell $3.23 to $129.38 a barrel on Tuesday.
"We've now seen more than a $20 decline in the crude oil market from the highs and this suggests that we've seen enough of a shift in the supply and demand balance on a larger scale to cap the market," said Tim Evans, energy analyst for Citi Futures Perspective.
There was relief in the market that the approaching Hurricane Dolly would not have a big impact on oil and gas production.
The US Minerals Management Service announced earlier on Tuesday that only 5% of oil and gas production in the US had been shut down.
The dollar strengthening against the euro also put pressure on oil prices as crude has been used as a hedge against the weakening US currency.
This story was featured on the BBC News website.
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Renewable Energy: E.ON takes 50 percent stake in world’s largest offshore wind farm
Monday, July 21, 2008
E.ON has today joined with Danish utility DONG Energy to buy out Shell’s stake in the London Array offshore wind farm. E.ON and DONG Energy will become 50:50 partners in the project.
London Array is the world’s largest offshore wind farm project with an estimated total power up to 1,000 megawatt (MW). It is located around 15km from the Kent and Essex coasts in the outer Thames Estuary, and may include more than 270 wind turbines. Due to high wind speeds, a low water depth and suitable ground conditions, London Array is regarded as an ideal location for a large-scale offshore wind farm. It is hoped that the first phase of the project will be completed by the end of 2012, subject to securing a number of important contracts, such as those for wind turbines.
Shell, who has contributed to the project's significant progress to date, has committed to leave their staff in the project until the end of the year to enable a smooth transition and handover.
Worldwide E.ON plans to invest €6bn in renewable energy and climate protection projects by 2010. Its Market Unit E.ON Climate & Renewables already operates three offshore wind farms with an overall generation capacity of 83 MW, with a further 200 MW currently under construction.
This story was featured on the Eon website.
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Tesco To Get Power From Straw
Friday, July 18, 2008
Britain’s favourite supermarket is to cut its carbon footprint by using straw to power its business.
Tesco has been given the go ahead to build Britain’s first ever straw-powered Combined Heat and Power plant to meet the electricity and heating needs of its Goole Distribution Centre.
The new plant will generate 5MW of electrical power – enough energy to run eight Tesco Superstores. All excess electricity will be sold back to the grid.
David North, Community and Government Director, said:
“We’ve set ourselves stretching targets to reduce the carbon intensity of our business, and energy from renewable sources is a key part of our strategy.
We’ve identified five sites that would be suitable for further biomass technology, and are making big investments in wind turbines too.”
Straw is a pure, natural material and a by-product of local farming. As straw is a renewable material rather than a fossil fuel, the CO2 emitted is equal to the amount it has absorbed whilst growing, effectively making the energy carbon neutral.
The plant works by burning straw which powers a steam turbine, generating electricity. The particulates (polluting particles) are then filtered to keep them from escaping into the air. The only waste from the process is ash which can be used by other industries, or passed back to the local farmers to be used as a fertiliser.
Tesco estimates that it will have recouped the £12m set up costs within six years. After this time, energy generated by the plant will cost the supermarket less than is currently charged for grid electricity.
Tesco has set itself a stretching target to halve the carbon footprint of its estate (as at 2006) by 2020. This single initiative will save 17,000 tonnes of CO2, and will pave the way for further investment in biomass energy generation.
Tesco has already made substantial investments in energy efficiency and new low-carbon technologies – investing £86 million last year alone. It is working with the planning authorities to build a number of new wind turbines and recently secured planning permission for two large wind turbines at its Distribution Centres in Daventry. These 90m high turbines will each generate 800KW (peak) of power. It is applying for consent for another three 100m turbines which will each generate 1.25MW.
Building work at the supermarket’s Distribution Centre in Goole will begin shortly, and the power plant will be operational later next year. The supermarket has also submitted a planning application to build a second small-scale biomass plant at their Livingston Distribution Centre.
This story was featured on the Tesco website.
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Rolls-Royce eyes cut of £50bn nuclear market
Thursday, July 17, 2008
Rolls-Royce is creating a nuclear unit to ensure that it gets a slice of the global civil nuclear market that the engineer believes will be worth £50bn in 15 years' time.
In the face of growing pressure to replace existing dirty power sources with environmentally friendly alternatives, nuclear is firmly back on the agenda. Rolls is already talking to utilities and reactor vendors around the world, particularly those involved in the design of next-generation reactors, and the newly created 450-strong division could ultimately outstrip the group's £1.5bn marine business and employ several thousands of people.
Once reticent about its involvement with the Royal Navy's long-running nuclear programme, Rolls is now keen to champion its experience.
"We have kept a low profile about our nuclear business in the last few decades but we think there is now going to be a nuclear renaissance," Jonathan Hale, the company's business development director, said. "We have more capacity and more skills than any other company in the UK by far, and with the growth of the civil market it is time to focus on that more."
The group does have long experience to draw on. It has been involved in nuclear engineering since the first transfer of pressurised water reactor (PWR) technology from the US to the UK in the 1950s. It employs 2,000 nuclear specialists, of which around half are engineers, and it manufactures all reactor components apart from the enormous containment vessel and stream generator. It also has expertise at the design, safety testing, licensing, and maintenance phases.
Rolls is, unsurprisingly, a vocal supporter of the Government's plans for eight new nuclear power stations, the earliest of which could come on stream in 2018. But the company is also trumpeting its UK-centricity – including an accredited supply chain comprised of more than 260 companies that between them employ some 20,000 people.
"It is important for the UK industry to be involved: these assets last up to 60 years, safety needs to be kept under local control, and there is the potential to create thousands of high-value jobs," Mr Hale said.
Currently the UK is at the forefront of the nuclear comeback, largely because only three of its 10 existing reactors – which between them generate nearly a fifth of the country's electricity – will still be going in 2020.
"If this country stays at the front, globally, then the industry will build up a capability that can then be exported," Mr Hale said. "So we are keen the nuclear programme goes ahead quickly here."
But the heady mix of political issues, planning procedures and construction complexity makes progress glacial.
George Lowe, the president of Rolls' new division, says the domestic market is a priority, but is not the only one. "Our preference is for business in the UK, but if there is slippage in that programme or even, God forbid, it doesn't happen, there are other opportunities for us to use our capability and expertise on the global stage," he said.
Rolls is already contracted to both EDF, the French utility, and Westinghouse, the US nuclear giant, as part of the licensing phase of the design of the next generation of reactors.
"There is a level of participation with certain reactor vendors and utilities that is naturally in advance of others," Mr Lowe said.
This story was featured on The Independent website.
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