Volume 31 Number 2 Reflections on a decade of energy in Parliament: An interview with Greg Barker MP August 2014 UK solar will still shine brightly in a CfD world Jamie Richards, Foresight Group Energy for Development Programme: Creating community-centric electrical mini-grids Professor AbuBakr S Bahaj, University of Southampton ENERGY FOCUS
Solar independence: Subsidy-free by 2020
Paul Barwell considers solar independence on page 4
The journal of the Parliamentary Group for Energy Studies The Parliamentary Group for Energy Studies Established in 1980, the Parliamentary Group for Energy Studies remains the only All Party Parliamentary Group representing the entire energy industry. We champion cross-sector energy research and development. The Group’s membership is comprised of over 190 parliamentarians, 130 associate bodies from the private, public and charity sectors and a range of individual members.
Published three times a year, Energy Focus records the Group’s activities, tracks key energy and environmental developments through Parliament, presents articles from leading industry contributors and provides insight into the views and interests of both parliamentarians and officials. Executive Council Chairman: Ian Liddell-Grainger MP Deputy Chairman: Rt Hon Simon Hughes MP | Rt Hon Lord Hunt of Kings Heath OBE | Lord O’Neill of Clackmannan | Lord Skelmersdale Joint Hon Treasurers: Lord Oxburgh KBE | Neil Parish MP Joint Hon Secretaries: Ian Lavery MP John Thurso MP European Officer: Vicky Ford MEP Membership Officer: Robert Lane CBE Executive Council: Christopher Chope OBE MP | Julie Elliott MP | Matthew Gordon | Dr Simon Harrison CENG FIET | Huw Irranca-Davies MP | David Jefferies CBE FREng | Joan MacNaughton CB | Albert Owen MP | Christopher Pincher MP | Michael Roberts OBE | Ruth Thompson OBE | Stephen Vaughan Barbara Vest | Graham Ward CBE | Dr Eilidh Whiteford MP | John Wybrew OBE Executive Secretary: Nikki da Costa | Lafone House, Level 4, The Leathermarket, 11/13 Weston Street, London, SE1 3ER | Email: [email protected] | Phone: 020 7234 3337 Disclaimer: The views expressed in Energy Focus are those of individual organisations and contributors and do not necessarily represent the views held by members of the Parliamentary Group for Energy Studies. Contents
Foreword 3 Ian Liddell–Grainger MP, Chairman of PGES Solar independence: Subsidy-free by 2020 4 Paul Barwell, Chief Executive of the Solar Trade Association UK solar will still shine brightly in a CfD world 6 Jamie Richards, Head of Infrastructure at the Foresight Group Energy for Development Programme: Creating community-centric electrical mini-grids 8 Professor AbuBakr S Bahaj of the Energy & Climate Change Division, Sustainable Energy Research Group at the University of Southampton Interview with Greg Barker MP 10 Minister of State, Department of Energy and Climate Change 2010-14 Shale gas: Is it right for the UK? (March speaker meeting) 12 Paul Mason, New Business Manager, Total E&P UK Stuart Andrews, Partner, Eversheds LLP Professor Peter Styles, Applied and Environmental Geophysics, Keele University Scottish independence: What would it mean for UK energy? (June speaker meeting) 16 Professor Peter McGregor, Director of Strathclyde International Public Policy Institute & Head of Economics at Strathclyde Business School, University of Strathclyde Peter Atherton, Head of Equity Research - Utilities, Liberum Capital Adam Brown, Senior Associate - Energy, Dentons LLP House of Lords Annual Dinner 20 House of Commons Annual Reception 21 Extract from the Queen’s Speech 22 Sustainable solutions in energy 23 Ian Graves, Costain Departmental Statements 24 Written and oral statements Parliamentary Record 26 Select Committees, oral questions, debates and legislation
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Printed in Great Britain by First Colour Ltd, London. Chairman’s Foreword
With the General Election fast approaching, parties are beginning to set out their stalls on all aspects of energy policy. Thankfully, Ministerial teams and their Shadows are recognising that the energy challenge cannot be resolved without thinking seriously about the UK’s long-term plans.
I am proud that PGES remains a vital resource for those grappling with these issues. We have been very pleased to welcome representatives from across the political spectrum to our recent speaker meetings and annual events. It serves as a constant reminder that energy of all kinds plays a central – although not always obvious – role in people’s lives.
Indeed, the social value of a robust, sustainable energy policy was a key theme of HRH The Prince of Wales’ “Happy Birthday” message to the sponsors of this year’s Annual Summer Reception, the Energy Institute – which was delivered via video link as we celebrated their centenary on the House of Commons Terrace. It was a fantastic event and a great opportunity for members to catch up ahead of the Summer Recess, and we were delighted to welcome Katrina Williams, Director General for International, Science and Resilience at DECC, and Ian Marchant FEI, President of the Energy Institute, on the night.
Both Katrina and Ian spoke about the need to develop a legislative framework which allows all sectors to fully realise their potential. With that in mind, I’m delighted that this issue focuses on a nascent industry which, as our contributors make clear, holds great promise: solar energy.
Our expert contributors include:
• Paul Barwell, Chief Executive of the Solar Trade Association, discussing what is needed to deliver a subsidy-free solar industry (page 4);
• Jamie Richards, Head of Infrastructure at the Foresight Group, examining the changing regulatory environment for solar (page 6);
• Professor AbuBakr S Bahaj, Head of the Energy and Climate Change Division at the University of Southampton and Chief Scientific Advisor to Southampton City, explaining how solar can invigorate rural communities abroad (page 8); and
• Former Energy and Climate Change Minister Greg Barker MP, reflecting on his achievements during his time in Government – including the Green Investment Bank and the cultivation of “The Big 60,000” (page 10).
We are always delighted to hear from members, so please do share your thoughts and feedback by emailing our Editor, Sophie Fernandes, at [email protected]
Ian Liddell-Grainger MP Chairman of the Parliamentary Group for Energy Studies 3 Solar independence: Subsidy-free by 2020 Paul Barwell, Chief Executive of the Solar Trade Association, considers what is needed for a subsidy-free solar future
Solar energy is a secure, Solar: The benefits goes straight into the British home-grown solution to Solar makes no noise, creates economy. Britain’s dual crises of no waste and emits no carbon. security of supply and In fact, when screened from And good solar farms do not spiralling energy bills. view with hedgerows or on displace food production. All Electricity from solar done rooftops, you wouldn’t even members of the Solar Trade on a big scale – on big know it’s there. Solar is in fact Association have signed up rooftops and solar farms the most popular form of low to our ‘10 commitments’ for – has become so cheap carbon energy in Britain, with developing and building solar that it could soon provide 82% support1. farms, and have pledged to independence from energy focus on low-grade or non- imports and independence for An investment in solar is an agricultural land. Sheep can consumers. This is the ‘solar investment in jobs. Over 60% graze and free range chickens independence’ prize that we of the value of installing and can be reared between the should be aiming for. operating large scale solar rows of panels.
Fig.1 - London King’s Cross Solar Roof 4 (C) James Beard
4 Fig.2 - Tavells solar farm (C) Duncan Bryson
Despite our infamous weather, go off on its own and compete Contracts for Difference solar in the UK generates subsidy-free with gas and coal. (CfDs) auction system that 60% as much power as in the We could be at that point in would replace it only suits Sahara desert, and the panels 2020 – but not yet. the largest companies with work more efficiently in cooler strong balance sheets and the British temperatures than in However solar will only get to infrastructure to bid for CfD hot weather. On the longest that breakthrough moment of contracts. day of the year – Saturday 21 being able to compete without June – solar generated 7.8% of public help if the Government All this would do is hold back the UK’s daytime power needs. gives it a stable policy the UK’s second cheapest This all goes to show that framework and a level playing renewable and make the solar, the most popular and field. low carbon energy mix more second cheapest renewable, is expensive than it needs to be. a key part of our energy mix. At the moment, the And it is useful to note that Government, basing its The Government should be within that mix, the generation decisions on out-of-date making sure businesses which profiles of solar and wind figures, is picking up the want to participate in solar match each other particularly energy mix and tilting the are given one last period of well. playing field against solar. stable policy in which to invest. British solar just needs one Supporting future solar DECC is currently threatening final push, one last period independence to withdraw all Renewables of support, before it can The cost of large-scale solar Obligation funding for solar achieve solar independence has fallen by a massive over 5MW (about a 30 acre and compete subsidy-free, 65% since 2010 – welcome site) as of next year. And and make the most of that news for the climate and the the reality at the moment is incredible source of power in environment. But it is not quite that, as the solar industry is our skies. yet at the point of being able to made up of SMEs, the new
1 DECC’s Public Attitudes Tracker, https://www.gov.uk/government/uploads/system/uploads/attachment_data/ file/342426/Wave_10_findings_of_DECC_Public_Attitudes_Tracker_FINAL.pdf
5 UK solar will still shine brightly in a CfD world Jamie Richards, Head of Infrastructure at the Foresight Group, looks at the changing regulatory environment for solar
UK solar has come a long subsidy regime has stimulated The new subsidy mechanism way since the introduction significant demand amongst Plans by DECC to replace the of the first Feed-in Tariffs institutional and private existing RO scheme by a new in April 2010 and is now one investors for ways to access Contracts for Difference (CfD) of the UK’s fastest growing this growing asset class. subsidy mechanism for new industries. Growth has been As a result, over the last 12 solar projects greater than driven by falling equipment months, three investment 5MW from April 2015, is not and installation costs and companies focused on expected to slow the sector’s a supportive regulatory acquiring large-scale solar long-term growth trajectory. framework that has seen assets in the UK have listed on However, in the short term the private investment flood into the Main Market of the London change effectively introduces a the sector as never before. Stock Exchange, raising ‘cliff-edge’ deadline at the end almost £400 million from of March 2015 by which large- According to the Solar investors – including £150 scale Renewable Obligation Trade Association (STA), million raised by Foresight Certificate (ROC) projects total UK solar capacity has Solar Fund Limited (FSFL) in must be completed or risk not now reached about 4.7GW, October 2013. securing subsidy support. compared to 2.7GW in July last year. On 21 June solar’s FSFL is currently the UK’s FSFL avoids this ‘cliff-edge’ contribution to the UK’s total largest listed solar fund, risk by only acquiring new electricity supply reached owning 111MW of operating solar assets once they a record 7.8%, produced by capacity across seven large- are operational and RO thousands of residential, scale assets, including the accredited. However, for any industrial and large-scale largest operating solar power solar fund investing ahead ground-mounted installations plant in the UK at Wymeswold of construction, and for the across the country. in Leicestershire. FSFL has many developers of solar also secured a further £100 projects, the switch to the The attractive and highly million debt acquisition facility CfD mechanism imposes a predictable returns generated to help grow the fund further significant additional risk. For by large-scale ground- and has put in place binding example, if an RO project, in mounted installations greater contracts to acquire a further which a fund or developer has than 5MW under the current two assets, totalling 74MW, already invested capital, fails Renewables Obligation (RO) later this year. to be completed in time and
6 the new CfD mechanism, will still be eligible for support under the RO scheme until 2017. Given the familiarity of the onshore wind industry with the existing scheme, it is likely that most project developers will stick with it until then. Any degree of competition is likely to drive efficiencies in the industry, and under the CfD mechanism, falls over this cliff, it may not the UK solar industry has project developers may opt secure subsidy support under had to react to a changing for even larger projects than the new mechanism and any regulatory environment. seen under the RO scheme to capital could well be lost. As The speed at which solar achieve economies of scale. this deadline approaches, power can be deployed in the risk of projects not being comparison to other types of Finally, for funds like FSFL completed in time increases renewables, and its rapidly the emergence of a vibrant and for investors looking at falling cost, has caused the UK secondary market in large- the sector, the avoidance of Government to adjust the level scale solar assets will present construction risk should be an and mechanism of subsidy an exciting new opportunity increasing consideration. support several times since in 2015 and beyond. Some 2010. In each case the industry developers may also look to From April 2015 the has adapted and continued to aggregate portfolios of sub- introduction of the CfD thrive, and there is a growing 5MW projects, which could mechanism will mark the start body of evidence that it will prove an interesting option for of an exciting new chapter respond in the same manner investors, like FSFL, looking to in the story of the UK solar this time. acquire large-scale assets. industry. Unlike under the RO scheme, solar will have to Firstly, the RO scheme will Conclusion compete for a limited annual still be open to solar projects In conclusion, the early subsidy budget with the likes below 5MW, and growth of introduction of the CfD scheme of onshore wind and other industrial/roof-mounted will force the UK solar industry established technologies. The and smaller scale ground- to respond by improving budget for the first annual CfD mounted installations is efficiency and reducing costs. auction has been set at £50 expected to continue under In the long run this can only million, with bidding for 2015/16 this scheme until 2017. be a good thing, and will to begin on 14 October 2014. help to ensure the industry’s Secondly, onshore wind, with continued and sustainable How will the industry respond? which large-scale solar could growth in the years ahead. This is not the first time that need to compete with under
7 Energy for Development Programme: Creating community- centric electrical mini-grids Professor AbuBakr S Bahaj of the Energy & Climate Change Division, Sustainable Energy Research Group at the University of Southampton, explains how solar can invigorate rural communities
Access to energy, especially for and implement replicable, E4D is to invigorate communities rural communities, represents a sustainable, decentralised and their village centres providing central pillar for development. It is off-grid electricity generation support for self-governance, widely recognised that without it, which promotes development finance and entrepreneurship. and particularly without a reliable and improves wellbeing in rural The first intervention in Kitonyoni energy supply, it is difficult to communities in East Africa. The village market in Makueni County, escape a subsistence lifestyle work addresses fundamental Kenya in 2012 created a community and poverty. Such issues are scientific, engineering, social and based cooperative and a mini-grid embedded in the United Nation’s policy research issues in rural providing electricity driven by a Millennium Development Goals power generation and distribution, solar photovoltaic (PV) system (MDG), yet it is still estimated that transferring knowledge between within the village Trading Centre approximately 1.3 billion people participating countries and building (TC). Businesses were connected around the world have no access research capacity both in the UK directly to the grid which, in turn, to reliable electricity. and in the other collaborating provided electrical charging for nations. appliances such as LED lanterns In many developing countries, the and mobile phones. The grid was upfront costs involved in connecting The E4D programme designed to supply power to all TC rural villages to the electrical The programme has people at its buildings: shops, cafes, schools, distribution network is, and is likely core, engaging effectively with health centres, and places of to remain, prohibitively expensive. communities to determine their worship. The plant infrastructure This is the case in sub-Saharan energy needs, design appropriate provided a focus for the village, Africa, which is the main focus for community vehicles and renewable housing the plant equipment the Energy for Development (E4D) electrical power supply systems and providing office and meeting programme. The overarching aim focussing on long-term project facilities for the community and its of the programme is to establish sustainability. One major aim of committees.
8 The transformation of the Trading Centre is very clear: land prices have more than doubled, at least five new buildings have been completed, new businesses started, most businesses’ income has more than doubled (fig.2) and, importantly, a new, donated, maternity ward has been electrified and is now operational. The challenge now is to reduce capital costs and embed the concepts and models in replication projects. This is currently being undertaken Fig.1 - Bird’s eye view of the Trading Centre, solar PV canopy and the water tank. Two in a second project in Kenya, as containers underneath the canopy hold the batteries and the system’s switch gear and well as projects in Cameroon, protection. One of the containers is used as the cooperative office. Uganda and Mozambique. There is a strong and growing interest from An economically sustainable provide additional services such as governments and the private sector approach information technology training, to adopt the E4D approach, and In this project, the E4D team tailoring and hair dressing. from international funding agencies worked closely with the villagers Additionally, the solar canopy of to provide substantial funding to to determine their needs, the PV system was designed to act support the concept at scale. aspirations and goals with respect as a rain collector (20,000 litres), to electrification. The team enabling water to be stored and Acknowledgement established an economically re-sold by the cooperative to the E4D is a five-year multi-institutional sustainable approach, whereby community throughout the year. research programme, funded by the community contributes to the the Research Councils UK and project and is responsible for the Benefits of the programme the Department for International operation and maintenance of the Over the last 18 months, the Development. Its full name is plant. Through the set-up of an E4D project has undoubtedly “Replication of Rural Decentralised energy supply company (ESCO), transformed the lives of the Off-grid Electricity Generation income is generated for the villagers. It has provided the through Technology and Business cooperative via membership fees, research team with data to Innovation”. The project consortium local sales of electricity and share appraise system performance, comprises of the University of ownership. Such income covers monitor energy demand within the Southampton and Imperial College, all the running and replacement Trading Centre and inform project London. More details about the costs of project components and replication. The project is now a project and the partners can be found management, provides micro beacon in Africa, hosting many at: financing for the community and local and international visitors from www.energy.soton.ac.uk and contributes to the recovery of countries such as Japan, Germany, www.energyfordevelopment.net. the capital cost of the project. UK, Zambia, as well as the World Together, E4D engineers, local Bank and other funding agencies. contractors and villagers were able to assemble the containerised 13.5 kWp photovoltaic solar plant, canopy and the installation of the locally supplied minigrid within one week (fig.1). The premise of the modular project design makes it easier to replicate and resize to suit villages of different sizes and energy requirements.
We estimate that up to 3,000 local people will benefit from electrical energy provided by the project. The school, health centre, churches and the 40 businesses in the Trading Fig.2 - Stephen, who opened a shop in the Trading Centre about a year ago, told Professor Centre have round-the-clock Bahaj (pictured right) that his weekly income from mobile phone charging is only about stable electricity, allowing them three times what he pays for the electricity he buys from the community. Establishing to extend their working hours and these vibrant tenants and local entrepreneurship are key to the success of such projects.
9 Interview with Greg Barker MP After a decade holding Shadow and Government roles in energy, we ask what’s changed and what’s next – both personally and for energy policy.
With 10 years holding roles the roll-out of renewables under across climate change, energy the Coalition Government. And if and environment, have your views we can see that replicated globally, changed? that could have a hugely important I think in terms of climate change, impact on emissions growth in the it is now a commonly accepted coming decade. fact that it represents a clear and present risk to the world. So, we have really been through it Now the time for action is getting these last 10 years, but I emerge something that we did in our shorter and shorter… BUT I remain optimistic that we can still beat this first year in Government, aiming optimistic we have it within us to thing. to slash carbon emissions and avert the worst impacts of man- energy consumption across the made global warming. government estate by 10% - What three words would you use actually we achieved 13.5% - it was The political climate for action has to describe your relationship with the Conservatives who first signed changed very significantly over your DECC coalition colleagues? up to that. If you look at the Green that period. A number of important I would use two, remarkably Deal Market, it has transformed factors have changed, in particular effective. I was surprised at how the way we are looking at energy the collapse of the cost of certain effectively I was able to work efficiency. We still have a long technologies. Solar, for example, with both Chris Huhne and then way to go, to develop at scale the has reduced in cost by over 70% subsequently Ed Davey. The ‘pay as you save’ model, but the since 2009. Phenomenal. Also, Coalition was formed in the national Green Deal Market is shifting the the assertion you can have green interest. I think on energy and emphasis towards private sector growth has been proved. Here in climate change, there was actually action and product innovation, the UK we are 25% below our 1990s a remarkable alignment of views. and creating a standard model of emission level and yet we have the The fact is the Conservatives came energy efficiency assessments fastest growth in the G7. We are into a department with far more which drives action. It has been living, real proof that you can cut ideas and much greater thought extremely successful and we are emissions and grow your economy. than the Lib Dems did. So the Green now well over a quarter of a million Investment Bank, that was an idea Green Deal assessments in, and I The other big factor is the geo- that George Osborne and I first feel we have really planted seeds politics. If you look now at the way articulated in November 2009. And for long term growth in the market in which China, more recently India, I have to say, the Green Investment for energy efficiency. even the United States are more Bank has been delivered at a engaged in a practical way on this greater scale and impact than any And on energy efficiency, the idea agenda. Another big factor which of us hoped in 2010. It is now an of megawatts was something I first is often uncomfortable for many enduring institution that will outlive started talking about in Opposition, in the environmental lobby is the this Government and will become a learning from the work of Amory growth of gas. The biggest reasons permanent part of the architecture Lovins at the Rocky Mountain that the UK is able to sit proudly of the City of London. Institute: why is it that we singly fail with a 25% cut in its emissions now to recognise that investing in saving compared to 1990 is because of the Then if you look at other initiatives energy is far more cost effective switch from coal to gas as well as – the 10:10 campaign was than constantly building new
10 supply? That truism is reflected of confidence and belief in an have huge potential to be a global in our Electricity Market Reforms alternative to an energy sector leader in offshore wind. and the capacity market design, dominated by just a handful of which will allow, for the first time, companies and reversing the Where I actually put a lot of effort in energy efficiency to bid in as part seemingly unstoppable decline of but there is no quick win - although of the solution to meeting capacity the number of participants in the I think there will be a lasting legacy shortfall; whether that’s demand market to an irreducible core, is - is marine. I created the first UK response offers or permanent something that I hope I have helped marine energy parks in the South demand reduction solutions. turn around. West and then in Scotland. We are in pole position to dominate that It was the Conservatives who led I think producing energy as a global market. There is no country that, but with the support of the Lib meaningful part of the consumption in a better position in terms of the Dems and I think we have worked of a sizeable business or a building science and manufacturing and extremely effectively together and or a community will increasingly deployment of these technologies I’m proud of the record. become the norm rather than than the UK. But that requires the exception. And that is why I continuing partnership between You brought a lot of new ideas and also became a little bit sceptical Government and the private sector. vision to the Department, do you about just seeing distributive think officials embraced that? renewables that you just stick in Is there anything you would like to Well I think they were slightly a field, whether that be a wind say on the future of solar? surprised to have a Minister who was farm or a solar park, because I Just that when I first set my sights so immersed in the subject, because want distributed energy wherever on 20GW of solar by the early during the Labour years of course, possible to be close to the point of 2020s, people thought I was mad. the average tenure of an energy use and aligning the user or the But now we are seeing around 4GW minister was a matter of months consumer with the generation of installed already – we are nearly sometimes. I’d spent five years on energy is the sweet spot. 25% of the way there. I think the the Environmental Audit Select 20GW ambition remains absolutely Committee and then a number of If that was the high, what could on the table and one I’m confident years in the Shadow brief. So I came have gone better? we can still meet. with a very clear view of what it was Well I think cutting the solar tariffs that I wanted to do. back in 2011 was very difficult. I got If you could go back to 2010, what a huge amount of abuse for doing advice would you give to the newly I can’t do anything other than it. Had I not done that, we would appointed DECC minister, Greg praise the expertise that there is in have bankrupted the scheme and Barker? DECC and the Civil Service and the the Treasury would have closed it, Trust your gut instincts. When you willingness there is from officials that is very clear. And I’ve always think you are being too ambitious, to work with me. I think sometimes believed that the way to true scale just keep persevering. government departments can be is through driving down subsidy. like large cruise liners in that they Many in the industry didn’t want to You must have hundreds of do take a while to turn around, but see that and it was very difficult and opportunities on offer - what’s when they do, they are unstoppable. sometimes personally abusive from next for you? I think it took a while to turn around people who didn’t want to see the A nice holiday! At the moment the view that solar could become an long-term goal that I had. So that I’m just exhaling. I hope to do important part of the electricity mix was probably personally the most more things abroad. One of the and that distributed energy per see difficult. reasons I am leaving the House could be an important part of the of Commons is that I want to do overall energy sector and challenge What do you think should be the more internationally. So I think I’m the hegemony of the ‘Big Six’. That priorities for energy policy post- not going to leave this space, and I was a pretty wacky idea when I 2015? remain passionate about it, but in came into the Department. I think the next five years is going terms of my future business career, to be about delivery. It’s going to I think it is more likely to be abroad You coined the term ‘Big 60,000’. be about a relentless focus on than at home. Will this be your legacy? costs, to ensure that we do get I hope so, but I think my biggest renewables as close to grid parity You can read the full interview at legacy actually will be the Green as we can. I think we are very www.pges.org.uk/library#articles Investment Bank, which spans close to that with solar, and will much more than just distributive be achieved within the next two or energy. But in terms of the three years. I think we are close to political narrative, I think giving that with onshore wind. If we can that massive boost and sense drive down those costs further, we
11 Shale gas: Is it right for the UK?
MARCH SPEAKER MEETING: Address to the Parliamentary Group for Energy Studies
By Paul Mason, New Business Manager, Total E&P UK Limited
As a traditional “major” of the greenhouse gas of coal in gas resources and thus reduce its integrated oil and gas company, combustion for energy production. reliance on imported energy. Total is involved in many energy segments. Shale In this context, our entry into Total and the UK shale gas gas development is also an shale gas in the UK has generated industry increasing part of our global much comment even though it is Total has signed an agreement to strategy and we are already a relatively modest investment for acquire a 40% interest covering active on shale gas in many Total. We consider the UK one of licences in the Gainsborough countries such as Argentina, the most promising countries in Trough area of the East Midlands. Denmark, Poland, Australia, Europe for shale gas development. Our partner, IGas, will be the China and the US. This is because of the geological operator during the initial evaluation, supportive government exploration programme, with Total strongly believes that all and well-established “open” gas Total taking over the operatorship energy sources will be required market, with existing pipeline as the project moves towards to meet growing global demand infrastructure. development. and that gas will remain an important part of the future energy Total is a long-term partner The first well is planned for 2015- mix. Natural gas resources are to the UK, with over 50 years’ 16, reaching a pilot stage in 2016- essential to ensure a smooth presence and experience. We 17. Total will play an important transition to a lower carbon are among the biggest investors role because of our global energy mix, while limiting price and producers in the North Sea experience in the exploration pressure and guaranteeing secure and provide employment for and production of shale gas. We supply. Significant investment over 3,000 people in the UK. We will provide technical advice needs to be made to optimise maintain a diverse portfolio of UK and contribute to facilitating and diversify production to activities, most notably through relationships with the authorities prepare for tomorrow’s energy our offshore exploration and and local stakeholders where mix, particularly by enhancing production activities, where we are required. energy efficiency and developing applying some of the industry’s alternative and renewable most advanced technologies to Hydraulic fracturing: Should energies. At the same time, we unlock remaining reserves. While there be concern? remain committed to tackling we continue to play our part in Hydraulic fracturing is issues of climate change and stemming the decline of North controversial, banned in France natural gas is the cleanest of all Sea production, we believe the UK and opposed by environmental fossil fuels, emitting almost half is well placed to develop its shale campaigners in the UK. Total
12 is an independent international For Total, our sustainable growth decisions are long-term and a energy company and respects model is based on a programme stable investment climate is key to the political decisions made in of profitable investments and our approach and vision. the countries where it is present. public acceptance of our activities. Where countries have made Industry and Government must There is of course a need for strategic choices to explore for work together, reassure local robust regulation and we trust the shale gas, Total is well positioned communities, address concerns authorities will put that in place to offer its expertise, bringing and be fully transparent through for the onshore shale gas industry. also the necessary guarantees the whole process. We must We already have extensive in terms of commitment to the engage early and we must get experience and knowledge of highest standards of safety and it right and have the necessary the North Sea, which has one of environmental responsibilities. and essential support of local the most stringent regulatory This is something Total takes very communities and authorities. frameworks in the world. seriously, taking all necessary We will fully support IGas as the measures to minimise any operating company in employing Land and planning issues will be environmental impact. all best practices and ensuring critical with proper, but efficient sound communications with all and streamlined planning We have experience of working stakeholders. Total has also application processes to avoid in areas of outstanding natural recently become a member of the unnecessary lengthy permitting beauty and environmental UK Onshore Operators Group and approvals, which could otherwise significance around the world. is involved in the development of undermine development. In the UK, for example, we the onshore industry framework. are building a new sub-sea In the longer term, we see shale infrastructure and gas treatment gas development as contributing plant in the environmentally What role should Government to improved energy security, sensitive Shetland Islands, to play? economic growth, creating jobs bring future supplies of energy It is important to remember and tax revenues for the UK. to the UK market from the deep that it could take 10 years from water basins lying to the west of exploration to full development. For more information please visit the Islands. Our business and investment www.total.com
Shale gas: Is it right for the UK? MARCH SPEAKER MEETING: Address to the Parliamentary Group for Energy Studies
Stuart Andrews, Partner at Eversheds LLP also contributed to this speaker meeting.
Stuart is a specialist planning lawyer and leads the National Planning Team at Eversheds LLP. He is a dual qualified town planner and solicitor.
He has particular expertise in the promotion of redevelopment projects involving complex compulsory purchase orders, substantial highway orders and associated environmental assessment.
13 Shale gas: Is it right for the UK? MARCH SPEAKER MEETING: Address to the Parliamentary Group for Energy Studies
By Professor Peter Styles, Applied and Environmental Geophysics, Keele University
We are used to the concept and in the UK (and most other gas, oil, or a mixture of both. The of exploration for oil and gas. places) these are what we product is often a rich mixture This involves searching for and call shales. Very fine-grained, of methane (which we recognise locating accumulations of oil and organic-rich deposits laid down as natural gas), but also heavier gas trapped in special structures in the low oxygen environments hydrocarbons such as ethane, in porous rocks, which are of deep ocean basins which pentane, hexane and so on, capped by an impermeable extended across a great deal which are extremely valuable as rock, keeping it there until of the US and Europe (which feedstock for the petrochemical we find it. To do this we use of course were much closer industry. sophisticated (and expensive) then), in the early part of the seismic techniques and we call Carboniferous period just There are extensive shale that, for some unhelpful reason, before the thick coal deposits deposits across most of England, conventional oil and gas. which are found in the same South Wales and the Central geographical regions. We call this Valley of Scotland and some will However, we don’t often realise again unhelpfully (as there is no be prospective for shale gas etc. that this oil and gas was not difference between the gases), The British Geological Survey formed there but has migrated unconventional hydrocarbons. has estimated that there may be from deeper, older rocks and c.1300 trillion cubic feet of gas some of it has serendipitously The ‘Goldilocks Effect’ in Northern England (possibly been caught, while a great deal The presence of shales in itself 25-40 years of UK supply at a 10% was lost to the surface where is not enough to guarantee that recovery rate) and some 4 billion nature took care of it, breaking there is oil and gas there; they barrels of oil in the Weald. The it down, albeit over long time- must be ‘cooked’ under just the gas in particular is very welcome scales. We sometimes still find right temperatures and pressures as economic and political these natural oil-seeps in the which I call the ‘Goldilocks developments in Ukraine and UK, e.g. in Formby Lancashire, Effect’. Too cold and there is no Russia, together with a depleting the Shropshire Tar-Tunnels and formation of hydrocarbon, too North Sea and closure of coal- sometimes in coal mines. The hot and it’s formed and broken fired power stations, make access place where this hydrocarbon down and left as bitumen. But if to secure and sustainable long- forms is called the source rock it’s ‘just right’ then we can get term gas a ‘Holy Grail’ for the UK.
14 Why aren’t we racing towards of relatively commonly used industry knows how to deal with extraction? chemicals which constitute these and will not be permitted to That all sounds excellent: so only a fraction of a percent cut any corners in the harsh glare why aren’t we racing towards by volume. This takes place of public and legislative scrutiny. extraction? The problem is that at depths of about 8,000 to shale holds onto its gas extremely 10,000 feet (3.5-4 km below the The other criticism of shale tightly for two reasons, which surface). gas is that it may perpetuate explain why it is still in place after the fossil fuel cycle, and this is more than 300 million years: This is not a new process, indubitably the case. However, it having been first used in its is not possible to instantly switch • It has very few pathways current form in 1947, and with to zero-carbon energy in the UK, through the rock (low many hundreds of thousands Europe and certainly not in the permeability) being carried out in the USA. developing world where energy is Indeed the first UK fracking for key to alleviating poverty, as well • Gas is adsorbed onto the gas is at least as early as 1964 as providing a route to economic molecular structure in a liquid- just east of Glasgow, and in self-sufficiency. like layer England monitored seismically by my research group in 1988 in The trick is to remove coal from And that, of course, is where Beckingham in Lincolnshire with the power generation process ‘fracking’ comes in - or as BP. We will never know the true and substitute gas for as long we used to call it before it potential of shale gas unless we as we need to develop practical, became such a contentious drill some boreholes and assess real-world energy solutions, not process: hydraulic stimulation. its extractability directly. rhetoric. Two significant technological developments have made it Just like any industrial process, The US has reduced its carbon possible to extract methane from this must be carried out under footprint by c.20% while having shales, and have been deployed careful regulation and monitoring gas at $3 per GWh while Europe with great success in the US. after environmental baselines pays c.$8 and Japan will outbid These are: have been established and anyone for LNG from Qatar at with appropriate legislation. $18. • Horizontal drilling: the ability The HSE and the Environment to turn a drill-string through Agency have been very clear Conclusion ninety degrees to drill along that the necessary regulations Just as we (most of us) are a rock formation rather than and jurisdiction exist, albeit they happy to purchase pre-packaged straight through, giving access may need to be more sharply supermarket steak without to far greater rock volumes. focussed. a great deal of thought as This process is how Wytch to where it comes from, we Farm, the largest European Public Opposition appear to be happy to consume onshore oilfield, can recover oil There is significant public ‘shrink-wrapped’ energy without from ten kilometres beneath opposition to ‘fracking’, some of cognisance that someone, the English Channel. it simply down to the terminology somewhere at the end of a as few understand the process cable or pipeline, often in a • Fracking: This involves properly, citing as show- country without political dissent producing artificial pathways stoppers: induced seismicity, or adequate environmental in the shale through which gas atmospheric emissions regulation, is picking up our can travel, by pumping high of methane, groundwater environmental bill. This is neither pressure water (sufficient to contamination, visual amenity and ethical nor environmentally overcome the weight of the traffic. Fracking has become the sustainable. rock above) to create a network whipping-boy for issues which are of spidery cracks often only a not shale gas-specific and which We would do better to repatriate few millimetres across in the exist for any oil and gas activities. our means of energy extraction, rock. These will close if the dealing with environmental water pressure is released These all require extremely good challenges and the eventual and so sand is introduced as a housekeeping at the surface disposal of carbon dioxide within proppant, with the aid of a very and in the final hundred or so our own bailiwick. small amount (but attributed metres where the four concentric, by opponents of the process grouted, inch-thick steel pipes with extreme significance) pass through our aquifers. The
15 Scottish Independence: What would it mean for UK energy? JUNE SPEAKER MEETING: Address to the Parliamentary Group for Energy Studies By Professor Peter McGregor, Director of Strathclyde International Public Policy Institute & Head of Economics, University of Strathclyde
What are the likely implications (RUKG) will import from Scotland and longer-term efficiency and of Scottish independence for on a purely commercial basis. demand side improvements energy policy in the Rest of the Here any alternative energy could limit RUK growth in energy UK (RUK)? I examine the likely source helps to keep the lights demand. impact on each of the goals of on, but if imported it creates a energy policy, the main ones dependence that could threaten So RUK can keep the lights on being1: security of supply. Furthermore, without imports from Scotland Scottish electricity exports and the longer the timescale we • Security of supply currently constitute less than 5% consider, the more opportunities • Environment (emissions) of RUK’s electricity consumption RUK would have for substituting • Affordability – though much more important to other sources of energy. Scotland (25%). Security of supply Overall, in terms of keeping The Scottish Government (SG) RUKG may choose to expand its the lights on, the importance argues that RUK needs electricity own renewables capacity. Legally of Scotland to RUK seems from Scotland to: “keep the binding EU and climate change exaggerated by the SG, which is lights on”. SG emphasises the targets (see Environment section) not to say of course that there are decline in UK (as compared are challenging, but nuclear and no challenges ahead for an RUKG to Scottish) capacity margins. large-scale biomass are feasible in this respect – and importing Ofgem has warned of the risks to options for RUK. RUK can invest from Scotland is likely to be part electricity security of supply over in capacity to import low carbon of the solution. Furthermore, the next few winters. Scotland’s electricity from elsewhere. In Scotland may have its own export capacity is set to increase short-run capacity, restricted security of supply challenges – given grid improvements and is restricted; in the longer term smaller economy, less diverse renewables development. there is a much wider range of generation capacity (no nuclear, possibilities. Also, Electricity large biomass) – but these are There is a “capacity issue” Market Reform capacity payments likely to reflect the intermittent for RUK, but under Scottish may, in due course, address nature, rather than the level, of independence RUK Government declining capacity issues in RUK, its generation capacity.
16 Environment Affordability a significant threat to RUK’s Climate change is impacted Much of the emphasis on energy policy objectives – notably mainly by: renewables (and affordability has focussed on the security of supply and emissions other low carbon) development, likely impact of independence on and renewables targets. RUK the price of carbon and energy affordability in Scotland, not RUK. can continue to import electricity efficiency. We focus here on Currently Renewable Obligation from Scotland if that makes renewables, since this is likely to Contracts – subsequently, sense in terms of relative costs. be most immediately impacted Contracts for Difference that However, both Scottish and RUK by independence, and is already apply to low carbon technologies Governments will continue to face the subject of considerable as a whole, not just renewables major challenges in energy policy, controversy. (and so include nuclear) - are not least in terms of affordability. funded jointly by all UK taxpayers. A key feature of successive SGs It seems likely that, at least in is their emphasis on renewables DECC argues that prices to terms of the security of supply because of the scale of the Scottish consumers would have to and environmental goals of resource in Scotland (and the rise very significantly to cover this energy policy, both Governments perceived economic development if Scotland becomes independent – and the population of the UK – potential of exploiting it). The SG and has to fund Scottish would benefit from coordinated, argues that, without Scotland, renewables development entirely rather than competitive, energy RUK will be unable to meet its EU on its own. Independent analysis policies. 2020 targets (for renewables or initially supported this argument, emissions). but the UK Government’s support Acknowledgement for nuclear makes the case This note draws liberally on joint But do EU targets really ensure rather less clear cut. Paying for research with colleagues in the RUK is a captive market for its own renewables is expensive, Fraser of Allander Institute, Scottish electricity exports? We but conceivably less so than Department of Economics and have already seen that other low paying a population share of Strathclyde International Public carbon options are available, new nuclear and renewables. Policy Institute, University of but the timescales required Furthermore, there remains Strathclyde. I am grateful to to activate these can be very some doubt about the legality of the ESRC’s Future of the UK extended. Furthermore: RUK can RUK withdrawing support from and Scotland Initiative and always trade green certificates renewables contracts struck prior ClimateXChange for their financial in the EU, and EU targets may to independence. Nonetheless support for our research into themselves be renegotiated after there are likely to be significant energy issues. independence in a way that would pressures on affordability, North be likely to favour RUK relative to and South of the border, with or Scotland. without independence.
Overall, EU targets would Conclusion undoubtedly be a challenge Scottish independence may for RUK, but it is not clear that create some short-to-medium- Scotland is the key means of it term disruption for RUK energy meeting these, and the longer markets, though it need not do the time scale the greater RUK’s so. However, it is not likely over options. the longer term to represent
1 The Scottish Government includes the economic development potential of the energy sector (and of renewables in par- ticular) as an explicit goal of energy policy, but this receives less emphasis in the UK, so we do not discuss it explicitly here (though the arguments we consider have implications for economic development).
17 Scottish independence: energy markets, law and nationhood
JUNE SPEAKER MEETING: Address to the Parliamentary Group for Energy Studies
By Adam Brown, Senior Associate - Energy, Dentons LLP
Energy policy and the legal on energy emergencies such as a Scotland is missing out on by frameworks that implement refinery or tanker drivers’ strike. not being independent; about an it provide a good perspective independent Scotland’s ability on the debate over Scottish The inability to legislate for itself to prosper economically (would independence. From this in these areas would demonstrate the offshore oil and gas and perspective, one can see a lack of statehood for any renewables industries continue to clearly enough why the country, let alone for one whose grow in an independent Scotland?); Scottish Government wants Government has laid as much and about an independent Scottish independence, but also that it emphasis on the contributions Government’s ability to finance may not easily deliver all their of the energy sector to its future its plans for more generous ambitions - or the aspirations prosperity as the SNP has. And public spending (it would be more of industry and consumers - although the Conservatives, Labour dependent than the UK as a whole any more effectively than the and Liberal Democrats have all is, on tax raised from oil and gas constitutional status quo. now pledged to devolve more production, whose profits are powers to Scotland in the event of inherently volatile). Under the current devolution a “no” vote, so far as I am aware, settlement, the Scottish Parliament none of them has yet suggested It is clear that the Scottish cannot legislate on the generation, that Westminster should give up its Government would like to have transmission, distribution or supply monopoly on legislation and policy more control over the fiscal of electricity; on the ownership of in these energy-related areas as aspects of oil and gas policy. But exploration for and exploitation of part of a “Devo Max” outcome. that aside, it would seem that they deposits of oil and gas; on coal or Energy is therefore central to would not want to do anything nuclear energy; on the shipping the debate: it is central to claims dramatically different in a post- or supply of gas through pipes; or about the kind of things that independence world. When it
18 comes to the other aspects of oil necessarily infringing the EU the electricity market; and a and gas regulation they appear rules on free movement of goods, Competition and Markets Authority to endorse the conclusions of there is nothing in that judgment investigation into GB energy supply the Wood Report as firmly as the which would limit the scope for markets which could result in Westminster Government. They the Government of the Rest of the further major structural reforms. have a vision of continued export UK (RUK) to continue subsidising of Scottish renewable electricity Scottish generators. Scottish independence will to England and Wales which relies inevitably complicate the both on preserving the existing GB- In other words, the Scottish implementation of all of these wide grid and trading architecture Government can have everything to some extent. But what of the and on there being no economic they want if Westminster underlying big issues, such as barriers to Scottish wind, wave Government and Parliament how to engineer a major switch and tidal power competing on are prepared to let them have in the electricity generating equal terms with other generators it (although it would take time mix without over-subsidising to sell their power to those to make all the necessary generators; reducing the carbon supplying electricity customers adjustments to the legislative intensity of transport and in England and Wales; in other and regulatory frameworks). A domestic heating and cooking; and words, on subsidies funded by “yes” vote does not automatically maximising economic recovery those customers continuing to mean specific outcomes in the of oil and gas from oil and gas be available for Scottish projects negotiations; detailed policy fields with declining productivity through the Renewables Obligation formulation, legislative drafting alongside management of the and Contracts for Difference. and regulatory revisions would decommissioning phase. follow a referendum. The two None of the things that make up Governments will have to reach Give or take a certain amount the Scottish Government’s vision agreement, and in most cases, of duplication of effort between of the energy market in England, if they fail to do so there will be Edinburgh and Westminster, Wales and Scotland is legally no higher authority or body of perhaps the best that can safely impossible or even fundamentally precedents to which to appeal to be said in most cases is that it is difficult to achieve. For example, break the deadlock. not obvious that an independent they point to the Single Electricity Scotland will necessarily make it Market in Ireland as an example Meanwhile, away from the political any harder to tackle these. Taking of how it is possible to align the battlefield, the prospect of Scottish a more optimistic view, we may autonomous regulatory regimes in independence is just another item hope that in one area of crucial two countries so as to facilitate the added to the long list of legislative future importance, cross-border operation of a single, cross-border and policy initiatives that operate co-operation, RUK and Scotland energy market with, effectively, as potential sources of uncertainty could lead the way. a single grid system. While it is for the energy industry and true that the EU Court of Justice potential investors in Scotland; Acknowledgement has recently ruled that an EU including the impact of Electricity For a fuller discussion of the issues Member State may refuse to allow Market Reform; the post-Wood raised here, see Dentons’ UK energy generators in other Member States Report changes to offshore oil and law and policy blog at to benefit from its renewable gas regulation; Labour’s proposals http://www.targetukenergy.com/. subsidy schemes without for further major changes to SCOTTISH INDEPENDENCE: WHAT WOULD IT MEAN FOR UK ENERGY? JUNE SPEAKER MEETING: Address to the Parliamentary Group for Energy Studies
Peter Atherton, Head of Equity Research – Utilities, Liberum Capital also contributed to this speaker meeting.
Peter leads the Utility Equity Research team at Liberum Capital. Before this he spent more than a decade as Head of the European Utility Research Team at Citigroup. He has also had stints at the National Grid and on the Central Electricity Generating Board.
19 HOUSE OF LORDS ANNUAL DINNER The Group’s Annual Dinner was held on the House of Lords Terrace on Wednesday 2nd April 2014. The dinner was a great success, and we were delighted to welcome the Secretary of State for Energy and Climate Change, The Rt Hon Ed Davey MP, as our Guest of Honour for the second year running.
The event was made possible through the kind support of Costain.
Alistair Smith, Costain; Claire Baker, Costain; Ian Liddell-Grainger MP, Chairman, PGES; Furah Naeem, Costain; Darren James, Costain; The Rt Hon Ed Davey MP, Secretary of State for Energy and Climate Change; Robert Ingram, Costain; Andrew Roper, Costain; David Cassar, Costain; Ian Graves, Costain; Sean Murphy, Costain
Ann Robinson, uSwitch; Paul Needley, Enertek Claire Nequest, Enertek; Kirsty Lambert, EnerG Switch2
Ken Fergusson, David Kilpatrick and Derry Carr from the David Cassar, Costain; Robert Ingram, Costain; Claire Baker, Combustion Engineering Association Costain; The Lord Boswell of Aynho; Andrew Roper, Costain
20 HOUSE OF COMMONS ANNUAL RECEPTION The Group’s Annual Reception was held on the House of Commons Terrace on Tuesday 8th July 2014. Our Guest of Honour, the Director General for International, Science and Resilience at DECC, Katrina Williams, delivered a keynote speech before taking questions from the floor.
Ian Marchant FEI, President of the Energy Institute, also addressed guests, and introduced a special “Happy Birthday” video message from HRH The Prince of Wales.
Ian Liddell-Grainger MP, Chairman, PGES; Katrina Williams, DECC; Ian Marchant FEI, Energy Institute; Louise Kingham OBE FEI, Chief Executive, Energy Institute.
Walt Patterson FEI, Chatham House; Judith Ward, Sustainability Sponsors of this year’s Annual Reception, the Energy Institute, First; Andrew Warren FEI, Association for the Conservation of celebrated their centenary year Energy
Natalia Salamon; Rose Atkinson GradEI; Ken Fergusson, Combustion Engineering Paul Taylor, Taylor Keogh; Mike Dr Dina Bayasanova GradEI and Hazel Association; Andrew George MP Harrison, Taylor Keogh; David Jefferies Clyne - all representatives of the EI Young CBE, Executive Council, PGES Professionals Network
21 Extract from the Queen’s Speech Her Majesty’s most gracious speech to both Houses of Parliament at the State Opening of Parliament, 4th June 2014
the most attractive place to start, standard and will guarantee finance and grow a business. The long-term investment in the road bill will support small businesses network. by cutting bureaucracy and enabling them to access finance. My government will continue to implement major reforms to the New legislation will require electricity market and reduce the ministers to set and report on use of plastic carrier bags to help a deregulation target for each protect the environment. Parliament. The legislation will also reduce delays in employment My government will continue to tribunals, improve the fairness deliver the best schools and skills of contracts for low paid workers for young people. In England, and establish a public register of my ministers will help more company beneficial ownership. schools to become academies and support more free schools My government will introduce to open, whilst continuing a bill to bolster investment investment to deliver more My Government’s legislative in infrastructure and reform school places. Further reforms to programme will continue to planning law to improve economic GCSEs and A Levels will be taken deliver on its long-term plan to competitiveness. The bill will forward to raise standards in build a stronger economy and a enhance the United Kingdom’s schools and prepare school pupils fairer society. energy independence and security for employment. My government by opening up access to shale and will increase the total number of My ministers will implement geothermal sites and maximising apprenticeship places to 2 million measures to increase further the North Sea resources. by the end of the Parliament. personal allowance and to freeze fuel duty. Legislation will allow for the creation of an allowable solutions Legislation will be introduced to scheme to enable all new homes help make the United Kingdom to be built to a zero carbon
22 ENERGY FOCUS SPONSORED FEATURE Sustainable Solutions in Energy Ian Graves, Power Director at Costain, looks at decarbonisation, energy storage and encouraging efficiencies
While there has been fierce areas of decarbonisation, Transmission and distribution debate over the years about what energy storage and encouraging Assets need to be replaced in the concept of sustainability efficiencies. the UK’s ageing transmission actually means, we find that for and distribution system but many of our stakeholders it is 1. Decarbonisation. Innovation it also needs to evolve into increasingly clear. is beginning to provide some a more ‘dynamic’ network, answers: capable of managing increased They are looking for sustainable • Carbon capture and storage interconnection as well as new solutions that ensure long-term (CCS) - We are working on a forms of generation. viability through meeting economic, project (with some of the UK’s environmental and social top universities) which will help We see the beginnings of a more challenges. At Costain we employ make CCS more affordable, sustainable solution with the our leading-edge engineering including one which aims to introduction of ‘smart’ grids skills to embed sustainability in develop a carbon capture pilot which will be reliable, efficient everything we do. plant capable of capturing 95% and sustainable. Smart metering of CO2 emissions. will assist in unlocking this The sector is actively working • Offshore wind farms - We are potential. to meet three closely-linked partners in a joint venture objectives: which has devised a new form Demand-side management • Maintain security of supply: of turbine base which avoids If we wish to continue to develop keeping the lights on. the need for specialists and a modern economy there needs • Decarbonise the energy grid: to expensive marine equipment. to be an equal focus on reducing minimise the impact of climate • Tidal - We are working with the energy we use. There change. a customer to develop a tidal are a number of interesting • Ensure affordability of supply: lagoon project in the UK. developments, including grid for business as well as balancing services, also known consumers. 2. Storage. The success of many as demand response. Our new renewable technologies (such COdemand venture is an example Finding balance between these as wind power) depends on of where new revenues can objectives is difficult because of being able to store the resulting be unlocked through a smart the complex energy equation, energy. Some ground-breaking approach to managing energy which encompasses generation, technologies are emerging, loads. We look forward to sharing transmission and distribution and including the use of liquefied air this with more customers soon. demand management. or liquid nitrogen as a storage medium. But more investment is None of this will be easy, of Generation critical. Costain is working with course. But we are excited about The UK Government has set three UK SMEs to support this the potential these and other challenging targets, including the development. innovative developments have, to reduction of carbon emissions by solve the UK’s energy challenges. 80% by 2050. Shorter-term, the 3. Encouraging efficiencies. Our target is to have almost 15% of customers recognise the need energy delivered from renewable to upgrade and extend the life of sources by 2020. existing plant. Costain is adopting For more information email: new processes and flexible [email protected] Key to this is reform of the working arrangements, as well Follow us on Twitter: electricity market. Costain is as optimising current plant @CostainGroup actively working in all three performance for our customers.
23 Departmental Statements Written and Oral Statements from the Department for Energy and Climate Change – 3rd April 2014 to 8th August 2014
Written Ministerial Statement on the fledgling shale gas and Presidency’s compromise, but Scottish independence geothermal energy industries to expressed disappointment that fulfil their potential. the agreement lacked ambition. 9th April 2014 – Ed Davey MP The Secretary of State also announced the publication of the Written Ministerial Statement proposed that the Council should Government’s 12th paper in the on the agenda for June’s focus on short-term measures Scotland Analysis Programme. environment council to address energy security The paper concluded that the and to prepare for potential current single market has 12th June 2014 – Ed Davey MP disruptions this winter, and called underpinned the success of the talked through the items on the for decisions on energy security Scottish energy industry. agenda for the EU Environment and the 2030 climate and energy Council in Luxemburg on 12th framework to be taken in parallel Written Ministerial Statement on June. These included an exchange by the European Council. the UK downstream oil sector of views on the Commission’s air quality package both on Written Ministerial Statement on 9th April 2014 – Michael Fallon Medium Combustion Plants the management of overseas- MP announced the publication of and National Emission Ceilings owned plutonium in the UK the Department’s review into the Directives, and the Commission role of the UK’s refining and fuel Proposal regarding the possibility 3rd July 2014 – Michael Fallon MP import sectors, in which it set out for Member States to restrict announced that the Government its support for the establishment or prohibit the cultivation of had agreed to the Nuclear of an industry-owned and Genetically Modified Organisms Decommissioning Authority (NDA) operated central stocking entity (GMOs) in their territory. taking ownership of around 800kg in the UK. of plutonium previously owned Written Ministerial Statement on by a Swedish utility company, Written Ministerial Statement on the agenda for June’s EU Energy and of around 140kg previously new energy investments Council owned by a German research organisation. 5th June 2014 – Michael Fallon 12th June 2014 – Ed Davey MP MP announced that eight major outlined the agenda of issues to Written Ministerial Statement on renewable electricity projects had be discussed in Luxembourg. the Fourth Carbon Budget signed the first contracts under Among them were the Greek the Government’s electricity Presidency’s proposal to amend 22nd July 2014 – Ed Davey MP market reforms. the Renewable Energy Directive announced that the Government and the Directive relating to the will not be amending the Fourth Written Ministerial Statement on quality of petrol and diesel fuels Carbon Budget. He said the the underground drilling access – with the Secretary of State decision is consistent with the consultation declaring that the UK “welcomes advice of the Committee on the Greek efforts to find a Climate Change, and reflects 5th June 2014 – Michael compromise”. the views of the vast majority Fallon MP announced that the of businesses, investors and Government had published Written Ministerial Statement on environmental groups. a consultation on proposals discussions at June’s EU Energy to reform the procedure for Council Written Ministerial Statement securing underground access on the future fuel poverty to oil or gas deposits and 25th June 2014 – Ed Davey MP framework geothermal energy. This formed reported on discussions at the part of the Government’s ongoing Energy Council in Luxemburg. 22nd July 2014 – Ed Davey MP work to consider whether the The UK and several member confirmed the Government was legislative environment allows states voted in favour of the Greek laying draft regulations before
24 Parliament to put in place a new Written Statement on the long-term fuel poverty target. outcome of the Strategic He also announced that DECC Environmental Assessment had published the results of (SEA) for further onshore the first Triennial Review of the licensing Fuel Poverty Advisory Group for England (FPAG). 28th July 2014 – Baroness Verma said the Coalition Government Written Ministerial Statement believes that shale gas has on the White Paper on geological the potential to provide the UK disposal with greater energy security, growth and jobs. Responses to 24th July 2014 – Ed Davey MP the Report, however, did not announced the publication of a generally support the Licensing White Paper on implementing Plan it outlined, indicating strong geological disposal of higher support for the exclusion from activity radioactive waste. He licensing of environmentally reiterated that the Government sensitive sites. She announced remains committed to geological that the Licensing Plan will disposal as the right policy for be adopted, but subject to the the long-term, safe and secure mitigation measures proposed in management of higher activity the Report. radioactive waste. Written and Oral Statements from the Department for Communities and Local Government Written Ministerial Statement on planning for unconventional oil and gas
28th July 2014 – Lord Ahmad of Wimbledon said the Government had amended regulations to streamline notification requirements and the calculation of fees, to speed up the determination of planning applications essential to the production of unconventional oil and gas. He said that other regulators, including DECC, the Environment Agency and the Health and Safety Executive will address sub-surface issues to protect against seismic disturbance or pollution of groundwater. Lord Ahmad also announced that the Government’s position on the recovery of appeals will be reviewed in July 2014.
Written Ministerial Statement on local planning and renewable energy developments
9th April 2014 – Eric Pickles MP announced that the temporary change to the appeals recovery criteria announced in October 2013 will be extended for a further 12 months, after the initial changes had reversed the trend which had seen more appeals being approved than dismissed. He added that every case should be considered on its individual merits in light of local circumstances and the material planning considerations.
25 PARLIAMENTARY RECORD Select Committees: Reports and enquiries 3rd April 2014 to 8th August 2014 House of Commons Business, Innovation and Skills Committee
Extractive Industries Sector 6th May 2014 – The Committee took evidence from Dr Patrick Foster, Senior Lecturer in Mining Engineering at the Camborne School of Mines, the University of Exeter, and Dean Thornewell and Paul Burton of Joy Mining Machinery.
5th June 2014 – The Committee took evidence from Jenny Willott MP, Parliamentary Under Secretary of State for Employment Relations and Consumer Affairs at BIS.
The Implications of Scottish Independence 8th August 2014 – The Committee published its report, which argued that a “Yes” vote could leave Scottish businesses uncertain of their position in Europe. The Committee also raised serious concerns that a ‘Yes’ vote may also leave Scotland facing a currency ‘limbo’ and in the short term, unable to join a sterling currency union and without the prospect of adopting the Euro.
Energy and Climate Change Committee
Inquiry into Carbon Capture and Reduction (EDR) policies. Key Inquiry into Low Carbon Storage questions included the role of Innovation the National Grid’s new Demand- 21st May 2014 – The Committee Side Balancing Reserve (DSBR), 4th August 2014 – The Committee published its report, urging and potential problems with the published its report, accusing Government to fast-track final proposed Capacity Mechanism the Government of “punching funding decision on two pilot CCS (CM) Transitional Arrangements below its weight” when it comes projects at Peterhead and Drax (TA). to support for UK businesses by early 2015, after years of delay developing innovative low in the “competition” launched to Inquiry into the Future of UK carbon technologies such as provide initial capital support for Deep Coal Mining smart meters, heat pumps and the industry. renewable energy technologies. 2nd July 2014 – The Committee Inquiry into Electricity Demand- took evidence from the Hatfield Inquiry into the IPCC 5th Side Measures Colliery, PGES members the Assessment Review Association of UK Coal Importers, 18th June 2014 – The Committee and the Confederation of UK 29th July 2014 – The Committee’s called for evidence to inform its Coal Producers. A later session report concluded that the scrutiny of the Government’s heard from the National Union of Intergovernmental Panel current Demand-Side Response Mineworkers and the TUC. on Climate Change’s (IPCC) (DSR) and Electricity Demand processes are robust, with the
26 IPCC having responded extremely 17th June 2014 – The Inquiry into Small Nuclear Power well to constructive criticism in Committee took evidence from the last few years. The Committee representatives of the Green Deal 19th June 2014 – The Committee concluded the IPCC had tightened Oversight and Registration Body, heard from representatives of its review processes, making its Ofgem and the Green Deal Finance the Thorium Energy Association, Fifth Assessment Report (AR5) Company. In a later session the the Dalton Nuclear Institute, the most exhaustive and heavily Committee heard the Rt Hon the Centre for Low Carbon scrutinised Assessment Report Gregory Barker MP, Minister Futures, Rolls Royce, the Energy to-date. of State for Energy and Climate Technologies Institute and the Change, as well as members of Nuclear Industry Association. Inquiry into the Green Deal: the Household Energy Efficiency Watching Brief team. 8th July 2014 – The second evidence session featured 25th April 2014 – The Inquiry into Network Costs witnesses from Generation Committee took evidence mPower LLC, NuScale Power from representatives of large 26th June 2014 – The first LLC, GE-Hitachi Nuclear Energy, energy companies: British Gas, evidence session looked at how the National Nuclear Laboratory ScottishPower and RWE npower. network costs are calculated, and the Nuclear Innovation and their impact on residential and Research Advisory Board. 1st May 2014 – The Committee business consumers, and losses focused specifically on public and leakages in transmission. Oral 22nd July 2014 – The session awareness and communication of evidence was taken from British looked at the more specific issues the Green Deal, taking evidence Gas, UK Power Networks, Citizens of regulatory assessment, internal from Calor Gas, Action with Advice Bureau and, in a later collaboration, the siting of small Communities in Rural England, session, First Utility, Haven Power reactors and reuse of spent fuels the Committee on Climate and RES. with representatives from the Change, Edge, and the University Office for Nuclear Regulation of Oxford. and Nuclear Decommissioning Authority. Environment, Food and Rural Affairs Committee Inquiry into Defra’s Responsibility for Fracking
14th July 2014 – The Committee announced it would hold a one-off oral evidence session, scheduled for 10th September 2014. Secretary of State Liz Truss MP will give evidence.
Environmental Audit Committee
Inquiry into an Environmental Scorecard
4th July 2014 – The first evidence session heard from conservation organisations the Aldersgate Group, the RSPB, the Wildlife Trusts, the WWF and the Wildfowl and Wetlands Trust.
16th July 2014 – The Committee heard from Dan Rogerson MP, Parliamentary Under-Secretary of State for water, forestry, rural affairs and resource management at Defra.
Inquiry into Climate Change Adaptation
9th July 2014 – The Committee announced the inquiry, which will examine the progress on preparations in England for adapting to the impact of climate change. Written submissions were still being accepted when Energy Focus went to print, with an initial oral evidence session not yet fixed.
Science and Technology Committee (Commons)
Inquiry into Climate: Public Understanding and its Policy Implications
23rd June 2014 – The Committee received the Government’s response to its report, “Communicating Climate Science”, which was published on 2nd April 2014. The Government said it believes that in order to clearly communicate about climate change it is necessary to talk about both climate change science and also the actions, at home and abroad, it is taking to address climate change.
27 Welsh Affairs Committee
Inquiry into Energy Generation in Wales: Shale Gas
16th June 2014 – The Committee published its report, which argued that the significant opportunity represented by shale gas in Wales should not be realised at the expense of Wales’ natural environment. The authors argued that both the UK and Welsh Governments must consider environmental risks, including the traffic and noise caused by commercial shale gas operations, as well as the visual impact and other environmental risks associated with fracking.
House of Lords Economic Affairs Committee Inquiry into the Economic Impact on UK Energy Policy of Shale Gas and Oil
8th May 2014 – The Committee published its report, recommending that the Prime Minister establish a new Committee or Sub-Committee of the Cabinet, chaired by the Chancellor, dedicated to ensuring that his commitment to “go all out for shale” is matched by action. Part of this action should include streamlining the “unwieldy regulatory structure”, to make it “effective as well as rigorous”.
9th July 2014 – The Government responded to the Committee’s report, reaffirming its commitment “to making the most of the opportunity presented by shale”, but acknowledging that “development and production will take time”. EU Sub-Committee of External Affairs Inquiry into EU relations with Russia
9th July 2014 – The Committee announced the Inquiry, against a backdrop of growing unrest in the Ukraine. Subjects to be covered included commercial relations between Russia and the EU, and how they sit alongside the EU’s political and strategic goals.
10th July 2014 – The Committee heard from Dr Lilia Shevtsova, Chair of the Russian Domestic Politics and Political Institutions Program at the Carnegie Moscow Center [sic.] (via video-link)
16th July 2014 – The second evidence session focused more strongly on the wider geopolitical context of strained EU- Russia relationships. Evidence was taken from representatives of the Centre for European Reform and the Eurasia Group.
24th July 2014 – The Committee heard from former British ambassador to Russia Sir Tony Brenton KCMG and Mr John Lough, Associate Fellow at Chatham House.
Science and Technology Committee
Inquiry into Resilience of Electricity Infrastructure
21st July 2014 – The Committee launched the Inquiry, which will investigate whether there will be enough electricity to meet demand as the UK reaches a critical pinch point over the two coming winters. The Committee will look at whether Government policies will be effective in “keeping the lights on” in the short term and through to 2030. Written evidence should be submitted by Friday 19th September 2014.
Inquiry into Waste Opportunities: Stimulating a Bioeconomy
18th June 2014 – The Committee welcomed the Government’s response to its report “Waste or resource? Stimulating a bioeconomy” (published March 2014). The Government embraced the report’s central recommendations of creating a long-term plan for a high-value bioeconomy, led by a Waste Champion charged with developing a comprehensive “brass from muck” bioecconomy.
28 PARLIAMENTARY ORAL QUESTIONS AND DEBATES House of Commons
Energy markets (competition) Air pollution/Energy security Energy investment Ann McKechin MP (Lab, Glasgow Mike Gapes MP (Lab, Co-op, Ilford Catherine McKinnell MP (Lab, North) South) Newcastle upon Tyne) 3rd April 2014, Col981 3rd April 2014, Col995 3rd April 2014, Col1011
Energy-intensive industries Onshore wind Energy-intensive industries Margot James MP (Con, Julie Elliott MP (Lab, Sunderland Paul Maynard MP (Con, Blackpool Stourbridge) Central) North and Cleveleys) 3rd April 2014, Col986 3rd April 2014, Col996 10th April 2014, Col408
Energy bills Energy security Energy Gavin Shuker (Lab, Co-op, Luton Mike Thornton MP (LD, Eastleigh) John Robertson MP (Lab, South) 3rd April 2014, Col996 Glasgow North West) 3rd April 2014, Col987 10th April 2014, Col412 Renewable Obligation Ofgem John Healey MP (Lab, Wentworth Fuel duty Graham Stringer MP (Lab, and Dearne) Jeremy Lefroy (Con, Stafford) Blackley and Broughton) 3rd April 2014, Col996 29th April 2014, Col679 3rd April 2014, Col990 Fuel poverty Cost of living Energy supply Andy Slaughter MP (Lab, Simon Wright MP (LD, Norwich Mel Stride MP (Con, Central Hammersmith) South) Devon) 3rd April 2014, Col997 29th April 2014, Col690 3rd April 2014, Col991 Green Deal Wind power Energy efficiency Mike Kane MP (Lab, Wythenshawe Mark Lazarowicz MP (Lab, Co-op, Siobhain McDonagh MP (Lab, and Sale East) Edinburgh North and Leith) Mitcham and Morden) 3rd April 2014, Col998 30th April 2014, Col823 3rd April 2014, Col993 Renewable electricity Nuclear power Renewables Duncan Hames MP (Lab, Mark Hendrick MP (Lab, Co-op, Graeme Morrice MP (Lab, Chippenham) Preston) Livingston) 3rd April 2014, Col999 30th April 2014, Col824 3rd April 2014, Col995 Coal industry Energy bills Energy prices Ian Lavery MP (Lab, Wansbeck) John Robertson MP (Lab, Mel Stride MP (Con, Central 3rd April 2014, Col1010 Glasgow North West) Devon) 7th May 2014, Col136 3rd April 2014, Col995 Coal Grahame M. Morris MP (Lab, Hinkley Point Easington) Ian Liddell-Grainger MP (Con, 3rd April 2014, Col1012 Bridgwater and West Somerset) 8th May 2014, Col289
29 Cost of living: energy and Shale gas Energy (Independence) housing Priti Patel MP (Con, Witham) David Mowat MP (Con, Warrington Ed Davey MP (LD, Kingston and 19th June 2014, Col1249 South) Surbiton) 2nd July 2014, Col879 5th June 2014, Col134 Energy markets (competition) Anne McGuire MP (Lab, Stirling) Rural paper industry Solar farms 19th June 2014, Col1250 Iain McKenzie MP (Lab, Julian Sturdy MP (Con, York Inverclyde) Outer) Solar PV 2nd July 2014, Col259WH 12th June 2014, Col678 Kelvin Hopkins MP (Lab, Luton North) Wylfa Nuclear Power Station Energy prices 19th June 2014, Col1254 David Mowat MP (Con, Warrington Caroline Flint MP (Lab, Don South) Valley) Renewable heating systems 9th July 2014, Col276 18th June 2014, Col1185 Oliver Colvile MP (Con, Plymouth, Sutton and Devonport) Navitus Bay Wind Farm Energy efficiency 19th June 2014, Col1256 Conor Burns MP (Con, Graham Jones MP (Lab, Bournemouth West) Hyndburn) Energy security 9th July 2014, Col405 19th June 2014, Col1247 Andrew Gwynne MP (Lab, Denton and Reddish) Oil and Gas Industry Carbon and renewables targets 19th June 2014, Col1257 Sir Robert Smith MP (LD, West David Mowat MP (Con, Warrington Aberdeenshire and Kincardine) South) Biomass 16th July 2014, Col858 19th June 2014, Col1245 Nigel Adams MP (Con, Selby and Ainsty) Fracking Low-carbon electricity projects 19th June 2014, Col1258 Stephen O’Brien MP (Con, Dr Julian Huppert MP (LD, Eddisbury) Cambridge) Energy-intensive industries 16th July 2014, Col859 19th June 2014, Col1248 David Mowat MP (Con, Warrington South) 26th June 2014, Col455
House of Lords
Climate change Climate change Electricity Capacity Regulations Lord Harris of Pentregarth Lord Dykes 2014 3rd April 2014, Col1034 13th May 2014, Col1756 Baroness Verma 24th July 2014, Col GC509 Climate change: Extreme Climate change weather Lord Judd Renewables Obligation Closure Lord Judd 17th June 2014, Col719 Order 2014 9th April 2014, Col1298 Baroness Verma Green Deal (Qualifying Energy 24th July 2014, GC539 Russian gas Improvements) (Amendment) Lord Higgins Order 2014 Energy Companies Obligation 8th May 2014, Col1576 Baroness Verma Lord Bourne of Aberystwyth 16th July 2014, ColGC249 30th July 2014, Col WA315 Renewable Heat Incentive Scheme (Amendment) Fuel poverty Energy: Conservation Regulations 2014 Lord Ezra Lord Bourne of Aberystwyth Baroness Verma 17th July 2014, Col693 30th July 2014, Col WA316 12th May 2014, ColGC428 Energy Companies Obligation Lord Bourne of Aberystwyth 11th August 2014, HL1251
30 LEGISLATION 3rd April 2014 to 8th August 2014 Private Members’ Bills
Department of Energy and Energy (Buildings and Reduction Climate Change (Abolition) Bill of Fuel Use) Bill 2014-15 2014-15 Dr Alan Whitehead MP Robert Halfon MP (Lab, Southampton Test) (Con, Harlow) Commons Commons First reading First reading 21st July 2014 7th July 2014 Second reading Second reading 12th September 2014 6th March 2015 Houses in Multiple Occupation Control of Offshore Wind (Energy Performance Certificates Turbines Bill 2014-15 and Minimum Energy Efficiency Christopher Chope MP Standards) Bill 2014-15 (Con, Christchurch) Dr Alan Whitehead MP (Lab, Southampton Test) Commons Commons First reading 2nd July 2014 First reading 21st July 2014 Second reading 16th January 2015 Second reading 12th September 2014
A look ahead With summer rapidly drawing to a close and the warm weather almost a distant memory, what does autumn hold?
Well first, in September the Party machines start creaking into gear for the conference season, and energy fringe events appear to be still firmly on the agenda. There is sure to be plenty of discussion around the looming Statutory Instruments attached to the Energy Bill still to be implemented, as well as whether the Contracts for Difference auctions in October will prove fruitful for the established technologies energy market.
And of course there will be the ongoing investigation into the ‘Big Six’ by the Competition and Markets Authority (CMA) - including any response to the challenge submissions over the CMAs approach. It’s a fight which is unlikely to end there.
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Fluor NuScale Final 210x297 3mm Bleed UK.indd 1 6/27/13 1:45 PM