New £400m gas-fired station approved
August 27, 2007 at 4:07 pm
Severn Power has been given permission by the Department for Business, Enterprise and Regulatory Reform to build a 800MW gas-fired power station near Newport in Gwent.
Carron Energy, owner of Severn Power, already owns the site on the banks of the River Usk, adjacent to the existing Uxmouth Power Plant. The land previously contained a power station bought by Carron after it went into receivership in 2004. Work is already under way to clear the site and began building the new facility. It is believed that Siemens will be the preferred bidder for the contract to build and maintain the plant.
The plant will cost around £400m to build, and create 650 skilled jobs during the 30-month period it will take to complete the project. Longer term, around 150 jobs will be created for the area, with only 60 involved in the day-to-day running of the plant. Severn Power would like to start production at commercial levels in 2010.
Speaking on the subject, Alex Lambie, chief executive of Carron Energy, commented: “We are simply thrilled to get the go-ahead for this important project that will create more than 650 skilled jobs, and provide vital electricity generation for South Wales. The scheme would boost the economy of South Wales and contribute to the Welsh Assembly’s aim of energy self-sufficiency for Wales.”
The area around Newport has struggled economically as it does not have the energy provisions required to bring businesses into the area. The Welsh Assembly has identified this as one of the main obstacles to the economic growth of the area, and has a stated objective of making Wales energy self-sufficient.
Welsh MPs were similarly happy to see the project approved. Newport East MP Jessica Morden said, “Severn Power is going from strength to strength – this announcement of jobs and investment is great news for the whole of Wales but particularly important for Newport East.”
However, this development won’t contribute to the government target of reducing the UK’s CO2 emissions 60% by 2050, and sourcing 10 % of electricity from renewable power sources by 2010. Energy companies still favour gas-powered plants, as they are the cheapest to bring online and maintain. According to the Association of Electricity Producers, there is 21,000 MW of capacity awaiting approval or being built, with 14,000 MW (66%) of this being gas-fired.
By comparison, electricity from renewable sources requires a greater outlay of capital at the beginning of the project. The London Array, which will be the largest wind farm in the UK, is costing Eon and Shell around £1bn to bring online, with only a marginally greater capacity than the £400m gas-fired facility at Uxmouth. The security and disposal issues associated make nuclear power a similarly costly and lengthy option. A nuclear station approved today would take at least 10 years to become commercially productive.
However, the UK became a net importer of gas in 2004, and as it becomes increasingly reliant on overseas powers to satisfy its gas consumption, the geopolitical risk present in this process could drive prices up. Not until it is equally cost-effective for UK energy companies to invest in renewable sources will carbon emissions from power supply really start to decline.
Is British Gas' 'Greenest Ever Tariff' worth it?
August 9, 2007 at 2:53 am
In recent years, British Gas has taken a number of steps to make its services more environmentally friendly. Early this month, the company launched two programs designed to tackle the problem of excessive carbon emissions. However, critics have argued that the recent proposals are no more than a marketing gimmick on the part of a huge organization wishing to jump on the ‘green’ bandwagon. Nevertheless, officials at British Gas have discounted these claims. Commenting to the Energy Business Review, a representative for the energy giant stated: “Green tariffs are moving from niche to mainstream products and we’re leading the industry by offering a tariff that will do more for the environment than any other product currently available.”
Two tariff schemes are to be introduced. The first, the Zero Carbon tariff, has been dubbed the “the greenest tariff available on the UK domestic market.” Households who switch to this option will be able to completely eliminate their carbon emissions. This is to be achieved through the use of techniques and equipment that are in keeping with DEFRA recommendations. Zero Carbon subscribers will also be able to make contributions to renewable energy programs. Contributions will initially be directed to a special fund run by British Gas. The corporation will then direct the funds to sustainable development projects across Britain. The Future Energy scheme similarly allows households to make contributions to renewable energy projects. Under the scheme, British Gas is to use a portion of the program’s proceeds to construct solar panels in British schools.
However, the Zero Carbon option from British Gas comes at a substantial cost. Subscribers can expect to pay an extra £84 each year for the opportunity to reduce their carbon emissions. Conversely, the Future Energy scheme is a more affordable option – customers need only pay an extra £20 per annum.
Are these green schemes likely to prove popular with consumers? A number of analysts have argued otherwise. Whilst most people are willing to do what it takes to protect the environment, many will find the cost of such schemes difficult to swallow. Indeed, commentators at the price comparison website, moneysupermarket.com, have suggested that consumers might be better off simply contributing to an environmental charity of their choice rather than subscribing to some green initiative run by British Gas.
Are these criticisms justified? To some extent, they are. British Gas is one of the largest corporations in the United Kingdom, and like any other corporation, it exists to make a profit. Eco-friendly schemes might result in positive externalities, but they are ultimately intended to boost revenue for the corporation. If you can afford it, then there is no reason why you shouldn’t subscribe to one of these schemes. However, remember that there are many steps that you can take to reduce your carbon footprint as an individual, such as walking rather than driving, and switching off electrical appliances when they are not in use. This is likely to be a far more economical means of reducing your carbon emissions in the long-run. As such, despite the stated intentions of British Gas, a lot more is needed before Britain as a whole goes green.
National Grid reveals market uncertainties
August 7, 2007 at 4:49 am
This year’s National Grid annual industry seminar, “TBE 2007: Living with Imports”, has identified key factors influencing the future of UK gas pricing. The seminar was part of an industry-wide consultation known as Transporting Britain’s Energy (TBE), which aims to identify market uncertainties surrounding gas supply and demand in the UK, and work out network capacity and industry trends for the next decades of the 21st century.
The consultation involves a wide range of stakeholders, including shippers, producers, consumers, terminal operators, storage operators, gas importers and transport specialists. The view of this diverse group is that security of supply and the price of oil will be the two most significant factors affecting gas prices in the medium term. In the long term, European liberalisation – deregulation and restructuring of national gas markets to enable a single, competitive European gas market to emerge – is identified as a significant factor. Unlike the UK, Continental European gas markets are not competitive, with gas prices locked in to the cost of oil. This impacts on the UK because of our reliance on European suppliers. Deregulation would aid competition and give gas companies more independence when it comes to pricing.
Opinions about the percentage of gas to be supplied by continental pipelines vary wildly. One respondent to the stakeholder questionnaire, which forms part of the consultation, estimated that Liquid Natural Gas would pipe in 19% of the UK’s gas supply by 2015. Another put the figure at 50%. These discrepancies indicate the level of uncertainty which surrounds supply, and therefore pricing.
How has the price of gas been affected by the market in recent years? Since 2001, the price of gas has increased by an incredible 67% in real terms – a direct effect of rocketing oil prices, which have gone up by 108% over the same period. Speaking in November 2006, the former Transport Secretary Alistair Darling said: “We know from our Energy Review that by 2020 we could be importing as much as 80 – 90% of our gas. We need to be ready for this and ensure we have the right facilities to help us import and store the gas we need.” Several large pipeline projects are currently nearing completion in the UK, which should improve security and continuity of supply.
British Gas launch 'greenest ever' tariff
August 7, 2007 at 4:33 am
In July 2007, British Gas launched what they claim is the “greenest energy supplier’s tariff on the UK market”. Users of the new Zero Carbon tariff won’t leave any carbon footprint and 20% of the energy produced will come from renewable sources. For every kilowatt-hour (kwh) of electricity provided to people’s homes, a kwh of electricity will be produced from green renewable sources and put back into the national grid. Customers willing to pay the extra £7 a month, or roughly £84 a year in total, for the service will also see their money go towards helping schools reduce their CO2 emissions as well as constantly building new renewable energy sources in the UK such as wind farms.
The Renewables Obligation, which was introduced by the government in 2002, requires power providers such as British Gas to produce a certain percentage of their power from renewable sources, such as wind, into which they are investing £750 million. That percentage is currently 7.9% but, according to British Gas, the Zero Carbon tariff and the slightly cheaper version known as Future Energy will reach levels nearer 12%, therefore leading the way in the UK market.
The managing director of British Gas New Energy, Gerald Laine said “Our new tariff responds to consumer demand for truly green energy solutions. It is essential that customers have confidence in green tariffs and that their credibility is not damaged by tariffs that claim to be green but in reality do not deliver any incremental environmental benefits.”
The other new green tariff launched at the same time is called Future Energy and is considered the cheaper option at only £20 extra per year. For this package customers still help the building of solar panels and other green energy sources for schools around the UK, as well as more general renewable sources for the whole of the country.
These new schemes are all part of a public campaign entitled We’re in This Together, which was launched in April 2007 by Tony Blair but was the brainchild of The Climate Group, a leading NGO. It pools together some of the UK’s biggest and well known household names such as Barclaycard, B&Q, HSBC, O2, Sky, Tesco, Marks and Spencer, British Gas and others, as well as receiving support from The Church of England and DEFRA. The campaign aims to help all the respective customers of the companies involved to find new ideas, services and products to help reduce their daily CO2 emissions in an affordable and easy way. With the aforementioned moves then, British Gas seems to be leading the way in terms of home energy.
Other energy providers such as Powergen offer a tariff called Go Green. For an extra £18 per year, Go Green promises to also offset 100% of the carbon produced. They also supply their customers with a carbon calculator and discounts on such products as low energy light bulbs, low energy kettles and Tesco Green Clubcard Points. Other companies also offsetting carbon for their customers (at a charge) are EBICO, EDF and Scottish and Southern Energy but this is well short of British Gas’ “greenest tariff”.
