Latest news with #ContractsforDifference
The Herald Scotland
5 days ago
- Business
- The Herald Scotland
Energy bills swollen by Scottish windfarm switch off costs
However, critics focused on the revelation that the Westminster administration planned to use £2.5bn allocated to the fledgling Great British Energy operation to fund work on a new generation of small modular nuclear reactors. SNP supporters slammed the move which they claimed would leave a big hole in the £8.3bn budget that GB Energy had promised would be used to support the development of technologies such as floating offshore wind and tidal energy. Keir Starmer decided to put the official headquarters of GB Energy in Aberdeen to mollify critics of his cabinet's decision to curb oil and gas activity. But the SNP Government has opposed North Sea field developments that could create thousands of jobs. It has pinned its hopes on the expansion of wind power, which acting climate change minister Alasdair Allan claimed recently could create thousands of high-quality jobs in support of a just transition from dependence on oil and gas. The number of renewables jobs created in Scotland, however, has fallen below expectations for years. READ MORE: Just transition furore reignited as SNP Government flounders Mr Allan put the onus on the UK Government to help accelerate windfarm development in Scotland by improving the support provided for developers under the flagship Contracts for Difference programme. Energy secretary Ed Miliband has held out the prospect that the budget for the forthcoming CfD allocation round will be much bigger than the £1.6bn set for the last one. The costs will be added to the bills of householders regardless of their income. But figures from the body that regulates the national energy system show bill payers have reason to be concerned about the wisdom of accelerating a programme that imposes costs on them that many can't afford. The National Energy System Operator revealed that the size of the bill it has to pay to deal with supply issues stemming from the fact that output from renewables such as windfarms is intermittent soared to £2.7bn in the latest year from £2.5bn in the preceding period. The balancing payments include amounts that NESO pays to compensate windfarm operators that are asked to constrain generation when there is insufficient demand. They also include payments made to operators of gas fired power stations to increase output when there is not enough wind power to meet energy requirements. READ MORE: Israeli-owned firm takes control of UK's biggest gas field NESO said the increase was driven by a rise in constraint costs and made clear that this was largely due to the fact that so much windfarm capacity has been added in Scotland although demand is much higher south of the border. 'Whilst payments to generators are distributed throughout the country the cause of cost is concentrated in Scotland,' it said. The organisation underlined the absurdity of the situation we find ourselves in after rushing to develop windfarms without ensuring the required infrastructure was in place to transport the power produced to where it is needed or to store it. The Seagreen windfarm off the Angus coast became fully operational in 2023 (Image: SSE) Noting that wind curtailment is currently a major driver of balancing costs, NESO said: 'This is because a large proportion of wind capacity in GB is connected in Scotland, which at present is a constrained region of the network. 'This means that when wind generation is high we must take actions to turn down wind output and turn on replacement energy in unconstrained regions to keep the system balanced.' The NESO report emphasises that the costs resulting from this situation fall on householders. In 2024/25 balancing charges added around £3 a month to a typical domestic electricity bill. That may not sound much but household bills are also inflated by other charges such as those related to CfDs and the Climate Change Levy. NESO's analysis indicates that developing more windfarms will make things worse for the time being. It warned: 'Balancing costs are expected to rise in the short term, reaching a peak of ~£8bn in 2030.' Part of the solution will involve a massive expansion of electricity transportation networks in the face of potential opposition from locals in areas affected and of storage facilities. However, energy giants such as SSE and Drax have made clear they will only make the hefty investment required to develop hydro storage facilities if the UK Government provides enough support for revenues to ensure they can generate strong returns. READ MORE: Scottish hydropower hopes fade amid threats to bumper projects This all means that power generation assets that can ensure the country can keep the lights on irrespective of weather conditions will be required for years. The case for SSE to be allowed to develop a new gas fired power station at Peterhead has been strengthened after the UK Government agreed to provide £200m initial development funding for the Acorn carbon capture scheme. This will take emissions from the plant for storage in depleted reservoirs in the North Sea. Friends of the Earth Scotland insists the Peterhead plant would be a climate disaster and has berated the Scottish Government for failing to properly interrogate SSE's assurances about related emissions. The organisation is bitterly opposed to plans for the Scottish carbon capture cluster which it reckons could be used to excuse continued production of oil and gas. The SNP Government, however, has spent years pressing UK ministers to fund the Scottish cluster, which could cost around £12bn to develop in full. Scottish Gas owner Centrica recently underlined the scale of expected demand for gas by agreeing a £20 billion deal to secure supplies from Norway until 2035. That deal may have been timely as oil and gas prices have soared in the wake of Israel launching attacks on Iran last week. READ MORE: SNP Government oil hypocrisy shocking amid Scottish jobs cull Against that backdrop it makes sense for the UK to maximise production of its own oil and gas. The case for investing in nuclear plants that can provide baseload power is also reinforced by concerns about the UK's dependence on imports of oil and gas. Nuclear plants take years to develop but could remain operational for decades. Add in the fact that work on a plant could create thousands of construction jobs and many more in the supply chain and it is little wonder the SNP Government is under pressure from trades unions to abandon its opposition to the development of nuclear power stations in Scotland.
The Star
05-06-2025
- Business
- The Star
Romania approves 246-MW wind farm
BUCHAREST, June 5 (Xinhua) -- Romania's National Energy Regulatory Authority (ANRE) has approved the development of one of the country's largest wind farms, the Ialomita Nord project, with a total capacity exceeding 246 megawatts. The announcement was made Thursday by Energy Minister Sebastian Burduja. The project is being developed by Portuguese energy company Greenvolt through its local subsidiary and will benefit from Romania's Contracts for Difference (CfD) scheme, which guarantees a fixed electricity sale price for 15 years. "This guarantees financing and brings jobs, local tax revenue, and clean, affordable energy produced in Romania," Burduja said in a Facebook post, adding that the initiative could drive economic growth in the Ialomita region. Romania currently has about 3,100 MW of installed wind capacity. Launched in 2024, the CfD scheme supports a wide range of low-carbon technologies, including onshore and offshore wind, solar PV, hydro, nuclear, hydrogen, and energy storage.
The Herald Scotland
19-05-2025
- Business
- The Herald Scotland
Glasgow has shown a sad lack of ambition with George Square proposals
The cost at £2.5 million was apparently deemed to be too high. Many millions of pounds have been spent on the hard landscaping required for the Avenues project which rumbles on and doesn't seem to have caught the imagination of the populace. I would argue that a fountain or a "wall of water" is fundamental to the success of the enterprise and a real justification for the redesign of this prime civic space. Once again the planners have shown a real lack of ambition for the city by denying it a feature that would provide a vibrant, visual asset long after Glasgow's 850th anniversary celebrations have been forgotten. David G Will, Milngavie. Zonal pricing is common sense ScottishPower and SSE's outcry against zonal pricing ("Kate Forbes slams 'damaging' North Sea profits tax", heraldscotland, May 14) and demands for 'simplicity' in the CfD scheme reek of self-interest disguised as public concern. Keith Anderson of ScottishPower's claims of a £30 billion investment threat, alongside Alistair Phillips-Davies' recent alarm over ScotWind projects, are classic scare tactics. Let's be clear: they're defending a pricing system that props up their profits while offloading costs onto struggling households and businesses. Equally disingenuous were Kate Forbes's new-found concerns about the 'damaging' impact of the UK's windfall tax. Zonal pricing is simple common sense: where energy is abundant, bills should be cheaper. Norway has proven it works – investment thrives, and consumer costs drop. Yet ScottishPower and SSE cling to a rigged system that inflates prices nationwide, shielding their margins from genuine competition. Mr Anderson's plea to avoid 'tampering' with a 'working' system is absurd. Working for whom? Certainly not the 6.5 million UK households in fuel poverty or the businesses fighting to stay afloat. Their warnings of higher costs are baseless fearmongering. Zonal pricing would cut bills where renewables flourish, reflecting real supply and demand. More importantly, a balanced energy policy – one that includes renewables alongside North Sea oil and gas, as well as coal – would reduce dependency on costly imports and stabilise prices. This is the only path to genuine energy security and affordability, not endless Contracts for Difference handouts to intermittent energy sources. If Ed Miliband backs zonal pricing, it would be his first sensible decision amid his bonkers Net Zero policies – policies that stifle North Sea oil and gas while increasing reliance on foreign imports, forcing the public and businesses to pay a premium compared to similarly placed countries. Enough is enough. Ian Lakin, Aberdeen. Read more letters These TV ads are disgusting Adverts at regular intervals are the price we pay for commercial TV. Those commercial breaks allow us to skip off into the kitchen to make the occasional cuppa. There have been times when the adverts on show have had an entertainment value with their subtlety, humour and clever use of language. Recently however our screens have been flooded with a spate of adverts which bring with them the cringe factor thanks to the coarseness and crudity in which they are couched. In particular I would like to point out those adverts which deal with female incontinence deodorants and indigestion remedies. Not one of them is characterised by subtlety, light humour or clever wordplay. Rather they are explicit in the extreme, leaving nothing to the imagination with their brash, bold and bald language. Is there anyone else who shrinks with disgust when those adverts occupy the screen to induce the cringe factor in the viewers, a reaction I imagine may well be more widespread rather than restricted to my prurient personality? There have been memorable adverts which have lived on in the national memory thanks to the smart work of those trying to capture the attention of the viewing audience for the products on display. Have those days now receded into the past and are we to be left exposed to more of the current crop of adverts which leave the TV audience cold? Do those productions exemplify the collapse of standards in public life, which is increasingly evident in all facets of our nation? Denis Bruce, Bishopbriggs. An offer easy to resist A wee word of warning to fellow readers considering disposing of "unwanted items cluttering your home". An advert I saw stated "Free uplift and a fair offer". Sounds good, however, on the "fair offer" issue, a variance of opinion may arise. In my case, I submitted medals (six), Scottish bank notes (two), watches (10) and cigarette card sets (two). In my own estimation of the value of total goods was between £400/£500. I received a call one week later. In a very civil manner the rep remarked on the good condition of many of the items (for example, the medals being worth £50-plus). Finally, when pressed he made an offer of £75 (all inclusive). A derisory offer to end a promising exchange. Hopefully my great expectations consignment will be returned to me intact ASAP. Allan C Steele, Giffnock. Keith Anderson of ScottishPower (Image: PA) Banking? What's that? May I add a necessary addendum to Ian McConnell's rose-tinted writing of his younger journalist years following the Royal Bank of Scotland ('The tumultuous tale of a great Scottish hope', The Herald, May 16)? When the Royal Bank of Scotland imploded (and it self-imploded) not a single member of its board was a professionally qualified banker, not even its managing director – who had been appointed by his predecessor in his own image. Enough said. Graeme Smith, Newton Mearns.
Daily Mirror
15-05-2025
- Business
- Daily Mirror
British Gas boss in shock admission over electricity prices
Chris O'Shea, chief executive of owner Centrica, has spoken honestly of what he sees as the real benefit of moving to net zero energy such as wind and solar British Gas boss Chris O'Shea has delivered a stark message about the pursuit of a net zero power grid - warning it isn't the golden ticket to slashing electricity bills. Chris O'Shea, chief executive at Centrica - British Gas's parent firm - said: "The shift to renewable power will NOT materially reduce UK electricity prices from current levels." Taking to LinkedIn to express his thoughts, O'Shea stressed that the move towards net zero energy sources like wind and solar is more about delivering price stability and safeguarding against future price shocks than cutting household energy bills. "They may give price stability and avoid future price spikes based on the international gas market, but they will definitely not reduce the price," he noted in his post. This assertion puts him out of step with other energy leaders such as Octopus head Greg Jackson and Dale Vince of Ecotricity, not to mention Energy Secretary Ed Miliband. His remarks are at odds with claims made by the Government that shifting to greener energy would be a win for lowering family expenses. His comments come despite British Gas rolling out deals with cheap or even free electricity for certain customers during periods of excess wind and solar generation. In his warning, O'Shea explained that although the cheapest green technologies can compete with gas on price, others, like floating wind and tidal power, could set consumers back by up to three times as much. He said: "We need to stop having a polarised debate populated with unsubstantiated, but convenient, sound bites. I fully support the move to a cleaner energy system. I am simply very frustrated that people peddle misinformation at best, and disinformation at worst." These statements clash with Labour's election campaign promises from last year. At that time, Ed Miliband committed to reducing household bills by £300 annually by 2030 through a transition to clean energy. The Labour manifesto said: "Families and businesses will have lower bills for good, from a zero-carbon electricity system." After assuming office, Mr Miliband reiterated this commitment, announcing: "The only way to guarantee our energy security and cut bills permanently is to speed up the transition away from fossil fuels and towards home-grown clean energy." However, Mr O'Shea disputes that viewpoint. He cited the Government's Contracts for Difference (CfD) scheme as an example, which assures renewable energy producers a set, index-linked price for every megawatt hour they generate. When market prices dip under this agreed "strike price" the difference is passed onto consumer bills. Mr O'Shea said: "Wholesale electricity prices in the UK may well be set by international gas prices." He added: "But the wholesale price does NOT set the price that the majority of consumers pay in the UK. That's because of the Contract for Difference that renewable energy producers get. Essentially, no matter the wholesale price, renewable producers with a CfD get the 'CfD strike price'." Contracts under the CfD system generally last for 15 years, which means consumers are committed to those prices for an extended period. Highlighting the cost disparities, he mentioned that the average wholesale price of electricity last year was recorded at £82.11 per megawatt hour, while recent offshore wind projects achieved strike prices up to £82.16, and solar and onshore wind rates were around £70 – not enough to significantly lower bills. When it comes to pioneering green technologies, the costs soar: floating wind technology is priced at £195 and tidal stream generation at a staggering £240. Centrica is a major figure in the energy market, supplying approximately 7.5 million households and 400,000 businesses through its British Gas wing, and invests in a wide range of energy solutions from nuclear to gas and renewable projects like batteries and solar. The company boasts a workforce of 21,000 employees. Mr O'Shea's stance has been backed by figures on the political right. Reform UK's Energy Spokesperson Richard Tice said: "Another energy expert admits the British people have been deeply misled. More renewables will not bring the electricity price down." He added: "We have sacrificed jobs, industries and wealth on a lie. Net zero is the most stupid policy ever imposed on our nation." Conservative MP Andrew Bowie, the shadow energy minister, lashed out at Labour's eco commitments, alleging: "Ed Miliband's mad dash to net zero by 2050 has been built on ideological dogma, with a total disregard for the consequences inflicted upon the British public." Yet the Department for Energy Security and Net Zero stood by their strategy. A spokesman said: "We are making the UK a clean energy superpower to get off the rollercoaster of fossil fuel markets controlled by dictators and replace that with clean homegrown power we control." He continued: "That is how we can protect family finances and our national finances. As evidenced by the National Energy System Operator's independent report, clean power by 2030 is not just doable but would lead to a more secure energy system, potentially reducing electricity costs and lowering bills." Despite the International Energy Agency's data indicating UK's electric charges are among the highest in the developed world – 50 per cent above Germany's and quadruple the US prices – British Gas recently rolled out perks like complimentary electricity on select days bolstered with surplus renewable energy, aimed at managing grid demand while nudging consumers towards greener practices.
Yahoo
13-05-2025
- Business
- Yahoo
Net zero will not bring electricity prices down, says British Gas boss
Britain's shift to a net zero power grid will not bring down electricity prices down for families, the boss of British Gas has said. Chris O'Shea, the chief executive of British Gas's parent company Centrica, wrote on LinkedIn that the shift to renewable power 'will NOT materially reduce UK electricity prices from current levels'. He added: 'They may give price stability, and avoid future price spikes based on the international gas market, but they will definitely not reduce the price.' Mr O'Shea based his conclusion on an analysis comparing the cost of renewable energy with gas, showing that the cheapest renewables cost roughly the same as gas and the most exotic are up to three times as expensive. It suggests that the move to an energy system based around wind farms, solar parks or emerging technologies like tidal power will not lead to lower bills. The verdict from the boss of one of Britain's biggest energy providers represents a damning rebuttal of Labour's pledges to consumers. During last year's election campaign Ed Miliband, now Energy Secretary, promised that the shift to clean energy would save households £300 per year by 2030. Mr O'Shea said: 'We need to stop having a polarised debate populated with unsubstantiated, but convenient, sound bites. 'I fully support the move to a cleaner energy system. I am simply very frustrated that people peddle misinformation at best, and disinformation at worst.' The British Gas boss made no mention of any particular politicians or parties but his judgment contradicts claims made in last year's Labour Party manifesto, which said: 'Families and businesses will have lower bills for good, from a zero-carbon electricity system.' Mr Miliband said soon after his appointment as Energy Secretary: 'The only way to guarantee our energy security and cut bills permanently is to speed up the transition away from fossil fuels and towards home-grown clean energy.' Mr O'Shea's analysis centres on the role of Contracts for Difference (CfD), the system under which the Government guarantees renewable energy developers an inflation-linked minimum price for each megawatt hour of electricity their schemes produce. That minimum price is underwritten by consumers, meaning that if wholesale prices fall below the strike price the difference is added to bills. As a result, household bills are unlikely to fall even if the market price for raw electricity becomes cheaper. Mr O'Shea said: 'There's a bit of confusion on whether renewables will bring down energy prices from where they are today. People talk about the UK electricity price being set by international gas prices and therefore point to renewables giving us price reductions. 'However, the truth is a bit more nuanced. Wholesale electricity prices in the UK may well be set by international gas prices, but the wholesale price does NOT set the price that the majority of consumers pay in the UK. 'Why is that? It's because of the Contract for Difference that renewable energy producers get. Essentially, no matter the wholesale price, renewable producers with a CfD get the 'CfD strike price'.' In the UK the minimum prices set by CfD are guaranteed for a set period of time with 15 years being the most common length of contract for renewables projects. Mr O'Shea compared the wholesale energy price set by gas, which averaged £82.11 over the last year, with the 2024 CfD prices for renewables, pointing out that the prices are too similar to allow for any significant reductions. Fixed offshore wind got up to £82.16 per megawatt hour in last year's CfD round, while solar generation and onshore wind generators saw prices hovering around £70. That's slightly lower than gas but not enough to make any significant difference to consumer prices. Emerging technologies like floating offshore wind, with a strike price of £195, and tidal stream, £240, are set to prove far more expensive. Mr O'Shea words carry weight as Centrica serves 7.5m residential customers under the British Gas brand and 400,000 businesses. The company employs 21,000 people and is a leading investor in projects ranging from offshore gas production, nuclear energy and low carbon projects such as battery storage and solar farms. Richard Tice, Reform UK's energy spokesman, said: 'Another energy expert admits the British people have been deeply misled. More renewables will not bring the electricity price down. 'We have sacrificed jobs, industries and wealth on a lie. Net zero is the most stupid policy ever imposed on our nation.' The UK has some of the world's highest energy prices, especially for business and industry. Data from 2024, collated by the International Energy Agency showed that UK prices were among the highest of its 31 members. UK electricity was about 50pc more expensive than in Germany and four times as expensive as in the US. Mr Miliband's Department for Energy Security and Net Zero was approached for a response. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
