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Scottish Government Approves Stornoway Wind Farm

10 Sept 2012 

The Scottish Government has officially approved and granted planning consent for the Stornoway Wind Farm project. The 36-turbine wind farm capable of generating almost 130 megawatts electricity, enough to power 60,000 homes will be located less than a mile west of Stornoway, on the Isle of Lewis.

The project is being developed and run by Lewis Wind Power. This is a joint venture between AMEC and EDF Energy and they are working in partnership with the Stornoway Trust, the community owned trust, which owns the site that has been chosen for the Stornoway Wind Farm.

Fergus Ewing, Scottish Energy Minister responsible for the approval of the site said:
“I’m delighted to consent the Stornoway wind farm, which will represent a significant boost to the economy of the Western Isles and create jobs during construction and in the longer term. Once it is up and running the wind farm will save thousands of tonnes of carbon dioxide each year, and will produce enough electricity to power more than 60,000 homes.

I am confident that the wind farm will provide great benefits to its local community and play an important part in helping Scotland reach its target of the equivalent of 100 per cent of electricity demand generated from renewables.

I am particularly pleased that the developer was able to work with SNH and RSPB to develop proposals which allowed this wind farm to go ahead whilst minimising effects on Lewis’ important natural heritage. In consenting this application I have put in place a series of conditions to protect the outstanding natural habitats and landscapes and local communities.”

The original application had 42 turbines, faced obstacles when the RSPB and Scottish Natural Heritage raised concerns about the potential impact on the Lewis Peatlands Special Protection Area. The developer worked with these groups to find a solution and Mr Ewing withheld consent for the 6 turbines which would impact most on the area.

Ron Peddie, Project Director for Lewis Wind Power said:
“We are absolutely delighted by the Scottish Government’s decision to grant approval to the Stornoway Wind Farm. From the very beginning we have sought to develop a wind farm based on the wishes of the local community. The development team is particularly pleased by the support shown by the public throughout the consultation process and we are confident that they will be pleased when the final wind farm is constructed.”

Chancellor Unveils New Tax Breaks for Oil & Gas Industry

7 Sept 2012

Chancellor of the Exchequer, George Osborne has announced today that the Government will be offering new tax breaks aimed at supporting billions of pounds of new investment in the North Sea for older oil and gas fields; whilst increasing tax revenues from the industry.

The announcement comes after the Government has been faced with criticism for increasing the supplementary charge on North Sea producers from 20% to 32% last year. This will now be a key step in attempting revive an industry that plays a key part the UK’s economy.

The Chancellor said: “Today’s tax allowance is more good news for the North Sea, good news for jobs and good news for the broader economy. It will give companies the incentive to get the most out of older fields, creating jobs and delivering more revenue for taxpayers.”

“This Government has signalled its absolute determination to get more investment in the North Sea, a huge national asset. Just last week, I saw the benefits at a supply chain factory creating many hundreds of jobs in the North East thanks to Government support for North Sea gas which made a major project possible.”

The Brown Field Allowance will shield up to £250m of income in qualifying brown field projects, or £500m for projects in fields paying Petroleum Revenue Tax, from the 32% Supplementary Charge rate. The level of relief available to an individual project will depend on its size and unit costs.

John Hayes appointed as UK’s New Energy Minister

5 Sept 2012

Following yesterday’s Government Cabinet reshuffle, it was announced that Energy Minister, Charles Hendry is to be replaced by Conservative MP John Hayes and will now return to the back benches.

Hayes, MP for South Holland and the Deepings was formerly Shadow Minister for Housing and Planning as well as Transport. In more recent times he was the Minister for Lifelong Learning, Further and Higher Education after the 2010 elections.

David Smith, Chief Executive of Energy Networks Association commented, “Charles has made an outstanding contribution to UK energy policy not just in government but in opposition before that. His vast knowledge and experience has delivered a balanced and incredibly valuable approach. He leaves very big shoes to fill and will be missed.”

Hayes appointment is due to cause apprehension amongst firms in the renewable energy sector due to his opposition of wind farms in his constituency; in a previous statement he described wind turbines as a “terrible intrusion on our flat fenland landscape”.

World’s Largest Offshore Wind Farm Planned in Moray Firth

3 Sept 2012

Moray Offshore Renewables Ltd has submitted plans to Scottish Government agency, Marine Scotland to build the world’s largest offshore wind farm in the Outer Moray Firth, off the Scottish north east coast.

The project, if successfully approved, could commence in 2015 and be completed by 2020; this will potentially see three offshore wind farms being constructed and will consist of up to 339 turbines. The £4.5 Billion project would have the potential to generate up to 1.5 GW which could power up to one million households.

In the last 10 years, the Crown Estate has held five offshore wind leasing rounds, the most recent being Round Three; in which they are investing £100 million. This application is the first for consent in Round Three. It is expected that additional submissions from various other developers will be received from now up to 2020. The Crown Estate said it was “the most significant milestone yet” in its Round Three programme.

Moray Offshore Renewables Ltd is a joint venture between EDP Renewables (EDPR UK) and SeaEnergy Renewables (SERL) which was formed in 2009. EDPR UK managing director Dan Finch commented, “By working in deeper water, more than 12 miles from shore, we can take advantage of the excellent wind resource in the outer Moray Firth, and make a significant contribution to cutting greenhouse gas production and reducing the need to burn fossil fuels.”

Ofwat plans wholesale incentives in 2014 Price Review

31 August 2012

In a bid to encourage more bulk water trading between companies and discourage unsustainable abstraction from ground water sources, the water regulator has published consultation papers on its plans to introduce an outcome focused wholesale price limits in 2014.

The document outlines four cost performance incentive options where companies will be able to choose between increased flexibility and varying degree of implementation risk.
These provide incentives for companies to produce accurate estimates of expected expenditure in their business plans One approach being contemplated is to identify a ‘cap and/or collar’ around the median of the splits that the companies propose.

Ofwat also reaffirmed a commitment to use the concept of regulatory capital value linked to the retail price index at least until 2020. The consultation runs till the end of September.

EU announces plans to launch joint carbon trading

29 August 2012

European Union and Australia agreed to link their carbon trade schemes by 2018. This deal will allow Australian firms to buy cheaper EU carbon credits in a move expected to increase demand for EU carbon allowances.

As per the agreement, Australia will alter its scheme in order to link with the EU ETS. The scheme will no longer require a carbon floor price and will limit the number of Kyoto units of carbon that participants can use to 12.5 per cent of their liabilities.

By using the EU Allowances, Australia will be able to buy up to 50 percent of Australian liabilities from July 2015 but European companies will have to wait until 2018 to use Australian allowances.

EU and Australian plan to agree registry arrangements for the interim link by mid-2013. The Australian Government will enter into negotiations on a full-linking agreement, and the Commission said it will seek a mandate in the coming months.

SSE to raise energy prices by 9 Percent

24 Aug 2012

UK utility group SSE Plc has announced that from 15 October 2012 it will be increasing its domestic gas and electricity prices by an average of 9 per cent. The price increase will affect around 5 million household electricity customers and around 3.4 million household gas customers in Great Britain.

The firm which trades as SSE, SWALEC, Southern Electric, Scottish Hydro, and Atlantic, said that some of the key factors for the increases were rising energy wholesale prices, increased costs of using the gas and electricity networks and environmental and social obligations. “SSE is committing to cap household energy prices at this level until at least the second half of 2013” it said in an official statement.

Ian Marchant, SSE Chief Executive, said: “In a time of economic difficulty, we have endeavoured to keep energy bills as low as possible. That is why we pledged last summer to cap our energy prices for as long as possible and until at least August 2012, and then in January extended this pledge to
October 2012.

Unfortunately, the increases in costs that we have seen since making this pledge can no longer be absorbed and mean that we are unable to keep prices at their current levels beyond this autumn. An increase in our prices has therefore, regrettably, become unavoidable.

We remain committed to offering a fair price for the energy we supply and providing a range of practical and financial support measures for those struggling to pay their bills. We will also continue to build on the initiatives introduced over the last year to create a simpler and more transparent approach for all energy customers.”

Tax Revenues Decline as Oil and Gas Output Drops

22 Aug 2012

Plummeting oil and gas outputs from the North Sea have caused a drastic decline in the Government’s finances. This is an indication of what will probably continue to happen as oil begins to run dry. 

The Office for Budget Responsibility had recently indicated a reduction in oil and gas revenues, due to low tax receipts in July. This is normally one of the main months for receipts and when oil and gas companies pay the first of three instalments on their annual profits. The sector which is generally responsible for contributing up to a quarter of the UK’s corporation tax is in decline.

Chancellor of the Exchequer, George Osborne, commented last year that it was fair for oil explorers to bear a greater tax burden as part of his austerity measures. He put a £2 billion tax increase on producers. In the new budget he claimed that the industry responded by dropping production by 18%, which in turn led to a steep decrease in tax revenues totalling almost £2.3 billion. With the addition of many fields reaching the end of their working life, this has resulted in a fall in output.

Malcolm Webb, Chief Executive of Oil & Gas UK said: “The dramatic fall in oil and gas production last year and consequent lower than anticipated tax revenue is very concerning. It can be attributed in no small part to the history of instability in UK oil and gas taxation resulting in lower investment in earlier years meaning very few new fields started producing last year. In addition to this, several unexpected stoppages were required to maintain the integrity of the existing fields.”

“All of this serves to underline the importance of unlocking new investment in projects in and around those existing fields. Unfortunately a large number of those projects are currently not able to proceed because the tax take – it is 81 per cent on the older fields – is simply too high. So right now, we urgently need a brown-field allowance of the type mentioned in this year’s Budget to allow further investment to flow. The industry and the Government have been in close and constructive discussions on this for some months and we are currently waiting on a decision from Treasury.”

Chinese Investment in UK Nuclear New Build Power Stations

20 Aug 2012

UK officials have indicated a preference towards having Chinese partners in two consortia competing for RWE AG and E.ON AG’s Horizon nuclear power projects in the UK.

One consortium, led by Toshiba Westinghouse, includes State Nuclear Power Technology Corp of China, while a second consortium includes China Guangdong Nuclear Power Corp.

The Horizon plans were to build reactors at Wylfa in Anglesey and Oldbury in Gloucestershire. The consortiums are working on bids in a deal expected to be worth circa £500 million.

It is understood, that the UK Energy department does not wish for the Chinese to have any more than a 50% stake in any consortium bid. The Government says it does not have a preference on the composition of the consortia.

The Chancellor, George Osborne, has been encouraging Chinese investors to back British infrastructure, energy and utility projects. China’s sovereign wealth fund bought a 9 per cent stake in Thames Water in February this year.

OFGEM to Remove Cross-Border Balancing Charges

17 Aug 2012

 UK energy regulator, Ofgem is set to remove the charges for the balancing of the British transmission system from electricity interconnectors that is levied by National Grid, the national Transmission System Operator (TSO).

The move comes as part of the regulators goal to remove cross-border trade barriers, enabling the development of a single European electricity market. The removal of the charges is due to take effect from 30 August 2012.

The daily charges of balancing the system are recovered by National Grid via its Balancing Services Use of System (BSUoS) charges which are divided between suppliers and generators. At present, interconnector imports are charged as generation while exports are charged as demand. Ofgem commented that according to the EU’s Third Package, electricity regulation interconnectors are defined as transmission lines; meaning interconnector flows should be classed as part of the transmission infrastructure, rather than generation or demand.

APX-ENDEX, the Anglo-Dutch Energy exchange said in an official statement, that it “welcomes the Ofgem decision to remove the charge” which could potentially “lead to 10% increase in traded volumes as well as increased interconnector utilisation of up to 20%”.  “APX-ENDEX believes that the removal of the BSUoS charge contributes to more efficient intraday cross-border trading which is essential for the transition to a low carbon energy sector by accommodating the increased intermittency created by the growing amount of wind energy produced in Great Britain” they added.

At present, the UK electricity market links to Continental Europe via the 1 Gigawatt UK-Netherlands BritNed cable and the 2 Gigawatt Interconnexion France-Angleterre (IFA) lines, as well as a link to Ireland via the 500 Megawatt Moyle cable. All flows on currently operational interconnectors, as well as any future interconnectors, will be exempt from the BSUoS charges.