Britain's energy bills problem - and why firms are paid huge sums to NOT provide power
It is 1am on 3 June. A near gale force wind is blasting into Scotland. Great weather for the Moray East and West offshore wind farms, you would have thought.
The two farms are 13 miles off the north-east coast of Scotland and include some of the biggest wind turbines in the UK, at 257m high. With winds like that they should be operating at maximum capacity, generating what the developer, Ocean Winds, claims is enough power to meet the electricity needs of well over a million homes.
Except they are not.
That's because if you thought that once an electricity generator - whether it be a wind farm or a gas-powered plant - was connected to the national grid it could seamlessly send its electricity wherever it was needed in the country, you'd be wrong.
The electricity grid was built to deliver power generated by coal and gas plants near the country's major cities and towns, and doesn't always have sufficient capacity in the wires that carry electricity around the country to get the new renewable electricity generated way out in the wild seas and rural areas.
And this has major consequences.
The way the system currently works means a company like Ocean Winds gets what are effectively compensation payments if the system can't take the power its wind turbines are generating and it has to turn down its output.
It means Ocean winds was paid £72,000 not to generate power from its wind farms in the Moray Firth during a half-hour period on 3 June because the system was overloaded - one of a number of occasions output was restricted that day.
At the same time, 44 miles (70km) east of London, the Grain gas-fired power station on the Thames Estuary was paid £43,000 to provide more electricity.
Payments like that happen virtually every day. Seagreen, Scotland's largest wind farm, was paid £65 million last year to restrict its output 71% of the time, according to analysis by Octopus Energy.
Balancing the grid in this way has already cost the country more than £500 million this year alone, the company's analysis shows. The total could reach almost £8bn a year by 2030, warns the National Electricity System Operator (NESO), the body in charge of the electricity network.
It's pushing up all our energy bills and calling into question the government's promise that net zero would end up delivering cheaper electricity.
Now, the government is considering a radical solution: instead of one big, national electricity market, there'll be a number of smaller regional markets, with the government gambling that this could make the system more efficient and deliver cheaper bills.
But in reality, it's not guaranteed that anyone will get cheaper bills. And even if some people do, many others elsewhere in the country could end up paying more.
The proposals have sparked such bitter debate that one senior energy industry executive called it "the most vicious policy fight" he has ever known. He has, he says, "lost friends" over it.
Meanwhile, political opponents who claim net zero is an expensive dead end are only too ready to pounce.
It is reported that the Prime Minister has asked to review the details of what some newspapers are calling a "postcode pricing" plan. So is the government really ready to risk the most radical shake-up of the UK electricity market since privatisation 35 years ago? And what will it really mean for our bills?
The Energy Secretary, Ed Miliband, is certainly in a fix. His net zero policy is under attack like never before. The Tories have come out against it, green politicians say it isn't delivering for ordinary people, and even Tony Blair has weighed in against it.
Meanwhile Reform UK has identified the policy as a major Achilles heel for the Labour government. "The next election will be fought on two issues, immigration and net stupid zero," says Reform's deputy leader Richard Tice. "And we are going to win."
Poll after poll says cost of living is a much more important for most people, and people often specifically cite concerns about rising energy prices.
Miliband sold his aggressive clean energy policies in part on cutting costs. He said that ensuring 95% of the country's electricity comes from low-carbon sources by 2030 would slash the average electricity bill by £300.
But the potential for renewables to deliver lower costs just isn't coming through to consumers.
Renewables now generate more than half the country's electricity, but because of the limits to how much electricity can be moved around the system, even on windy days some gas generation is almost always needed to top the system up.
And because gas tends to be more expensive, it sets the wholesale price.
Supporters of the government's plan argue that, as long as prices continue to be set at a national level, the hold gas has on the cost of electricity will be hard to break. Less so with regional – or, in the jargon, "zonal" - pricing.
Think of Scotland, blessed with vast wind resources but just 5.5 million people. The argument goes that if prices were set locally, it wouldn't be necessary to pay wind farms to be turned down because there wasn't enough capacity in the cables to carry all the electricity into England.
On a windy day like 3 June, they would have to sell that spare power to local people instead of into a national market. The theory is prices would fall dramatically – on some days Scottish customers might even get their electricity for free.
Other areas with lots of renewable power - such as Yorkshire and the North East, as well as parts of Wales - would stand to benefit too. And, as solar investment increases in Lincolnshire and other parts of the east of England, they could also see prices tumble.
All that cheap power could also transform the economics of industry. Supporters argue that it would attract energy-intensive businesses such as data centres, chemical companies and other manufacturing industries.
In London and much of the south of England, the price of electricity would sometimes be higher than in the windy north. But supporters say some of the hundreds of millions of pounds the system would save could be used to make sure no one pays more than they do now.
And those higher prices could also encourage investors to build new wind farms and solar plants closer to where the demand is. The argument is that would lower prices in the long run and bring another benefit - less electricity would need to be carried around the country, so we would need fewer new pylons, saving everyone money and meaning less clutter in the countryside.
"Zonal pricing would make the energy system as a whole dramatically more efficient, slashing this waste and cutting bills for every family and business in the country," argues Greg Jackson, the CEO of Octopus Energy, one of the biggest energy suppliers in the UK.
Research commissioned by the company estimates the savings could top £55 billion by 2050 - which it claims could knock £50 to £100 a year off the average bill. Octopus points out Sweden made the switch to regional pricing in just 18 months.
The supporters of regional pricing include NESO, Citizens Advice and the head of the energy regulator, Ofgem. Last week a committee of the House of Lords recommended the country should switch to the system.
There are, however, many businesses involved in building and running renewable energy plants that oppose the move.
"We're making billions of pounds of investments in renewable power in the UK every year," says Tom Glover, the UK chair of the giant German power company RWE. "I can't go to my board and say let's take a bet on billions of pounds of investment."
He's worried changing the way energy is priced could undermine contracts and make revenues more uncertain. And he says it risks undermining the government's big push to switch to green energy.
The main cost of wind and solar plants is in the build. It means the price of the energy they produce is very closely tied to the cost of building and, because developers borrow most of the money, that means the interest rates they are charged.
And we are talking a lot of money. The government is expecting power companies to spend £40bn pounds a year over the next five years on renewable projects in the UK.
Glover says even a very small change in interest rates could have dramatic effects on how much renewable infrastructure is built and how much the power from it costs.
"Those additional costs could quickly overwhelm any of the benefits of regional pricing," says Stephen Woodhouse, an economist with the consultancy firm AFRY, which has studied the impact of regional pricing for the power companies.
That would come as already high interest rates have combined with rising prices for steel and other materials to push up the cost of renewables. Plans for a huge wind farm off the coast of Yorkshire were cancelled last month because the developer said it no longer made economic sense.
And there's another consideration, he says. The National Grid, which owns the pylons, substations and cables that move electricity around the country, is already rolling out a huge investment programme – some £60bn over the next five years - to upgrade the system ready for the new world of clean power.
That new infrastructure will mean more capacity to bring electricity from our windy northern coasts down south, and therefore also mean fewer savings from a regional pricing system in the future.
There are other arguments too. Critics warn introducing regional pricing could take years, that energy-intensive businesses like British Steel can't just up sticks and move, and that the system will be unfair because some customers will pay more than others.
But according to Greg Jackson of Octopus, the power companies and their backers just want to protect their profits. "Unsurprisingly, it's the companies that enjoy attractive returns from this absurd system who are lobbying hard to maintain the status quo," he says.
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Yet the power companies say Octopus has a vested interest too. It is the UK's biggest energy supplier with some seven million customers, and owns a sophisticated billing system it licenses to other suppliers, so could gain from changes to the way electricity is priced, they claim.
And the clock is ticking. Whether the government meets its clean power targets will depend on how many new wind farms and solar plants are built.
The companies who will build them say they need certainty around the future of the electricity market, so a decision must be taken soon.
It's expected in the next couple of weeks. Over to you, Mr Miliband.
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Washington Post
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- Washington Post
With retail cyberattacks on the rise, customers find orders blocked and shelves empty
NEW YORK — A string of recent cyberattacks and data breaches involving the systems of major retailers have started affecting shoppers. United Natural Foods, a wholesale distributor that supplies Whole Foods and other grocers, said this week that a breach of its systems was disrupting its ability to fulfill orders — leaving many stores without certain items. In the U.K., consumers could not order from the website of Marks & Spencer for more than six weeks — and found fewer in-store options after hackers targeted the British clothing, home goods and food retailer . A cyberattack on Co-op, a U.K. grocery chain, also led to empty shelves in some stores. Cyberattacks have been on the rise across industries. But infiltrations of corporate technology carry their own set of implications when the target is a consumer-facing business. Beyond potentially halting sales of physical goods, breaches can expose customers' personal data to future phishing or fraud attempts. Here's what you need to know. Despite ongoing efforts from organizations to boost their cybersecurity defenses, experts note that cyberattacks continue to increase across the board. In the past year, there's also been an 'uptick in the retail victims' of such attacks, said Cliff Steinhauer, director of information security and engagement at the National Cybersecurity Alliance, a U.S. nonprofit. 'Cyber criminals are moving a little quicker than we are in terms of securing our systems,' he said. Ransomware attacks — in which hackers demand a hefty payment to restore hacked systems — account for a growing share of cyber crimes, experts note. And of course, retail isn't the only affected sector. Tracking by NCC Group, a global cybersecurity and software escrow firm, showed that industrial businesses were most often targeted for ransomware attacks in April, followed by companies in the 'consumer discretionary' sector. Attackers know there's a particular impact when going after well-known brands and products that shoppers buy or need every day, experts note. 'Creating that chaos and that panic with consumers puts pressure on the retailer,' Steinhauer said, especially if there's a ransom demand involved. Ade Clewlow, an associate director and senior adviser at the NCC Group, points specifically to food supply chain disruptions. Following the cyberattacks targeting M&S and Co-op, for example, supermarkets in remote areas of the U.K., where inventory already was strained, saw product shortages. 'People were literally going without the basics,' Clewlow said. Along with impacting business operations, cyber breaches may compromise customer data. The information can range from names and email addresses, to more sensitive data like credit card numbers, depending on the scope of the breach. Consumers therefore need to stay alert, according to experts. 'If (consumers have) given their personal information to these retailers, then they just have to be on their guard. Not just immediately, but really going forward,' Clewlow said, noting that recipients of the data may try to commit fraud 'downstream.' Fraudsters might send look-alike emails asking a retailer's account holders to change their passwords or promising fake promotions to get customers to click on a sketchy link. A good rule of thumb is to pause before opening anything and to visit the company's recognized website or call an official customer service hotline to verify the email, experts say. It's also best not to reuse the same passwords across multiple websites — because if one platform is breached, that login information could be used to get into other accounts, through a tactic known as 'credential stuffing.' Steinhauer adds that using multifactor authentication, when available, and freezing your credit are also useful for added lines of defense. A range of consumer-facing companies have reported cybersecurity incidents recently — including breaches that have caused some businesses to halt operations. United Natural Foods, a major distributor for Whole Foods and other grocers across North America, took some of its systems offline after discovering 'unauthorized activity' on June 5. In a securities filing , the company said the incident had impacted its 'ability to fulfill and distribute customer orders.' United Natural Foods said in a Wednesday update that it was 'working steadily' to gradually restore the services. Still, that's meant leaner supplies of certain items this week. A Whole Foods spokesperson told The Associated Press via email that it was working to restock shelves as soon as possible. The Amazon-owned grocer's partnership with United Natural Foods currently runs through May 2032. Meanwhile, a security breach detected by Victoria's Secret last month led the popular lingerie seller to shut down its U.S. shopping site for nearly four days, as well as to halt some in-store services. Victoria's Secret later disclosed that its corporate systems also were affected, too, causing the company to delay the release of its first quarter earnings . Several British retailers — M&S , Harrods and Co-op — have all pointed to impacts of recent cyberattacks. The attack targeting M&S, which was first reported around Easter weekend, stopped it from processing online orders and also emptied some store shelves. The company estimated last month that the it would incur costs of 300 million pounds ($400 million) from the attack. But progress towards recovery was shared Tuesday, when M&S announced that some of its online order operations were back — with more set to be added in the coming weeks. Other breaches exposed customer data, with brands like Adidas, The North Face and reportedly Cartier all disclosing that some contact information was compromised recently. In a statement, The North Face said it discovered a 'small-scale credential stuffing attack' on its website in April. The company reported that no credit card data was compromised and said the incident, which impacted 1,500 consumers, was 'quickly contained.' Meanwhile, Adidas disclosed last month that an 'unauthorized external party' obtained some data, which was mostly contact information, through a third-party customer service provider. Whether or not the incidents are connected is unknown. Experts like Steinhauer note that hackers sometimes target a piece of software used by many different companies and organizations. But the range of tactics used could indicate the involvement of different groups. Companies' language around cyberattacks and security breaches also varies — and may depend on what they know when. But many don't immediately or publicly specify whether ransomware was involved. Still, Steinhauer says the likelihood of ransomware attacks is 'pretty high' in today's cybersecurity landscape — and key indicators can include businesses taking their systems offline or delaying financial reporting. Overall, experts say it's important to build up 'cyber hygiene' defenses and preparations across organizations. 'Cyber is a business risk, and it needs to be treated that way,' Clewlow said.


New York Times
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Eagle and Butler, via his representatives, have been approached for comment. Previously backed by two Saudi Arabian businessmen, Haider and Mansoor Syed, the original group opted to allow its 30-day period of exclusivity to end and instead sought alternative funding. The new consortium, sources added, is backed by an American group which has experience investing in soccer clubs. Should the group's expected offer be accepted, it would value Palace — which won the English FA Cup, the world's oldest soccer cup competition, for the first time in May — as a whole in excess of $465million (£343m). Other recent investments in Premier League clubs include Sir Jim Racliffe's purchase of a 28.9 per cent stake in Manchester United for $1.6bn in December 2023, the Todd Boehly-Clearlake Capital takeover of Chelsea for $3.02bn in May 2022 and the Saudi Arabian Public Investment Fund (PIF)-backed takeover of Newcastle United for £305m in October 2021. Sources also added that Woody Johnson, owner of the New York Jets, has also made an offer for Eagle's shares but has yet to meet Textor's valuation. The Athletic has approached Johnson for comment, via the Jets. Sportsbank, a sports investment group advised by the former Everton director and experienced football financier Keith Harris, was granted exclusivity to invest in Eagle in January, but that exclusivity also lapsed and it no longer has an active offer, although remains interested in investing should Eagle complete its initial public offering (IPO). Advertisement The expected offer from the new U.S. consortium comes amid concerns over Palace's eligibility to compete in next season's Europa League despite qualifying as FA Cup winners, due to Eagle's ownership of French side Lyon, where it holds a majority stake, putting them potentially at odds with UEFA's rules around multi-club ownership. Textor had hoped fellow Palace co-owners Josh Harris, who owns the NFL's Washington Commanders, and David Blitzer, the two American businessmen who together make up the other general partners alongside chairman Steve Parish, would purchase Eagle's shares but no deal has been agreed. They have the right of first offer to buy Eagle's stake in the south London soccer club and have been approached by Textor, but according to sources familiar with the situation, their proposal fell short of being accepted. Textor believes it would be the easiest way to remove doubt over Palace's Europa League participation. Textor, the fourth general partner at Palace as a representative of Eagle, is the chairman of the group but after more than a year shifting between being open to selling Eagle's stake and seeking to buy a majority, appears to have settled on selling, especially with Palace's place in Europe in question. UEFA's rules restrict teams from multi-club groups playing in the same competition. While there may still be ways around this, the deadline set by European football's governing body to address any multi-club ownership issues passed on March 1 — the day Palace beat Millwall in the fifth round of the FA Cup. Lyon qualified for the same competition through their league standing and due to finishing higher than Palace in their respective league, they have precedence to be admitted to the competition. All four of Palace's general partners met with UEFA in Nyon, Switzerland, last week to present their case that Textor does not have control or influence at Palace. There is some confidence that they would be able to convey a lack of decisive influence but the decision on whether to admit Palace to Europe remains in the balance before it is communicated to the club, which is expected later this month. The U.S. consortium is expected to now come back to the table. Should it make the offer and it be accepted by Eagle, as their previous offer was in December, then the deal will be subject to Premier League approval. It remains to be seen whether UEFA would be satisfied by a binding agreement for Eagle to sell its stake, or whether any deal can reach that stage before the committee makes its decision. Should the consortium be successful in buying out Eagle, it may subsequently look to carry out a full takeover of Palace in due course in order to have full decision-making power. In May last year, Textor told The Athletic that he was actively looking to sell Eagle's stake in Palace and he had hired investment banking firm Raine to find a suitable investor to purchase the group's share in the club. 'We've reached the point where we have a significant investment in a club we hold in the minority (in Palace),' he said. 'We're having extreme success in Brazil and early on in France, (and) to not have that same level of integration with our partner in the UK… it just becomes more and more clear that that level of collaboration we want and need works.' Advertisement Eagle Football 'is simply not a perfect fit for Crystal Palace,' he added. Textor originally purchased 40 per cent of Palace in 2021 for £87.5m (now $114m), helping to fund a successful transfer window and complete the redevelopment of the academy, before increasing that stake by around five per cent with an additional £30m. Further investment has come from capital calls. There have been failed attempts by Textor to purchase a controlling stake in the club, which is also owned by fellow general partners Parish, Harris and Blitzer, who each have 25 per cent of the voting rights. Over the past four years, Textor has struggled to make headway into purchasing a controlling stake and disagreed with Parish over the direction of the club, in particular with his multi-club model which includes controlling stakes in Lyon, Brazilian top-flight club Botafogo and Belgian club RWD Molenbeek, which he recently renamed Daring Brussels. Now, he appears to have accepted it is time to sell up at Palace. Additional reporting: Anthony Slater (Top photo of Crystal Palace players celebrating their FA Cup win in May:)


Bloomberg
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