Latest news with #ContractforDifference
Morocco World
3 days ago
- Business
- Morocco World
Xlinks Pauses UK-Morocco Undersea Power Cable Project Amid Regulatory Delays
Doha – Xlinks, the British company behind the ambitious project to connect Morocco and the United Kingdom via undersea power cables, has temporarily paused its Development Consent Order (DCO) examination process. In a May 14 letter to the UK Planning Inspectorate, the company requested this halt while awaiting a crucial decision on its Contract for Difference (CfD) from the UK Department of Energy Security and Net Zero. The pause comes as the company seeks financial certainty through a CfD that would guarantee fixed electricity prices for 25 years. According to company sources close to the matter, this is 'a pause in the DCO process, not a suspension,' aimed at preventing 'misalignment of different project development stages.' The main issue holding up the project is the need for price certainty. Xlinks is seeking a guaranteed price of £77 per megawatt-hour for solar energy and £87 for wind energy produced in Morocco's Guelmim-Oued Noun region. Without this financial commitment, investors are reluctant to move forward with the necessary funding. 'Without this clear commitment on a stable price, Xlinks' financial partners are hesitant to inject the necessary investments,' the company stated. Dave Lewis, Xlinks' chairman, has expressed frustration over the delays and frequent ministerial changes in the UK's energy department. In a January interview with Bloomberg, Lewis noted that the undersea cable project could generate up to £24 billion (MAD 300 billion) in investments, with approximately £5 billion in Great Britain alone. The project was designated as a 'nationally significant infrastructure project' by the British government in 2023, highlighting its strategic importance to the UK's energy security. It aims to provide power to nine million British households and reduce CO2 emissions from the UK energy sector by 10%. Read also: Former UK Minister: Morocco Key Player in Britain's Clean Energy Mission The proposed 3,900-kilometer cable would traverse Portuguese, Spanish, and French coastal waters to connect Morocco's renewable energy facilities with the British grid. If completed, it would deliver 3.6 gigawatts of electricity generated from solar parks, wind farms, and battery storage systems. Facing continued delays, Xlinks has begun exploring alternatives. Lewis told The Telegraph in early April that if the British government's response was further delayed, shareholders might redirect resources toward other projects under development, including a potential Morocco-Germany connection. The company opted for direct negotiations with the government rather than going through a tender process, which has contributed to the delays. Political instability in the UK has further complicated negotiations. Meanwhile, competition is emerging. Australian group Fortescue is developing a similar 100-gigawatt electrical connection project between North Africa and the European Union. Fortescue's chairman, Andrew Forrest, has confirmed discussions with Ed Miliband, the British Secretary of State for Energy Security, and various European governments about installing multiple undersea cables that could transport up to 500 terawatt-hours (TWh) of electricity annually—nearly equivalent to Germany's total annual consumption. Even with the most favorable outcome, Xlinks' complex authorization process is unlikely to conclude before 2026. While the company targets a 2030 launch date, effective service might not begin until 2031 at the earliest—a timeline that has investors increasingly concerned. The project has already received authorization from the Moroccan side, but still requires approvals from France, Spain, and Portugal, which the cables would cross. Tags: UK MoroccoXlinks project
Ya Biladi
3 days ago
- Business
- Ya Biladi
Xlinks requests pause in UK permit process as it awaits pricing decision for Morocco–UK project
Xlinks, the company behind the 4,000 km subsea cable to deliver solar and wind-generated electricity from Morocco to the UK, has paused its application for a Development Consent Order (DCO)—a legal authorization required for large infrastructure projects in the UK. Xlinks formally requested the pause in a letter to the UK Planning Inspectorate on May 14, explaining that it wants to wait for the outcome of its Contract for Difference (CfD) bid before proceeding. The CfD is a pricing mechanism that allows renewable energy developers to lock in a fixed price for their electricity over a set period, ensuring financial stability for large-scale projects. Xlinks expects a decision in late spring and is seeking a price of £70–80 per megawatt-hour (MWh), lower than comparable projects. Aligning project stages The Planning Inspectorate's answer was swift, granting Xlinks said pause on May 15. Sources close to the project told Yabiladi that the pause is not a suspension or cancellation, but a strategic move to align project stages. «The purpose of the pause is to allow the review process to proceed as efficiently and rigorously as possible, while ensuring that the DCO can then progress rapidly», they explained. It is worth noting that the Morocco–UK Power Project aims to deliver 3.6 gigawatts (GW) of dispatchable, clean energy from solar, wind, and battery facilities in Morocco to the UK. The project, which could cost up to £24 billion, is expected to cut UK carbon emissions by 10% and reduce wholesale electricity prices by 9.3%. In 2022, the project was included in the UK's strategic energy vision and recognized as a project of national significance in 2023. For the record, Xlinks has expressed frustration over delays in receiving UK government backing for the project, warning it could move the initiative to another country. Speaking to local media in March, Sir Dave Lewis, chairman of Xlinks, said that the delays in securing government approval are undermining investor confidence.
Daily Record
3 days ago
- Business
- Daily Record
Scottish Labour leader and UK Energy Minister visit major Lanarkshire wind farm
Anas Sarwar and Michael Shanks, who is also the Rutherglen MP, were at Kype Muir Wind Farm. The leader of the Scottish Labour Party, Anas Sarwar, and UK Energy Minister Michael Shanks have visited a pioneering wind farm in South Lanarkshire. During the trip to OnPath Energy's Kype Muir Wind Farm site, Mr Sarwar and Mr Shanks met with senior representatives from the firm, receiving a tour of the development, learning about the history of the project and the benefits it continues to deliver. Home to 26 turbines, Kype Muir Wind Farm generates enough renewable energy to power over 63,000 homes annually while providing over £11m in community benefits across its 25-year lifespan. The project is delivering significant benefits to the surrounding area, with over £700,000 distributed to local communities through the Kype Muir Community Panel Fund (KMCP) as part of its OnPath Together commitment. Each area is represented by two members on the KMCP panel, ensuring a broad and inclusive approach to decision-making. The fund was further bolstered with the launch of the Kype Muir Wind Farm Extension developed by OnPath Energy (now owned by funds managed by Schroders Greencoat), which added a further 15 turbines to the overall site taking the lifetime community benefits of both sites to over £21m. Mr Sarwar said: 'It was fantastic to visit OnPath Energy to see their site at Kype Muir and learn about all the work they do. 'Businesses like OnPath are at the cutting edge of the transition to clean energy and have a vital role to play in delivering energy security and driving down bills. 'Scottish Labour will work hand in hand with companies like OnPath and the UK government to put Scotland at the heart of the energy transition.' After Kype Muir Wind Farm became the first project in the UK to secure consent for 132-meter turbines, OnPath Energy launched in 2019, the Kype Muir Community Partnership (KMCP) which was established to ensure nearby communities benefit directly from the wind farm's success. The initiative has proven highly effective, empowering five local community council areas to reinvest a share of the revenue into projects that are tailored to local issues and identified by local people. The purpose is to make community-driven action facilitate long-lasting benefits for the community's surrounding the projects. In addition, the community fund supported a jobs and skills collaboration with South Lanarkshire Council which has supported over 2000 people into employment or education. Notably, in collaboration with NATS, OnPath Energy (then Banks Renewables) funded a new radar system in 2019 for Glasgow Airport, which enabled the development of not only Kype Muir Wind Farm, it also unlocked £500m worth of development in the area from other projects. Kype Muir Wind Farm was also the first onshore wind site to benefit from the UK Governments Contract for Difference having taken part in Auction Round 1. Mr Shanks, Parliamentary Under Secretary of State for Energy and MP for Rutherglen, said: 'OnPath Energy is leading the way in green energy and it was an honour to meet with them and learn more about the project's they lead. 'The Labour Government is committed to delivering the clean energy of the future and the jobs Scotland needs. ' Gordon Thomson, projects director at OnPath Energy said: 'It's been a pleasure to welcome Mr Sarwar and Mr Shanks to Kype Muir Wind Farm today and to share with them the story of a project that has come to symbolise what's possible in Scotland's transition to renewable energy. 'We set out with the vision to create something special here, and since going operational, Kype Muir has done just that, generating clean energy, creating local jobs, and delivering meaningful support through the KMCP. 'In addition to this, the launch of Kype Muir Extension was a huge moment for the renewables sector in Scotland, not just in terms of the scale and ambition of the engineering involved, but also in how it set a new benchmark for community involvement and benefit. 'These two sites have empowered communities to lead the way in identifying and funding local priorities, and we're incredibly proud of the lasting positive impact this model continues to have.' The original Kype Muir Wind Farm alone is expected to generate a lifetime local spend of approximately £123 million. Reflecting OnPath's ongoing commitment to supporting the local economy, local contractors were also prioritised throughout the construction and delivery of the Kype Muir Extension. Combined, both projects will contribute an estimated £188 million to the Scottish economy, with £159 million of that investment within a 60km radius of the site. Robin Winstanley, sustainability and community director said: 'Onshore wind is the clear winner of any energy generation project when it comes to delivering social and economic value for communities in Scotland, with over 60% of the lifetime spend within 40 miles of the sites. 'We firmly believe that renewable energy must also empower people and communities. 'Through our OnPath Together commitment, we're ensuring that our developments create long-lasting, tangible value for those who live and work closest to them. 'This includes shared community ownership, education bursaries, real living wage jobs, and £5,000 per MW of installed capacity as a baseline community benefit. 'It also means prioritising local contractors to stimulate regional economies and delivering nature-positive solutions that restore and enhance biodiversity.' Together, Kype Muir and Kype Muir Extension will generate over 155MW of renewable electricity annually, enough to power more than 123,000 homes, equivalent to a city larger than Aberdeen. They are set to displace around 307,000 tonnes of CO₂ emissions each year, the equivalent of removing approximately 30,700 petrol cars from the road. * Don't miss the latest headlines from around Lanarkshire. Sign up to our newsletters here.
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.
Yahoo
07-05-2025
- Business
- Yahoo
The choppy waters between North Sea oil and green energy revolution
The Great Energy Transition is under way, and may come to define this era, but it's not going smoothly. For the oil and gas sector, a further sign of its decline - both long-term and cyclical - is in 250 onshore Aberdeen jobs being axed by Harbour Energy, now one of the biggest operators. With a global portfolio of producing fields, it has other places to put its capital, from Egypt to Argentina, where profits are not taxed at 78%, and where the government is not refusing to grant new drilling licences. It is also reviewing its commitment to the Viking carbon capture and storage scheme being planned for Humberside, blaming "repeated delays" by the UK government. The same company is a partner in the similar Acorn project, based in north-east Scotland. Those "repeated delays" affect both projects. It would be less concerning if there were a transition for oil and gas workers into the renewables sector, re-skilling as they move. For many, including their union representatives, that is merely rhetoric. And the gap between one industry declining and the other rising is growing wider, with the decision by Ørsted, a Danish company, to halt development of a vast offshore wind farm off the coast of Yorkshire, called Hornsea 4. The project secured a valuable and hard-won guarantee of a minimum price for 15 years, known as a Contract for Difference. That reduces risk for investors. But Orsted, majority owned by the Copenhagen government, is giving that away, and paying heavily to break supply chain contracts, because the financing of the project no longer stacks up. The clean energy revolution is also grinding to a halt near Scotland's west coast. Drax, the owner of the hydro power station inside Ben Cruachan near Oban, had plans to expand its potential for pumped storage - a form of storing power by pumping water uphill when demand is low and there's excess supply of wind power, and then releasing water steeply downhill to generate power when demand goes up. To reduce risk for investors, it wanted to win a similar type of contract for a minimum price (as well as a maximum one). But it's decided to postpone that £500m plan, blaming the capital costs. Some high-profile offshore wind farm projects have been halted or scrapped [Getty Images] Even before the auction of contracts has been designed by Ofgem, it's backing out of bidding later this year, looking instead to the UK government and its regulator, Ofgem, to help reduce the risk and the costs associated with it. Meanwhile, Drax is looking at less ambitious options for expanding the existing power station, now aged 60, which could generate both power and the cash to go much further. Such delays put a big question mark over the Labour UK government plan to reach 95% of British energy generation from clean sources within only five years. If current plans cannot stack up financially, there are many other plans that are put into doubt. These include four projects for pumped storage in Scotland - three of them new, one an expansion - and the humongous ScotWind plans to locate hundreds of fixed and floating wind turbines arrayed around the coast of Scotland. Without pumped storage, the greener grid will require a lot more battery storage, and that is not proving popular with those who live near planned sites. Because the UK government has set such an ambitious and high-profile target for clean, green power, it may be that these developers are using the leverage of a halted project to get a more attractive set of price guarantees. These don't come from the taxpayer but from future electricity bill-payers, and Ofgem has the job of balancing the consumer interest with the objective of the energy transition. It may also be that Harbour Energy is backing up the wider oil and gas industry in putting pressure on the UK government to give it a less hostile business environment. It took only a few minutes from the announcement of Harbour's job losses to Prime Minister's Questions, with both the Conservatives and SNP piling on the pressure. Zonal pricing over national pricing Across the British energy sector, this pressure is building at a vital time for three difficult and complex decisions. ONE. The UK government recently closed a consultation on the future of the oil and gas industry, the way it is taxed and licensed. The industry has been lobbying furiously for a slower wind-down of drilling activity, arguing that Britain will continue to need oil and gas for decades, and it is more secure and less damaging in greenhouse gas emissions if that is domestically produced. To concede that argument would be an awkward U-turn, particularly for the Energy and Net Zero Secretary, Ed Miliband. Not to concede it puts future job losses at his door. TWO. REMA, the Review of Energy Market Arrangements, is a Whitehall project to change the way markets work. The big decision there is over zonal pricing, instead of a national pricing system. The case is made, most enthusiastically by retail supplier Octopus, that it could cut prices in some parts of Britain if they reflected the market rate for regional supply. So lots of wind power in northern Scotland could mean cheaper prices for northern Scots. That is in theory. Critics of the plan say it would add cost overall, prices would be more volatile and unpredictable, which is itself a cost to suppliers, and cheaper power in one part of Britain would likely mean higher prices in other parts. Developers of renewable energy say such a change would render it hard to make an investment case, where revenues become even more uncertain. And bedding in the system could take until the mid-2030s, and delay progress on other priorities. An alternative outcome from REMA would be an evolved system with several reforms: Technical and economic fixes to balance the power grid when the wind doesn't blow, and reduce the dependence on back-up gas plants Opening up access to smaller generators, in solar, for instance: improving price transparency And reform of those Contracts for Difference to align them with the changes the power system needs, and not merely with lower prices for consumers. The intention is to send signals to investors that they can have the confidence to commit an estimated £40bn per year to fund the energy transition. Ed Miliband is expected to make that decision this month and announce it next month. Keeping domestic energy bills down could come at a cost of securing jobs [Getty Images] To back up that confidence for investors, the taxpayer-fuelled National Wealth Fund has added to a busy Wednesday of energy sector developments by committing £600m, alongside Bank of America, three Spanish, one French and two UK banks, to complete a £1.3bn Scottish Power loan. This is for the Glasgow-based, Spanish-owned utility to build some of the grid connections necessary to link renewable power with customers. The total GB bill for that, however, looks more like £60bn. In this case, it contributes to two high-voltage subsea links - one from Torness in East Lothian to County Durham, the other from Fife to landfall in Lincolnshire and on to Norfolk, while installing new substations and overhead transmission cables, often facing the headwind of local resident opposition. And then there's THREE. Ofgem is due to conclude a review of the costs to developers of having access to the national grid. Known as TNUoS, Transmission Network Use of System, this has long been controversial in Scotland, because it places a rising cost on generating firms per unit of power as you travel north. This was designed more than 30 years ago, as an incentive to build big thermal power stations nearer cities. In the north of Scotland, where the most reliable winds blow, there's a hefty cost. In the south of England and Wales, connection is not a cost, but a subsidy. SSE Networks, which owns and operates the north of Scotland transmission cabling, is lobbying for change and gives an example of similar wind farms, the northern Scottish one paying £5.54 to connect per megawatt hour, while a Welsh one receives £2.81 in subsidy. What about Net Zero targets? Added to very high volatility from year to year, this issue is a deal-breaker for the next generation of offshore windfarms. Their supply costs of installation have been rising steeply, so they want to nail down the continuing transmission costs and the revenue they can expect. That's put Ofgem under pressure to change the system, and build in incentives to put turbines where the wind blows. None of these decisions can be spotted on your domestic or business energy bills. But all of them end up there, embedded in the prices charged for getting power into homes and business premises. As more money is spent and the transition continues, a larger share of the bill is likely to come from the costs of giving developers and financiers the incentives to invest. Such costs could be avoided, if the priority is to keep bills to a minimum. But that comes at a price, of jobs not created. The power grid would remain dependent on imported gas, and on the volatility of its global pricing. And the targets for Net Zero? Blown away.
