Latest news with #Hornsea4
Yahoo
23-05-2025
- Business
- Yahoo
Net zero less likely to bring down energy bills, warns auditor
Net zero is less likely to bring down energy bills in the near future, one of Britain's auditing giants has warned, amid falling gas prices and the soaring cost of offshore wind. KPMG said it will become 'harder to argue' that the switch to renewables can lower bills in the near-term if such trends continue. Annual household energy bills will fall by 7pc on average from July 1 after Ofgem committed to lowering its price cap to £1,720, largely as a result of the seasonal reduction in the demand for gas, which sent prices lower. It means that the cost of subsidies offered to renewable generators – which are funded by taxes on bills – are becoming an increasing proportion of the cost of household energy. Such levies now account for up to 25pc of energy bills, according to Dieter Helm, professor of energy economics at Oxford University. Simon Virley, the head of energy at KPMG UK, said:'Today's decrease in the energy price cap is the result of falling gas prices and will bring costs back to where they were at the end of last year. This is good news for households still struggling with the cost of living. 'But with upward pressures on the cost of renewables, due to supply chain and other constraints, and if gas prices continue to fall, it will be harder to argue that switching from gas to renewables will help bring energy bills down in the near-term.' Mr Virley's comments reflect the recent turmoil in the renewables industry caused by Danish developer Orsted, which decided to abandon its massive Hornsea 4 wind farm project off the coast of Yorkshire due to rising costs. Orsted won the contract for Hornsea 4 only last year with a guaranteed minimum price of £85 per megawatt hour, which was higher than any other recent award. The renewables sector has been hit hard by inflation, including rising costs for steel and for the ships, cables and other equipment needed to build offshore wind farms. Mr Virley said that in the longer term the shift to renewables still made sense 'to remove our dependence on volatile global fossil fuel markets'. Other analysts say the shift to renewables, and the levies that support them, is costing consumers too much. A separate report, issued last week by Watt-Logic energy consultancy, found that green levies added £18bn to bills last year, a sum that will reach £20bn by 2030. Analyst Kathryn Porter said: 'My analysis indicates that had Britain continued with its legacy gas-based power system in the period since 2006, consumers would have been almost £220bn better off, even taking into account the impact of the gas crisis.' At the centre of such debates is the ever-changing price of natural gas. Its price is set partly by trading at the so-called TTF Hub in the Netherlands – a virtual point in the pipeline network where gas is bought and sold. In 2021, TTF prices – the benchmark for Europe – were hovering around €20 (£17). They soared to €340 at the peak of the energy crisis caused by the Ukraine invasion and have since fallen back sharply. Memories of this huge but short-lived rise – and the huge costs it imposed on personal and public finances – have fuelled the continuing political pressure for an accelerated shift to renewables. Over the last year gas prices have hovered between €31 and €58 – much lower than 2022 but not back to 2021 levels. This remains important for power bills because about a third of UK electricity is generated by gas-fired power stations. However power bills contain several other components besides gas costs. Other factors include network costs – covering transmission infrastructure – and green levies. As the amount of renewables on the network has grown so the size of those green levies has increased – both in cost and as a proportion of bills. This trend is set to continue, directly linked to the growing number of wind and solar farms added to the system. Ed Miliband, the Energy Secretary, repeated his calls to replace gas with renewables. He said: 'The fall in energy bills is welcome news for families across the country and will mean that working people keep more of their money in the coming months. 'But the only way we get long-term energy security is through our mission for cheap, clean home-grown power. 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
23-05-2025
- Business
- Yahoo
Net zero less likely to bring down energy bills, warns auditor
Net zero is less likely to bring down energy bills in the near future, one of Britain's auditing giants has warned, amid falling gas prices and the soaring cost of offshore wind. KPMG said it will become 'harder to argue' that the switch to renewables can lower bills in the near-term if such trends continue. Annual household energy bills will fall by 7pc on average from July 1 after Ofgem committed to lowering its price cap to £1,720, largely as a result of the seasonal reduction in the demand for gas, which sent prices lower. It means that the cost of subsidies offered to renewable generators – which are funded by taxes on bills – are becoming an increasing proportion of the cost of household energy. Such levies now account for up to 25pc of energy bills, according to Dieter Helm, professor of energy economics at Oxford University. Simon Virley, the head of energy at KPMG UK, said:'Today's decrease in the energy price cap is the result of falling gas prices and will bring costs back to where they were at the end of last year. This is good news for households still struggling with the cost of living. 'But with upward pressures on the cost of renewables, due to supply chain and other constraints, and if gas prices continue to fall, it will be harder to argue that switching from gas to renewables will help bring energy bills down in the near-term.' Mr Virley's comments reflect the recent turmoil in the renewables industry caused by Danish developer Orsted, which decided to abandon its massive Hornsea 4 wind farm project off the coast of Yorkshire due to rising costs. Orsted won the contract for Hornsea 4 only last year with a guaranteed minimum price of £85 per megawatt hour, which was higher than any other recent award. The renewables sector has been hit hard by inflation, including rising costs for steel and for the ships, cables and other equipment needed to build offshore wind farms. Mr Virley said that in the longer term the shift to renewables still made sense 'to remove our dependence on volatile global fossil fuel markets'. Other analysts say the shift to renewables, and the levies that support them, is costing consumers too much. A separate report, issued last week by Watt-Logic energy consultancy, found that green levies added £18bn to bills last year, a sum that will reach £20bn by 2030. Analyst Kathryn Porter said: 'My analysis indicates that had Britain continued with its legacy gas-based power system in the period since 2006, consumers would have been almost £220bn better off, even taking into account the impact of the gas crisis.' At the centre of such debates is the ever-changing price of natural gas. Its price is set partly by trading at the so-called TTF Hub in the Netherlands – a virtual point in the pipeline network where gas is bought and sold. In 2021, TTF prices – the benchmark for Europe – were hovering around €20 (£17). They soared to €340 at the peak of the energy crisis caused by the Ukraine invasion and have since fallen back sharply. Memories of this huge but short-lived rise – and the huge costs it imposed on personal and public finances – have fuelled the continuing political pressure for an accelerated shift to renewables. Over the last year gas prices have hovered between €31 and €58 – much lower than 2022 but not back to 2021 levels. This remains important for power bills because about a third of UK electricity is generated by gas-fired power stations. However power bills contain several other components besides gas costs. Other factors include network costs – covering transmission infrastructure – and green levies. As the amount of renewables on the network has grown so the size of those green levies has increased – both in cost and as a proportion of bills. This trend is set to continue, directly linked to the growing number of wind and solar farms added to the system. Ed Miliband, the Energy Secretary, repeated his calls to replace gas with renewables. He said: 'The fall in energy bills is welcome news for families across the country and will mean that working people keep more of their money in the coming months. 'But the only way we get long-term energy security is through our mission for cheap, clean home-grown power. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
21-05-2025
- Business
- Yahoo
Green energy giant slashes investment by £3bn in blow to Miliband
Energy giant SSE has slashed its green energy spending plans by £3bn and warned it will not hit its 2030 net zero goals. The power company told shareholders it was 'unlikely' to meet targets for renewable output amid the 'changing macroeconomic environment and wider delays to planning processes'. SSE, one of the operators of Britain's high-voltage power grid, said it would reduce spending on renewables by £3bn over the next five years, blaming planning and policy delays by the UK and Scottish governments. Alistair Phillips-Davies, the SSE chief executive, said the company would cut its investment expectations to around £17.5bn 'reflecting financial discipline ... and consent phasing in networks'. 'Consent phasing' is where separate planning permissions must be granted for each stage of construction. It follows last month's announcement that it would cut 300 jobs from its renewables business. The bulk of the remaining investment cash – about 60pc – will be invested in SSE's transmission and distribution networks with only about 30pc going to new renewables such as offshore wind. Mr Phillips-Davies said SSE's portfolio had to be built to 'withstand risk and uncertainty'. He said: 'What we see on planning is that historically, policies haven't been conducive to getting many planning consents approved. 'Our Berwick Bank offshore wind project has been on [Scottish] ministers' desks for about three years now. In transmission our Argyll-Skye link project is well over two and a half years.' He said SSE was continuing work on its massive Dogger Bank wind farm 80 miles off England's north-east coast, with the first phase due to become operational this year, eventually powering 6m homes on a windy day. However, Berwick Bank, which is potentially even larger, has been awaiting Scottish ministerial approval for so long that it missed out on the opportunity to take part in last year's government funding round. Mr Phillips-Davies suggested that Ed Miliband will need to also raise subsidy rates for future offshore wind projects or risk energy companies abandoning vital projects. That warning came as the Energy Secretary aims to commission thousands more offshore wind turbines in another funding round this autumn. The subsidy system, funded by levies on consumer bills, offers developers a guaranteed minimum price for the power they produce and has been getting steadily more expensive. It follows last month's announcement by Danish developer Orsted that it had abandoned plans to develop Hornsea 4, another giant wind farm, even though it had been guaranteed a minimum price of £85 per megawatt hour – among the highest rates ever offered. Mr Phillips-Davies said Orsted's decision suggested that Mr Miliband might have to offer even more to future developments. He said: 'This might tell you that companies in a similar position [to Orsted] might seek a higher price.' SSE reported £2.4bn in adjusted operating profit in the year to the end of March. Profit after tax was £1.8bn. Its distribution and transmission divisions are among the most profitable, generating £1bn in adjusted profits – up from £691m last year. The distribution division runs the networks linking homes and businesses to the national grid across central southern England and the north of Scotland. Its transmission division runs the high voltage grid in northern Scotland. The profits for SSE Renewables division also surged by 25pc to £1bn, up from £833m last year. Mr Phillips-Davies said he hoped planning processes would accelerate. 'What's been encouraging is that the administration in Scotland has committed to 52-week turnarounds on planning, and indeed, the new Labour Government are putting in place a new Planning Bill and new planning regime, which we would hope will significantly accelerate applications.' He warned that a move to zonal pricing with prices set by local supply and demand, would risk introducing confusion and a new set of delays at an already-turbulent time for UK energy. 'Zonal pricing just represents a dislocation in the market, significantly increasing costs and jeopardizing 2030 delivery. It's a really bad idea.'
Yahoo
21-05-2025
- Business
- Yahoo
SSE's share price rises a little after it reported flat earnings for 2025
Within the first hour of trading today (21 May), the SSE (LSE:SSE) share price was up just over 1% after investors digested the company's results for the year ended 31 March 2025 (FY25). The timing of the release of its numbers was unfortunate. At exactly the same time, the Office for National Statistics announced a bigger-than-expected increase in inflation. Higher energy prices was one of the reasons given for the surprise. And SSE shareholders appear to have benefitted from this. The energy group announced a 7% increase in its dividend to 64.2p. The stock's now yielding 3.5%, exactly the same as the FTSE 100 average. However, in FY23, it was 96.7p – a reminder that dividends are never guaranteed. But apart from the payout, most of the group's numbers were pretty flat. Indeed, adjusted earnings per share (EPS) were exactly the same in FY25 as in FY24. Measure FY23 FY24 FY25 Adjusted operating profit (£m) 2,529 2,426 2,419 Adjusted earnings per share (pence) 166.0 160.9 160.9 Dividends (pence) 96.7 60.0 64.2 With EPS of 160.9p, it means its price-to-earnings (P/E) ratio is now around 10.5. This is higher than that of, for example, Centrica (8.9), the other integrated energy provider in the Footsie. SSE claims that it has a 'clearly defined pathway' to delivering EPS of 175p-200p by FY27. At the top end of this range, the stock's P/E ratio falls to 8.5. Perhaps conscious of its large debt pile, the company — which claims to be at the heart of the clean energy transition — announced a £3bn reduction in its planned investment programme over the next five years. It says this reflects 'financial discipline in a changing macro environment across the energy businesses and consent phasing in networks'. In other words, there's increased uncertainty about the UK's energy policy. Ørsted recently cancelled plans for the Hornsea 4 offshore wind project. It blamed higher costs and increased 'execution risk'. SSE's debt is now equivalent to 3.2 times EBITDA (earnings before interest, tax, depreciation and amortisation). This time last year, it was three times. And despite the planned reduction in capital expenditure, the group's expecting this to rise to four. I think this is something to keep an eye on. SSE's unspectacular performance in FY25 is, in my opinion, the biggest single reason for owning the utility stock. The sector's defensive qualities can be attractive. During times of economic turbulence, utilities should keep ticking along paying a generous dividend, while other stocks are caught in the fall out. And I do think we live in uncertain times, meaning there's a strong case for considering shares in the sector. But despite SSE's undoubted strengths, I believe there are other better FTSE 100 utility stocks out there. Even after today's dividend hike, four others offer a higher yield. And based on its beta value (a measure of share price volatility) its the second most unstable. Stock 5-year beta value Dividend yield (%) Centrica 0.61 2.9 SSE 0.58 3.5 United Utilities Group 0.40 4.5 Severn Trent 0.35 4.3 National Grid 0.31 4.3 SSE's reported another solid set of numbers and has pledged to increase its dividend by 3.7%-5% in FY26. But there appears to be growing uncertainty surrounding large-scale renewable energy projects in the UK. Also, its growing debt — relative to earnings — remains a concern. For these reasons, despite its defensive qualities, I don't want to own the stock. The post SSE's share price rises a little after it reported flat earnings for 2025 appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool James Beard has no position in any of the shares mentioned. The Motley Fool UK has recommended National Grid Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025 Sign in to access your portfolio
Yahoo
19-05-2025
- Business
- Yahoo
Norway Bets Big on Offshore Wind
Norway announced on Monday a tender for three project areas for floating offshore wind in a highly-anticipated first competition for this type of renewable energy in the Nordic country. The Norwegian Energy Ministry, which said earlier this year that it would bet on floating wind instead of fixed-bottom offshore wind, is now opening competition for project areas for offshore wind in Utsira Nord outside the coast of Rogaland off Norway's southwest coast. The installed capacity in each project area cannot exceed 500 megawatts (MW), according to the competition tender, in which applications for projects will be received until September 15, 2025. Norway will subsidize the projects, for a total of $3.4 billion (35 billion Norwegian crowns) cap for state aid at Utsira Nord. Winning bids will have two years to mature their projects and participate in an auction for state aid as a direct grant in 2028 or 2029. The model for allocating project areas and government support – developed in dialogue with the offshore industry – is adapted to floating offshore wind and will contribute to both technology development and cost reductions for subsequent projects, Energy Minister Terje Aasland said in a statement. Earlier this year, Norway scrapped plans to hold a fixed-bottom offshore wind tender at the Sørvest F offshore area in 2025, due to high costs to connect power to the grid. Instead of fixed-bottom offshore wind at Sørvest F, the Norwegian government will prioritize floating wind in the tenders with radial links to the grid, the energy ministry said in February. Norway's floating wind tender comes as the global offshore wind industry continues to face significant headwinds relating to supply chain, regulatory, and macroeconomic developments. Orsted, the world's biggest offshore wind project developer, earlier this month warned of a continued challenging environment for the industry. Due to higher costs and interest rates, the company announced it had decided to discontinue the development of the Hornsea 4 offshore wind project in the UK in its current form. By Michael Kern for More Top Reads From this article on
