Utility Week

Uberflip 17 01 14

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Markets & Trading This week Local authorities will get to keep all business rates collected from shale sites in their area Total invests £30m as fracking is sweetened Total became the latest company to join the UK fracking rush on Monday, as David Cameron said the government was "going all out for shale gas". The French oil giant announced investment of up to £30 million in shale gas in the Cameron: going all out for shale gas Midlands, in partnership with Ecorp, Dart Energy, Igas and Egdon Resources. Total has taken a 40 per cent share of two licences covering Lincolnshire's Gainsborough Trough. The move is seen as a vote of confidence in the burgeoning industry. Meanwhile, the prime minister promised that local authorities would keep 100 per cent of business rates collected from shale sites in their area. That is worth up to £1.7 million for a typical site, and comes on top of community benefits worth £100,000 plus 1 per cent of revenue for each well. Cameron said: "A key part of our long-term economic plan to secure Britain's future is to back businesses with better infrastructure. That's why we're going all out for shale." Industry body the UK Onshore Operators Group (UKOOG) used the occasion to launch its community benefit pilot scheme. It will be partnering with UK Community Foundations to direct the money to local causes. UKOOG and the government are jointly funding a study into the skills and equipment the industry needs from the supply chain. It follows a report by the Institute of Directors saying the industry could create 74,000 jobs, reduce gas imports by 50 per cent and attract investment of £3.7 billion a year. MD Emissions 'No change needed' to carbon budget An ambitious emissions reduction target for 2030 from the European Union (EU) would result in the fourth carbon budget being tightened, according to Lord Deben. The chair of the Committee on Climate Change (CCC) told MPs last week that if the EU accepts the UK government's proposal for a 50 per cent emissions reduction by 2030, "we would have to seriously look at tightening the budget". However, Lord Deben was not expecting the EU to support the UK's proposals and said to the Energy and Climate Change Select Committee: "Life is such that it is very often true that you don't get the most ambitious answer." He added: "If the EU does the very least that is sensibly likely, the fourth carbon budget is still the place you would like to be." Electricity All constraint costs to be published National Grid is to publish data on payments to restrict output of all power generators, not just windfarms, after the renewables industry hit out at cherry- icking p by opponents. Scottish Renewables called for the move after a front page story in The Times Scotland singled out wind power for criticism over "constraint payments" – compensation to generators when the grid is overloaded and they cannot sell their power. The Times Scotland reported on Wednesday that power generators "could receive more than £20 billion" in constraint payments and onshore windfarms would be the main recipient. It was not the first constraint payment story to emerge with an anti-wind spin, but the first to talk in billions rather than millions of pounds. National Grid rejected the figure, which came from anti-wind campaigners at the John Muir Trust, as "extremely unrealistic". Scottish Renewables pointed out the latest National Grid figures showed wind accounting for just 14 per cent of constraint payments, with coal, gas and hydro taking most of the rest. Wind was the only form of generation to be reported separately. Niall Stuart, chief executive of Scottish Renewables, complained this selective reporting allowed opponents of wind to "cherry pick" the figures that suited their agenda. He wrote to National Grid, demanding it publish a regular breakdown of payments to all electricity generators. A National Grid spokeswoman said: "Before the end of February we will publish a full breakdown of constraint costs across all technologies in our Monthly Balancing Services summary." Open market Ken Cronin Monday 13 January will go down as a critical day in the development of shale gas in the UK. The government, the industry and also a key new entrant all made important announcements that will help shape our energy future. We welcomed the news that local councils and communities will benefit from 100 per cent of the business rates generated from our industry; this is in addition to the £1.1 billion in community funds that the industry has already proposed. "This is not a case of shale versus renewables or nuclear" Together this creates a comprehensive programme of fair and just rewards for communities. Many who are opposed to our industry have called these announcement bribes. However, they are similar to proposals that have already been announced for the onshore wind industry and other energy-related indus- 28 | 17th - 23rd January 2014 | UTILITY WEEK tries and reflect a growing understanding that industry needs to ensure that local communities are rewarded for hosting sites on behalf of others in the country. UKOOG has also launched a comprehensive supply chain study to ensure that UK companies benefit as much as possible from the potential £3.7 billion peak year investment in the supply chain and skills. This is not a case of shale versus renewables or even nuclear. In the short to medium term we don't yet have a renewable solution that covers all of the country's electricity, heating and transport requirements. We will need all forms of energy in the course of the next few decades. Ken Cronin is chief executive of the UK Onshore Operators Group (UKOOG). See this blog in full on utilityweek.co.uk

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