Utility Week

Utility Week 28th February 2014

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UTILITY WEEK | 28Th FEbrUarY - 6Th March 2014 | 15 Policy & Regulation This week Davey hints at scale of UK's CCS ambition Second tranche of carbon capture schemes could follow award of £1bn to competition winners There could be a second phase of carbon capture and storage (CCS) projects following the award of £1 billion to two projects, Ed Davey hinted on Monday. The government has con- firmed funding for Peterhead and White Rose under its £1 bil- lion commercialisation competi- tion, and officially deselected two other schemes on the reserve list. But in a blog entry the energy secretary assured the unsuccessful develop- ers that the government's plan for CCS "does not stop at these first projects". "We envisage three phases of CCS," he said, "with a second phase of projects possibly following the Peter- head and White Rose projects on a similar timescale." Despite the high initial costs of CCS, Davey said achieving a low-carbon mix without the technology would be "much more expensive". The industry is seeking support under the contracts for difference (CfD) regime, similar to that available for renewables and nuclear. The contracts will be negoti- ated case by case, because the cost depends heavily on how advanced the surrounding infrastructure is. The consortia behind Captain Clean Energy and Don Valleyprojects are talking to government about getting early approval for these subsidies. Another development at Teesside is on ice. Luke Warren, chief executive of the CCS Association, said a second phase must happen "in parallel" with the competition. He is hoping a subsidy deal will be struck "in the coming months". MD EnErgY Fallon gets tough on constraint payments Michael Fallon has threatened to clamp down on constraint payments to small windfarms, it emerged this week. In a leaked letter to renewa- bles trade bodies, the energy minister accused small wind generators of overcharging. He said government "stands ready" to legislate if they do not show "restraint". Meanwhile, National Grid for the first time published a break- down of constraint payments by generation type. Windfarms were paid £3.6 million in Janu- ary and gas power generators netted more than five times that sum, £19.6 million, in payments to rebalance the system. ELEcTrIcITY Labour would not renegotiate Hinkley strike price deal Labour has said it will not rene- gotiate the contract for the new nuclear power station at Hinkley Point C if it wins the next gen- eral election. Shadow energy secretary Caroline Flint said she would not seek to change the contract for the £16 billion plant. The government agreed a strike price of £92.50/MWh for the electricity produced at the power station in October last year, which has since been labelled as "the most expensive power station in the world". Despite these concerns, Flint told BBC One's Andrew Marr Show that electricity from the plant was still cheaper than other low carbon energy. WaTEr EU citizens oppose water privatisation Campaign group Right2Water, which opposes the privatisation of water, has succeeded in bring- ing proposed legislation before the European Parliament. The legislation, which pro- poses legally binding guarantees that water services will not be privatised in the EU and that access to clean water should be considered a human right, was debated in the European Parlia- ment this week. Right2Water was able to take its campaign to parliament through the first successful Euro- pean citizens' initiative, which gives citizens the chance to ask for new European legislation if at least one million supporting signatures could be collected. Trade body Water UK said it was monitoring the situation. Right2Water co-ordinator Pablo Sanchez told Utility Week that if the legislation were passed, "it would put pressure on the British government to discuss and review the 25 years of privatisation of water". Davey has hinted at future CSS projects Political Agenda Mathew Beech "The politicians have turned their attention to energy" David Cameron and Alex Sal- mond have been trying to win the hearts and minds of Scots as the independence campaign continues. Aer the recent playground spat about currency – "we're going to use the pound", "no you won't", "yes we will", "no you won't" – the politicians have turned their collective attention to energy. The argument boils down to whose oil it is and how much of its is le. be crippled by high subsidy costs and an inability to cope with the burden of volatile oil prices in a world of ever-decreas- ing North Sea oil reserves. The best solution, accord- ing to Cameron and the Better Together campaign, is to "share the burden" across the broader shoulders of the UK. We'll find out what Scots make of this North Sea face-off in September, but in the mean- time the arguments, and photo shoots, will continue. Salmond is in the "there is lots le and it's Scotland's" camp, and Cameron takes the view that "there's not that much le, and it belongs to the UK". This forms part of a wider energy debate in the run-up to the referendum. Scotland aims to be the greenest country in Europe, with Salmond proudly aiming to get all of Scotland's electricity from renewable sources – renewable energy that will also help keep the lights on in a UK struggling to meet its own demand and renewable targets. Westminster's view is that an independent Scotland depend- ent on renewable energy would

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