Utility Week

UTILITY Week 27th March 2015

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UTILITY WEEK | 27Th March - 2nd aprIL 2015 | 7 E l E ct i o n c o u n td o w n : 4 1 d ay s to g o Budgeting for an infrastructure boost Osborne wrong-footed some of his opponents by finding extra cash for infrastructure spending in the Budget. Lobby Election / Party conferences C hancellor George Osborne patted him- self on the back and "walked tall" last week as he laid claim to a recovering economy and improved living standards across the country. But, in his last budget before the general election, what did Osborne's Budget have in terms of plans for the future and paying for the monumental shi to a low-carbon econ- omy? This week's Lobby explores his prom- ises for infrastructure and planning support from a utilities perspective. The energy sector's old guard will have welcomed the tax breaks for offshore oil and gas, but perhaps the most remarkable and controversial infrastructure announcement concerned tidal energy. Many renewable energy advocates wel- comed Osborne's endorsement of the Swan- sea tidal lagoon, but others felt a better return on investment could be achieved else- where. Ben Warren, environmental finance partner at EY, for instance, commented: "We have seen a very slow passage of mar- ket reform, and the late introduction of the CfD [contract for difference] regime has made it very difficult for developers to sanc- tion investment in new projects. It would be hugely beneficial for the UK renewables sector to see the same level of support for already proven and cost-effective renewa- bles." The proposed strike price of £168/ MWh for the first lagoon in Swansea is cer- tainly eye-watering (see p19). Perhaps hoping to balance this risky splurge, Osborne ensured that other energy infrastructure announcements were firmly focused on reducing system costs. His com- mitment to introduce competitive tendering for onshore transmission links, as is already the case for offshore links, should help. For water companies, there was little fod- der this year, though a promise to add £16.8 million to existing government spending on flood defences over the next four years should help to strengthen resilience. Non-specific to utilities but essential to the creation of smart infrastructure across the board, Osborne's gi of £40 million for commercial exploitation of the "internet of things" should create more scope for utili- ties to explore their role in future cities and a world of smart generation, distribution and consumption. See Caroline Flint interview, p10 In partnership with: DCLG and planning The government's National Planning Policy Framework (NPPF), launched in 2012, set out to return power to local authorities, but since then communities secretary Eric Pickles has called in, and rejected, two-thirds of plans for onshore wind and has banned the sustainable developments the NPPF set out to encourage. At the same time, the planning regime for fracking has been streamlined – only late additions to the Infrastructure Act have put any hurdles in the way, with the legislation banning the controversial technique in groundwater protection zones. Eric Pickles: "I want to give particular scrutiny to planning appeals involving renewable energy developments." David Cameron: "We're going all out for shale." • Thames Tideway Tunnel: London's new supersewer Estimated cost: £4.2bn • Hinkley Point C: The Somerset new build nuclear project owned by EDF Energy Estimated cost: £24.5bn • Swansea Tidal Lagoon: The 320MW tidal energy project Estimated cost: £1bn • The Western Link (aka Bootstrap): The col- laborative project between National Grid and Scottish Power Transmission to spread the wealth of Scotland's renewable energy assets Estimated cost: £1bn Utilities infrastructure mega projects thames tideway tunnel Hinkley Point c the western link swansea Bay

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