The CEO of DONG Energy, Henrik Poulsen, has stated that wind power could supply the majority of the UK’s energy supply in the future. In an article published in the Guardian, Poulsen noted the falling costs of renewable energy and new developments in technology, and says that offshore wind power could create more than half of the UK’s energy.
DONG Energy has also issued a statement regarding the future of its gas and oil division. The company confirms that it is ‘reviewing strategic options’ regarding its £1.5 billion-pound gas and oil arm.
The company released the statement following media speculation that the company was making plans to sell its gas and oil business. DONG Energy say that JP Morgan has been ‘engaged’ to carry out a ‘preliminary market assessment’ but the Danish-owned company makes it clear it has not yet decided if it will divest its gas and oil division.
Support for Renewable Energy
The comments come at a time when the use of renewable energy is growing from strength to strength. DONG Energy, who are a leader in renewable energy had a record breaking IPO this year, and In 2015, 11 per cent of the UK’s energy supply was produced through wind power, which is the highest figures yet according to Businessgreen.com
In addition, public support for wind energy continues to grow. Figures from the Department for
Business, Energy & Industrial Strategy indicate that record levels of people (71 per cent) are now in favour of wind power.
RenewableUK’s Chief Executive, Hugh McNeal, said:
“It’s great to see public support for onshore wind has reached its highest ever level, at an overwhelming 71%. Onshore wind is the cheapest form of new power generation available in Britain, so it makes sense to use it to keep people’s electricity bills as low as possible”.
The Government continues to show its support for renewable energy with the announcement of the new Contracts for Difference auction, which will allow companies to bid for £290 million in renewable electricity contracts.
Business and Energy Secretary Dick Clark also gave more details of government plans to phase out unabated coal-fired power stations over the next decade and replace them with greener forms of energy.
The government says the investment in green energy is necessary to secure energy supply and reduce carbon emissions. It has pledged £730 million towards renewable energy projects over the next decade.
A new report shows how competitiveness in the oil and gas industry is improving, The Oil and Gas UK economic report also highlights how the cost of extracting oil and gas have fallen dramatically and how productivity has increased by 10%. However, it also details the importance of new investment into the sector.
Lack of capital investment and exploration
Another factor highlighted in the report is the declining capital investment for the industry: £9 billion was invested in 2015, compared with over £14 billion in 2014. In addition, job losses are a continuing concern for the sector, as well as declining revenues for the supply chain, which fell by 30 per cent.
The report goes on to explain how the lack of exploration continues to be a concern. It states that there are low levels of exploration, with only ten wells subject to exploration and appraisal activity in 2015. In addition, only one new field received approval, and brownfield investment was also on the decline with just five projects given the go ahead in 2016.
Commenting on the report, Oil & Gas UK’s chief executive, Deidre Michie said:
“The UKCS is in urgent need of fresh investment to boost exploration and drive activity, particularly for the supply chain.
“Exploration has fallen to record lows and little new investment has been approved in 2016 and 2017 looks no better. Increased asset trading is one area that could free up new investment by facilitating the trading of late-life assets.”
Calls for government action and recognition
As a result of the report’s findings, Michie is urging the government to “champion the UK’s oil and gas industry”. One of the measures Michie specifically called for was ‘encouragement’ for new entrants into the sector.
Although Oil and Gas UK remain focused on increasing productivity and efficiency, while reducing costs in the sector, it’s still asking that the Oil and Gas authority, the Department of Business Energy and Industrial strategy and HM Treasury offer further support for the industry.
One of the steps Oil and Gas UK have requested is for the government to reaffirm its commitment to the Driving Investment Strategy, which was first published in 2014. The Strategy detailed the need for reform in the industry; reforms already introduced were aimed at increasing exploration and aiding the UCKS to compete for investment, however, despite these efforts, exploration is now at an all-time low.
Oil and Gas UK also ask industry and government bodies to “work together to create a low tax, high activity province which can continue to support the important supply chain based here and position our sector in the best place to take advantage of any potential upturn.”
The UK Government has signed an historic agreement with the French-owned energy firm EDF, which paves the way for a new generation of nuclear power. After an unexpected delay to further review the Hinkley Point C proposals the government finally gave the go ahead for the two new nuclear reactors in mid-September 2016.
The Current secretary of State for Business, Energy and Industrial Strategy Greg Clark, Jean Bernard Levy, CEO of EDF and He Yu, chairman of the China General Nuclear Power Group (CGN) came together to sign the Contract for Difference and Secretary of State Investor agreement in late September.
Commenting on the development, Greg Clark stated:
“Signing the Contract for Difference for Hinkley Point C is a crucial moment in the UK’s first new nuclear power station for a generation and follows new measures put in place by Government to strengthen security and ownership.
Britain needs to upgrade its supplies of energy, and we have always been clear that nuclear power stations like Hinkley play an important part in ensuring our future low-carbon energy security.”
Building and Funding of Hinkley Point C
The £18 billion plant is being partly funded by the CGN group, who have invested £6 billion; the government has also pledged funding towards the new plant.
Hinkley Point C will be the UK’s first nuclear power plant for twenty years and Vincent de Rivaz, CEO of EDF Energy in the UK, said it will “kick start Britain’s nuclear revival”.
Once built, the Somerset-based plant will produce 7 per cent of the UK’s fuel needs, and the signing of the agreement will also allow the development of Sizewell C and Bradwell B.
Hinkley Point C Plans
Hinkley Point C is due to start producing electricity in 2025 and it will provide power for 6 million homes.
Decommissioning of the plant will begin in 2083 and will cost more than £7 billion; the operators of the Hinkley Point C have been made responsible for the decommissioning and site clearance costs under new measures brought in by the government.
Importance of nuclear energy to UK
Nuclear power is part of the government’s plans to provide energy security for the UK and to help fill the need for low carbon energy sources. There are eight potential sites that could be commissioned by 2025, and Horizon Ltd and NuGeneration are just two companies who plan to build nuclear reactors in the UK.