Retentions have been a source of conflict in the construction industry for too long. Their day is over. It is time for governments to act

 Calum Melville is CEO of Edison Capital

 

Is there a strategy within the construction industry in Britain to drive contractors out of business? This is not some mad conspiracy theory. The tragedy for the sector is that it has to be asked as a serious question.

What makes me say this? Well, nobody in construction will be surprised to learn that I am talking about cash retentions, the issue which has bedevilled small- to medium-businesses throughout living memory and is still killing them off with depressing regularity.

We need to be explicit about the shocking behaviour of big companies holding on to money that doesn’t belong to them and the fact that unscrupulous outfits are not paying what is owed to their suppliers in the hope that they will go under, and resolve the issue for them. Everyone who goes bust in this business has on their books a customer who hasn’t paid them.

Unfair behaviour by the big boys remains rife. Only last week (October 8), a major Scottish-based contractor was ordered by the High Court to pay a subcontractor £1.1 million when the judge ruled it had mounted a “frivolous defence” and that its arguments were “entirely without merit”.

This is not a new problem. Retentions, which are still the main bugbear, have been a part of the construction industry in the UK for more than 100 years and, in recent times, there has been a growing divide between major companies, which regard them as a useful mechanism, and smaller firms which almost unanimously see them as a company-destroying blight.

A rational analysis of the matter probably lies somewhere in between, but the focus of the construction sector, in which I have become increasingly involved over the past two years, must surely be on whether retentions have a place in a modern industry or whether Government should be legislating to get rid of them.

First of all, what are retentions? Essentially, they are a percentage of payment held back typically by a client or main contractor under a construction contract to act as security, or an assurance that the project works will be completed and that defects which may subsequently develop are remedied.

On the face of it, this seems reasonable, since it would appear to ensure that the contracted works are defect-free and that, in theory, the sub-contractor’s payment is protected until it is released at the end of an agreed period.

That is how it would work in an ideal world. However, in the mud and breezeblock world of the sub-contractor, things can often be seen from a different and significantly more jaundiced perspective.

The time between the contract start and the release of the held-back payment can inexplicably lengthen, frequently to the point where the subbie, now fully engaged on other projects, stops trying to collect and writes it down as a loss.

It is widely believed in the industry that less responsible contractors have made it a practice to count retentions as part of their own profit, or as an aid to cashflow, and have never had any intention of releasing the sums in question. Or contractors go bust, and the retention monies held go to primary creditors, rather than those to whom it was owed.

Let’s also factor in that, if clients keep 5% of the contract value as job retentions, that could equate to 50% of the profit the contractor expects to make. It could even be 100%. Margins are tight across the board, so it makes it even harder to swallow.

Even when contractors are calculating their returns from a job, they often don’t include existing overheads and, while overlooking this clearly is their fault, it shows they are so desperate to win the work that they are not pricing it properly, and it adds more pressure.

Also, contractors legally need to be on site the whole time, accruing further costs, especially if money is being held back. If they leave, they will be breaching contract and could be in more trouble legally, so they are stuck between a rock and a hard place.

Industry veteran Rudi Klein, former CEO of the SEC Group, said recently that SMEs had lost more than £2.5 billion of retentions, at a conservative estimate, as a result of upstream insolvencies. The Pye Tait Report from seven years ago reckoned that £5 billion was being withheld annually – a figure that will only have risen in the intervening period.

Just last year, in a less-than-festive Christmas message, Scotland’s Construction Industry Collective Voice said that 73% of respondents to a survey had experienced severe difficulties in securing the release of their retentions.

There have been innumerable Government initiatives over the years, at both Scottish and UK levels, to address the issue – from Build UK’s “roadmap to zero retentions” by 2025, the Get It Right initiative and the 2018 Hackitt Inquiry on building safety – but the practice remains as firmly entrenched in the construction industry psyche as ever.

This month’s damning Grenfell Inquiry report is long on improving standards – which, it is generally recognised, removing retentions would do – but the best advice would be not to hold your breath on that one.

One potential answer to what is clearly a convoluted and intractable problem might be an adoption of some of the more realistic elements of the Industry Behaviours Charter introduces by Oil and Gas UK’s Efficiency Task Force in 2015.

As well as a collective commitment to work effectively, efficiently and co-operatively, the Charter suggested that differences of view on retained money could focus on the individual part of the contract at issue.

Thus, if the matter in dispute was worth only 5% of the whole contract, then that would mean that 5% wouldn’t be paid rather than holding onto all the monies in the meantime while it was resolved.

The GVA of the construction industry in the UK was £108.7 billion, according to number-crunching site Statista, compared to a contribution of £30 billion by the oil and gas sector, which admittedly is winding down.

Action on retentions will eventually have to be at a legislative level. If it can raise standards across the board, create greater transparency and co-operation and avoid the annual cull of small firms who haven’t been paid for the work they’ve done, then surely it’s worth a try.

 

 

As a specialist in all areas of the building envelope, SFS Group Fastening Technology has created a comprehensive selection of CPD seminars which are intended to offer architects and other specifiers valuable insights into relevant industry topics, embracing key issues such as sustainability, safety and structural stability.

The RIBA approved presentations have been compiled to ensure participants gain a better understanding of the topics which range from fall protection systems to the fixing of warm roofs.  Each seminar normally runs for 40 minutes with the opportunity for questions afterwards, while RIBA Chartered Architects will qualify for double CPD points.  There is also the choice of having seminars delivered by the manufacturer’s Specification Team at offices and at the SFS Academy in Leeds or Welwyn Garden City.

Vincent Matthews, the Head of UK Marketing for SFS Group Fastening Technology, commented:

“The CPD sessions have been designed to develop the knowledge of architects and other construction industry professionals on topics impacting the industry.  The subjects include rainscreen cladding systems, designing the correct roof safety systems, and Evolution to Innovation: the fixing of warm roofs.  Each subject is broken down into specific areas: with ‘Airtightness and Thermal Efficiency’, for instance, covering how to test for airtightness, the energy performance of a project design, corrosion issues and cost-effective system specification as well as other aspects.

“Importantly, the CPDs are designed to provide information which will benefit architects in their everyday work, particularly in respect of issues such as energy efficiency trends sustainability, safety and some of the complex challenges raised by changes to legislation.”

As an acknowledged leader in the roofing and cladding industry, SFS has developed a diverse catalogue of products including rainscreen support systems, and has recently collaborated with an insulation manufacturer to create the game-changing NVELOPE ®NVS-RP range of thermally broken stainless steel brackets, facilitating thinner build-ups offering a reaction to fire rating of Euroclass fire classification of A2-s1, d0 good fire as well as energy performance.  Also, the force behind the Fall Protection Installer Network, SFS continues to innovate and helps shape the future of the industry through its CPD programme while offering a growing library of While Papers along with other training and education support.


CLICK HERE

For further information and view a video case study of the project

 

 

 

Dewan Architects + Engineers is set to unveil its latest innovations in AI-augmented BIM and automation alongside some of the world’s leading technology innovators at the Autodesk University (AU) 2024 in San Diego, USA.

This high-level event marks a significant milestone in Dewan’s digital transformation journey as the firm, celebrating its 40th anniversary this year, joins over 12,000 design and make experts at the AU conference.

At AU 2024, Dewan will showcase its ongoing research and development (R&D) in automation tools, which significantly boost efficiency and project delivery in the architecture, engineering, and construction (AEC) industry. Dewan’s bespoke suite of tools integrate seamlessly with Autodesk products, streamlining workflows and addressing critical challenges such as coordination inefficiencies and data fragmentation. Through a live talk, Dewan will illustrate how these tools are improving outcomes on ongoing projects, not only accelerating timelines but also enhancing data accuracy and team collaboration.

As the lead design consultant for the AMAALA Yacht Club, Dewan Architects + Engineers’ cloud-driven BIM workflows reduced design collaboration time by 43%, shortened total design time by 17%, and minimised change management efforts by 28%. These processes resulted in a 40% reduction in design-related activities, delivering significant operational savings and enhancing overall efficiency.

AI and Quible:

The Future of Smarter, Agile DesignDewan will showcase its progress in leveraging AI, with Quible as the centrepiece — a BIM-to-AI tool developed in-house to enhance data analysis and decision-making. By utilising deep learning and Large Language Models (LLM), Quible enables smarter, more precise designs, leading to greater design accuracy and improved project outcomes across all phases.

From Automation to AI-Augmented Decision Making

The integration of AI within BIM, as exemplified by Quible, enables near-real-time insights that significantly enhance the design process. AI algorithms can analyse vast datasets, including information from previous projects and environmental factors, transforming building design from a reactive to a proactive approach. This shift optimises project performance, cost efficiency, and sustainability.

As AI continues to reshape industry standards, Dewan’s innovative approach positions it as a driving force in the evolution of the AEC industry. The company’s forward-thinking strategy, centred on Outcome-Based Design, envisions a future where AI provides interactive insights into the performance, sustainability, and cost implications of design elements—leading to more informed decisions.

Christopher Stock, Head of BIM at Dewan Architects + Engineers, commented:

“The ability for data to be interactive and live opens the door to a more responsive design process, allowing teams to stay agile and informed, ultimately driving better project outcomes.”

 

Ammar Al Assam, CEO of Dewan Architects + Engineers, added:

“Our commitment to technological advancement is part of our DNA. With AI and platforms like Quible, we’re not just optimising processes; we’re creating a new paradigm for how architecture and engineering are practiced globally. This marks a key milestone in our 40-year journey of shaping the future of design.”

 

Unlocking New Frontiers

MAD, a dedicated technology research lab within Dewan, is focused on driving digital transformation through R&D. By integrating AI, automation, and emerging technologies like Digital Twins, Extended Reality (XR), MAD aims to optimise workflows across the company. The division also fosters digital innovation, spearheading R&D to develop pioneering solutions that address industry challenges and anticipate future trends.

Case Studies and Real-World Impact

Attendees at AU 2024 will have the opportunity to explore Dewan’s design automation and analytics solutions through practical case studies. Notably, the AMAALA Yacht Club project developed by Red Sea Global in the Kingdom of Saudi Arabia demonstrates how cloud-driven BIM workflows reduced design collaboration time by 43%, shortened total design time by 17%, and minimised change management efforts by 28%. These processes resulted in a 40% reduction in design-related activities, delivering significant operational savings and enhancing overall efficiency.

Pioneering Innovation in Architecture and Engineering

Dewan’s development of Quible is just one of its many technological advancements in 2024. Alongside breakthroughs in BIM, cloud-based solutions, and AI-enhanced design processes, Dewan continues to lead innovation in the architecture and construction sector. The recent acquisition of a majority stake in Singapore-based DesignLab further solidifies Dewan’s leadership in the global hospitality sector.

Dewan’s adherence to the ISO 19650 standard ensures that project data and collaboration meet the highest international benchmarks. With AI, deep learning, and advanced analytics at the core of its operations, Dewan remains committed to pushing the boundaries of architectural innovation and operational efficiency, shaping the future of the built environment.

Looking Ahead: The Path to Digital Excellence

Dewan’s initiative at AU marks the beginning of a broader vision for digital excellence. By leveraging AI for design and embracing near-real-time data analysis, Dewan is at the forefront of a sweeping transformation that promises to unlock new efficiencies, better outcomes, and limitless potential for future projects.

As Dewan continues to advance decision-making and digital integration, it remains focused on its mission: to redefine the possibilities in architecture and engineering by placing technology at the heart of its innovation strategy.

 

A Norfolk MP has called for derelict city school to be transformed.

Alice Macdonald, Labour MP for Norwich North, has urged County Hall to bring the Angel Road Junior School building back into use.

The school suddenly closed down more than three years ago after tiles fell from the ceiling and could sit empty for another decade unless Norfolk County Council agrees a new lease.

Ms Macdonald told parliament that “urgent action” was required and expressed her hopes to see the site turned into a school for children with special educational needs (SEND).

Since its closure in 2021, the school site has been left empty, with delays in securing a future for it branded a “scandal” by opposition councillors at County Hall.

The current lease on Angel Road Infant School is due to expire in 2035, meaning unless current renegotiations conclude the junior school site will remain in limbo.

Norwich North Labour MP Alice Macdonald raised the issue of the empty school – and her hopes that it can be turned into a school for children with special educational needs and disabilities (SEND) – in Parliament last week.

A spokeswoman for Norfolk County Council confirmed the council had not yet carried out its own inspection of the ceiling at Angel Road Junior School.

She said:

“This is something we will do when the building is transferred back. The school isn’t being used currently, so there has been no reason to carry out an inspection.”

But Steve Morphew, leader of the Labour group at County Hall, said:

“We need to challenge the whole school building inspection system.

“Angel Road Junior School closed because of a ceiling collapse, which should have been a flashing warning that other older school buildings in Norfolk might be at risk.

“Academies have taken over many former council run schools on full repairing leases, but the county council remains responsible for school standards including ensuring children are learning in a safe and well maintained environment.”

Mr Morphew said the current rules over inspections of schools needed to be “clarified and tightened” to prevent responsibility being avoided.

He said:

“Children’s safety trumps every consideration. But behind that is a potentially enormous backlog of inspection, improvement, maintenance and cost which academies have responsibility for, and the council has responsibility for making sure is carried out, on top of direct responsibility for schools still under council control.

“This is becoming a major issue and I am very pleased Alice Macdonald raised it in the House.”

When the county council announced the inspections of the schools it has responsibility for, it urged trusts to conduct their own safety checks.

 

Source: Eastern Daily Express

 

 

Propertymark has backed the Government’s reforms to the National Policy Planning Framework and other changes to the planning system but warns requirements need to be more area specific for each region.

Responding to the Government’s consultation on planning reforms, the professional body highlighted concerns raised from a roundtable in September about what is working with the planning system and what needs improving.

Responses highlighted a lack of local knowledge and consistency among local council planning officers and stated that planning requirements should be tailored to each area. Properties, therefore, need to be built for the specific needs of local neighbourhoods, as one area may need more housing for older residents than others, Propertymark said.

Members stressed that construction remains expensive, so councils would either have to build more affordable homes themselves or subsidise developers to meet precise demand.

To make matters more difficult, members said that there is a lack of incentives for landowners to sell to develop.

They also warned that without a long-term housing strategy from successive governments, there can be no way for politicians to ensure that there are housing options across all tenures to meet the needs of local communities on an individual basis.

There was also strong feeling that new homes should also be built on brownfield sites first, be more energy efficient, and not compromise any natural landscapes.

Commenting on members’ feedback, Rose Forman, policy and campaigns officer at Propertymark, said:

“Focusing on planning reform is an important step for the UK Government to deliver the magnitude of new homes it has promised. Propertymark consulted with our members who said there is a greater need for planning requirements to be more area specific, and for greater local knowledge and consistency in the decisions made by local authority planning officers.

“Our members want to see homes built for the demographics who will need them and in the precise locations for which there is demand. The type and cost of construction must be taken into consideration and the UK Government must have a long-term strategy which future-proofs our towns, villages and cities for generations to come. New homes must be energy efficient and built around robust supporting infrastructure, such as upgrades to road and public transport setups, as well as wide ranging health and education provision.”

Source: Estate Agent Today

 

Soiurce:

 

Funding for further trials of repurposed London Clay as low-carbon cement alternative

 

High Speed 2 London tunnels team Skanska Costain Strabag Joint Venture bags funding from Innovate UK’s £3.2M pot for trialling repurposed London Clay as an alternative to carbon-intensive Portland cement.

The Skanska Costain Strabag Joint Venture (SCS JV) project is one of six recipients of £3.2M in Innovate UK funds, which could help the UK’s concrete industry accelerate its decarbonisation efforts.

SCS JV will use its part of the funding to carry out further research and testing into using calcined London Clay – excavated from tunnel activities – as a replacement for Portland cement in concrete for High Seep 2 (HS2) permanent works.

Portland cement production is highly energy-intensive and emits large amounts of CO2. Replacing it with calcined London Clay could lead to reductions in greenhouse gas emissions.

The JV is working on the project together with client HS2 Ltd, technical lead Arup, concrete supplier Tarmac, the University of Leeds and Sika UK, along with Expedition Engineering and the Mineral Product Association (MPA).

Skanska materials engineering manager Apostolos Tsoumelekas, who has been heavily involved in the project, said: “The clay that is excavated from the HS2 tunnels is essentially a waste product. We have developed a process which calcines the clay and grinds it to a powder transforming it into a useful resource which can then be added to concrete replacing Portland cement. The results have been impressive and hopefully if it’s scaled up it could really help speed up the adoption of low-carbon concrete for commercial use.”

Background

The funding builds on the Re-purposed Excavated Arising Loop (REAL) initiative, a feasibility study established to address the challenge of excess tunnel and excavation materials from the HS2 London tunnels.

he majority of this waste material consists of London Clay. The REAL initiative explored ways to repurpose this clay, initially focusing on two potential applications: as expanded clay aggregate (lightweight aggregate – LWA) and as a supplementary cementitious material (SCM) to replace Portland cement in concrete.

According to Tsoumelekas, the project underwent multiple stages:

  • Stage 1a: Testing London Clay for its suitability as SCM and LWA
  • Stage 1b: Designing and optimising concrete mixes incorporating London Clay-derived SCM and LWA
  • Stage 2: Setting up a pilot clay processing facility and using its outputs in construction works.

The team discovered that while London Clay could be used for both applications, its use as SCM provided the most substantial benefits, Tsoumelekas told GE.

The results of the REAL study showed a reduction in carbon figures and suggested potential savings of tens of millions of pounds on a project the size of HS2. However, further research was required.

The preliminary trials have thus paved the way for this latest funding to help scale up production.

Calcined London Clay

When asked about the suitability of calcined London Clay as a low-carbon alternative to Portland cement, Tsoumelekas said: “Simplistically, the mineralogy of the London Clay will determine its suitability. A key parameter indicating the reactivity of clays is the kaolinite content, which can subsequently be used to justify a clay’s suitability as a SCM.

“We have found that despite London Clay’s relatively low kaolinite content, it is possible to be used as a beneficial supplementary cementitious material.”

Despite its promise, using London Clay as an SCM comes with challenges. One of the key hurdles is the limited availability of calcination facilities in the UK.

“Based on the data from the REAL initiative, we have proven that low/moderate reactivity clays can be used as SCM in concrete to produce structural concrete mix designs,” Tsoumelekas added.

“The funding will help with scaling up of the calcination of the excavated London Clay and will assist with the assessment of long term durability aspects.”

Preliminary data has shown that calcined clays as SCM can be used in medium-strength structural concrete mixes, with the potential to achieve even higher compressive strengths through optimised concrete mixes.

“Calcined clays as SCM are permitted in the relevant standards, up to a certain replacement percentage,” Tsoumelekas told GE.

“The funding will also assist with the development of admixtures that will assist with the performance of the designed concrete mixes with higher calcined clay contents. Its long-term durability will also be tested and assessed.”

In summary, Tsoumelekas said, the funding will be used to help with the characterisation of the raw and calcined form of the London Clay, the development of appropriate concrete mixes and relevant admixtures, as well as long and short term durability aspects.

 

Source: Ground Engineering

 

 

 

A Gloucestershire non-league football club is aiming to decarbonise the whole of its ablutions by installing a high temperature R290 heat pump solution for the DHW requirements in the club’s washrooms and showers.  The target for the football club is to reduce carbon by installing a state-of-the-art Rinnai commercial heat pump system.

Rinnai produced full data modelling for the site, that focuses on capital and operational costs whilst also reviewing the carbon intensity of different hybrid and heat pump systems so that all the costs and performance parameters where completely visualized for the client. This transparency is critical to users, who can now be made aware of the full costs associated with electrical systems. The operational costs are modelled against the projected cost reductions in electricity prices from valid sources. A breakdown of fuel costs is provided below.

 

 

Figure 2: Energy prices and carbon factors used for analysis study.

 

Figure 3: Energy prices and carbon factors used for analysis study.

When comparing OPEX, CAPEX and carbon reductions information pertaining to the current system is not available, however it is known that the football club uses a gas-powered system. Therefore, a comparison between a Rinnai Heat Pump and Rinnai natural gas powered N1300 can be made and illustrated with visual graphs.

The first graph will detail the amount of carbon reductions made possible through installing a Rinnai high temperature heat pump when compared to a natural gas powered N1300. Rinnai’s gas system is represented in blue whilst Rinnai’s High Temperature Heat Pump is highlighted in purple.

 

Figure 4: Carbon Emissions Lifecycle comparing a H1 and a H3 system for DHW

 

The above graph demonstrates the carbon reductions achieved through a Rinnai high temperature heat pump. Over five years a gas fired system will emit over 5 times the amount of carbon emissions when compared to a Rinnai heat pump. Overall, there is an 81% reduction in carbon offshoots over 5 years.

Below is another graph that details the cumulative running costs over a 5-year period. The OPEX costs are compared to a Rinnai N1300 natural gas appliance.

 

Figure 5: Cumulative Running Costs (OPEX) comparing a H1 and a H3 system for DHW

The above graph illustrates the difference in cost between a Rinnai N1300 (blue) and a High Temperature Heat Pump (purple). Over a 5-year period there is a 23% increase in operational costs. A Rinnai natural gas system will cost £18,844.71, whilst a Rinnai High Temperature Heat Pump would cost £24,296.58.

Rinnai will continue to provide transparent examples of carbon reducing technology that results in cleaner local air quality. Rinnai’s product offering includes multiple technologies that are capable of being powered by current and future clean energies. All commercial operations and premises that require a reduction in emissions should consider manufacturers that can offer a selection of appliances capable of accepting various clean and current fuels.


To take advantage of the Rinnai design and modelling support service CLICK HERE

or call us today on 0300 373 0660


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  • Rinnai offer carbon and cost comparison services that will calculate financial and carbon savings made when investing in a Rinnai system. Rinnai also provide a system design service that will suggest an appropriate system for the property in question.
  • Rinnai offer comprehensive training courses and technical support in all aspects of the water heating industry including detailed CPD’s.
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(Image credit: Will Pryce)

Station Lodge peeks out between New Malden’s typical period homes, inviting visitors to the architecturally unexpected. This new home, designed by architect Andrei Saltykov in South West London is certainly unusual – and offers a radical subversion to residential architecture of its region.

 

Tour the surprising Station Lodge

Built on the site of a former garage, acquired by the client in 2020, the project is now a family home with inbuilt future-proofing – a ‘vague initial aspiration’ the architect explains, to be potentially split into two homes for the owners’ children. In more immediate terms, the new house should provide a comfortable and equitable private space for the couple’s two teenagers, as well as room for the family’s extensive art and book collection.

The brief was rich, yet the site was awkward, the architect writes:

‘The site is a triangle bound on two sides by typical suburban terraces (with a right of way to an adjacent substation), and the third by the Motspur Park train station platform.’

(Image credit: Will Pryce)

Inside, a large, flowing triple height living space is the heart of the home. It is punctuated by a bright red metal staircase which becomes a key spatial feature, which also serves as the main circulation route leading to the bedroom ‘block’ upstairs. The bedrooms are aligned to the station and to protect users from noise and protect their privacy, the volume is made of heavy blockwork and oblique windows. A home office areas sits at the very top.

 

The interiors follow the overall composition’s unusual geometry, which is in turn defined by light, traffic and volume regulations. It makes for a multi-faceted, grey roof which becomes the home’s defining, instantly recognisable feature.

 

Source: Wallpaper

The FTSE 100 (^FTSE), European and US stocks were up by the close in London on Friday (11.10.24), following a GDP print that showed the UK economy returned to growth in August. Investors are also gearing up for Q3 earnings season, which begins in earnest today with reports by big US banks.

  • The FTSE 100 (^FTSE) rose by 0.2% Germany’s DAX (^GDAXI) gained 0.7%. The CAC (^FCHI) was up 0.4% in Paris by the closing bell in Europe.
  • The pan-European STOXX 600 (^STOXX) rose 0.5%.
  • The Dow Jones Industrial Average (^DJI) was mostly flat at the open, paring deeper premarket losses as big bank financial updates rolled in. By mid-morning it had risen 0.8%. The S&P 500 (^GSPC) also opened mostly flat before tipping 0.6% higher, and the tech-heavy Nasdaq (^IXIC) opened down 0.3% before rising 0.2%, after closing out Thursday with small losses.
  • Investors were combing through quarterly results from big Wall Street banks — the traditional starting gun for earnings season. In focus is the potential impact of the Fed’s pivot to rate cuts on lending margins, and thus on profit.
  • JP Morgan (JPM), Wells Fargo (WFC), BlackRock (BLK), and BNY Mellon (BK) stocks rose in early trade.
  • This morning, fresh data showed a 0.2% rise in GDP for the UK in August. The increase comes after two successive months of stagnation.

  • The services sector grew 0.1%, while construction hit its stride with growth of 0.4% and production rose 0.5%, supported by manufacturing.


  • “While change will not happen overnight, we are not wasting any time on delivering on the promise of change,” said chancellor Rachel Reeves. “Next week hundreds of the world’s biggest businesses will come to Britain as we deliver on our promise to bring investment, growth, and jobs back to every part of the country.”
  • The pound gained 0.2% against the dollar (GBPUSD=X), after a week of losses. It is trading around the $1.31 mark having hit $1.34 at the end of September.

Source: Yahoo Finance

Dinorwig’s operational characteristics and dynamic response capability are still acknowledged the world over

 

Long-duration energy storage is required to support the UK’s renewable power fleet and bolster the country’s energy security, the Department for Energy Security and Net-Zero (DESNZ) said in a statement. Some 20 GW of new capacity could save the system GBP24 billion between 2025 and 2050, it added.

The UK already has four pumped-storage power stations representing 2.8 GW: First Hydro Holdings Co.’s 1.7-GW Dinorwig and 360-MW Ffestiniog power stations in Wales and Drax Group PLC’s 440-MW Cruachan and SSE PLC’s 300-MW Foyers facilities in Scotland. The newest site, Dinorwig, entered operation in 1984.

“We are reversing a legacy that has seen no new long-duration storage built for 40 years, and taking steps to unleash private investment in both established and new technologies,” UK Energy Minister Michael Shanks said. “With these projects storing the surplus clean, homegrown energy produced from renewable sources, we can boost our energy security by relying less on fossil fuels, protect household bills and help deliver our key mission to make Britain a clean energy superpower.”

The cap-and-floor program will provide revenue support to developers should their annual gross margin — the difference between their electricity revenues and cost of charging — fall below a set threshold.

The DESNZ said floor levels are set deliberately low to minimize the likelihood of their use, while still providing comfort to investors that operators can meet debt payments if revenues are lower than expected. It stressed that floor levels are “not high enough for the asset owners to make a profit” and are “merely a form of insurance.”

A similar cap-and-floor regime is used for electricity interconnectors that connect Britain with its European neighbors. Under that program, no floor payments have been made but developers have shared revenues with consumers, the DESNZ said.

The new support program for energy storage will be designed by UK regulator Ofgem and be split into two application routes, one for mature technologies and another dedicated to innovation.

The program forms part of the Labour government’s effort to fully decarbonize the UK’s power system by 2030, which includes a massive acceleration of wind and solar capacity and billions of pounds in funding for carbon-capture technology, among other initiatives.

Source: S&P Global