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Gary Ward Senior Member Relationship Executive The Energy Consortium (TEC). Flexible energy buying in support of the impact of Energy Market Reform. The Energy Challenge – The four cornerstones of an effective strategy .
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Gary WardSenior Member Relationship ExecutiveThe Energy Consortium (TEC).Flexible energy buying in support of the impact of Energy Market Reform
Issues and risks
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The UK is fast approaching a supply slump by the middle of the decade, which is set to get worse beyond 2020 as nuclear closes. The Government hopes that energy efficiency measures will reduce the impact
Source: National Grid, DECC, Neta Reports – analysis Utilyx Research
Electricity remains UK-centric, but what are the drivers?
Maintaining the mix versus low carbon.
LCPD closing as hours run out (Didcot) due to cheap coal and low carbon prices.
Margins are getting tighter. Is there a race to keep the lights on?
Gas as the marginal fuel – but for how long?
What to do when the wind doesn’t blow – Capacity from gas.
Nuclear fleet is ageing but seeming never closes down.
But coal and gas remain the main fuels so as with gas, Geo-political events (Black Swans) have an impact too.
Levy support for new renewables is getting ever larger (£2.46 Bn to £7.6 Bn), and EMR takes it to a whole new level.
The sector is well aware of the challenges on carbon.
UK has targeted to achieve 80% carbon reduction by 2050.
The question is, can HE deliver a growing estate against these demanding carbon targets in an environment where delivered energy prices are set to double by 2020?
Can institutes tackle this alone or will aggregation and leverage of the sector allow greater opportunity to deliver against demanding cost and carbon targets?
The carbon price floor aims to underpin and top up the price of carbon in the EU emissions trading scheme making low carbon investments more attractive
To remunerate capacity providers, based on their availability, allowing for investment in flexible plant
Long term feed-in tariff Contract for Difference (CfD) to provide stable financial incentives to invest in all forms of low carbon generation
FOUR CENTRAL POLICY INSTRUMENTS PROPOSED IN DECEMEBER 2010 WILL TRANSFORM THE UK ELECTRICITY MARKET FROM AUTUMN 2013.
A regulated limit on CO2 emissions allowed from new (or life extended) power stations.
£10 million additional cost
What can we do about rising non-commodity charges driven by new levies and regulation?
Simply use less.
Self generate – all regulated charges are avoided if you do not import from (or export to) the grid.
Protect budget on a longer term basis – buy long term for a proportion of usage (30%) as part of a strategy.
Think about managing when you use as well as how much – DUoS charges are time related, but this requires behavioural change as well as some self generation.
Choose renewable – this could make you recipient of levy support rather than a payer.
Domestic will pay as well – estimates of impact vary from an increase of £95 per year (DECC) to an additional £640 (Which).
AN ALTERNATIVE WAY TO BUY ELECTRICITY
BENEFITS TO THE BUYER
Answering the conundrum:
A solution from TEC: