COMMENT : Brian Rickerby Joint Managing Director
Energy prices remain at very high levels and the impending energy gap, the amount of energy produced falling short of the energy required, can only add to the uncertainty on future pricing.
Renewable energy is stalling as successive councils refuse permission to build windfarms. As a result the government is accelerating the process to build new nuclear plants, not just to replace decommissioned sites, but also to increase nuclear generating capacity, and we are seeing new build coal-fired stations.
The net result of all this, is that energy prices are predicted to remain high for the foreseeable future, but also very volatile, with a number of peaks and troughs.
Flexible purchasing could provide an excellent solution as this helps reduce the overall cost by allowing purchases to be made when there are ‘dips’ in the market. However flexible purchasing does not provide absolute budget certainty, and as prices are much higher in the winter than summer, there are cashflow implications.
For more information see our ‘Guide to Flexible Purchasing’ by clicking on the following link:
A Guide to Flexible Purchasing
We firmly believe that energy purchasing should be aligned to energy management. Energy is now one of the biggest expenditures for all companies. Cost and the growing pressure on ‘Corporate Social Responsibility’ are combining to make energy a board issue. Purchasing 'Green' energy is increasingly difficult as it is in such short supply, but the greenest energy is the energy that is not used.
energyTEAM able to issue EPC’s
energyTEAM can issue energy performance certificates (EPCs) for customers NOW
From April 2008 Commercial buildings that are constructed, sold, leased or rented will need an Energy Performance Certificate and advisory report in order to complete the transaction. Tom Fidell is one of the first 17 to be accredited as an Energy Assessor by the Chartered Institute of Building Services Engineers to issue Energy Performance Certificates.
Other energyTEAM engineers will become accredited soon.
DECs Assessor Training Delay
Display Energy Certificate energy assessor training still held up by the Department for Communities and Local Government DCLG
60,000 public authority buildings over 1000 sq m will need to display a Display Energy Certificate and have an advisory report before October 2008. The software that will be used to deliver this has still not been released to the accreditation training bodies by DCLG. It is less than 6 months before these certificates and reports must be in place and not one energy assessor has been accredited to do the work as yet.
energyTEAM engineers have been trained on all aspects of the work to deliver DECs and need only one final day of training on the new software so that we will be able to issue DECs and the associated advisory reports.
Carbon Reduction Commitment- will it affect you? start planning now!
2008 is the base year for calculating energy reduction targets for those organisations that will be caught by the carbon reduction commitment planned to start in January 2010. Organisations that use more than 6 Million kWh of half hourly monitored electricity will be caught by this scheme (some exceptions for those already in Climate Change Agreements or the European Emissions trading scheme). It is likely to have a big cash impact in the first year as participants will need to buy carbon credits in year one, 2010, and will only find out how much they will have returned to them based on their overall performance against energy reduction targets at the earliest, 15 months later.
All forms of energy use will need to be monitored and reported on a regular basis - issues will arise where organisations have a large amount of non half-hourly electricity supplies and other fuels where the consumption is not automatically read. This is likely to lead to the need for installation of automatic meter reading equipment, which will need to be budgeted for.
Plastics Manufacturers Qualify For Rebate
The British Federation of Plastics manufacturers are soon (hopefully by the end of May) to announce details of a Climate Change Umbrella Agreement that they have negotiated with the Department for Environment Food and Rural Affairs (DEFRA) where by plastic manufacturers can get up to 80% of their climate change levy that they currently pay discounted. This in return for entering in to a climate change agreement with targets to reduce energy consumption. The scheme includes vacuum forming; injection moulding; and compounding. Not included in the scheme will be extrusion coating. More details will be released once the scheme has received final approval from the EU.
energyTEAM engineers already help customers of other trade organisations make the initial applications and ensure that the required regular reporting deadlines are adhered to during the course of the agreements and will be able to do the same for plastics manufactures quite soon.
Energy Information – Via Our Website
From April all our clients are now able to access information on their half-hourly meters via password-protected access on our website. Graphs showing consumption data in various formats will help your organisation manage your energy consumption: a pre-requisite to reducing your company’s carbon footprint.
Graphs are derived from half hourly data, which dependent on your data collector may not show current months figures. energyTEAM have arranged with IMServe, the UK’s largest data collector to obtain the most up to date data. Changing to IMServe will not involve additional cost.
If you would like to arrange data collection to IMServe or you have any problems accessing this service please do not hesitate to contact us on our normal number or our dedicated helpline: 01444 460522
Electricity Market Overview
Oil prices have increased significantly causing both electricity and gas prices to rise. We are now seeing record electricity prices and with the maintenance season disrupting supply plus Nuclear reactors likely to be off line until the autumn, the market looks set to remain unstable.
Baseload Electricity Prices (Graph)
Fundamental Changes Proposed for Grid
The Department for Business, Enterprise and Regulatory Reform (BERR) said that fundamental changes were needed to the way intermittent power is connected to the grid, to accommodate huge increases in renewable generation over the next decade. The proposals were contained in the interim report: ‘Transmission Access Review’ where BERR said that by 2020 there could be up to 120GW of capacity on the system, much of which will be renewable power, compared to 70GW today.
British Energy Closes Reactors
British Energy has announced that four of its ageing nuclear reactors at Hartlepool and Heyshem, which have been shut since last October, are likely to remain closed until the autumn to allow for essential repairs. British Energy assessed the cost of repairing faults found in boiler closure units at £70million, and replacement power and other trading costs could be a further £90million.
The four 660MW reactors represent around a quarter of British Energy’s full capacity. In addition boiler tube cracking at four other reactors at Hinkley point and Hunterstone has resulted in those reactors operating at just 60 per cent of capacity.
MPs to Launch Energy Competition Enquiry
Massive hikes in energy prices, especially in the domestic market, have prompted a Commons select committee to conduct a full-scale enquiry into the structure of the energy market. Amongst other things the all-party group of MPs will consider if there is effective competition in the wholesale energy markets, increasing consolidation in the energy market, the interaction between energy markets in the UK and those in mainland Europe and what it calls “appropriate policy instruments”.
Nuclear Generation to Increase
In a recent speech John Hutton the business secretary said that nuclear power would increase significantly over the next two decades. “I don’t want to see just a like for like replacement of nuclear capacity in the UK,” said Mr Hutton. A new generation of nuclear power stations will offer “breathtaking” economic opportunities not seen since North Sea Oil was discovered. Mr Hutton stressed that politicians have a critical two-year window to clear a path by removing regulatory and other obstacles to nuclear power. A new fleet of reactors could potentially create up to 100,000 jobs and could represent about £20bn worth of business to UK companies.
The UK wants to become a leader for exporting nuclear skills, as well as building a strong domestic base of jobs. “I want Britain to be leading the world in the development and application of this new generation of low-carbon power technology. It could position the UK as the gateway to a new nuclear renaissance across Europe”.
The government is now determined to fast-track the replacement of existing reactors with the first plant operational by 2017, a year ahead of the target set in a white paper in January, according to Mr Hutton.
Mr Hutton also suggested that the government might sell its £2bn stake in British Energy amid rumours that Germany’s RWE and EDF of France have entered into discussions with Centrica about a possible bid for British energy
In a separate move Cogent, the industry body responsible for predicting nuclear demand, predicted that more than 9,000 graduates would be needed over the next ten years. The University of Manchester is the first to respond to this potential skills gap, planning a ‘Centre for Nuclear Energy Technology’
Gas Market Overview
Despite increasingly robust gas supply lines to the UK, the cost of gas continues to rise on the back of high oil prices, with Winter 08 gas prices at their highest level on record.
Whilst oil prices remain high the market looks set to remain unstable.
Wholesale Gas Prices (Graph)
National Grid Fined £41million by Ofgem
National Grid has been ordered to release gas suppliers from long-term metering contracts and pay a £41million fine for “serious breaches” of the Competition Act in 2004. Ofgem Chairman Sir John Mogg said, “ National Grid has abused its dominance in the domestic gas metering market, restricting competition and harming consumers. The abuse prevented suppliers contracting with other companies for cheaper metering deals and could discourage suppliers from installing smart meters.” National Grid strongly denies that they acted anti-competitively and launched an appeal to the Competition Appeal Tribunal.
Changes to Interruptible Gas Supplies
From October 2011 all Local Distribution Zone (LDZ) supply points will become fully firm. Existing interruptible customers need to participate in a tender process in June 2008 in order to secure more flexible interruptible contracting options with the relevant Gas Distribution Network (GDN). However there is no guarantee that all customers will secure their desired interruptible arrangements, as this will depend largely on the GDN’s requirements. GDN’s will be able to reject requests for interruptible sites from 1st October 2011 with interruption accepted solely in locations, and volumes required by GDNs in response to incentive arrangements set by Ofgem.
Counter-Terrorism Legislation
New legislation has been published requiring gas transporters to pay for added security and policing at a number of gas supply terminals in the UK. Ofgem has agreed that these costs can be passed through to customers.
Oil Market Overview
The price of oil continues to rise. Just as it started to drop off, a fire at a major Finnish oil refinery caused the market to jump back up. With OPEC announcing that it has no plans to increase production, it is difficult to see a short-term end to the record high oil price.
Oil Prices Brent Crude (Graph)
SOURCE: BBC News – Market Data
Last Deep Coal Mine in UK Closes
Twenty-two years after a collective of miners and locals saved the Tower Colliery in Mid Glamorgan, the last deep coal mine in the UK has closed as the reserves at the colliery are now exhausted. It is understood that RWE Npower that took its supplies from the Tower Colliery
for the Aberthaw power station has signed agreements ensuring that 40 per cent of the coal used will still be sourced from Welsh mines.
'Green' Energy
UK Greenhouse gas emissions fell 2% in 2007 from 652.3 million tonnes of carbon dioxide in 2006 to 639.4 million tonnes in 2007,helping the country achieve its obligations under the Kyoto protocol.
Call to delay biofuel policy was made by Professor Robert Watson, the UK’s chief environmental scientist. Under The Renewable Transport Fuels Obligation the UK is scheduled to introduce 2.5% of biofuels at the pumps from this year. However a growing number of scientists believe that negative effects from their production may outweigh the benefits
Planning for Windfarm has dropped with approval rates last year at their lowest level for three years according to the British Wind Energy Association. Approval rates in 2007 were 62 per cent compared to 82 per cent in 2006. In addition the planning process has risen from an average 22 months to 24 months over the same period.
Upgrade for Mid Hill Windfarm has been approved by Scottish Ministers, increasing capacity at the windfarm near Banchory in Aberdeenshire from 25MW to 50MW.
A Tidal Stream Project is planned to be built off the coast of Anglesey, North Wales. A planning application to site the scheme comprising of seven 1.5MW turbines in an area of 25m-deep open sea is to be submitted in 2009 with commissioning scheduled for 2011.
Scottish & Southern energy plans to double its renewable energy business in the UK and Ireland over the next five years, helped by its recent acquisition of the Irish wind farm operator, Airtricity.
Helpful Guides
energyTEAM publish guides on our website www.energyteam.co.uk on the following topics:
(please click on the topic of interest)
energyTEAM Media Coverage
We regularly provide articles for various respected publications on a range of energy-related topics. The following have all appeared in the last three months. (please click on any article listed)
Contact Details
energyTEAM
Team
House
Braybon Business Park
Consort Way
Burgess
Hill
RH15 9ND |
|
| 
