Energy Debate

The Power Debate:A UK Generation Game

Welcome19 November 2013

The UK Power MixAndrew PoynerWatson Burton

Agenda

• Generation through to sales

• The current generation split

• Sustainability and emissions

• Generation methods: the headlines

• Questions and Voting

Power Generation: Overview of the market

• Generation

• Transmission and Distribution

• Supply and Sales

• Regulation

Power Generation: The current split

• Fossil Fuels - mainly coal (38%) and natural gas (28%)

• Nuclear – 18%

• Renewables – 13%

• Imports – 3%

Power Generation: Sustainability

• £17billion investment (2007-2010)

• 45,000 new jobs

• Carbon emissions

• Zero carbon technologies (40% generated by 2020)

1. Is there any point in reducing UK emissions when the likes of Brazil, Russia, India and China are not reducing in the same way? ?

Q

Coal: The headlines

• Supply

• Price

• Environmental

• Resources

• Employment

2. Coal continues to be one of the most significant players in the UK energy mix, is the Government being short sighted to turn its back on coal?

Q?

Oil and gas: The headlines

• Supply: North and Irish Sea, pipelines, LNG shipping

• Price

• Resources

• Storage

• Employment

3. Given dwindling supplies of North Sea oil and gas, should we focus on this as part of a long term energy solution for the UK?

Q?

Nuclear: The headlines

• Supply

• Price

• Resources

• Employment

• Safety / Risk

4. Is the Government right in proposing that nuclear should play a larger role in our energy mix in the future?

Q?

Wind Power: The headlines

• Supply

• Price

• Resources

• Employment

• Safety / Risk

5. Given the continuing public resistance to onshore wind farms, is there a real future for wind power in the UK?

Q?

Solar: The headlines

• Supply

• Price

• Resources

• Employment

• Safety / Risk

6. Is solar as reliable as a British summer?Q

?

Thank youfor your participation

The panel perspective

Martin Needham, CNG

Barnaby Pilgrim, Banks Group

Andrew Mill, NAREC

Colin Henry, Siemens

James Poyner, Miller Argent


Andrew Mills, Narec

Andrew Mill

Chief Executive

UK Current Electricity Market

• 3 Drivers for Government– Cost to consumer– Environmental– Energy security

• Offgem warning reserve could fall to 2% in 2015• HMG proposing gas subsidy for gas plants to use as

back up – EU may block• Lights unlikely to go out because:

– Mothballed gas can be brought into production– Reduced demand and government intervention– Growth in renewables

Wind O shoreff WindWind OnshoreTidalBiomassHydroPumped storageNuclearOil GT CCGT Coal Reference Scenario 2012

100

80

60

40

20

2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Installed Capacity By Generation Technology• Consumption 376TWh• Source:

• 361 TWh generation

• 3 TWh pumped storage

• 14 TWh import• -2 TWh export

• Capacity = 80GW• Peak Demand = 60GW• Wind 9GW growing to

20GW but assume 17% for firm capacity

Changes In Installed Capacity

Additions Wind O shoreffAdditions Wind OnshoreAdditions BiomassAdditions CCGTClosures BiomassClosures NuclearClosures OilClosures GTClosures CCGTClosures Coal

2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

6

4

2

0

-2

-4

-6

• Over next 6 years– Reduction of 14GW mainly

base load– Increase of 17GW mainly

renewables– +11GW of wind equiv. to

2GW firm– +3GW biomass– +3GW CCGT

• Station closures– 9 Coal plants 12GW by 2015– 3 Oil plants 3.5GW by 2015– 8 Nuclear plants 14GW by

2025– 4 Gas plants 4.1GW

mothballed

Cost of New Low Carbon Generation

• New nuclear £92.5/MWh• Hinckley FID 2014• Wave & tidal £350/MWh• Renewables still in early stage

of technology development• Impact on grid cost and

operational • Current grid pricing structure• Sources of funding

World Factors

• China key driver of global oil demand• By 2025 China will be 2X USA oil consumption• Vehicles 2009 China 13.6M – USA 10M• China investing in Future Energy Supplies• China currently consumes 45% of world coal• China only one of a number of growth areas• Kyoto China & India no imposed limits• No. countries have opted out USA, Canada, Russia &

Japan

Future UK Power Industry Factors• Government Electricity Market Reform• Prediction that UK demand will require capacity of 112GW by

2030• Capital required £260bn this decade for new capacity and grid• Renewable energy technologies still early stage • Smart grids

– 200,000 X 40kW cars = 8GW storage– Timing of appliances– Micro-renewables

• New technologies required CCS & shale gas



Answers for infrastructure and cities.

Restricted © Siemens AG 20XX All rights reserved.

The Power Debate:Transition to a low carbon energy mix – balancing the system19th Nov 2013

Colin Henry - Infrastructure and Cities Sector, Smart Grid

For internal use only © Siemens AG 2010. All rights reserved.

The big “themes”

• Global race: Climate change or creation of new high skilled jobs?

• The Energy Trilemma: Security, Sustainability, Affordability

• Backing winners: EMR, a level playing field?

Some considerations:• Cities today consume 75% of all the world’s energy and emit around

80% of all greenhouse gases. The fight against climate change will be won or lost in cities!

• The UK will need a diverse mix of energy sources and systems by 2050, to ensure that supplies remain affordable, resilient and flexible. Local energy systems will play an important part, and technologies are required for generating, harvesting, distributing, storing, and using energy at this scale. (Technology Strategy Board – Localised Energy Systems)

https://www.innovateuk.org/competition-display-page/-/asset_publisher/RqEt2AKmEBhi/content/localised-energy-systems-a-cross-sector-approach




The new world of Smart Grid: Decentralized and intelligent generation and consumption of Electricity!

power

information

Tomorrow

UK Driver: Carbon Reduction,Changing the Generation Mix

Energy Security & Efficiency withincreased consumer participation.

Data Energy Services


Large generation

Smart Energy SystemsStakeholder Contributions to Flexibility

Transmission owners

Distribution network operators

Small generationEnergy

consumers

Large generation

Energy suppliers

Imbalance settlement

Energy exchanges

System Operator

(B.M.)

Plant Market

AggregatorsFlexible demand

Flexible generation

Flexible networks

Tariffs to encourage flexibility

Market to encourage flexibility

Control


Investment / Innovation focus

Business as Usual

4

5

6

7

8

9

2010 2011 2012 2013 2014 2015 2016 2017 2018

TRL

1. Low Carbon Networks Fund (2011-2015) = £500m

2. Network Innovation (2013-2021) = £40m per annum

3. Electricity Market Reform (2013 onwards)4. Technology Strategy Board (Future Cities,

2013 onwards)

Evolution of the UK (Smart) Market – aligned with Govt/Energy Policy

smart networks (DNO)

1 smart market

smart cities / local energy systems

smart networks (transmission)

Today

2

34

TRL – Technology Readiness Level


“Future” Localised Smart Energy SystemsMicrogrids, ESCo’s, MUSCo’s

Energy producersNet energy consumers

Plant Market

Large generation

Energy retailers

Imbalance settlement

Energy exchanges

Regional distribution systems

Control

Transmission systemBalancing

Mechanism

City/Municipal distribution systems

electricity gas heat


Food for thought.......other market entrants??

Some key figures for China:-• Population – over 1.3 billion (20% of world;1 in 5 Chinese)

most populous country in world• State Grid Corporation of China (SGCC), covers 88 per cent of

China and serves over 1 billion customers • 26.53% electricity generated in China from clean energy in

2010. Carbon intensity of China‘s economy to be reduced by 40-45% by 2020, [against baseline 2005]

• Smart Grid market size $22.3bn in 2011 rising to $61.4bn in 2015, largest element T&D Eqpt (at 35%)

• SGCC released in June 2010, industry rules, standards and favoured technologies for domestic and international manufacturers of smart grid equipment

Source: China: Rise of the Smart Grid, January 2011, www.Zpryme.com, Research and Consulting

• And .......Chinese domestic firms serving the smart grid market will expand their footprint beyond their nation‘s borders as their technologies and their services will become increasingly competitive with their foreign counterparts

http://pikeresearch.cmail4.com/t/r/l/yhlitik/ulhhqurt/y

http://www.zpryme.com/


James T. Poyner, Miller Argent

37

Coal Consumption in the UK

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120.0

10.0

20.0

30.0

40.0

50.0

60.0

Deep mined Surface mining Imports

The Energy Trilemma

38

Sustainability

Security Affordability

39

Could It Be True?

Refreshment break

See you at 10.45am

The Debate

Martin Needham, CNG

Barnaby Pilgrim, Banks Group

Andrew Mill, NAREC


James Poyner, Miller Argent

Closing remarksIf you would like to contribute your views to our report on the sector, please contact me:

[email protected]

Thank youPlease leave your feedback forms on the table