[email protected] eiug.uk

JN (EIUG) - Ceramics, Stoke on Trent - 14th October 2010

[email protected]

www.eiug.org.uk

International Federation of Industrial Energy Consumers

Avenue Louise 200, B 1050 Brusselswww.ifieceurope.org

EIUG

Jeremy Nicholson

Director – Energy Intensive Users Group

Energy Intensive Users Group British Ceramic Confederation British Glass Manufacturers Confederation Chemical Industries Association EnergyQuote Mineral Products Association Confederation of Paper Industries Major Energy Users Council Alcan; Anglesey Aluminium UK Steel BOC; Air Products

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Context :• c.12 GW oil & coal fired capacity to be retired by 2016 (LCPD)

• c.7GW nuclear capacity to retire by 2018 (absent AGR life extension)

• Concern over gas import security (UK c.70% import dependent by 2020)

• Major investment required in energy supply chain (c.£200bn by 2020)

• UK committed to at least 34% reduction in ghg emissions by 2018-22

• EU renewable target: 15% UK energy by 2020

Implies >30% electricity – mostly wind (intermittency issues)

• UK aspiration for 40% low carbon electricity by 2020

• Political resistance to new coal absent CCS (still at demonstration stage)

Key concern to consumers:

need to maintain secure, competitive/affordable power supplies

EIUG

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UK CS

Belgium / Netherlands

LNG

Norway

EIUG

Gas Sources – growing import dependency:Source: National Grid TBE 2008 (Base Case)

bcm per year

Dependent on access arrangements and pre-contracting

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Gas Storage – not nearly enough:

Storage Capacity

% Annual Demand

Germany 19%

Italy 16%

France 24%

UK 4%

EU 25 13%

North America 20%

Source: International Energy Agency – date unclear (pre 2006)

EIUG

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Wholesale Gas Prices: UK (NBP) / EU (oil-indexed) / US (Henry Hub)

Source: EPSL, 2 September 2010

EIUG

Oct-10 Feb-11 Jun-11 Oct-11 Feb-12 Jun-12 Oct-1225

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Gas Forward Prices: UK, US, European (oil indexed)

UK

Russia to Europe (oil indexed)

US p/th

erm

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EIUG

Forward Wholesale Gas Prices: Summer & Winter 2010-16UK NBP Offer - p/therm

Source: Spectron 21 September 2010

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S 10 W 10 S 11 W 11 S 12 W 12 S 13 W 13 S 14 W 14 S 15 W 15 S 16 W 16

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EU 27

2005 Energy Share

2020 Energy Target

EU Renewables (%)

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8EIUG

13.713.1 13.0 12.9

12.211.8 11.6 11.5

10.8 10.7 10.510.1 10.1 10.0

9.7 9.5 9.3 9.2 9.08.7

8.0 7.87.3 7.1 7.0 6.9

6.66.2

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15

UK

Spain

Denm

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Irela

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Germ

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EU 27

Belgiu

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Growth required to meet EU Renewable Targets

(as % total energy, 2005 to 2020)Source: European Commission


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Other renewables

Large hydro

Indicative targets 2010

Source Data: Eurostat 2006

Note: Data on production of hydro plants larger

than 10 MW in Switzerland was not available from Eurostat, however several

large-scale hydro plants (>10MW) do exist

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EIUG

UK Renewable Energy Strategy: Consultation DocumentChapter 10 - Wider impacts - Page 231-2:

10.5.3. On the industrial side, for an average medium-sized consumer, the RO, EU ETS & CCL together contribute around 21% to industrial electricity

bills and about 4% to gas bills.

10.5.7 Our existing climate change policies are projected to add around 18% to annual domestic electricity bills and around 55% to industrial electricity bills by 2020

Additional impact of Renewable Energy Strategy measures by 2020:

Table 10.1 Industrial Electricity Bills: 10 to 16%Table 10.2 Industrial Gas Bills: 24 to 49%

(NB impact on household bills will be around half this level)

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CIVITAS Report:

“British energy policy and the threat to

manufacturing industry”

Ruth Lea and Jeremy Nicholson

Online Report: April 2010

http://www.civitas.org.uk/pdf/EnergyPolicyApril2010.pdf

Parliamentary Group for Energy Studies: 23rd November

EIUG

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UK's National Renewable Energy Plan (1)As submitted to European Commission 30 June 2020

http://ec.europa.eu/energy/renewables/transparency_platform/doc/national_renewable_energy_action_plan_uk_en.pdf

Table 1: Expected gross final energy consumption of the UK in heating and cooling, electricity and transport up to 2020 taking into account the effects of energy efficiency

and energy saving measures 2010 – 2020 (ktoe)

2005 2010 2020

BaseYear

referencescenario

additionalenergy

efficiency

referencescenario

additionalenergy

efficiency

Heating andcooling

66900 60000 60000 54800 51500

Table 6 - Estimated share of renewable energy in the building sector (%)

2005 2000 2015 2020Residential * * 1 4Commercial / Public * * 3 12Industrial * * 2 9Total 2 8

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UK's National Renewable Energy Plan (2) As submitted to European Commission 30 June 2020

http://ec.europa.eu/energy/renewables/transparency_platform/doc/national_renewable_energy_action_plan_uk_en.pdf

Table 10: Estimation of total contribution (installed capacity, gross electricity generation) expected from each renewable energy technology in the UK to meet the binding 2020 targets and the indicative interim trajectory for

the shares of energy from renewable resources in electricity 2010-2014

2005 2010 2020MW GWh MW GWh MW GWh

PV 11 8 50 40 2,680 2,240Wind - Onshore 1,351 2,501 4,040 9,520 14,890 34,150Wind - Offshore 214 403 1,390 4,630 12,990 44,120

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EIUG

Generation By Fuel Type (table)

Current Last Half Hour Last 24 Hours(12:30-13:00) (13:00-13:00)

Generating Plant MW %age MW %age MWh %ageCCGT 20895 39.3% 20879 39.2% 460744 38.9%OCGT 0 0.0% 0 0.0% 1401 0.1%OIL 1395 2.6% 1433 2.7% 18919 1.6%COAL 24684 46.4% 24649 46.3% 547220 46.2%NUCLEAR 5114 9.6% 5117 9.6% 121898 10.3%WIND 378 0.7% 389 0.7% 6023 0.5%PS 347 0.7% 412 0.8% 14841 1.3%NPSHYD 351 0.7% 370 0.7% 9537 0.8%OTHER 0 0.0% 0 0.0% 0 0.0%Interconnectors MW %age MW %age MWh %ageINTFR 0 0.0% 0 0.0% 2658 0.2%INTIRL 16 0.0% 16 0.0% 129 0.0%TOTAL 53180 100% 53265 100% 1183371 100%

Data last updated:2009-01-06 13:25:00 (GMT)

www.bmreports.com/bsp_home.htm

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EIUG

Managing intermittency – implications for reserve (backup generation)

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2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21

STORR (MW)

Source: National Grid ‘Future System Operations’ February 2009

‘Gone Green’ scenario overview – potential opportunities for reserve providers

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Citigroup Global Markets 3 February 2010

'The extraordinary investment levels identified by Ofgem – £200bn over 10 years – is driven by the UK’s commitment to the renewable energy target. We fully agree with Ofgem’s cost assessment. The UK power and gas utilities are currently investing around £7bn per year, so will need to increase that investment rate to £20bn per annum – that is 2 London Olympics every year!'

'without the environmental targets, we calculate that the UK would need to invest only between £30-40bn in new power generation assets to replace and renew plant that is coming to the end of its engineering life and secure reliable generation and gas supplies‘

‘in our view, bills will need to rise by around 100% if £200bn of new assets are really to be built. But the consumer is guaranteed one thing. The UK seems to be setting out to create an electricity system that is substantially more expensive, less efficient, and less robust than the current system’

EIUG

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UK ERC - Great expectations: The cost of offshore wind in UK waters - September 2010

EIUG

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EIUG

WWA Report for EIUG & TUC, July 2010:

“The Cumulative Impact of Climate Change Policies on UK Energy Intensive Industries – Are Policies Effectively Focussed?”

EIUG / TUC presentation to Parliament: 9th November

www.eiug.org.uk

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Documents

[email protected] eiug.uk