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The challenge in UK power generationSteve Riley, Executive Director, Europe
London, 3 December 2010
3 December 2010 page International Power2
What constitutes a viable electricity system in the period to 2030?
What attributes are needed?
What market structure can deliver the attributes needed?
What are the fundamental drivers?
Need for a holistic approach
3 December 2010 page International Power3
Looking ahead to a different generation mix in 2030
Source - Gas: At The Centre of a Low Carbon Economy Future, A review for Oil & Gas UK, Poyry, September 2010
January 2030
Total generation potential of wind capacity in 2030
Flexibility required from other sources of generation
0
10
20
30
40
50
60
70
01 04 07 10 13 16 19 22 25 28 31
Gen
era
tion
(G
W)
Nuclear Biomass CCSCoal Coal CHPCCGT Other renewables Demand Peaking plants Imports
80
0
10
20
30
40
50
Gen
era
tion
(G
W) Intermittent generation
3 December 2010 page International Power4
A changing generation mix
Supply/TWhCarbon intensitygmCO2 per kWh
Note: Imports, currently at around 7 TWh per annum, not included Sources: DUKES for historical data; IPR projections for 2030
Renewables
Nuclear
Gas
Coal
Carbon intensity
Committee on Climate Change aspiration on carbon intensity
3 December 2010 page International Power5
Reserve Margin
Sources: IPR analysis, March 2010 Notes: Profile reflects LCPD but not IED
16GW (coal/oil and nuclear) to be retired
Unreliability of aging plant
Intermittent wind generation
Uncertain timetable for potential new nuclear
Peak Demand
Week Ahead Availability Unconstrained Availability
40
45
50
55
60
65
70
80
GW
75
85
Headline Availability
2008 2009 20100
5
10
15
20
25
30
40
35
45
2009 2011 2013 2015 2017 2019
%
Firm new build reserve margin
Target reserve margin
3 December 2010 page International Power6
IPR position on market reform in the UK
On the carbon price floor – the priority must be a mechanism that delivers CO2 reduction at the least extra cost to the sector and the consumer
On renewables deployment - overall, it is timely to replace the Renewables Obligation with a Feed-in-Tariff mechanism
On low carbon obligation and capacity payments:
need to consider the whole market, not just the low carbon producers
capacity payments offer a credible mechanism for delivering the attributes needed for a viable electricity system
On Emission Performance Standards – in light of existing and new emission reduction regulation, Emission Performance Standards are an unnecessary regulation
3 December 2010 page International Power7
International Power investing for the future
In early stage development
Consented
Fossil generation remains an important technology for International Power
Plant improvement projects at UK’s main pump-storage facility at Dinorwig:
increased storage capacity and investment to improve unit efficiency
Renewable projects – IPR has around 1.3 GW of wind power globally and is starting to invest in the UK:
pipeline of onshore wind projects across the UK
developing energy from waste and biomass projects
tidal projects in Scotland in early stage development
8MW
6MW
6MW
12MW
8MW
3MW
32MW
3 December 2010 page International Power8
The industry is faced with a number of major challenges in the coming decade
Market reform needs to consider the whole market, in recognising that a number of attributes are needed for a viable and effective system
Developments in the UK cannot be in isolation from what is happening in the rest of Europe.
IPR is very well placed to contribute to the electricity mix of the future
Concluding remarks