Energy and Utility Management Consultants

Eurozone fears rumble on, more Renewables given "Green" light

May 2012

 

It has been a very busy European week with elections being held across the continent and many changes seen to country leaders and policies. The Greek economy is still cause for debate as elections results show no majority vote winner, and the efforts to form a coalition government have so far been unsuccessful. The four parties willing to continue the country’s austerity measures took a combined total of just 36% of the vote, so uncertainty remains with Greece’s exit from the Eurozone being suggested in some quarters. Further poor growth figures in Europe has seen Spain preparing a bailout in an attempt to revive its flagging economy, but German industrial output increased by almost 3% in March, over 2% greater than expected.  Political incidents and economic outlooks can be big drivers of utility prices, so we’re keen to see what happens in those countries affected by struggling economies. Following the March 2011 tsunami and earthquake that caused the Fukushima nuclear power plant to meltdown, the final generator at Hokkaido is now fully offline. As all of Japan’s 50 nuclear power plants are now offline a supply gap will be seen during a forecast hot summer where air conditioning demand is at a peak. Over 10% of Japan’s total power is typically generated through nuclear, so LNG imports are expected to help plug this gap. This could well be at the cost of LNG deliveries being diverted from the UK, among other countries – fortunately, our dependence on LNG has not reached a point where such a small volume diversion is expected to have large market repercussions.

 

Swedish company Vattenfall are to create a massive onshore wind farm in Wales, it has been announced. Large enough to power 206,000 homes via 76 turbines, and at a cost of just £300m, this wind farm would be the biggest in the UK, and is expected to be feeding some 300MW into the gird within four years. Although wind and solar power installations are surging forward, there could well be a more reliable and regular source of renewable power in tidal power generation. The wind doesn’t always blow, and the sun doesn’t always shine, but there will always be tides (to varying degrees of course). Unfortunately, the cost of installing tidal energy generators has always been significantly higher than on-shore generation (including ‘hydro’ energy which is typically generated using water flows through dams), and so many would-be investors are turned off owing to the relatively small returns. Hopefully as technology improves this will change, and the largely untapped source will become a major player in the push toward renewable energy generation.  As reported in January, recent developments in wave power generation should also help in the drive for renewables, with the Searaser (using technology whereby the seawater is ‘pumped’ to an onshore power station as opposed to the generation taking place offshore) likely to be operational in 2014, and hopefully inspiring other such installations. Centrica Upstream (part of Centrica) have announced that they are finally producing gas from the Ensign platform (situated in the Southern North Sea off Norfolk) after the discovery of gas there in 1986.

 

This has been a notoriously difficult project which has required pioneering new drilling technology to be developed in order to extract the gas – exact volumes are yet to be determined, but it’s certainly good news for UK supply. A large part of energy users final costs are made up of Transmission and Distribution charges (commonly referred to as TuoS & DuoS): when combined, these charges generally account for around a third of the delivered cost of energy. It has been expected that these ‘pass-through’ charges – which are reviewed twice-yearly – are set to increase by 11% (and by as much as 27% in more remote areas of the UK) by 2020, but the biggest single rise could be seen long before then as network companies look to carry out substantial improvements to the distribution network. We will keep you up to date on any significant developments related to this via our news feeds and through regular contact with our clients. Being experts in Energy Procurement we are of course keeping track of events and possible revelations which may impact on prices and influence our well-judged recommendations for our clients as part of our Utility Bureau Services. Get in touch using the details here and see just how having a professional Utilities Consultant can benefit your business energy needs and beyond.

 

 

 

 

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