UK Electricity Market Reform: an independent viewpoint

The formal consultation on the Government’s Electricity Market Reforms is now closed. The proposals, which seek to encourage investment in low-carbon generation, have attracted much comment and indeed criticism from a number of quarters, in and outside the energy industry

Carlton Power has been involved in the UK power generation market for more than 15 years and has been involved in the construction of more than 1800MW of installed generation capacity and 2380MW of consented plant in the UK. The company originated the 890MW Langage gas-fired power station in Devon, which is now owned and operated by Centrica, and is partnering Ireland’s ESB International on the Carrington 2 CCGT near Manchester.

Mike Benson (pictured) a director of Carlton Power, gives his view on the EMR and the steps that he wishes to see in the UK energy market:

What would be your ideal energy mix for the UK?

I think we need a robust mix of competitive technologies, including renewables, new nuclear and of course Gas CCGT. We all recognize the need to move towards a lower carbon industry, which is why gas is replacing much of the retiring coal powered generation. Gas remains an attractive option for many reasons, it has the fastest lead time, is a large scale generator, it is economically viable and new CCGT plants lower the UK carbon profile.

What issues do you think the EMR should address?

The EMR is primarily addressing issues such as new nuclear, renewable subsidies and getting an energy market in these areas that is attractive for investors. But we believe that another priority has to be creating a more competitive market, one that is open and transparent. If those issues aren’t addressed, then consumers and taxpayers will be paying more than necessary in the coming years and the UK will struggle to produce the new generating capacity that everyone agrees is required.

If the EMR could fix one issue, what should it be?

New capacity and renewable deployment are necessary, but the most important change should be market liquidity. At the moment, the UK is geared towards the ‘Big Six’, and that needs to change, the wholesale markets needs to be reformed.

What benefits would greater competition bring to consumers?

There has been a 43% rise in energy bills for consumers in the period 2008 – 2011, which represents a huge increase and has led to two investigations by Ofgem. Much of the problem comes from the fact that the current wholesale market lacks transparency about their pricing and transactions. Introducing further competition throughout the market would create competitive pricing for consumers and industry and encourage new investors to enter the market.

How would you bring more competition into the energy markets?

By re-introducing self-supply license conditions. An SSLC would ensure greater competition between retail and generation which would free up all areas of the energy market. This would guarantee the ‘Big 6’ could not just rely on their own generation and would create a wholesale market with greater liquidity, ensuring investors could enter more readily, would be better monitored and we would have proper competition. Emissions would also reduce as genuine competition favours more efficient plants.

For a copy of Carlton Power's EMR submission, please contact Taylor Keogh Communications. 

Client News-NEW INVESTMENT FOR AWS OCEAN ENERGY

NEW INVESTMENT FOR AWS OCEAN ENERGY

AWS outlines timetable for technology deployment

Scottish wave energy company, AWS Ocean Energy, has secured a £2 million investment from Scottish Enterprise’s Scottish Co-investment Fund and the Shell Technology Ventures Fund 1 B.V. (“STVF1”), an affiliate of Royal Dutch Shell.

This is the first-ever investment in AWS Ocean Energy made by Scottish Enterprise whilst it is AWS Ocean’s second tranche of investment from the STVF1, which is managed by Kenda Capital B.V..

The new investment enables AWS Ocean to take forward its plans to develop and deploy its wave power technology as well as help the company in its work to design associated technologies, such as mooring systems, for wider use in the wave and tidal energy sectors.

The new investment follows a review of the company’s technology which has resulted in significant improvements to the system now known as the AWS-III. The design builds on extensive research including offshore testing and detailed modelling of the AWS technology. The improved system will have a generating capacity of between 2.4 and 4MW.

Simon Grey, Chief Executive of AWS Ocean Energy said: “We are delighted to announce this investment by STVF1 and Scottish Enterprise’s Scottish Co-investment Fund as they vindicate our thorough and measured approach to development. STVF1/Kenda are very hands-on and we have benefited enormously from their experience in technology investment on challenging projects. Not only did they challenge our engineering approach but they also required the AWS-III to demonstrate the potential to compete cost-effectively with offshore wind before agreeing to invest further. It is not sufficient to produce a machine that works - we need to produce a machine that can generate electricity at a competitive cost.”

Aruna Subramanian, Investment Principal at Kenda Capital B.V. said: “Drawing on our understanding of offshore engineering and new technology challenges, we are excited by the latest development of AWS Ocean’s wave energy system. We are confident that the team at AWS Ocean, aided by their Technical Advisory Committee, who all have extensive and relevant experience in this sector and in technology development, will successfully address the major challenges faced in harnessing energy from the waves at a commercially viable cost.”

Andrew Sloane, senior investment manager at Scottish Enterprise, said: “This is an exciting investment for Scottish Enterprise, not only because the company is at the vanguard of wave power technology, but also because it marks our first venture with new investment partner Kenda Capital. Going forward, we hope our partnership with Kenda Capital will provide other companies in the already strong Scottish renewables sector with the risk capital required to grow and take advantage of new markets.”

Commenting on the cost of wave power, AWS Ocean’s Simon Grey said: “One of the key drivers behind our review was the cost of energy and the ability to contribute to the Government’s 2020 renewable energy targets. Making sure our customers can make adequate returns from AWS wave power on current tariffs is essential. Also essential is the ability to achieve rapid roll-out and the large scale of AWS-III contributes to both of these.

“Delivering the complete solution will take time. We are already in discussions with partners to ensure that AWS-III is available as a demonstrated commercial product by 2014. Industrial multinationals will be prepared to fund ‘big ticket’ demonstration projects providing that the technology is proven first and so our focus is to do just that: delivering proven technology that actually works.”

AWS Ocean Energy is presently undertaking component and sub-system testing and qualification and is aiming to deploy a full-system prototype AWS-III during 2011. The company is confident that this will lead to deployment of a pre-commercial demonstrator plant during 2013. Throughout this process, the AWS Ocean team will draw on the advice and support of the company’s Technical Advisory Committee (TAC) which was established following STVF1’s first investment in 2008 (see Notes to Editors).

Notes to Editors

1. AWS Ocean Energy (www.awsocean.com) was established in 2004. The company is chaired by John Anderson, the Chief Executive Officer of Entrepreneurial Exchange.



2. The company’s board and executive management team are advised by a Technical Advisory Committee comprising:

Dr Bruce Storm (formerly of Halliburton and a R&D physicist)

Professor Antonio Sarmento (IST Lisbon, Head of Portugal’s Wave Energy Centre)

Dr Tom Thorpe (wave energy specialist)

Andrew Mill (Chief Executive, NaREC and former Managing Director of EMEC)

Captain Peter Hodgetts (Managing Director of SeaRoc, marine engineering specialists)



3. Kenda Capital B.V. (www.kendacapital.com) is the independently owned manager of STVF1 which made its first investment in AWS Ocean Energy in February 2008. Kenda Capital B.V. and STVF1 maintain a unique technology relationship with Shell. Major investors in STVF1 are Shell, Coller Capital and the Abu Dhabi Investment Authority. STVF1 also has proprietary access to oil and gas field operations and wells in order to test, prove and demonstrate combinations of new technologies. STVF1 is a unique, large scale investment fund focused at reducing the cost of energy by accelerating the development and deployment of new technologies. Kenda and STVF1 possess a solid energy sector expertise, fostered through its technology relationship with the Shell Group.



4. The Scottish Co-investment Fund is a £72 million equity investment fund established by Scottish Enterprise, and partly funded by the European Regional Development Fund, to invest from £100,000 to £1 million in company finance deals of up to £2 million.



For further information

AWS Ocean Energy (www.awsocean.com)

Paul Taylor/James Court of Taylor Keogh Communications: +44 (0) 20 3170 8465 / paul@taylorkeogh.com / james@taylorkeogh.com



Scottish Enterprise

Andrew Sloane: +44 (0) 141 228 2787 / andrew.sloane@scotent.co.uk



Kenda Capital B.V.

Aruna Subramanian: +31 (0)70 413 4040 / info@kendacapital.com

Client News-GATEWAY SECURES FIRST GAS STORAGE LICENCE FROM UK DEPARTMENT OF ENERGY

Monday, February 15th 2010

GATEWAY SECURES FIRST GAS STORAGE LICENCE FROM UK DEPARTMENT OF ENERGY

The £600m Gateway Gas Storage project has today received the first gas storage licence to be issued by the UK Government under a new regime designed to encourage the construction of new storage facilities in this country. The licence has been issued under the auspices of the 2008 Energy Act and it consolidates the main environmental and planning consents that were given to the project by the Department of Energy & Climate Change and the UK Marine & Fisheries Agency in November 2008.

George Grant, Chairman of Gateway Storage Company said: “The support and encouragement given by DECC to bring the Gateway Storage project forward has been invaluable, as was the Crown Estate’s agreement of the offshore site licence. We are now fully engaged with the project’s engineering design and are targeting 2014 for the start of commercial storage operations.”

The Gateway facility will add new capacity equal to approximately 30% of current UK storage capacity, sufficient to meet five days of Britain’s average gas demand. Gateway will be built in 20 salt caverns, each the size of the Albert Hall, and sited approximately 750m beneath the surface of the seabed. Located 15 miles offshore, south west of Barrow-in-Furness, the storage scheme will be connected to the National Gas Transmission System via a new pipeline to a gas compression station adjacent to the existing Morecambe gas terminals at Barrow.

Last month (January 21st 2010), Gateway announced that AMEC, Parsons Brinckerhoff and Senergy had been appointed to undertake the detailed engineering design work for both the offshore and onshore elements of the scheme. Their work will support a commitment to construction of the facility at the end of this year (2010) and enable the commencement of gas storage services for the UK market in 2014.


Notes to Editors:

1. The Energy Act 2008 created a regulatory framework in which DECC operates a licensing system that regulates storage for environmental and other purposes whilst the Crown Estate controls the exclusive rights to the seabed and the use of geological structures beneath the seabed for gas storage.

2. Gateway Storage (www.gatewaystorage.co.uk) is a company that was formed to develop the gas storage project and is managed by Stag Energy. Stag Energy (www.stagenergy.com) is an independent company, headquartered in Edinburgh. The company, established in 2002, has extensive experience of managing the development, construction and operations of gas storage and power generation projects in the UK and overseas.

For further information:

Gateway Storage Company Ltd

Andrew Stacey / George Grant

T: +44 (0)131 550 3380

E : astacey@stagenergy.com

ggrant@stagenergy.com

or

Paul Taylor (Taylor Keogh Communications)

T: +44 (0) 20 3170 8465

E: paul@taylorkeogh.com

Client News-Marine Current Turbines awarded £2.7m by Carbon Trust to enhance its SeaGen tidal system

Marine Current Turbines awarded £2.7m by Carbon Trust to enhance its SeaGen tidal system

Marine Current Turbines has secured funding of £2.7million from the Carbon Trust’s Marine Renewables Proving Fund (MRPF) to support the enhancement of SeaGen, the world’s largest and so far only megawatt scale grid-connected tidal current energy system that has been supplying electricity to customers in Northern Ireland since December 2008.

Martin Wright, Managing Director of Marine Current Turbines (MCT), said: “Securing the MRPF funding is another strong vote of confidence in our SeaGen technology and importantly we are proving that our SeaGen technology works extremely well, supplying power to commercial customers on daily basis.

“The experience that we are gaining from SeaGen’s real-time operation is of enormous value as we seek to improve its efficiency and operational capabilities in advance of deploying further turbines into our first tidal farms. The Carbon Trust funding will be used to assess SeaGen’s operation, our engineering processes, construction and installation techniques and assist us in reviewing and evaluating a range of other important issues.”

Marine Current Turbines aims to deploy its first tidal farm in UK waters during 2012. The company is partnering RWE npower renewables to develop a 10MW tidal farm off Anglesey, and in Canada MCT is working with Minas Bay Pulp & Paper to deploy a single SeaGen device in the Bay of Fundy, Nova Scotia during 2011.

Notes to Editors:

Marine Current Turbines Ltd (www.marineturbines.com) is based in Bristol, England. The company was established in 2000 and its principal corporate shareholders include BankInvest, Carbon Trust Investments, ESB International, EDF Energy, Guernsey Electricity and High Tide. The company has a power purchase agreement with Ireland’s ESB Independent Energy for SeaGen’s output.

In September 2009, MCT was ranked the world’s top tidal energy company in The Guardian/Clean Tech Global 100 Survey and in June 2009 won Renewable Energy Developer of the Year in the UK Renewable Energy Association Annual Awards.

Industry News-Committee on Climate Change report

The recommendations from the CCC, which sets legally binding carbon budgets and advises the government on how to reach them are wide ranging, and have urged a step change in government policy if future carbon budgets are to be met.

A cleaner, greener country, playing meeting it global, European and domestic targets is both possible and affordable, says the Climate Change Committee, but only if the government acts immediately to implement radical policies on energy efficiency and low carbon technologies, as well as dealing with the threat of the recession to carbon trading schemes.

A overview of some of the key recommendations:

• Market rules – investment in low-carbon generation is risky under
current market arrangements. The CCC strongly recommends that
Government undertakes a near-term review of options to improve
the investment climate for low-carbon power generation.

• Support for CCS – the Government needs to send a strong signal
to investors that there is no future in using conventional coal-fired
plants beyond the early 2020s. As part of the framework to support
CCS development, there should be a review of economic viability
and appropriate financial support mechanisms should be in place
no later than 2016.

• Strengthening the grid – investment in the power transmission
network is required to support investment in new wind and nuclear
capacity. Approval of necessary investments is required at the latest
by 2011.

• Whole house approach – every household would be provided with
an energy audit followed up by hassle free help with installing loft and
cavity wall insulation, replacing boilers and installing heating controls.
• Street by street approach – energy efficiency of buildings would
be addressed street by street, area by area across the UK, much as the
switch over to natural gas was achieved in the 1970s.

Improving the efficiency of petrol/diesel powered cars
• Currently new cars emit around 160 gCO2/km travelled. This should
be reduced to 95 g/km in 2020 through more fuel efficient and lowcarbon
cars. If this is achieved, emissions could fall by 16 MtCO2
in 2020.

Widespread roll-out of electric cars
• The Government should aim for up to 1.7 million electric cars and
plug in hybrids on the road in 2020.
• Electric cars are market ready and there is scope for reducing the cost
of their batteries by 70% which would mean that they could in fact
be priced competitively with conventional cars.
• The Government has offered price support up to £5,000 per car,
which should be enough to offset the cost premium of many
electric cars.

• The typical range for electric cars is around 80 miles, possibly
increasing to 250 miles as battery technology develops. This is
currently sufficient to cover the vast majority of trips.
• A charging infrastructure should be developed including: off-street
home charging; on-street home charging; workplace charging;
charging in public places (e.g. car parks, supermarkets); and possibly
battery exchanges.
• This infrastructure should be developed in the context of pilot
projects to exploit economies of scale and target up to 240,000
electric cars and plug-in hybrids on the road by 2015; funding costs
for pilot charging infrastructure could be up to £250 million.

Industry News-Ofgem report calls for more investment

Ofgem releases a wide-ranging and comprehensive review of the UK energy market, warning that a £200bn investment is needed for new power generation and infrastructure.

Both energy supply and energy security are areas of concern raised by the report, with north gas supplies declining, increasing the need for more gas storage.

With many European countries becoming increasingly dependent on gas imports, recent events such as the Russia-Ukraine crisis raised concerns about the security and price of future gas supplies, the regulator said.

This investment will lead to a 14 to 25 % increase in energy bills in the next 10-15 years.

See the report here.

Industry News-E.ON postpone Kingsnorth

German utility company, E.ON, have announced plans to shelve the controversial Kingsnorth coal powered station today.

This comes after many months of campaigning by green pressure groups, with Greenpeace having staged several protests, claiming a victory today.

The delay will put pressure on the Government to ensure power supplies in the coming decade, with many closures planned for 2015, and ensures that a seamless handover of generation at Kingsnorth is no longer possible.

The decision also raises questions regarding the governments CCS completion, with E.ON being one of the favourites to win the £1bn pound funding.

It also comes a day after the Conservatives have pledged new clean coal powered stations.

The company insist that they still have plans for clean coal generation in the UK, but economic conditions have pushed back the need for a new plant in the UK.

Industry News-UK and Ireland moving closer to one energy market

UK and Ireland moving closer to one energy market - In a move that will bring the UK and Irish energy markets closer together the Irish National Electricity network operator Eirgrid yesterday was given the green light for its planned €600 million power link between Wales and Ireland.

Source: Guardian.co.uk

Client News - AWS contributes to Marine Energy Report calling for more marine energy in Scotland.

More than 12,000 jobs in marine renewables could contribute £2.5 billion to Scotland's economy by 2020, according to a report published today.

The industry-led Marine Energy Group study charts a course for wave and tidal power around Scotland, and highlights actions to build further success in the sector. Its recommendations, for Government and its partners, include:

A call for the Scottish Government to repeat its Wave and Tidal Energy Support scheme A review of grid infrastructure required to support growth A fresh look at the levels of support available under the renewables obligation Calls for the Treasury to do more to help the sector, including the release of the Fossil Fuel Levy surplus funds to help promote renewables in Scotland Cabinet Secretary for Finance and Sustainable Growth John Swinney is in Orkney today where he will visit Stromness based marine energy company Aquatera.

Mr Swinney said: "With unrivalled marine resources and a range of wave, tidal and offshore wind development already underway, Scotland leads the way in generating energy from the sea.

The £10 million Saltire Prize continues to attract global interest in the marine energy potential around our coast. We also have publicly funded world leading testing facilities here in Orkney which are hosting wave and tidal devices built with Scottish Government support.

"Marine energy will be key to Scotland's future energy mix and that's why we changed our support mechanisms to give greater assistance to wave and tidal energy in Scotland than anywhere else in the UK.

"The report, put together by industry, highlights the actions it believes we need to deliver a commercial scale industry. It confirms there could be 12,500 Scottish jobs in marine renewables by 2020, a huge boost for the economy and a long term platform for sustainable growth.

"Industry recognises, as this Government has always believed, that the Treasury should unlock Scotland's share of the Fossil Fuel Levy - currently over £150 million - to allow us to give additional support to our renewables industry, the economy and environment.

"This report is an excellent example of collaboration in the public and private sectors. The recommendations are very much industry driven and we will consider their views very carefully as we continue to build a world leading renewables sector."

The Marine Energy Group is part of Forum for Renewable Energy Development in Scotland and works to accelerate delivery of a world leading marine energy industry to provide a contribution to the sustainable economy and environment of Scotland.

Its members are:

Sian McGrath, Aquamarine Power (co-chair) Lynne Vallance, Scottish Government (co-chair)

Mike Barlow, Scottish & Southern Energy

Graham Bibby, AWS Ocean Energy

Alistair Birnie, Subsea UK

Duncan Burt, National Grid

Robin Burnett, Airtricity [from June 2009] Morna Cannon, Scottish Renewables/Scottish Government Gareth Davies, Aquatera Karen Fraser, Scottish Government Phil Gilmour, Scottish Government Neil Kermode, EMEC Audrey MacIver/Elain Cameron, Highlands & Islands Enterprise Tom Mallows, The Crown Estate Robin McGregor, Lunar Energy/Christie Griffith Alan Mortimer, ScottishPower Renewables Paul Neilson, Scottish & Southern Energy Brian Nixon, Scottish Enterprise Paul O'Brien, Scottish Development International Matthew Seed, Wavegen Robin Wallace,

Industry News-Objectors to wind farms to be bought off

A scheme to reward local people is being considered

Ministers are considering whether to establish a “conservation bank” to help overcome planning objections to wind farms and other

renewable-energy projects. Planning problems have held back British onshore wind farms. Vestas blamed nimby (not in my back yard) objections for its recent decision to shut Britain’s only wind-turbine plant, on the Isle of Wight.

Vestas and other energy groups say planning delays and uncertainties make it riskier to invest in Britain than in other countries, where planning approval can take half the time and there are more lucrative incentives for developers.

Now ministers at the Department for Environment, Food and Rural Affairs think they might have found a way to speed up the system.

For Full details of this article in the Sunday Times Please click here