Utility Week

UTILITY Week 12th June 2015

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28 | 12TH - 18TH JUNE 2015 | UTILITY WEEK Markets & Trading This week Centrica and SSE top Grid capacity awards SSE to provide 760MW of reserve capacity in the second round of National Grid's SBR scheme Centrica and SSE have secured the largest capacity contracts to help National Grid secure 2.5GW of additional reserve capacity to provide extra backup electricity needed to prevent a blackout this winter. The results of the second tender round show SSE secured contracts to provide 760MW of reserve capacity to National Grid, the highest in the second round of National Grid's supplemental balancing reserve (SBR) scheme for this year. In the second winter 2015/16 tender round, National Grid tripled the amount of generation capacity contracts on offer compared with its first tender round, to almost 1.8GW of capacity. The latest units contracted include SSE's 675MW Peterhead power plant, despite it failing a reliability test as part of the same contract last winter. SSE said "major investment work" has been undertaken, and is continu ing, at Peterhead to improve its flexibility and efficiency. In addition, SSE secured contracts for 89MW of capa city from smaller units at its Fiddler's Ferry, Ferrybridge and Keadby stations, which it says will have no bearing on its recent decisions to close Ferrybridge by 31 March 2016, or bring Keadby CCGT plant out of deep mothball. Centrica's South Humber Bank and Barry gasfired power plants will be contracted to provide 40MW and 227MW respectively. In the first round, Centrica secured a contract for its 660MW Killingholme gas plant, bringing its total SBR capacity for this winter to almost 930MW. JA ENERGY Elexon calls for market overhaul Electricity balancing and settle ment company Elexon says there is a need to "start again" with a new energy market to get the right value to the consumer from demandside response (DSR). Elexon's head of market design, Justin Andrews, said at an energy consultancy confer ence last week that the current market rules should be "ripped up" to "start again" aer the prin ciples of the market have been "bastardised" by new schemes. Andrews said: "We have typically tinkered around the edges of the energy market over the years and now we've got the imbalance mechanism and BSC [Balancing and Settlement Code], we've got the feedin tariff scheme and renewables and now Electricity Market Reform… adding all these things on, the original intent of the market has been lost." DSR will make up less than 0.5 per cent of the capacity market aer the first auction price closed lower than expected in December, undercutting bids from DSR technology developers. ELECTRICITY Half-hour metering 'will force efficiency' The introduction of halfhourly metering will be the "biggest chance" for uptake of energy effi ciency among business electricity users by causing a sharp price increase, according to business electricity supplier Haven Power's chief executive Peter Bennell. Speaking at a consultancy conference last week, Bennell said the introduction by Ofgem of mandatory halfhourly meter reading in April 2016 for mid sized nondomestic customers would force inevitable "losers" facing "very substantial" increases to embrace energy efficiency as a way of reducing costs under the legislation. ELECTRICITY Drax sales up despite 'challenging' market Drax has extended its power sales for 2015 and 2016 by 3.4TWh and 2.7TWh respectively to bring its total contracted posi tion up to 23.8TWh and 12.1TWh for 2015 and 2016. In its latest trading update, the generator added that trading conditions "have remained chal lenging" due to weak gas markets keeping the power price down, and said it has sold 22.3TWh of its 2015 contracts at £49.9/ MWh, which is slightly below the average price of £50.80/MWh announced in February. Drax said the contracts, cou pled with the "good operation performance" of its generating units, have helped the company to maintain its fullyear targets. Peterhead: 'major investment work' undertaken Tricks of the trade Jillian Ambrose "The Russia-Ukraine gas contract expires this month" There is no grim coincidence in news that the death toll on the RussiaUkraine border has begun to rise again, just as negotiations over Gazprom's next quarterly gas supply deal ramp up. Although recent months have brought a relative calm to the fractious relationship between Europe's largest gas supplier and neighbouring Ukraine, the current gas supply contract expires at the end of June, meaning a fresh round of talks is unavoidable. wellsupplied summer. But now ahead of the third quarter of the year – a crucial time for topping up storage stocks ahead of the colder months – the markets could face greater volatility. Europe's situation is par ticularly precarious as custom ers delay their imports to take maximum advantage of the full impact of low global oil prices. Although far from the nego tiation table, those at Europe's gas trading desks will no doubt be hoping for a resolution too. A Bloomberg report has already warned of "bloody clashes" in the coming weeks, pointing out that lower coal stocks in Ukraine have upped the ante. The intense power play between the two nations, played out in cubic metres of pipeline gas, is not only a threat to the political stability of the region, but also to energy markets across Europe. In March this year, the price of UK gas spiked 10 per cent as concerns over Russian gas sup ply climbed in line with reports of mounting tensions. Then, the impact was muted by the fact that Europe was about to enter a

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