Utility Week

Utility Week 7th August 2015

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Page 25 of 31

Markets & Trading This week National Grid looks to extend balancing Consultation opened on making SBR and DSBR services available for winters 2016/17 and 2017/18 National Grid is considering extending the option to purchase balancing services for winter 2016/17 and 2017/18, due to "uncertainties" around supply and demand outlook prior to the capacity market coming into force in 2018/19. It has opened a consultation on whether to continue making supplemental balancing reserve (SBR) and demand-side balancing reserve (DSBR) services available for the next two winters. "Given the uncertainty over whether there will be sufficient capacity margins available in the electricity market for balancing purposes, it is prudent that we explore options that help us do our job in transporting Britain's energy," said balancing services manager Claire Spedding. DSBR is targeted at large energy users who volunteer to reduce their demand on winter weekdays between 4pm and 8pm in return for a payment, while SBR is targeted at keeping power stations that would otherwise be closed or mothballed in reserve. In its Electricity Security of Supply report, Ofgem warned of uncertainty on the outlook for winter 2016/17 margins, and suggested this is a "significant opportunity" for industry to play a role in delivering security of supply by "returning mothballed plant to the market or improving plant availability". However, the regulator insisted National Grid has enough additional balancing services to secure electricity supplies for consumers this coming winter. LV GAS Imports down in 2014 as demand fell Natural gas imports fell 11 per cent in 2014 compared with 2013, as overall UK gas demand decreased by 8.9 per cent. Statistics from the Depart- ment of Energy and Climate Change show domestic demand for gas fell 19 per cent due to unusually warm average temper- atures. Gas used by the industrial sector was down 0.7 per cent. However, gas became the main fuel used for electricity gen- eration, with its share rising by 5.9 per cent to 30 per cent, due to a decrease in coal generation and lower wholesale gas prices. Pipeline imports from Europe were down 19 per cent to 477TWh in 2014, with 57 per cent of this coming from Norway and 15 per cent from the Netherlands. LNG imports were up by 21 per cent to 124TWh, driven by increasing global supply and "weaker than expected" demand in Asia. LNG accounted for 27 per cent of overall gas imports, up from 20 per cent in 2013, with 92 per cent coming from Qatar. ELECTRICITY Renewables climbs towards 2020 target Generation of electricity from renewable energy sources rose by 21 per cent last year, accord- ing to official government data. The use of gas-fired power generation also rose, contribut- ing to a 36 per cent decline in the use of coal-fired power. The government's Digest of UK Energy Statistics 2015 showed a strong increase in the amount of energy generated from renewable technologies compared with the previous year, contributing 7 per cent of the UK's total generation mix. The UK has an ambitious legally binding renewables target of 15 per cent of electricity use to achieve by 2020. WATER Northumbrian to embrace energy DSR Northumbrian Water is set to become the latest water company to embrace energy demand-side response (DSR) as it plans to roll it out across all its facilities. It currently has one pilot DSR project at its Aycliffe wastewater treatment works in County Durham, but it is set to develop three more at new sites in the coming months. Following a review of these tri- als, Northumbrian Water climate change manager David Chap- man told Utility Week it will go "company-wide thereaer" to all of its 437 sewage treatment works and 35 water treatment works. He added: "The dynamic side is interesting to us, not least because of the sums of money involved." DSBR: large users are paid to reduce demand Tricks of the trade Jillian Ambrose "Brent crude is on the move again, wielding a scythe" Brent crude is on the move again and this time the shadowy figure of the commodities space is wielding a scythe. Fresh manufacturing data from China showed a new slow- down resulting in pricing levels below $50 per barrel for the first time in four months at the start of August. And in the same week the effects of the year-long oil price collapse have reached crunch point. Already, analysts estimate that around $200 billion of oil top Centrica's jobs cuts by slash- ing 6,500 from its workforce. So where does the pain end? Shell seems to think that will be by the end of the decade, but even then its estimates suggest a return to between $70 and $90 per barrel. And even that is couched with the word "potential". The smart energy companies have already made moves to adapt to a new world order. For everyone else it could be a long five years. and gas projects have been shelved as a result of the market crash. Good news for environ- mentalists, but agony for the companies themselves. For UK utilities this is most clear in the latest H1 financial results from Centrica Energy, which saw operating profits plummet from £526 million to £116 million, with particular pain for its gas business, whose profits fell from £465 million to £48 million over the same period. Centrica is poised for a staff cull of some 6,000, but it is not alone. Oil and gas giants Shell and BP have also seen profits crushed, with Shell expected to 26 | 7TH - 13TH AUGUST 2015 | UTILITY WEEK

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