Utility Week

UTILITY Week 25th September 2015

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Page 27 of 31

Markets & Trading This week Price spikes unlikely despite low gas stocks Record imports from Russia and stronger Norwegian production mean gas supply is healthy Record gas imports from Russia and Norway have dampened the chances of significant gas price spikes in European markets this winter, despite the all-time lows seen in the continent's largest gas storage stocks. Germany's total 24 billion cubic metre storage capacity currently stands at just 74 per cent, the lowest ever recorded level for the start of the winter season. But record imports from Russia into Europe over the summer combined with stronger Norwegian gas produc- tion have le the gas supply picture looking healthy. And analysts suggest the ample supply is set to continue through to early 2016. Thomson Reuters Point Carbon gas analyst Oliver Sanderson told Utility Week that only a prolonged and extremely cold winter could li the cost of winter gas, which is currently dragging at six-year lows. "And even then we should have sufficient supply to mitigate significant spikes in price," Sanderson said. Point Carbon is set to publish its winter outlook report at the end of the month, showing a significant increase in summer supply and forecasts of even greater winter volumes from Russia. Russian gas imports into Europe over the summer were 20 per cent higher than last summer and are expected to rise 45 per cent above last year's winter output. Meanwhile, production from Norway's giant Troll gas field increased by 25 per cent year on year, meaning significant imports are set to follow. JA ELECTRICITY Smartest Energy to provide DSR service Business energy supplier Smartest Energy is set to provide a demand-side response (DSR) service to its customers through the capacity market auction expected to take place in January 2016. Customers signing up to the new Smart DSR service will receive payments for reducing consumption in periods of high demand. Smartest Energy said custom- ers will also receive some pay- ment for taking part even if not called on to cut demand, while also being provided with wider energy saving and efficiency opportunities. The DSR service will place customers into groups to share the capacity obligation, allow- ing customers the flexibility to only opt to reduce their usage at peak hours in winter months when they choose to. If a customer chooses not to reduce its demand at a certain time, the capacity will be covered by others in the group. The company said the move to help customers become smarter consumers was a "natural development" for it. National Grid has said it wants DSR to pay a larger role in providing a secure energy sys- tem. It has estimated that if just 5 per cent of peak demand is met by DSR solutions, consumers would save £790 million. ELECTRICITY Interconnector 'crucial' to Ireland's single market The heavily delayed intercon- nector project intended to link Northern Ireland and the Repub- lic of Ireland will be crucial in making the single electricity market work more efficiently, the Irish energy sector has warned. Speaking at an energy policy conference in Belfast, Utility Regulator chief executive Jenny Pyper said the country had been unable to secure the benefits of the single electricity market because of limitations on inter- connection, and "the same will be true for the new market". "In order to be able to trade the electricity freely throughout the island... we need the second interconnector to be able to flow electricity and they're designing a new I-SEM on the basis that that second interconnector will be there, and that the electricity will be able to flow," Pyper said. The interconnector project is a proposed 400kV development that will link the existing elec- tricity transmission networks of Northern Ireland and Ireland between County Tyrone and County Meath. It will take three years and was planned for com- pletion by 2017, but has since suffered major setbacks. Greater winter volumes from Russia forecasted Tricks of the trade Jillian Ambrose "Internal carbon pricing policies have taken hold" Global commodities markets may have buckled under the pressure of plunging prices in recent years, but one looks set to rise from the wreckage. Carbon pricing is having a moment fol- lowing recent findings from the World Bank that the number of global carbon pricing schemes has doubled from 2012. It doesn't take much to dou- ble something of limited scale – but in the run-up to the COP21 talks in Paris at the end of the year, the case for carbon trading corporations are sleepwalking towards a catastrophic "carbon bubble", the World Bank report found that internal carbon pric- ing policies have taken hold on an international scale, too. The need to reduce emissions seems to have made the leap from leie rhetoric to pragmatic business strategy. And it's a trend energy companies in particular should welcome: a truly market-based answer to the very political question of how to tackle climate change. could finally gain meaningful traction. The European market offers both inspiration and a cautionary tale for all who choose to follow. But even the beleaguered Emis- sions Trading System is on the up. Carbon prices have gained about 10 per cent this year aer Brussels' long-awaited move to curb the market's debilitating oversupply. And experts believe further gains of 11 per cent are possible by the end of 2015. It's an encouraging sign for the carbon trading schemes developing across the globe, and for the companies that are beginning to take note. Counter to claims that the world's largest 28 | 25TH SEPTEMBER - 1ST OCTOBER 2015 | UTILITY WEEK

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