CBI energy conference: Phil Hare

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Phil Hare, managing director, Poyry Energy Consulting at the CBI's energy conference. London, September 2010.

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  • Increase in extreme priced periods
  • CBI energy conference: Phil Hare

    1. 1. Energy Market Trends CBI Energy Conference 2010 London Phil Hare Managing Director 15 th September 2010
    2. 2. Once upon a time…gas prices were “volatile” Source: Heren 0 10 20 30 40 50 60 70 80 90 100 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 GB NBP (2008 p/therm) High continental prices pull up UK prices Mild winter and oversupply causes low summer prices Sharply rising gas prices driven by oil prices Oil prices drive up the price of gas Extremely mild winter causes oversupply and price crash Rough storage failure and cold weather causing extremely high prices
    3. 3. ….....and coal prices were “stable” Source: Reuters, McCloskey, ARA CIF basis 6000kcal/kg 0 20 40 60 80 100 120 140 160 180 200 220 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 NWE coal marker price (2008 $/tonne)
    4. 4. …. and what of the future for commodity prices? <ul><li>What is a good long run price for oil? </li></ul><ul><li>There is a lot of gas… in a global market </li></ul><ul><li>Is there an acceptable (high) price for carbon? What if the electricity market decouples? </li></ul><ul><li>Renewables and nuclear plant have low short run costs… </li></ul><ul><li>Increasingly not just a question of “must go up” – but “if” and “when” </li></ul>
    5. 5. Even more change “planned” Sources: DECC, Committee on Climate Change
    6. 6. Generation plant dispatch in a low carbon future 2010 2030
    7. 7. Gas is in the party GB – daily demand with weather of 2003 2009 2029 0 50 100 150 200 250 300 350 400 450 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 0 50 100 150 200 250 300 350 400 450 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Non power generation Power generation Demand (mcm/day)
    8. 8. Market price volatility and stretch will greatly increase Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Weather year: Prices spike at £7700/MWh 2010
    9. 9. Demand Side Management Value likely to grow? <ul><li>Inevitable response from demand response…. </li></ul><ul><li>….but need to develop quantitative analysis of potential </li></ul><ul><li>Analysis needs to include volumes, behaviours, timeframes and technologies </li></ul><ul><li>This will not be ‘load management’ as we know it.. </li></ul>
    10. 10. Some early answers on demand… Example for 2030 with electrification of heat and transport (Jan 2000 weather) Quantity load management Centralised active load management
    11. 11. In conclusion… <ul><li>Wider views of the future than ever before </li></ul><ul><li>Too simple to say that energy prices will go up </li></ul><ul><li>UK even less of an island </li></ul><ul><li>Moving to a low carbon future likely to be even more </li></ul>
    12. 12. Pöyry Energy Consulting King Charles House Park End Street Oxford, UK OX1 1JD +44 (0)1865 722660 www.poyry.com www.ilexenergy.com Phil Hare Managing Director [email_address] +44 (0) 7770 828644 Pöyry Energy (Oxford) Ltd. Registered in England No. 2573801. King Charles House, Park End Street, Oxford OX1 1JD.

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