Managing carbon price risk
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Managing carbon price risk

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Presented by Sarwjit Sambhi, director, power business unit, Centrica - at the CBI Climate change Summit, Tuesday 2 December 2008

Presented by Sarwjit Sambhi, director, power business unit, Centrica - at the CBI Climate change Summit, Tuesday 2 December 2008

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Managing carbon price risk Presentation Transcript

  • 1. Managing carbon price risk Sarwjit Sambhi, Centrica 2 December, 2008
  • 2. Centrica’s carbon exposure Fuel Carbon O&M Gas Carbon Spark Spread
    • 9 CCGTs in UK (including Langage and Spalding)
    • 6 million UK retail electricity customers
    GENERATION COSTS MARKET PURCHASES 12 million tonnes p.a. requirement
  • 3. EU ETS
    • Phase I overallocation leads to price collapse, though length not understood until Apr-06 reporting
    • Phase II NAPs tighter - prices driven by other commodities & trading sentiment
    • Phase III still to be finalised but looking tighter again giving more robust pricing signals out to 2020
    • Trading volumes continue to increase
  • 4. Impact of ETS on Investment ABATEMENT COST CURVE LEVELISED COST OF GENERATION (£/MWh) CCGT Coal w/o CC Nuclear Offshore with ROC ROC Capital Costs O&M Fuel Carbon Range of abatement required Nuclear extensions Additional CERs Fuel Switching below €45/t Fuel Switching above €45/t CCS Industrial demand destruction