1. Power Generation : Gas & Electricity
Regional & UK Outlook 2010-2020 &
Opportunities
By Shahzad Paracha
By Shahzad Paracha

2. Regional Outlook
2

3. UK Outlook – Investments by Industry
3

4. UK Distributors & Margins Forecasts
4

5. Investments in Renewables & Impact on Energy Prices (UK)
 £200 Bln Industry Investments & £ 100 Bln in Wind (Mostly) from 2010-2020 to meet:
 Electricity Generation Capacity Mix - Nuclear & Coal (40%), Gas fired Plants (30%) & Alternative Energy (30%)
 Investment Support:
 Tax Payers, high Energy Prices (£200 per customer), Stable carbon Price mechanism, Government Subsidies,
incentives & Tax Breaks
 Investment in line with:
 Efficient & Low cost to Serve Energy Mix for B2B & B2C
 For sustainable Gas Supply security & reduced dependency
 Part of CERT - 34% by 2020 5
 2009 Successful Pilot in US delivered 6% rise in prices - $150 per household

6.  2020 Post Round 3 - Offshore Vs Onshore Wind Capacity Split - 50:50
6
 6000 Turbines in Pipeline @ 2.5 per day

7. UK Dual Fuel Wholesale Costs & Projected Margins
Dual Fuel Projected Gross Margins 2010 - 2012
250
200
150
100
50
0
2008 2009 2010F 2011F 2012F
Electricity Gas Dual Fuel
Rise in G.M’s 2010 – 2012:  Demand Growth:
 High Gas Prices – Over-suppy to meet demand e.g. LNG, GTL  Driver – Nuclear & Gas fired Plants
 Electricity Prices - Moderate Rise & Decline in Futures Market i.e. 2 – 4% Growth - Residential & Industrial Segments
Cheap hedging costs

8. Hedging Strategies
Electricity costs under different hedging Gas costs under different hedging
strategies strategies
 Suppliers - 12 months Hedge costs to rise potentially but will Cost Less as in Past for 2010-2012

9. Wholesale Prices & Costs
Wholesale electricity forward prices Vs Wholesale gas forward prices Vs 18mth
18mth hedge hedge
 2010-2012 – Overall Rise in Gross Margins with decline in demand & Futures Market
hence CHEAP Wholesale Costs

10. Regional & UK Gas Demand & Storage
 30% Regional LNG Demand Growth by 2020  UK Gas Supply 2016 Proportion:
 EU: 10% & BRIC’s: 50%  Domestic production 20%, Imports 80%
(Norway 35%, LNG 35%, Continent 10%)
 Gas Supplier Qatar Will meet 20% of UK Gas  Current Gas Imports 40%
demand from 2011
 UK - 2nd Largest Gas Markets in EU  UK Supply Cover Storage
 1999 – 2009 Average demand growth 6%  15 days Vs 100 in France & SC/AC only 4%
 Gas Fired Power Generation to drive Gas  Investments In Gas Storage :
demand till 2020  From 2010-2020 : 14 bcm (SC/AC - 11%)
• Will lead Supply Cover Storage – 45 days
Annual Storage Capacity Storage capacity/ Annual
Consumption (bcm) (bcm) consumption (%)
UK 99 4 4
Germany 101 9 19
Italy 86 13 15
France 46 11 25
10