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Work Begins on New Electricity Interconnector

Work has begun on the new ElecLink electricity connection between Britain and France, which will enable transmission of up to 1GW of power through the Channel Tunnel in either direction.

The project will increase the interconnected capacity between the two countries by 50%. The UK is currently a net importer through the existing IFA (Interconnexion France-Angleterre), a 2GW connection that was commissioned in 1986 and uses a 45km subsea cable.

The new connection will provide greater flexibility, with the opportunity to import more power when prices are cheaper. However, it could also result in increased volatility at times of supply constraints on either side of the Channel, as the markets become more greatly connected. Overall, increased flexibility is likely to have a positive impact, although it should be noted that we do not yet know how the costs of imports and exports of energy might be impacted by Brexit. (more…)

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BP Predicts 30% Growth in Energy Consumption

Spencer Dale presented the 2017 BP Energy Outlook last week. The base case, or most likely path, predicts 30% growth in energy consumption by 2035, which will shift away from the US and Europe and towards fast-growing markets in China and India. Energy will be used more efficiently, and the proportion of renewables will increase. While BP expects carbon emissions to continue to grow, this will be more slowly than in the past.

The greatest decline is expected to be in coal demand, with global consumption peaking in the mid-2020s. This is in large part because China’s coal consumption is forecast to decline sharply from 66% of its energy mix today to less than 45% by 2035.

Renewables will be the fastest growing source of global energy  as the price of solar and wind generation falls, with China being the largest source of growth. A mix of nuclear, renewables, and hydro will lead to continued decarbonisation, although BP still expects 75% of the energy mix to be from oil and gas in 2035 as India surpasses China in terms of growth. BP does not envisage India following China’s path of a decline in energy intensity because it is already very service-orientated. (more…)

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Energy-intensive Industries Exemption

In line with the government-stated intention to reduce the impact of renewables policies for most Energy-intensive Industries (EIIs) and safeguard their competitiveness internationally, from April 2017 EIIs will be exempt from a significant proportion of the costs of the Renewables Obligation (RO) and the Small Scale Feed-in Tariff (ss-FiT).

Subject to state aid approval, companies operating in sectors such as steel, chemicals, engineering, brick making, metal casting, heavy manufacturing, and mining will benefit from this exemption, but non-exempt customers will pay extra to cover the shortfall.

(more…)

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Preliminary Outlook: Winter Electricity Margins are Manageable

Electricity margins will be “tight but manageable” this coming winter according to a preliminary outlook from the National Grid. The grid operator has issued its 2016/17 Winter Consultation, which seeks views on gas and electricity supply and demand for the coming winter and includes a first look at supply expectations. The consultation responses will be used as an input to the Winter Outlook report, which is due to be published in October. The National Grid is particularly seeking views from sites that take part in demand side response, which plays a significant part in balancing the system during times of peak demand.

At this stage, the margin for power generation is expected to be 5.5%. To put this into context, this is similar to last year’s forecast of 5.1% and is well above the level at which a Notification of Inadequate System Margin (NISM) would be triggered.

(more…)

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