Newsletter 1st February 2016
Something significant is happening to the UK’s energy mix. New figures recently released by industrial specialists, EnAppSys, reveal the renewable energy industry generated nearly as much electricity as nuclear sources during 2015.
Additionally, During 2015, the total generation from coal-fired power stations fell from 30% to 24% and was displaced as the primary source of electricity by gas-fired power stations which produce 27% of the electricity requirement.
The development of gas production facilities in the Shetland Isles will further strengthen the position of gas as the key fuel for electricity generation.
The future of coal fired power stations in the UK remains bleak, with news that the UK’s 1GW Rugeley coal power station will be forced to close in early summer after failing to win a capacity market contract at last Decembers auction.
Wind was responsible for just under half of the total renewable contribution, with the generation of power fuelled largely by off- shore wind farms.
Biomass also saw significant growth with Drax power station’s on-going conversion of coal-fired generation to biomass units. A project to convert three of its six generating units to biomass sees two of the three units now converted and the third set to complete its upgrade in 2016.
Solar; the rush to meet subsidy deadlines saw solar PV also increase its contribution significantly with solar providing more electricity than hydro plants for the first time.
The overall level of fossil fuel power generation in the UK has now fallen by 39% over the past five years. This represents a share of total power generated form fossil fuels of just over 51% during 2015 and has led to an estimated fall in the country’s carbon emissions.
These results provide further evidence that the renewables sector can provide a large chunk of the UK’s power mix without compromising grid stability.
Current Market Position
Warmer than average temperatures for the time of year, healthy storage supplies and low oil prices continue to pressure gas prices. Electricity markets generally followed the lead of gas markets. Prices have remained relatively steady with some downward movement driven by falling oil prices.
Volatility at the start of January was largely due to chaotic events on the Chi-nese stock exchange having a knock on effect on global markets.
Norwegian outages disrupted gas supplies and inconsistent wind generation tightened electricity prices but oil continued to fall as worries over the Chinese economy and its impact on oil demand dominated.
The end of the month saw both gas and electricity prices recover as rumours of a possible meeting between OPEC and non-OPEC producers in February with production cuts on the agenda.