The U.S. EPA says that a typical sport fisherman working the Great Lakes would pay $4.58 for the privilege of catching a single walleye/pike, but would gladly fork over $7.99 to land a trout, or...
U.K. Carbon Lessons
Emissions regulations are reshaping the U.K. and Irish energy markets.
to continue as coal and gas will remain the fuels at the margin, with gas-fired generation increasing its share in the medium to long term. Going forward, new market drivers such as emission-reduction targets are expected to make the future GBEM uncertain. The study reference case and scenario forecasts attempt to quantify this uncertainty.
The average wholesale electricity market price in GBEM was 36 £/MWh in 2005 and 38 £/MWh in 2006. In 2006, the system had supply problems mainly due to nuclear outages and a combination of other outages and unusual weather conditions that caused the general increase in prices ( e.g., a heat wave in July 2006).
Similar forces will drive prices in the future. In Great Britain, 15.5 GW of base load and 3.3 GW of peak capacity will be retired by the end of 2015. This is equivalent to 23 percent of total installed capacity in the GBEM. Perhaps more alarming is the nature of generation being retired—nuclear and coal. By 2015, 6.5 GW of nuclear capacity, which is one of the most secure and cheap generation sources today, will disappear. A further 9 GW of coal generation will be forced to close down due to environmental restrictions introduced by the LCPD.
Furthermore, the U.K. will need more peaking capacity than ever with increasing renewable capacity. About 6.5 GW of installed windpower capacity by 2015 will necessitate peak-power supply to balance its volatility. According to our forecast, 1.8 GW of peak capacity will be needed by 2015, 5.2 GW by 2018, and 7.7 GW by the end of the study period.
Currently, no new peaking plants are proposed in the GBEM. Consequently, the system is expected to get really tight in 2015, with average on-peak prices reaching over £86/MWh during winter peak hours.
Peak-power prices on average will rise by about 33 percent from 2008 to 2011 compared with 2007 prices. Average peak prices increase to £42/MWh between the years 2012 to 2018. For the balance of the forecast, 2018 through 2031, on-peak prices increase driven mainly by the rising natural-gas price forecast.
Additions and Subtractions
In Great Britain, Glendoe hydro station (100 MW), Marchwood combined-cycle gas plant (850 MW), and approximately 1.3 GW of wind generation is under construction. These additions will not be sufficient to replace the retiring fleet and restore healthy reserve margins. On the other hand, new power-plant project announcements indicate leading players are preparing to build new power stations in Great Britain.
Currently, 12.5 GW worth of new gas-fired plant projects and around 4 GW of new coal-fired plant projects have been announced. Recently, Scottish Power announced its plans to convert Longannet and Cockenzie to clean-coal technology, which is equivalent to an additional 6 GW of new coal-fired generation.
Most announced projects are in the pre-proposal stage, and the sponsors’ date announcements likely will prove to be optimistic. Realistically, however, around 2.5 GW of the capacity announced will be built by 2015. A further 12 GW of renewable energy is forecasted to come on line in Great Britain by 2015.