Utilities Review, January 2017
Some interesting snippets of information in the UK Utilities market this month…
How will Brexit impact the interconnectors with the continent?
For the existing infrastructure this will depend on the nature of the agreement existing and yet to be made between the UK and Europe. This could depend on whether the UK remains in the European internal energy market, which would in effect mean the same rules for interconnectors when the UK leaves the EU. In the short term the impact should be limited, however, we are already seeing that currency rates are impacting short term prices on a daily basis.
Perhaps more important will be the impact of Brexit on new infrastructure. There are 9 power interconnector projects lined up as part of the enablement of UK energy security thinking, which are now paused pending clarity from Brexit negotiations.
2016 a big year for supplier competition
As some small players fall by the wayside 2016 was the most intensive yet for competition with 44 retailers now operating in the UK including 15 new entrants.
We wonder why therefore the government is obsessed with the lack of switching as it surely isn’t a lack of competitive effort. Surely that is how markets are supposed to operate? If we are going to regulate to force customers to change supplier why not regulate to simply force price down and go back to a monopoly. Unless perhaps deregulation hasn’t worked?!
However, this still isn’t enough for everyone with a people crowdfunding project being launched to create a new kind of energy supplier. The Our Energy project is reaching out to customers to help start up an energy company in response to the arrogance of the Big Six suppliers. The concept is based on a truly transparent supplier which will share details of salaries, accounts and prices.They want £450,000 to become operational in 2017! After 3 years customers will be able to own part of the company.
Smart meters and demand side response
Whilst the case for DSR for businesses proves difficult to sell, with minimum requirement of C200kW of sheddable load for about 200 hours per year, the government are keen to promote its potential at domestic level through Smart Meters. The link below will take you to a pamphlet explain how it could work. Clearly the scope for small business customers to participate should improve as the same technology is rolled out to them also. Click here
British Fracking industry set for first major production in 2017
Three separate fracking projects could be launched this year. Hydraulic fracturing in North Yorkshire, could be imminent as planning obstacles and protests overcome. Two other operators — Cuadrilla Resources and iGas — hope they will be able to start operations at two other sites in northern England this year.
The UK made history in 2016, with new analysis revealing that energy from wind turbines dwarfed energy sourced from coal power stations for the first time ever.
Figures from analysts Carbon Brief revealed that coal-generated electricity in the UK fell from 22.6% in 2015 to just 9.2% in 2016. In comparison, wind power provided 11.5% of all generation in 2016, which is 0.5% lower than figures for 2015.
A major Solar PV supplier is planning to spend £600m on buying back solar assets. They plan to take over the operation and maintenance of the assets in return for the remaining FiT payments.
Utilitywise survey drumming up water business?
A Utilitywise survey reported in Utility Week raised some interesting statistics
- English water companies to lose hundreds of thousands of business customers from April
- 53% of English businesses to switch supplier in 2017
- 74% likely to switch when informed about deregulation
- 19% happy with current supplier
If these results are achieved it will be amazing, exceeding Scotland’s performance with much higher discounts. This feels very much like scare mongering to force companies to think they may be missing the boat. It isn’t surprising that later on in the edition the announcement that Utilitywise and Business Stream have teamed up to offer a multi-utility service.
It also conflicts with the views of Lord Rupert Lonsdale, chair of the Water Retail Company who claims that the event will be a damp squib for most businesses, citing that awareness amongst small businesses will be minimal.
More firms applying for retail licences
Veolia, Everflow and Peel group have recently applied for retail licences on top of the 14 already licenced. Cobalt, who have a licence, do not intend to compete yet in England.