"Disruptive changes" such as slowing electric load growth, falling peak-load power prices due to demand response mechanisms and expanding distributive generation are challenging power producers in the US. "We as an industry have to meet the challenge and embrace these trends. If we don't, they are going to run over us," says Jon Wellinghoff, chairman, Federal Energy Regulatory Commission (FERC).
Flexible rather than conventional gas generation could save Britain between £380 million to £550 million by 2020 and up to £1.54 billion by 2030 alone through reduced balancing costs incurred by National Grid, research commissioned by Wärtsilä through Redpoint Energy and Imperial College London shows. The modelling is based on replacing 4.8GW of conventional CCGTs with 4.8GW of gas-fired Smart Power Generation.
The launch of capacity markets may come too late, the Department of Energy and Climate Change (Decc) has acknowledged, and decreasing generation margins are threatening Europe's energy trading market. "Decc may well find that once they intervene, find they have to intervene again which causes the risk that we will go back to a regulated energy market," says Jim Fitzgerald, associate partner at The Advisory House.
A 'dash for gas' scenario, unveiled by UK Chancellor George Osborne as part of the Gas Generation Strategy, may threaten the country's climate targets, critics warn. As one of three proposed scenarios, the 'dash for gas' case calls for 37 GW of new gas-fired power plant capacity, or up to 40 plants, by 2030 and implies a rewrite of a draft law that sets out Britain's carbon emissions reduction goals by the mid-2020s.
Britain's Chancellor George Osborne has put his political weight behind realising new gas-fired capacity to provide baseload electricity beyond 2030, rather than using it merely as backup capacity for renewables. The Chancellor will use his Autumn Statement on December 5 to unveil the much-awaited Gas Generation Strategy.
The UK energy bill, unveiled today, does not specify details on 'strike prices' – the financial support levels to be available to low-carbon generation. Strike prices are of central importance under the planned contract for difference (CfD) regime, aimed at incentivising new-build capacity by guaranteeing operators a steady return of the plant's lifetime.
The Beijing government has stepped back from interfering with pricing of coal as a fuel for power stations, adopting a hands-off approach following a 25 percent drop in the price of the fuel. This move may herald a liberalisation in the tight electricity tariff regime which would prompt investment in more gas generation for peak-load power demand.