Timing of UK's first capacity auction next year for delivery in 2018 is "not perfect", as it risks a gap in power supply in the face of tightening reserve margins starting from 2016, no new capacity by then and a lack in demand response, says Stephen Woodhouse, director at Pöyry Management Consulting.
Eager to curb China's notorious air pollution, the State Council has announced it will ban the construction of new coal-fired power plants in three key industrial regions surrounding Beijing, Shanghai and Guangdong. In an action plan, the Chinese cabinet aims to slash the share of coal in the country's energy mix from currently 70 percent to below 65 percent by 2017.
In an open letter to UK energy secretary Ed Davey, the chairman of the Committee on Climate Change Lord Deben has called for caution on shrinking subsidies for offshore wind power projects, warning "required investment" would decline. Investors into new renewable as well as gas-fired capacity are sitting on their hands amid a persistent lack of clarity on the Electricity Market Reform Delivery Plan.
Turkey's government is plagued with a new headache over costs of gas imports after Abu Dhabi-based energy group Taqa decided to pull out of a $12 billion coal-fired power project. Domestic coal is seen as a leeway to reduce Turkey's annual $55bn energy import bill, and policy makers in Ankara have introduced tax breaks in favour of coal generation.
Tension is rising between policy makers and utilities amid rising urgency to invest in new power generating capacity in the UK. Policy makers keep urging utilities to fund much-needed new capacity, but cash-constraint utilities need to first reorganise their balance sheet before they can fund new-build projects, says Ben Caldecot, head of government advisory at Bloomberg New Energy Finance (BNEF).
As the regulatory clock continues to tick and deadlines loom large on implementing new EU rules like EMIR and REMIT, some utilities "face an uphill battle" to understand and meet the obligations, warns James Brown is senior energy consultant, EMEA for Allegro Development.
"When the current ambiguities are cleared up and firm deadlines reset, everyone will be expected to switch on quickly," he said, warning "Failure to comply will be met with stiff penalties."
A new independent, cross-party report urges the UK Government to clarify its energy policy beyond 2020. "The Government should work with industry to narrow the debate by identifying 'low regrets' investments for the power sector beyond 2020," finds the report which will be presented in Parliament today.
Nine out of ten businesses in the UK believe the government's flagship energy policy under the Electricity Market Reform (EMR) will burden the industry by making cost more difficult to predict, shows research released today by Npower. The £10 billion EMR programme guarantees a fixed price for green energy production, which is feared to increase electricity prices and reduce competitiveness of the UK economy.
Capacity markets will provide stable cash flows to thermal generators in the UK to enable them to finance new projects at lower discount rates, reflecting lower risk. However, financiers may find that regulatory uncertainty exceeds the price risk in energy-only markets, warns Dr. Jim Fitzgerald, associate partner at The Advisory House.