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www.cornwall-insight.com Tim Dixon Alex Wynn HELPING YOU MAKE - - PowerPoint PPT Presentation

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www.cornwall-insight.com Tim Dixon Alex Wynn HELPING YOU MAKE SENSE OF THE HELPING YOU MAKE SENSE OF THE www.cornwall-insight.com ENERGY AND WATER SECTORS ENERGY AND WATER SECTORS Tim Dixon Wholesale Team Leader Title slide Alex Wynn

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HELPING YOU MAKE SENSE OF THE ENERGY AND WATER SECTORS HELPING YOU MAKE SENSE OF THE ENERGY AND WATER SECTORS

Tim Dixon Alex Wynn

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Title slide Tim Dixon Wholesale Team Leader Alex Wynn Analyst

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Change from last report Additional info CP16 CP17 CP18-25 Roc supply

  • Lower than expected Roc issue for fuelled

technologies and onshore wind

  • Partially offset by a rise in Roc issue for
  • ffshore wind

Roc demand

  • EII exemptions continue to be taken into

account from 1 April 2018

  • BEIS forecasts annual eligible EII volumes of

11.7TWh for 2018-19 to 2021-22, and 11.6TWh for 2022-23 to 2026-27

RO targets

  • The GB RO target is forecast to peak at 0.479

Rocs/MWh in CP20

  • CP16 and CP17 RO targets both confirmed

Cost to suppliers

  • Reflects Ofgem’s confirmation of the 2018-19

buy-out price (£47.22/Roc)

Roc values

  • A net 1.0mn decrease in forecast Roc issue

for CP16

  • Fewer-than-expected onshore and offshore

stations accrediting in CP16

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  • Buy-out price for 2018-19 confirmed on 12 February
  • Ofgem confirmed the new buy-out price at £47.22/Roc, representing a

£1.64 increase compared to the previous compliance period

  • Controlling the cost of Biomass and Co-firing under the RO
  • BEIS confirmed its final decision on its consultation on Controlling the

Costs of Biomass Conversion and Co-Firing Under the RO

  • A generator cap of 125,000 Rocs will be applied to the generation

eligible for Rocs at the biomass conversion and co-firing bands

  • It is intended that, subject to parliamentary approval, the cost control

measures will come into effect in 2018-19

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  • Drax confirms the conversion of fourth unit to biomass
  • Drax welcomed the decision on controlling the cost of biomass under

the RO, and confirmed that it will be converting a fourth unit to biomass

  • The generator plans to complete work on this unit as part of a major

planned outage in the second half of 2018, before returning to service in late 2018

  • Energy Intensive Industry exemptions
  • BEIS published a revised level of the RO to include EII exemptions,

confirming the obligation level for the 2018-19 obligation period in GB has increased from 0.452/Rocs/MWh to 0.468Rocs/MWh

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  • Our demand forecast remains unchanged on our previous report

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264 268 272 276 280 284 288 292 GB Demand (TWh) GB demand forecast before EII exemptions GB demand forecast after EII exemptions)

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5,000 10,000 15,000 20,000 25,000 30,000 35,000 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 CP16 CP17 CP18 CP19 CP20 CP21 CP22 CP23 CP24 CP25 Installed capacity (MW) Onshore wind Offshore wind PV Fuelled Hydro Landfill gas Wave/tidal

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CP16

  • Roc supply is now

forecast at 105.3mn (2mn lower than our previous long-term report, 1mn lower than

  • ur latest report)
  • Largely due to lower-

than-expected Roc issue for fuelled technologies

  • Drax 2 and 3 recorded

reduced capacity factors throughout December 2017 and January 2018

  • Roc issue for onshore

wind also below expectations

CP17

  • Roc supply is now

forecast at 116.0mn (1.5mn lower than our previous report)

  • Reflects changes to

capacity forecast for

  • nshore and offshore

wind

  • Partially offset by the

inclusion of a fourth Drax biomass conversion unit

CP18-CP25

  • Roc issue forecast has

decreased by an average of 0.1%

  • Roc supply is forecast to

peak in CP18 at 118.2mn Rocs

  • Roc issue will decline

more steeply from CP21 as capacity begins to exit the RO

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  • BEIS already sets targets for

CP16 and CP17

  • CP16 target: 0.409Rocs/MWh

for GB and 0.167Rocs/MWh for NI

  • CP17 target: 0.468 Rocs/MWh

in GB and 0.185 Rocs/MWh in NI

  • The GB RO target forecast for

CP18-25 has remained static

  • The GB RO target is forecast

to peak at 0.479 Rocs/MWh in CP20

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0.0 0.1 0.2 0.3 0.4 0.5 0.6 CP16 CP17 CP18 CP19 CP20 CP21 CP22 CP23 CP24 CP25 Rocs/MWh GB NI

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CP16

  • Roc values are forecast

at £50.52/Roc

  • The buy-out price of

£45.58 and a recycle value of £4.94

  • £0.96/Roc higher than
  • ur previous long-term

report, £0.48/Roc higher than our latest report

  • Reflects lower Roc issue

CP17

  • Roc values are forecast

at £52.32/Roc

  • The buy-out price of

£47.22 and a recycle value of £5.10

  • £2.44/Roc above our

previous forecast, due to fewer-than-expected

  • ffshore and onshore

stations gaining accreditation CP16

  • We therefore forecast

this capacity to come

  • nline at a later date in

CP17

CP18-CP25

  • CP18-CP25 values (with

recycle) are forecast at £51.91

  • The buy-out price of

£47.22/Roc and a recycle of £4.69/Roc

  • BEIS’s headroom setting
  • f 10% is assumed to

keep Roc values stable from CP17 to CP25

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£40.00 £45.00 £50.00 £55.00 £60.00 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 CP13 CP14 CP15 CP16 CP17 CP18 CP19 CP20 CP21 CP22 CP23 CP24 CP25 Roc value (£/Roc) Outturn Central scenario Low wind scenario High wind scenario

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  • CP16 costs for GB are

expected at £18.64/MWh

  • This is in line with our last

report

  • CP17-CP25 costs have risen

by 3.5% on average

  • £0.74/MWh for GB customers,

in line with the updated buy-

  • ut price
  • GB costs are forecast to rise to

a maximum of £22.63/MWh in CP20, before declining to £20.04/MWh by CP25

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£0.00 £5.00 £10.00 £15.00 £20.00 £25.00 £/MWh GB NI

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HELPING YOU MAKE SENSE OF THE ENERGY AND WATER SECTORS HELPING YOU MAKE SENSE OF THE ENERGY AND WATER SECTORS

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  • Government announced that it

will consult on widening the eligibility criteria for the EII exemptions in the Industrial Strategy

  • The volume of exempt supply if

the eligibility criteria is widened is currently unknown

  • Each additional TWh of electricity

demand exempt from the costs

  • f the RO adds 0.4% to the

average consumer bill in GB – equivalent to £0.09

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£22.4 £22.6 £22.8 £23.0 £23.2 £23.4 5 10 Cost to consumers (£/MWh) TWh

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  • Ministers have been warned that the development of offshore wind

projects in the UK could be at risk due to the removal of subsidies

  • Neither the 60MW Forthwind nor 10MW Dounreay Tri projects are

expected to be generating electricity by the October deadline for support through the RO scheme

  • Should Forthwind and Dounrey Tri both not accredit under the RO,

removing 70MW of eligible offshore wind capacity, this could increase the recycle value in CP17 from £5.10/Roc to £5.21/Roc, taking the total Roc value to £52.43/Roc (central scenario)

  • Costs and RO targets from CP18 to CP25 would fall by 0.5% on

average, due to lower Roc issue

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HELPING YOU MAKE SENSE OF THE ENERGY AND WATER SECTORS HELPING YOU MAKE SENSE OF THE ENERGY AND WATER SECTORS

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RO Demand (mn) Rocs Presented Total Roc Supply (mn) Oversupply

  • f Rocs (mn)

Recycle Value Buy- Out Roc Value Forecast values 116.8 N/A 105.3 0.0 £4.94 £45.58 £50.52

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  • Roc value is forecast at £50.52/Roc (up from £50.04/Roc) owing to a

reduction in forecast Roc issue (-1.0mn)

  • Roc supply is forecast at 105.3mn, down 1.0mn on our long-term forecast
  • Output from fuelled (-1.6mn), onshore wind (-0.3mn) and landfill gas (-0.1mn)

technologies continues to outturn below expectations, and we have therefore reduced our forecast to reflect this

  • These reductions have been partially offset by an uplift in forecast Roc

generation for offshore wind (+1.0mn)

  • Roc demand is forecast at 116.8mn, unchanged on our long-term forecast
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  • 2,000,000

4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 Roc Issue CP16 Roc issue CP16 forecast

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  • A Cornwall Insight customer event for our subscription customers
  • We will discuss current and future developments in the renewables

market, including:

  • Roc market developments
  • FiT and CfD updates
  • The PPA market and future renewable deployment
  • Drinks reception to follow the afternoon’s discussion

28 March 2018, 3PM Bridewell Hall, London

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