De ma nd Side Re spo nse Je r r y Hutton CHP Comme r c ial Manage r
Br itish Sugar today So le pro c e sso r o f UK sug a r b e e t c ro p Six fa c to rie s, a ll with CHP pla nts, fo ur o f whic h use na tura l g a s a s a fue l Hig he st fue l de ma nd is whe n pro c e ssing the b e e t c ro p b e twe e n la te Se pte mb e r a nd F e b rua ry Da ily g a s re q uire me nt o f 560,000 the rms
Why ar e gas pr ic e s so high? “T he ma rke t is no t wo rking ” “T he o lig o po listic b e ha vio ur o f the pro duc e rs” “T he ina ppro pria te linka g e to o il pro duc ts”
Why ar e gas pr ic e s so high? “T he ma rke t is no t wo rking ” “T he o lig o po listic b e ha vio ur o f the pro duc e rs” “T he ina ppro pria te linka g e to o il pro duc ts” Be c ause de mand is not pr ic e se nsitive ?
Qua ntity ve mal De mand Cur Pric e Nor
Qua ntity ium quilibr ke t E Pric e Mar
Qua ntity Impac t of Ine lastic De mand Pric e
Why ar e we so inse nsitive to pr ic e ? We ha ve e xpe rie nc e d a lo ng pe rio d o f lo w pric e s until re la tive ly re c e ntly We ha ve ma de o ur inve stme nt de c isio ns b a se d o n 20p/ the rm g a s We a re no t use d to c o ping with this le ve l o f vo la tility We ha ve no t pla nne d fo r hig h pric e s We ha ve no t a llo c a te d the re so urc e s to de a l with the c urre nt situa tio n
What should we be doing? Pla nning fo r hig he r pric e s! • L o ng T e rm • E ne rg y E ffic ie nc y a nd I nve stme nt • Me dium T e rm • E ne rg y Ma na g e me nt • Sho rt T e rm • Re spo nse o n the da y to syste m tig htne ss
Br itish Sugar ’s Appr oac h • T e a m e sta b lishe d with e ne rg y c o st ma na g e me nt a s prime o b je c tive • L o ng T e rm • Alte rna tive F ue ls inc luding re ne wa b le s • E ne rg y Sa ving Ca pita l I nve stme nt • Me dium T e rm • Mo nito ring a nd T a rg e ting • Optimising Pro c e ss Pe rfo rma nc e vs. E ne rg y
R e sponse on the Day Daily Gas Price 130.00 110.00 90.00 p/therm 70.00 50.00 30.00 10.00 Nov Dec Jan Feb Mar Apr May Day Ahead Price 2004/05
Impac t of Pr ic e Spike T he a ve ra g e pric e No ve mb e r to Ma rc h wa s 33.75 p/ the rm T he a ve ra g e e xc luding nine hig he st pric e d da ys wa s 31.09 p/ the rm F o r a b usine ss using 100,000 the rms pe r da y tho se nine da ys c o st £682,625
R e sponse on the Day F ue l Switc hing • Syste ms te ste d • Alte rna tive fue l a va ila b le • Re g ula to ry c o nstra ints • Co ntra c tua l a rra ng e me nts Sto p Pro duc tio n • Co st I mpa c t unde rsto o d • Syste ms in pla c e • Co ntra c tua l a rra ng e me nts
R e sponse on the Day F ue l Switc hing • Syste ms te ste d • Alte rna tive fue l a va ila b le • Re g ula to ry c o nstra ints • Co ntra c tua l a rra ng e me nts Sto p Pro duc tio n • Co st I mpa c t unde rsto o d • Syste ms in pla c e • Co ntra c tua l a rra ng e me nts Yo u ma y ha ve to do it a nywa y in c a se o f a g a s e me rg e nc y!
Conc lusion T he da ys o f 20p g a s a re g o ne Org a nisa tio ns ne e d to pla n fo r hig he r pric e s a nd ha ve stra te g ie s to c o pe with the vo la tility De ma nd side re spo nse is re q uire d to a c hie ve a n e ffic ie nt g a s ma rke t
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