BMI View: We have incorporated plans to phase out the UK's remaining coal-fired power capacity by 2025 into our forecasts - based on our view that Amber Rudd's announcement will simply accelerate a trend that is already in play. The biggest challenge will be mobilising investment into replacement capacity amid delays to the UK's flagship nuclear project - something that could require reform of the country's existing capacity mechanism so as to incentivise gas.
|e/f = BMI estimate/forecast. Source: EIA, National Sources, BMI|
|Generation, Total, TWh||318.501||317.138||320.275||319.272||321.479||317.182||319.159|
|Consumption, Net Consumption, TWh||302.3||305.4||306.3||307.2||307.8||308.6||309.5|
|Capacity, Net, MW||94,087.1||91,004.1||92,746.3||93,230.3||92,351.7||93,408.0||94,056.2|
Latest Updates & Structural Trends
We have decided to factor the UK's plans to close all of its coal-fired capacity by 2025 into our 10-year forecasts. There are a number of factors that underpin this forecast - not least that coal plants in the UK are already being closed down due to tightening EU emissions directives, as well as the UK's carbon price floor and plunging gas prices amid global oversupply.
Engie, for example, announced in February 2016 that it would close its 1 gigawatt (GW) Rudgely power plant in Staffordshire earlier than expected: in the summer of 2016. Utility SSE similarly announced the closure of it 2GW Fiddler's Ferry power plant in the same week. The closures are a result of declining profitability as wholesale power prices fall on the back of lower commodity prices, and a rise in carbon costs.
In January 2016, the UK's Institution of Mechanical Engineers released a report stating that the UK will face an unprecedented 'energy gap' within the next 10 years. The institute claims that, without plans to stimulate investment in a fleet of new gas plants, policies to stop unabated coal-fired generation and the phasing out of nuclear reactors will combine to create a supply crunch.
The UK's latest capacity auction, which was carried out in December 2015, resulted in a clearing price of GBP18.00 per kilowatt (kW). This was marginally lower than the GBP19.00/kW price achieved at the first auction (carried out in December 2014). We believe that the mechanism is likely to be reformed in order to encourage investment in new capacity - specifically cleaner burning gas plants.
In January 2016, EDF once again delayed making a final investment decision (FID) on the UK's flagship Hinkley Point C nuclear power plant. The company has repeatedly delayed the FID amid concerns about how it will finance the project and objections from the unions (which have seats on EDF's board) over view the huge cost of the project as a threat to EDF.
The ongoing Competition and Markets Authority (CMA) investigation into high electricity and gas bills and possible collusion in the UK energy sector has again been delayed. The CMA was expected to complete its investigation by December 2015 but is now due to report in June 2016.
In the meantime, the UK's Energy And Climate Change Committee is conducting pre-legislative scrutiny of the government's draft legislation on energy. The document sets out proposals, which Energy Secretary Amber Rudd claims would increase competition and protect consumers.
The United Kingdom Power Report features BMI Research's market assessment and independent forecasts covering electricity generation (coal, gas, oil, nuclear, hydro and non-hydro renewables), electricity consumption, trade, transmission and distribution losses and electricity generating capacity.
The United Kingdom Power Report also analyses the impact of regulatory changes, recent developments and the background macroeconomic outlook and features competitive landscapes comparing national and multinational operators by sales, market share, investments, projects, partners and expansion strategies.
- Use BMI's independent industry forecasts for United Kingdom to test other views - a key input for successful budgeting and strategic planning in the power market.
- Target business opportunities and risks United Kingdom's power sector through our reviews of latest power industry trends, regulatory changes, and major deals, projects and investments in United Kingdom.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Competitive Landscape analysis.
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis, covering power markets, regulatory changes, major investments, projects and company developments.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the power sector and within the broader political, economic and business environment.
BMI’s Power Forecast Scenario
Forecasts to end-2024 for all key indicators, supported by explicit assumptions, plus analysis of key downside risks to the main forecasts:
- Generation: Electricity generation total, thermal, coal, natural gas, oil, nuclear, hydropower, hydro-electric pumped storage and non-hydropower renewables.
- Transmission and Distribution Losses: Electric power transmission and distribution losses.
- Trade: Total imports and exports.
- Electricity Consumption: Net consumption.
- Electricity Capacity: Capacity net, conventional thermal, nuclear, hydropower and non-hydroelectric renewables.
BMI’s Power Risk Reward Index
BMI’s Risk Reward Indices provide investors (power companies, service companies and equity investors) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors,
Structure, size and value of the industry sector; overview of the industry landscape and key players; an assessment of the business operating environment, sustainable energy policies, pricing and the latest regulatory developments.
Key Projects Database
Details and analysis of all current and planned developments (new ventures, capacity expansion and other investments) across the sector broken down by location, sector type, capacity, value, companies and operational status.
Illustration of the power industry that exploits our data-rich, in-depth analysis of the leading players in the sector and examination of operational results, strategic goals, market position and the potential for investment.
Power Outlook long-Term Forecasts
Regional long-term power forecasts covering electricity generation, consumption and capacity for thermal, hydroelectric and nuclear power. These are supported by a country specific overview, alongside an analysis of key downside risks to the main forecasts.
Providing BMI’s near-term economic outlook for the region as a whole, as well as taking a close look at countries of particular interest and the latest trends and developments.
The Power Market Reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports, including Energy Information Administration (EIA), World Bank (WB) and United Nations (UN).