Ed Simpson

I'm sure a few of you are up to your armpits in REMA, the Review of Electricity Market Arrangements that DESNEZ launched on the 12th March for response by 7th May. That's some 46 days to respond on the biggest change to our industry since NETA in 2001. And luckily you only have to wade through a mere 294 pages of documentation. For those of you who aren't, this consultation has some proposed changes which have huge implications for the UK power market - and many of them are mad, bad and downright risky. Think I'm indulging in hyperbole? I'd urge you to get familiar with the provisions being considered because they WILL change your business model, whether you are a generator, a customer, a consultancy, a supplier, an investor - yes, in other words everybody. Unfortunately DESNEZ will congratulate themselves on their broad stakeholder engagement, never mind the fact that most actors barely have the resources to do any justice to the amount of work that needs to be done on this. So unless you want to see a meaningful forward market to disappear, PPAs to become a thing of the past, and you want to learn how to trade transmission rights, I urge you to respond. Good luck! #REMA #wholesaletrading #electricitymarkets #nationalgrid

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#UK power company Drax Group has set up a US subsidiary, Elimini, and plans to spend ~$12.5 billion to build five #carbon negative power plants in the US. The five plants will collectively generate 750MW of #electricity by burning #biomass while capturing their collective annual #carbonemissions of 7.5M tonnes. The process, known as #BECCS (bioenergy with carbon capture and storage), has the potential to annually generate $500M in #IRA tax breaks for Drax. While BECCS is not without its challenges and controversies, if successfully executed, it has the duel profit potential of selling power as well as #carboncredits. Learn more about Elimini and its plans here: https://elimini.com/ If you don't have the FT, read the Reuters article "UK’s Drax to invest up to $12.5 billion in US biomass power plants" here: https://lnkd.in/e4UWUPuY #sustainability #energytransition #CO2 #cleanenergy #decarbonization #decarbonisation #carboncapture #ccs #ccus #carbonremoval #unitedkingdom #bioenergy

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Daily Energy Market Update - September 2nd, 2024 Today’s UK energy market saw significant movements, particularly in both gas and power prices. The NBP Gas Day-Ahead price experienced a notable increase of 2.65%, reaching 94.79 p/th. This upward trend extended to key contracts such as October 2024, which rose by 2.07% to 96.15 p/th. These price movements reflect the current market dynamics and underlying factors influencing supply and demand. In the power market, UK Base Day-Ahead power prices surged dramatically, with a sharp increase of 42.56%, bringing the price to £91.97/MWh. Even more striking was the rise in peak power prices, which climbed by 56.12% to £93.50/MWh. These significant jumps in power prices can be attributed to several critical factors impacting the market this week. One of the primary drivers is the forecasted shortfall in wind power generation. This week, wind output is expected to fall over 20% below seasonal norms. As wind plays a crucial role in the UK's energy mix, this reduction in generation capacity is putting upward pressure on prompt energy prices, as the market anticipates a tighter supply-demand balance. Adding to the bullish sentiment in the gas market is the ongoing industrial maintenance in Norway, which is set to have a considerable impact on gas flows. With a reduction of 40 million cubic meters per day in Norwegian gas flows, the market is reacting with higher prices as supply tightens. Despite these factors, temperatures in Britain for the week are expected to align with seasonal norms. While this will likely have a limited impact on gas demand, the market is more focused on the supply-side constraints and the reduced wind generation that are driving prices higher. Looking at the broader energy complex, we see TTF Gas Day-Ahead prices inching up by 0.89% to €39.15/MWh, while the Front Month price rose by 2.43% to €39.82/MWh. On the global front, Brent Crude prices declined by 2.46%, now trading at $76.93 per barrel. Meanwhile, in the carbon markets, both UK and EU carbon prices saw minor declines, with UK carbon closing at £43.31 per tonne, down 2.61%. In summary, today’s energy market activity is shaped by a combination of reduced wind generation, significant Norwegian gas maintenance, and stable temperature forecasts. These factors are collectively driving the sharp increases we’ve seen in UK power and gas prices. As we move further into the week, it will be crucial to monitor how these elements continue to influence the market. Stay tuned for more updates, and as always, feel free to reach out with any questions or for deeper insights into these trends.

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I read today's article in the The Guardian (see link in comments below) with interest. The dawning realisation and indeed policy endorsement to promoting the continued usage of #naturalgas in the #UK's power system, demonstrates a level of common sense from the incoming #Labour administration - though let's not pick bones about the fact that the previous administration's decision to extend usage of #CCGTs met with widespread criticism from across the chamber at the time.  The idea that greater penetration of renewables in the system requires greater #flexiblepower provided by natural gas #powergeneration, is clear - at least until and unless it is displaced by #nuclear, or indeed #longdurationstorage, which can recycle green #electrons. The jury's currently out on the latter from a commercialisation perspective, and new nuclear build is years ahead. So natural gas continues to be the #decarbonised transition fuel of choice. But here's the kicker, with #carboncapture #technology attached to gas generators, we can deliver #netzero flexible power into the #grid. And why only #sequester the #CO2? Why not create a further revenue opportunity by scrubbing or reusing the CO2 in products such as food grade #industrialgases or #carbonblack products, or indeed #methanol? In doing so, a real opportunity exists to invest without the dependence on #subsidy. At Victory Hill Capital Partners LLP, our thematic approach to investing in the #energytransition foresaw such an #evolution, hence our investment in a UK programme which provides #gasfired flexible power combined with carbon capture technology which scrubs the CO2 into #foodgrade CO2 to be sold into the industrial gases market where there is a structural short in the UK, creating a #sustainable value chain, with our partners, Landmark Power Holdings. Moving forward, we believe the picture of the #demandsidedynamics are likely to be further skewed by the emergence of generational #AI technology in #datacentres. With the amount of energy required for AI technology tasks being 10x more than the equivalent Google tasks, the demand for dependable energy is expected to spike to historically higher levels in the next 10 years in #Europe, the #US and beyond. And within this context, the conversation will likely be, is natural gas a #transitionfuel? Or will it be here to stay? In which case the question arises of: who understood ahead of time the benefits of carbon capture technology, and is there sufficient policy initiatives and #privatecapital to support this? Interested? #letstalk #sustainableinvesting #unsdgs #victoryhill #gseo Department for Energy Security and Net Zero Fiona Harvey #victoryhill Emily Revess #sustainableenergy Louis Taylor John Flint Emma Floyd Valerie Hamill Victoria Seabrook Rt Hon Rachel Reeves Peter Kyle Lord Philip Hunt

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Chart taken from an article I've written up on the Current+ website, demystifying the cost of #electricity supply. #climate and #renewableenergy sceptics argue that because of their intermittency, #wind and #solar are responsible for the high cost of delivered power. This could not be further from the truth. A more detailed read on this subject can be found here 👉 https://lnkd.in/ekyJV-8U

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Negative power prices: solar energy and price cannibalisation Negative pricing is not new in some markets. It occurs when weather conditions create spikes in the production of electricity from sources such as wind and solar farms, creating excess supply. So far, though, the effect has been relatively contained. In the UK last year, the hours when there were negative prices accounted for less than 3 per cent of the total, says Alon Carmel of PA Consulting. The trend is only going one way. Electricity prices dropped into negative territory for a record 7,841 hours across Europe in the first eight months of the year, according to consultancy ICIS. There are other causes: industrial electricity demand is still low as some manufacturing facilities never reopened after the 2022 energy crisis. Construction of storage technologies has lagged as governments prioritise the rollout of renewables capacity. Solar energy has been the main driver of negative pricing as solar resources tend to be more consistent, leading to negative prices in particular during the spring and summer and late mornings to early afternoon. Mario Draghi, the former European Central Bank governor, warned in his September 9 report on the bloc’s competitiveness that price cannibalisation may “deter investments and slow the energy transition. The EU is aiming for renewables’ share of consumption to reach at least 42.5 per cent by 2030, up from 23 per cent in 2022. This will undoubtedly lead to more price cannibalisation. (FT)

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Good article from James Lindsay on the important role that #familyoffices (plus corporate capital) play in helping to bridge the gap in scaling-up emerging technologies to accelerate the #energytransition, which often require significant upfront capital investment into #FOAK facilities. These FOAK plans often demand more risk capital than many early-stage #venturecapital funds can deploy, while also carrying more engineering, scale-up and offtake risk than most #infrastructure funds are prepared to take on for emerging #energytech, #foodtech, #climatetech, #carbontech, #oceantech, #materials, and most hard technologies. Builders Vision does a nice job articulating how there is an "incentive challenge" inherently present in the market today and that we need to reimagine how we finance FOAK plants and build new hybrid investment vehicles that combine the risk-adjusted return expectations of later stage project financing and infrastructure funds, with at least some of the upside that early-stage VCs seek when investing in emerging technologies. #catalyticcapital #blendedfinancing #energytransition #climatetech #climatefinance #energytech #decarbonization #hardtech #industrialinnovation

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An opinion; British Gas vs. Octopus Energy: Navigating the Shifting Tides of the Energy Market The UK energy market is undergoing a profound transformation, mirroring the disruptions seen in other industries like automotive. This shift is characterized by the contrasting approaches of established players like British Gas and disruptive newcomers like Octopus Energy. Risk Aversion vs. Reward Seeking: A Tale of Two Strategies * British Gas: The Legacy Giant * Focus on Stability: With a long history and established customer base, British Gas prioritizes risk mitigation and maintaining its existing market share. * Challenges: This risk-averse approach can hinder innovation and responsiveness to evolving customer demands. The focus on shareholder value and pension obligations might inadvertently overshadow the importance of customer satisfaction and loyalty. * Struggling to Adapt: While adapting by offering more digital services and renewable energy options, British Gas's legacy infrastructure and brand image can be perceived as less agile and innovative compared to newer entrants. * Octopus Energy: The Agile Disruptor * Embracing Innovation: Octopus Energy thrives on a growth mindset and a willingness to take calculated risks. They prioritize technological advancements, flexible tariffs, and 100% renewable energy offerings. * Customer-Centric Approach: This focus on innovation, transparency, and sustainability resonates strongly with a new generation of consumers, driving their rapid expansion and market share gains. * Building Trust and Loyalty: By prioritizing customer needs and offering competitive pricing, Octopus Energy has built a loyal following among those who value flexibility and transparency. The Self-Fulfilling Prophecy The contrasting approaches of these companies can create a self-fulfilling prophecy: * British Gas's risk aversion may lead to stagnation and a gradual loss of market share as they struggle to keep pace with the evolving demands of a new generation of customers. * Octopus Energy's proactive and customer-focused approach fuels their growth and attracts a loyal customer base, further reinforcing their position in the market. The Need for Balance While risk-taking is crucial for innovation and growth, it's important to strike a balance. Companies must carefully assess risks and rewards to ensure their strategies are sustainable and aligned with their long-term goals. Lessons for the Energy Market and Beyond The success of Octopus Energy underscores the importance of adapting to changing customer expectations and embracing innovation. Even established companies need to continuously evolve to stay relevant in today's dynamic market. The energy sector, like many others, is undergoing a transformation. Companies that prioritize customer-centricity, transparency, sustainability, and technological advancement are poised to lead the way in this new era. #EnergyMarket #DisruptiveInnovation

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🔥🔥🔥 Welcome to the ZCC portfolio Exergy3 Limited! We were first introduced to Markus Rondé over two years ago by Edinburgh Innovations, so this one has been a slow burner. I'm so pleased that we can announce today that Exergy3 has become the 18th ZCC portfolio company. We're stoked by the potential of their electric, modular, high-temperature thermal storage to replace fossil fuel boilers in supplying industrial heat, which comprises a mind-boggling quarter of annual GHG emissions. Most of that energy is used to provide heat to the processes we use to make chemicals, food, materials and more to support our modern lives and almost all of that heat (especially at temperatures exceeding 200°C) is delivered by burning natural gas on site. Exergy3's innovative thermal batteries store heat at up to 1200°C and can be charged quickly when clean, cheap, renewable energy is available. They can store that heat with very low losses until it's needed, when electricity is expensive and dirty. 💰 We were joined in this round by Old College Capital and Scottish Enterprise, and the funds will help Exergy3 accelerate the development of their pilot project with the Annandale Distillery in Scotland. Read more on our blog: https://lnkd.in/ek_zcJTx Read the Exergy3 blog post: https://lnkd.in/eufeMnte

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ENERGY STORAGE 🔋 A good piece in the Financial Times this morning regarding the need and important role Battery Storage is in our power and electricity eco system. Having spent the last number of years funding and developing a Battery storage business alongside our partners, there is so much opportunity in this space, and the resource is badly needed. The good news being there is finally now strong appetite from the investor and debt markets, however in N Ireland, like most other things across society, we remain the only region without a government backed subsidy scheme in the UK, and it's a challenging business model to get going for a whole ream of reasons, a lack of support merely adds to this. Some argue against subsidy schemes, however the CAPEEX and risk associated with these projects are all developer led, and this needs addressed as a matter of urgency. Most of us in the industry are aware of the capacity restrictions within our electricity network, which similar to the challenges facing our water and sewage infrastructure, needs a huge amount of investment. My own experience with planning was a much more pleasant experience, however beurocracy and delays need to be minimised if we want things to improve and get more projects into development, and out of the ground. FUNDING Battery storage is not for the faint hearted as our Irish Banking system are not interested. I reckon come 2040 some BD managers in the local banks may look at this type of opportunity 😭 Predominantly and initially this is an EQUITY play, certainly at the initial stages, with construction finance a challenge, however that is made easier if you can secure the golden ticket of a 10 year contract with the regulator. Most local developers operate and provide services into the shorter term DS3 markets, but with 12/ 18 month security of income, that's doesn't lend itself to the funding people you need on board. There is much to do in this sector locally, and the opportunity is real, but it would be hugely helpful if local government finally launch their new subsidy scheme, which by all accounts is coming (allegedly). In the FT piece you can see that across the world governments are 1.acknowledging the need for this resource 2. developing policy to enable and encourage development. #Battery #Storage #Development https://lnkd.in/ezWj26Ab

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As of October 1, 2024, the UK energy market has entered a critical period as colder weather and tighter supply conditions push natural gas prices higher. The NBP Day-Ahead settled at 92.35 p/therm today, driven by falling temperatures across the UK and Europe, which are expected to remain below the five-year average for the rest of the week. With Norwegian gas exports holding steady and UKCS terminal receipts down, gas-for-power demand has surged in response to a forecasted decline in wind speeds throughout the week. Meanwhile, UK LNG send-outs have increased to 29 mcm/day, with the next LNG cargo from Qatar anticipated later this week to shore up supplies. On the forward curve, NBP front-month prices climbed modestly, with November 2024 contracts up by 0.96 p/therm to 97.36 p/therm, while December 2024 saw a rise of 0.77 p/therm to 99.36 p/therm. Curve prices continue to reflect market concerns around reduced LNG imports and the potential for increased demand as the winter period approaches, setting the stage for continued volatility. In the power market, UK Day-Ahead baseload prices fell to £71.78/MWh, a drop of £5.02 from the previous session, while peakload power rose to £88.09/MWh. The tightening of the power system, driven by reduced wind generation and increasing reliance on gas for power, suggests further upward pressure on power prices as the week progresses. Forward baseload contracts, particularly January 2025, have seen slight increases, with the contract settling at £90.15/MWh, up by £0.75. As renewable output declines and colder weather takes hold, higher demand for gas-fired power generation is likely to fuel further price hikes. European gas storage levels remain robust, standing at 94.28% as reported by AGSI, offering some cushion for the winter months. However, risks tied to LNG supply reductions and planned outages at key Norwegian gas facilities could exacerbate market tightness. These developments highlight the importance of closely monitoring supply flows as winter approaches. In the global commodities market, Brent crude futures for November 2024 eased slightly by $0.21, settling at $71.77/bbl. Market sentiment remains cautious amid global economic uncertainties, contributing to softening oil prices. On the carbon market, EUA December 2024 prices dropped by €0.77 to settle at €65.56/tonne, while UK ETS contracts also saw a slight decline, closing at £36.45/tonne. These shifts come against the backdrop of ongoing discussions on the future of emissions reductions and energy transition strategies across Europe, which could have further implications for carbon pricing in the coming months. As we move further into October, the market will be focused on how sustained cooler temperatures and reduced wind generation will impact both gas and power prices. LNG cargo arrivals and any potential disruptions to Norwegian gas flows will also be key factors shaping market dynamics in the days ahead.

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National Grid is raising £7bn in a rights issue to fund electricity grid expansion in the UK and USA. This is the biggest rights issue in London since 2009, but is there enough here for equity investors? The new capital will help to fund 10% annual asset base growth, and 6-8% growth in earnings, but the growth in the dividend will be in line with CPIH. Clearly this is a fluid number, but currently is at 3%. There is a strong argument that the growth in the dividend should be more aligned with the growth in the underlying business.

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Small & Modular Might Be the Nukes that Finally Make Sense Suddenly new nuclear announcements have been popping up like mushrooms.  ·      Last Energy’s just announced a £300mio SMR project in Bridgend County, Wales for Prosiect Egni Glan Llynfi. This follows a successful $40mio series B in August. ·      Google has signed to purchase energy from Kairos Power SMRs ·      SMR player X-energy is partnering with Dominion to provide >5GW SMR generated power to Amazon, who are investing $500mio together with Ken Griffin. What’s big and new isn’t just the AI & data center driven growth angle that gets all the press.  The exciting bit: SMR might actually allow us to benefit from the superior energy generation profile of nuclear, while avoiding the problems that have made new development a train crash for decades. New nukes have been a hugely expensive mistake for investors, governments and the public for decades.  Why? Because the advantageous thermal generation profile has more than been offset by disastrous megaproject economics that have consistently led to cost overruns.  According to Bent Flyvbjerg’s analysis (great podcast on Redifining Energy Tech), the average cost over-run has been 120%, and 55% of projects have at least a 50% overrun. This is the result of staggering complexity associated with completely bespoke, GW sized projects, constructed very infrequently. The result: according to Lazard’s annual LCOE report, nuclear is the one form of utility scale generation that’s seen cost of energy increase steadily for more than a decade. But Google, Ken Griffin, Amazon, Gigafund and Dominion Energy are betting SMRs are different and can circumvent the project economics impediments of large scale nuclear. Through modularity and substantially simpler design and project scope, they think nuclear can be built on time and on budget. Last Energy thinks they can go from soup to nut in 24 months in lego fashion. And since many projects are designed to operate behind the meter, the delays and expense associated with grid connection can be avoided. And that’s probably why we’re certainly seeing customer interest – even with nuclear powers track-record. https://lnkd.in/gMA7aNDf Capstan Capital Partners #energytransition #SMR #climateinvesting

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The anti-cyclone combined with heavy cloud cover weather patterns provided much of Europe with low resource levels to energise both #wind and #solar over the first two weeks of November. There is a route to build predictable dispatch of electricity from the UK abundance of #tidal energy in the form of #tidalstream and #tidalbarage. Combined capacity is in the region of 45GW and works positively with #bess and #ldes solutions. The gif below shows the impact of spring and neap tides taking place every 7 days providing predictable dispatch 365 days of the year. If we are looking for joined up thinking to re-energise UK ports and heavy industries we have a small number of world leading UK players in this market to deliver power quickly in a short period relative to #nuclear. So what’s not to like? #positive #gva #positive #cost #benefit - #solving #dunkelflaute

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Daily #Buisness #Energy Report 13th December 2024: A market overview marked by milder forecasts and shifting dynamics. Today’s energy markets reflect a dynamic interplay of factors, with notable movements across gas and power prices. The UK's NBP day-ahead gas prices settled at 105.75 p/therm, down slightly due to warmer weather forecasts curbing demand, while power prices followed suit, with the UK day-ahead baseload closing at £150.98/MWh, a significant drop from yesterday. The UK's system opened with a 4 mcm/day shortfall this morning, impacted by reduced Norwegian flows, an outage at the Rough storage facility (cutting 2.5 mcm/day until noon), and moderated MRS withdrawals. LNG sendout continues robustly at around 100 mcm/day, with 11 LNG cargoes expected by early January. Internationally, muted Asian demand persists as high prices deter Chinese buyers despite cold snaps, particularly in South Korea. In Europe, Northwest regions anticipate warmer-than-average temperatures through January, aligning with predictions for the UK where conditions remain near seasonal norms. UK power prices mirrored gas trends, with baseload and peak contracts softening. Increased nuclear capacity from France, exceeding 52 GW after years of underperformance, has also helped stabilise continental markets. Additionally, renewable generation continues to complement the UK's supply mix, aided by strong interconnector performance. Oil prices remain stable, with Brent settling at $73.41/bbl, while coal fell slightly to $112.66/tonne. Carbon pricing saw a dip, with EUA Dec-24 at €66.10/tonne. In currency markets, the GBP strengthened slightly against the Euro, trading at 1.2132 GBP/EUR. As we approach the weekend, warmer weather forecasts and robust LNG supplies are likely to maintain pressure on short-term gas and power prices. The energy landscape is poised for further volatility amid global supply adjustments and regional demand patterns. Stay tuned for how these developments evolve.

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Accepted one weeks data is not representative of annual production figures. However, the North East of Scotland is often over looked as a place for #solar deployment with its annual production not too dissimilar to East Midlands. In periods of #dunkelflaute, the north south geographical spread for #solar production is a useful mitigant - see sunshine hours below. Oddly, the handbrake on its development for large scale connections is the Scottish TNUoS charges killing project returns. This is made all the more frustrating as the #wind and #solar is largely non-correlated. Additionally, the #solar summer production profile in the far North extends into the shoulder hours when projects in the South are past peak. Reform of use of system #grid costs needs addressing using an open book and holistic approach.

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Interesting thinking about the electricity market and how market forces could support an evolution of the way we do business there. "For instance, similar to markets that trade different grades of crude oil (WTI and Brent), perhaps we can “grade” energy based on its characteristics, so that energy that includes inertia and VARs is valued higher than energy that doesn’t include these other characteristics. A MWh of energy from a synchronous generator has a higher operational reliability value than a MWh of IBR energy, so how can we signal this economically?"

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