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2014 Q4 Energy Market Update

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The UK Energy Market

In developments regarding security of power supply and effectively keeping the lights on, this quarter, National Grid have revealed plans to “dim” the lights of households, by reducing the supply voltage, in order to secure the energy supply for consumers. This action is being planned after the closure of coal powered power stations has removed significant capacity form an already stretched supply. Britain now faces the prospect of 'brownouts' in order to meet EU targets.

This problem is not only pertinent to this quarter but is in fact a growing possibility moving through 2015. To alleviate this situation, the UK needs to add reliable capacity to the market while at the same time reducing consumption and carbon emissions, this is throwing yet another spotlight on the renewable energy sector and some reports are that more than 70,000 jobs could be created in the wind and marine area over the next decade, however, with the current low oil prices and low cost of imported coal form the US, it is making it financially very attractive to burn fossil fuels.

Regulation

Thirty countries gathered in Berlin in November to pledge for a fund to help developing countries reduce emissions as part as the United Nations Framework Convention on Climate Change (UNFCC). Richer countries have been asked to contribute and they came to an agreement to raise $9.3bn for the Green Climate Fund.

The Green Climate Fund helps developing nations invest in clean and green technology and defend against storms, floods, droughts and rising sea levels caused by global warming. The UK has committed to £e-mail (approx. $1.13bn) for the pledge.

A few weeks before the pledge, European Union leaders made the world’s first significant pledge towards cutting green house emissions for the next 10 years. As the world’s 3rd largest greenhouse gas producer, the EU has pledged to cut its emissions by at least 40% by 2030 compared to 1990.

In order to deliver on this pledge, the UK’s climate change industry would have to create a significant amount of jobs to maintain sufficient action through technology, plants and equipment, for example, the Carbon Capture and Storage industry can create up to 100,000 jobs across the UK by 2030.

SMART

Smart grid is finally coming to the fore with an expected value of  £2.8 billion to the UK economy by 2030, In a report composed by SmartGrid GB,  recommendations have been made that Decc and Ofgem smart grid forums investigate further how the costs and benefits of smart grid investment can be distributed across the electricity supply network. All of this comes off the back of a good week for the utilities industry with SMETS 2 meters being made compliant by the EU commission but it is yet to be seen if they will be adopted by the UK market with so many SMETS 1 meters already deployed. There was further good news for the industry as consultation on the Companion spec being concluded with some serious head way being gained which will hopefully see suppliers ramping up integration into DCC. This will have a positive effect on the job markets with suppliers able to continue phased deployment of their meters, a large number of smaller suppliers are seeing clarity with the role out and have also began ramping up resource capability.