Mr Chris Cuijpers, Commission for Electricity and Gas Regulation (CREG), Belgium Mr Andreas Tirez, Commission for Electricity and Gas Regulation (CREG), Belgium This paper examines the various reasons for joining gas markets in Europe as well as the practical difficulties and concerns. It is true that an increasing number of transmission system operators (TSOs) are looking for cross-border opportunities to coordinate and eventually join activities. The impulse for this trend is clearly given by the implementation of the European Third Energy Package and the European Gas Target Model, both aiming at an effective European Energy Union. However, this political and regulatory framework leave open whether this should be through coupling or through merging of markets. Coupling of gas markets aims to eliminate restrictions on cross-border trade in gas and enhance efficient price mechanisms. The European Third Energy Package brings changes to market design, for example the establishment of entry-exit regimes across Europe and provides European network codes to further harmonise capacity allocation, balancing and trading arrangements. Merging of gas markets, however, goes a step further and aims at removing borders in order Read more…Cuijpers-Drivers-and-Hurdles-for-Gas-Market1.pdf 1.08 MBCuijpers-rev-Drivers-and-Hurdles-for-Gas-Market-presentation.pdf 1.56 MB
Andrew Morris, Director Poyry Energy, looks at the relationship between renewables and Ccgts and whether they are competitors or complementary. He concludes that increasing renewable generation leads to less predictable running patterns for thermal generation plant including CCGTs. As a consequence, gas demand becomes more volatile in many of the largest gas consuming countries in Europe. The gas market is well positioned to be able to cope with the increasingly volatile demand in the short term and with a modest level of investment to meet the demands in the long term. CCGTs and renewables might compete on a day by day basis, but overall there is a role for both within a low carbon generation mix.Renewables-and-gas-poyry.pdf 986.36 KB
Dr James Henderson, Oxford Institute for Energy Studies Historically Russia, and particularly Gazprom, has relied on gas exports to Europe to subsidise low domestic prices. However, Russia’s attitude towards European sales is set to change over the next decade as its domestic market is gradually liberalised, with potentially profound consequences for gas supply to Europe. As domestic prices rise towards export netback parity gas producers in Russia will be able to generate profitable returns from domestic sales as well as exports. Indeed, a number of independent producers such as Novatek are already doing this, and the rise of these new producers could fundamentally change the Russian gas portfolio supplying western markets. As prices and pipelines are liberalised, so” Independents”, whose production has previously been restricted by Gazprom’s monopoly, will be allowed to increase sales of their relatively low-cost gas domestically and may even be given access to export markets. Meanwhile Gazprom, whose new west-facing fields are both remote and high cost, may find itself increasingly focused on eastern markets to secure its growth. Gazprom’s monopoly on fields in eastern Russia Read more…The-Potential-Impact-on-Europe-of-Russia’s-Evolving-Domestic-Gas-Market.pdf 387.16 KBThe-Potential-Impact-on-Europe-of-Changes-in-Russias-Gas-Market.pdf 760.15 KB
Mrs Melanie Houllier, Cass Business School, City University London This paper empirically examines the economic impact of electricity generated by renewable energy sources (RES-E) in Germany on European electricity spot markets by employing a MGARCH (multivariate generalized autoregressive conditional heteroscedasticity) model with constant and time-varying correlations for daily data. Germany´s so called Energiewende (energy transition) of the summer 2011 induced a process that will shut down all its nuclear power stations by 2022 while at the same time ambitious medium and long term targets for RES-E and the reduction of greenhouse gas are being pursued. The German government has adopted a concept which is yet unique for a major industrial country. This pioneering transformation project is therefore closely watched in Europe and other parts of the world in terms of its economic viability and challenges presented, as for example the management of highly volatile generation. The interrelationship of European electricity spot prices for APX-ENDEX (UK and Netherlands), EPEX (Germany, Swiss), OMEL (Spain), Nordpool (Finland, Denmark, Norway) and Powernext (France) with wind as well as solar penetration induced by the German Read more…Germany´s-Energy-Transition-and-its-Effect-on-European-Electricity-Spot-Markets.pdf 1.24 MBGermany´s-energy-transition-and-European-electricity-spot-markets.pdf 587.51 KB
Michel Colombier, IDDRI An overview of the role of electricity in providing heat within the domestic sector in France, suggests that it has had a growing role in meeting demand. This in part reflects a drive to increase the share of electricity within heating in the domestic sector, on the back of a policy decision (in respond to oil shocks) that saw the introduction of an integrated electricity package that combined action on energy, technical options and tariff support. The result was a considerable growth in electric heat in new build, where investment costs were low and installation was easy. However, the late 1980s also saw a large scale uptake of electric heat in existing buildings due to the favourable tariff structure, but many of these buildings had poor levels of insulation, resulting in growing energy poverty. Looking forward, low energy building is becoming the standard for new build making electricity a good choice, but its use within existing stock will require a systematic thermal renovation programme. It is apparent that the choice of fuel for heat depends on both Read more…Decarbonising heat is electricity the answer 2011.pdf 671.95 KB
Dr Tina Fawcett University of Oxford In the UK, there is currently little interest in exploring increased direct personal carbon taxation as a response to climate change. In theory it should be an attractive policy tool, being cheaper and administratively simpler to introduce than personal carbon trading, and more comprehensive than the current patchwork of product, housing, renewable energy and behavioural policies. So why isn’t it perceived as being an important part of the future policy mix, and is this likely to change? This paper reviews UK and European evidence on responses to personal carbon and energy taxes and focuses on three aspects; (1) their effects on behaviour in the short and longer term; (2) social acceptability, and; (3) the political risks involved in introducing increases in taxation. Using historical and current evidence, this review concentrates on energy and carbon taxation of household energy, using experience from transport and aviation fuels where necessary to enrich the analysis. It identifies effective taxation policies, and considers whether these could be extended to make a substantial and sustained contribution to household emissions reduction. Read more…Personal carbon Taxation - Paper.pdf 156.02 KBPersonal carbon Taxation - Presentation.pdf 262.89 KB
Peter Parsons, National Grid Provides an overview of what happened in the previous winter, before considering the outlook for 2009/10. During the previous winter, there were periods of cold weather lasting around two weeks, but overall the winter was average; although one impact of the January cold snap was that it drove UK gas demand to near record levels. There were also: widespread gas supply disruptions across Europe in January as a consequence of Russia/Ukraine disputes; unprecedented IUK winter export flows; and higher demands met through significant flows from UK storage facilities at an early stage of the winter period, leading to concerns over the UK’s resilience to a late winter supply shock or prolonged period of cold weather. However, the impact of the economic recession also lowered overall demand. Looking forward to the 2009/10 winter, it is anticipated that this will be milder than the previous year, with a 1 in 7 chance of a cold winter. Forecast gas demand (weather corrected) is 2.5% lower, on top of 6% reduction last winter, whilst forecast non storage supply is similar Read more…Winter Gas Outlook National Grid 2009.pdf 1.19 MB
David Cox, Pöyry Energy Consulting Provides a detailed analysis of the major drivers to energy prices and the relationship between oil price and the prices for coal, gas and power. Consideration is given to price in forward markets, price risk, global and regional markets, and the potential impact of the credit crunch. Future prices are considered through four views of the future world (Slow-motion Shock; Supply Hell; Demand Crash; and Technology Heaven). It is suggested that oil price weakening will bring down Continental oil-indexed gas contracts, but not before next spring and that Continental gas prices should set the floor for UK gas prices. However, a number of factors could combine to result in much lower prices, such as: a warm winter; low coal prices reducing gas demand in power generation; and lower demand for global LNG resulting in cargoes being “dumped” into the UK. However, if the winter is colder than average and gas from Norway/Continent/LNG does not arrive, the price could rocket upwards. It is recognised that any decrease in liquidity will exasperate the volatility.
Tags: Contracts, Crude oil, Europe, Finance, Forecasts, Fossil fuels, Gas outlook, gobal, GPD, LNG, Natural gas, Non-OPEC, Norway, Oil markets, OPEC, Pricing, Production, Production capacity, Resources, Retail market, Risk, Supply demand balance, UK, Upstream, Wholesale marketWinter Gas Outlook Prices - 2008.pdf 1.24 MB
Paul Horsnell, Barclays Capital Provides a detailed overview of oil markets in 2008, considering drivers to demand, growth and price. Annual changes to the forward curve of the West Texas Intermediate (WTI) show both the rate at which oil prices have risen since 2004 and the movement in the back end of the curve (dollars per barrel). The choices made by OPEC are shown, in terms of their average output over time and this is considered against projected demand growth in 2008, estimates of supply growth from non-OPEC countries, and supply decreases (e.g. UK, Norway, Mexico). The oil market balances between OPEC and non-OPEC, in terms of supply and demand, are set for 2006 to 2008. A breakdown of the incremental oil supplies is given (OPEC, non-OPEC, Canadian Tar Sands, Coal to liquids and biofuels) contrasting US Department for Energy and Barclays Capital projections to 2030.
Tags: Barclays Capital, Biofuels, BRICS, Coal, Contracts, Europe, Fossil fuels, Global, Non-OPEC, oil market outlook, Oil markets, OPEC, Pricing, Production capacity, Resources, Supply demand balance, Tar sands, UK, USA, VolatilityOil Markets in 2008.pdf 699.78 KB