An injection of energy

After a couple of months away from both the city and the energy industry, this week I attended a brokers conference on European and UK energy, mainly because I had agreed to speak. It gave me a fresh injection of energy related information. I will address my address later but thought I'd set out some things that grabbed my attention from other speakers.

The first talk was from Anne-Sophie Corbeau from the IEA who looked at the global gas market. I missed the first part of what she said but was struck by how global the gas market is but how local some of the issues and questions are. For example, Australia is building seven different LNG plants but will they all start up on time and where will that gas go? The US is experiencing a boom in shale gas production which has pushed prices down. Will the US start exporting significant gas? Will domestic US demand increase? Will US prices stay low? Her view was that shale gas in Europe would not be material over the next five years. There is a lot of optimism in the promises from the industry but it is likely to be more difficult and take longer to see large production volumes. I wonder if thats right? China is the big swing factor with by far the fastest growth in demand (estimated to be over ten times the volume increase that might come from Europe) pulling in one direction and the prospects for Chinese shale gas production potentially pulling in the other. Which way will the pendulum swing?

The second speaker was Stuart Ffoulkes who is an expert on the German generation market. I'm afraid I didn't pay full attention given my lack of knowledge on Germanic energy issues but a couple of sound items caught my attention. Firstly, apparently, the German approach to energy efficiency is that no German child should know what a draught is by 2020. Secondly, the best way to see whether German power plants have actually closed is to read the blogs of train spotters to see what coal hauling trains are being decommissioned or watch for YouTube videos of chimneys being blown up.

Then it was the turn of a panel who discussed the future of electricity capacity markets in Europe. For some reason the analogy that seem to dominate the session was 'stripes on a zebra'. I pointed out that there are two species of zebra, the grevy and the plains and they don't interbreed. There is a real danger of the same happening with capacity markets in different countries.

Here is a gratuitous picture of a grevy zebra I took this summer.

The last speaker who wasn't me was Nick Winser. He pointed out the enormous transformation in the UK gas market in the last ten years with over fifty percent now being imported. He also explained the UK's approach to decarbonisation in a way I hadn't heard before. We are transforming the electricity sector from a carbon intensity of around 500 grams of carbon dioxide per kilowatt hour of energy produced to an intensity of less than 100 grams and then we intend to migrate the heat and transport sectors to electricity to get them down for their current levels of around 200 to 300 grams per Kwh. It makes the order of action clear and also illustrates the scale of the task facing the electricity industry.

I will finish with one last quote from the conference. 'When politicians talk of market failure they usually mean the market isn't doing what I want'. How true.