Drilling through the shale gas spin

(New Power, November 2011)

Cuadrilla Resources, Britain’s first shale gas exploration license holder, claims the Bowland Shale contains enough methane to supply national gas demand for at least 50 years and create thousands of jobs. Proponents say Cuadrilla’s resource is revolutionary, opponents say shale gas is unnecessary. Who’s right?

Comment from the British Geological Survey, Palladian Energy, Douglas-Westwood, RGS Energy and UK energy secretary Chris Huhne MP.

Germany’s giant utilities are in trouble – is the traditional European business model doomed?

(New Power, October 2011)

German utility E.ON recently posted its first ever quarterly loss and is laying off around 10,000 workers. Compatriot RWE is up the creek following Frau Merkel’s decision to abandon nuclear power. And investors are no longer deeming these utilities a ‘safe haven’ in turbulent financial times. The need to move away from their traditional thermal businesses into clean energy, not only in Germany but across Europe, will be challenging but necessary. But it is also clear that given the size of these companies and the businesses they need to support, European utilities have to look at new markets outside their slow-growth, highly-regulated continent to thrive. Otherwise they may not survive.

Comment from Deutsche Bank, Societe Generale, Citigroup, Mott MacDonald, Greenpeace and energy policy professor Stephen Thomas.

Is the Committee on Climate Change’s influence on the wane?

(New Power, September 2011)

The foundation of the Committee on Climate Change (CCC), established as part of the UK’s landmark Climate Change Act 2008, was a bold move. In climate change policy terms, it was not dissimilar to the UK government making the Bank of England independent in 1997. The CCC is widely respected by business and environmental groups alike as a powerful force, but realpolitik may be seeing its influence diminish.

Contracts for difference: A financier’s view

(New Power, August 2011)

The central pillar in the UK’s Electricity Market Reform is to replace the Renewables Obligation with a feed-in tariff with contracts for difference (FiT CfD) for low-carbon power generation. In theory, the FiT CfD will de-risk renewables projects, thus reducing the cost of capital and lowering barriers to potential investors. Nicholas Sinden, HSBC’s Associate Director for Project Finance, is not so sure it will. At least, not yet.

Contracts for difference: An energy trader’s view

(New Power, August 2011)

The UK’s Renewables Obligation (RO) has been fairly successful in delivering new renewable energy capacity but it has one major flaw: if one wants to buy a RO Certificate (ROC), then one must be a supply company in order to monetise it. This situation has limited the number of players willing to offer long-term power purchase agreements to wind farm operators and is largely why investment in wind farms in the UK tends to be centred on the incumbent vertically-integrated utilities. Could the transition from the RO to the FiT CfD change that? According to Robert Groves, CEO of London-based Smartest Energy, it most certainly will.

Contracts for Difference: Confusion and complexity

(New Power, July 2011)

The UK Department of Energy and Climate Change’s (DECC) decision to opt for a feed-in tariff with contracts for difference (FiT CfD) to incentivise low-carbon power has not gone down well in the industry. Tim Probert attended a recent conference run by the Parliamentary Renewable and Sustainable Energy Group (Praseg) and found that many thought that DECC has come up with the wrong answer to the wrong question and will disrupt investment in renewables.

This article features comment from RenewableUK, the Committee on Climate Change, National Grid, RWE npower, Scottish & Southern Energy, E3G and Rothschild.