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Title of presentation and date 1 Energy Essentials for Cost Reduction NIPA 4 th October 2012
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Energy Essentials for Cost ReductionNIPA
4th October 2012
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Presentation Overview
•ESB Group / Electric Ireland
•Market Price Drivers – Electricity
•Procurement Options
•Summary
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About ESB Group
ESB Group
ESB Services &
Electric IrelandESB Networks
Generation &
Wholesale Markets
NI NetworksGroup Finance
& Commercial
Group People &
SustainabilityInnovation
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About Electric Ireland
•Selling generation output to I & C market from Synergen CCGT, Ringsend (400 MW)
Coolkeeragh CCGT, Derry (400 MW)
Renewable energy sources
Pool Pass Through Contracts
•Offering tailored solutions Competitive STOD prices
Retail Gas Offers (ROI & NI)
Energy Efficiency Services
High Quality Customer Service
Emphasis on Win-Win partnerships
Competitive supply business of ESB Group:Established in 2000 – 32 county businessWholly owned subsidiary company of ESB
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Electricity market shares by consumption (GWh) – Northern Ireland
Source: RETAIL MARKET MONITORING Quarterly Transparency Report AUG 2012
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Market Price Drivers
•Electricity – Key Price Determinants
• Gas prices (NBP)
• Coal prices
• Pool prices
• Stg/€ exchange rates (regulated charges)
• Carbon price
• Regulatory Charges
• International events
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Market Price Drivers - Natural Gas Trends
For October 1st 2012, the most recent measurement date, the year ahead gas price is 62.65 p/ therm).
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Market Price Drivers - Pool Price
0
50
100
150
200
250
Price €/MWH
Size (MW)
•Units stacked up in order of price – driven by Fuel•Unit that meets demand set the price
Wind & Hydro
CHP Coal & Peat
Interconnector
CCGT Gasoil, HFO, etc
•Capacity Payment charged to suppliers and awarded to generators
•Fuel Price the fundamental driver – especially gas
Summer Winter
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Pool Price Movements – SMP Prices
Close correlation with Day Ahead Gas prices
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Market Price Drivers – Regulatory Charges
Impact depends on consumption profile
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Regulatory Charges – Typical HV Customer(5 GWh)
Excludes CCL
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Procurement Strategies – Contract Options
Fixed price contracts – up to 3 yrs
Flexible contracts – partial
Flexible contracts – fully
transparent
Pool Price Pass Through
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Procurement Strategies other than fixed price
Indexed Contracts•Pool Pass Through + Mgt Fee•Day Ahead Gas price / Heren Index
Framework Flexible Contracts•Monthly / Quarterly Lock in of prices•Monthly Partial volume lock in
Fully Flexible Contracts•Fixed Energy Charge (Conversion Charge)
•£cost per MWh•Variable Energy Charge
•Lock and Unlock transactions •Default gas/carbon price is Day Ahead Price
Minimum volume but can participate through Portfolio /Basket arrangement.
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Summary
•Wholesale energy markets (Gas) are the key market drivers of
energy costs.
•Company needs to agree appropriate contract option to balance the
management of budget risk and cost containment.
• NB to understand the benefits of Fixed / Flexible alternatives.
•If Flexible – must involve all stakeholders
• Clearly agreed strategy
• Devolved decision making in accordance with agreed strategy
• Regular performance reviews
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Thank you
Michael Counihan Sales ManagerTel: 01 893 4417Mob: 087 6495306E-mail: [email protected]
