The year ahead
15 Jan 2014
Happy New Year. It looks as though 2014 is, like last year, going to be a year where energy dominates the headlines.
In the UK the most significant development will be the working out of the details of the Energy Act, which was passed by Parliament in December.
One of the main features in the Act for the process industries is the proposal for capacity payments.
Chiefly beneficial to the construction of new reserve combined cycle gas turbine facilities, it will also pave the way for a “Demand Response” regime where major users of energy free up capacity on the grid by reducing their energy consumption during peak hours.
Energy costs will continue to be a limiting factor on productivity
As our cover feature in the January issue of Process Engineering explains, many process firms are already offering up their load requirements in return for payments via National Grid’s existing grid balancing schemes. Many more may do so through the launch of its Demand Side Balancing Reserve scheme, due to be launched later this year.
Perhaps most exciting of all, as our exclusive news story (picked up by both the Daily Telegraph and Financial Times) revealed, National Grid is even considering plans where it pays major energy users to use excess electricity generated by wind farms at off-peak hours.
For those firms unable to take advantage of such schemes, energy costs will continue to be a limiting factor on productivity. This is especially true in the chemicals sector, where Tata Chemicals Europe was forced to close a Cheshire plant at the end of last year, citing energy costs as the main cause.
Likewise Ineos chairman Jim Ratcliffe has attacked the UK’s energy regime and is rushing through plans to build a £150m ethane tank and liquefied natural gas (LNG) import at the Grangemouth petrochemical complex, in order to take advantage of cheap LNG exports from the US on the back of its shale gas boom (see the January issue’s News Analysis).
BASF chairman Kurt Bock is equally clear in this interview that the huge difference between energy prices in the US and Europe means that it is the former that is most likely to benefit from new plant investment.
With both Bock and Ratcliffe urging European shale gas development to help ease cost pressures, a pre-Christmas government report identifying much of the UK as ripe for exploration, and David Cameron yesterday announcing “incentives” for local councils to back shale exploration, it looks as though the many fracking headlines will continue to be with us this year as well.
