Transcript Slide 1

The UK Electricity Market
Stuart Senior
Chief Executive, ELEXON
[email protected]
1
Agenda
• A brief history of the electricity market in Great
Britain
• Who is ELEXON?
• Is the market working?
– a technical view
– a consumer view
• What about the future?
2
A brief history
1990 - privatisation of the industry and competition
in generation and supply >1MW
1994 – competition in supply >100kW
1998 – full competition in supply
2001 – replacement of the Pool with the current
trading arrangements - bilateral contracts
and imbalance settlement
3
Who is ELEXON?
ELEXON manages the operation and governance
of the wholesale market as set out in the Balancing
and Settlement Code (BSC).
4
Is the market working?
A technical view - 1
10
Total number of modifications
per month
5
0
2001
2002
2003
2004
2005
2006
2007
5
Is the market working?
A technical view - 2
5
Number of pricing
modifications
per month
0
2001
2002
2003
2004
2005
2006
2007
6
Is the market working?
A technical view - 3
96%
95%
94%
93%
Percentage of non-half hourly
energy settled on actual vs.
estimated consumption
92%
2001
2002
2003
2004
2005
2006
2007
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Is the market working?
A consumer view
The Regulator
(ofgem)
The Consumer Watchdog
(energywatch)
8
Ofgem’s view
• Vigorous competition on price
• Tariff innovation to win customers:
– fixed, capped and index-linked
– online and green
• Customers switching suppliers (4m households
in 2006)
• Competition in service (fewer complaints)
Source: Britain’s competitive energy market, ofgem fact sheet 69, 04.07.07
9
energywatch’s view
• Concentrated regional markets (incumbents
retain ~55% share)
• Price matching by the big verticals to avoid
damaging price wars
• Switching driven in part by customer confusion
and mis-selling, and the same people chasing
early (late) movers
• Barriers to entry and expansion
Source: An assessment of competition in the energy market, Prof. Stephen Davies
University of East Anglia, 11 July 2007
10
Electricity market shares
12%
<1%
21%
18%
19%
14%
British Gas
Powergen
Npower
EDF Energy
SSE
Scottish Power
Others
16%
Source: Domestic Retail Market Report - June 2007 , ofgem, 4 July 2007
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What about the future?
Evolution Steering Group (ESG)
Sources of
change
Impact on
the market
Likelihood
of change
Annual Review
http://www.elexon.co.uk/documents/Consultations/Consultation_on_Evolution_Steering
_Group/ESG_Consultation.pdf
http://www.elexon.co.uk/documents/Consultations/Consultation_on_Evolution_Steering_Group/ESG_Consultation.pdf
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Sources of change
Simplification
Climate Change
Europe
Security of Supply
Energy Costs
Nuclear
Renewables
Micro-generation
Distributed generation
Smart meters
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ESG Conclusions
High
Climate change
Simplification
Impact
on the
market
Micro generation
Smart metering
Low
0
5
Timescale
- years
10
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Overall conclusions
• The GB electricity market is now >6 years old
and works well …. but we continue to ‘fine tune’.
• Over the next few years, better data quality,
through smart metering, will speed up settlement
but no major system changes will be required.
• The next BIG market re-design will probably be
a consequence of the climate change agenda.
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