Inenco RE Renewable energy management
description
Transcript of Inenco RE Renewable energy management
![Page 1: Inenco RE Renewable energy management](https://reader035.fdocuments.net/reader035/viewer/2022062309/5681454f550346895db21fee/html5/thumbnails/1.jpg)
understanding energy
Inenco RERenewable energy management
John Dodds
Business Development Manager
![Page 2: Inenco RE Renewable energy management](https://reader035.fdocuments.net/reader035/viewer/2022062309/5681454f550346895db21fee/html5/thumbnails/2.jpg)
understanding energy
Inenco RE
• Over 40 years experience
• 15 tW of Energy delivered 2007/08
• Over £1 Billion in management
• FSA Accreditation
• Blue chip client base
![Page 3: Inenco RE Renewable energy management](https://reader035.fdocuments.net/reader035/viewer/2022062309/5681454f550346895db21fee/html5/thumbnails/3.jpg)
understanding energy
The need for renewable energy
• Government target is 20% of its total energy from renewable sources by 2020
• Currently this figure stands at less than 1.5%
• This target is driven by the need for energy security as much as climate change
• In total it is estimated that delivering the target represents £100 billion of revenue
![Page 4: Inenco RE Renewable energy management](https://reader035.fdocuments.net/reader035/viewer/2022062309/5681454f550346895db21fee/html5/thumbnails/4.jpg)
understanding energy
The scale of the challenge
Major increases are required for all three applications
Electricity Heat Transport 2008
2020
0
5
10
15
20
25
30
35
40
2008
2020
Percentage renewable contribution to total energy consumption
%
![Page 5: Inenco RE Renewable energy management](https://reader035.fdocuments.net/reader035/viewer/2022062309/5681454f550346895db21fee/html5/thumbnails/5.jpg)
understanding energy
The solution
• Distributed Generation
• Merchant plant
• Farm Diversification on a major scale
![Page 6: Inenco RE Renewable energy management](https://reader035.fdocuments.net/reader035/viewer/2022062309/5681454f550346895db21fee/html5/thumbnails/6.jpg)
understanding energy
Distributed Generation
• Renewable energy projects require:– Land
– A secure feedstock source
– Customers for the energy
• Renewable projects can provide security for:– Heat
– Electricity
– Income
![Page 7: Inenco RE Renewable energy management](https://reader035.fdocuments.net/reader035/viewer/2022062309/5681454f550346895db21fee/html5/thumbnails/7.jpg)
understanding energy
So what is required?
• A wind turbine can take up just the space needed to park four cars
• A power plant fired by Biogas or Biomass requires approximately two acres
• Expertise to develop the project
• Effective project managment and finance
![Page 8: Inenco RE Renewable energy management](https://reader035.fdocuments.net/reader035/viewer/2022062309/5681454f550346895db21fee/html5/thumbnails/8.jpg)
understanding energy
How is income earned?
• Electricity is either sold locally, used on site or sold to energy supply companies over the National Grid
• Heat produced can be used on site or sold locally
• “Gate fees” for plants that deal with waste
• Government subsidies in the form of ROCs
![Page 9: Inenco RE Renewable energy management](https://reader035.fdocuments.net/reader035/viewer/2022062309/5681454f550346895db21fee/html5/thumbnails/9.jpg)
understanding energy
Government support
• Renewable Obligation Certificates (ROCs) are the mechanism to provide financial support to renewable electricity, they are currently worth £50 per mWh. The amount of ROCs you receive depends on what type of generator is being used.
• Levy Exemption Certificates (LECs) are for the Climate Change Levy charged to all commercial users of electricity, generators of renewable electricity are paid this as a benefit, approximately 0.45p per kWh.
• Renewable Energy Guarantee of Origin (REGO) certificates have no cash value, they provide an audit trail for the energy generated.
• All of these are administered by Ofgem.
![Page 10: Inenco RE Renewable energy management](https://reader035.fdocuments.net/reader035/viewer/2022062309/5681454f550346895db21fee/html5/thumbnails/10.jpg)
understanding energy
An example income model• The types of income streams for electricity are common
to all renewable energy generators
• The ROC payments will vary for different types of technology
Income stream Pence per kWh
ROCs 0.25 – 10
LECs 0.5
Wholesale elec 5-9
Gate fees (if applicable) 0-5
Heat 2-5
Total 7.75 - 29.5
![Page 11: Inenco RE Renewable energy management](https://reader035.fdocuments.net/reader035/viewer/2022062309/5681454f550346895db21fee/html5/thumbnails/11.jpg)
understanding energy
Three ways to export
• Private wire
• End user PPA
• Wholesale energy markets
![Page 12: Inenco RE Renewable energy management](https://reader035.fdocuments.net/reader035/viewer/2022062309/5681454f550346895db21fee/html5/thumbnails/12.jpg)
understanding energy
Private Wire
• Hard wire to Neighbour or self use
• Increased value
• No transmission charges
• Could reduce grid connection charges
![Page 13: Inenco RE Renewable energy management](https://reader035.fdocuments.net/reader035/viewer/2022062309/5681454f550346895db21fee/html5/thumbnails/13.jpg)
understanding energy
End User PPA
• Guaranteed price for between 1 & 5 years
• Income security
• Bankable offering
![Page 14: Inenco RE Renewable energy management](https://reader035.fdocuments.net/reader035/viewer/2022062309/5681454f550346895db21fee/html5/thumbnails/14.jpg)
understanding energy
Wholesale Energy Market
• Maximise income
• Managed trading
• Virtual floor
![Page 15: Inenco RE Renewable energy management](https://reader035.fdocuments.net/reader035/viewer/2022062309/5681454f550346895db21fee/html5/thumbnails/15.jpg)
understanding energy
What is Virtual Floor?
• A robust procurement strategy to reduce downside risk and benefit from market increases
• The Virtual Floor strategy is managed using the ‘unlock’ and ‘relock’ tool contained in flexible supply agreements offered by the leading energy retailers.
• Dependant on your attitude to risk, we can unlock your fixed energy price to get higher export prices for your generated energy
• The share of increased profit gives more than any fixed price deal
![Page 16: Inenco RE Renewable energy management](https://reader035.fdocuments.net/reader035/viewer/2022062309/5681454f550346895db21fee/html5/thumbnails/16.jpg)
understanding energy
45.00
50.00
55.00
60.00
65.00
70.00
75.00
Time
Pri
ce
……Relock when market rise triggers ‘lock in'
Unlock
Lower lock trigger once desired gain has been
achieved – OR….
Market Fundamental and Technical analysis used to make informed unlock and relock decisions, incl.:-
Unlock/Relock – Technical Expertise
•Analysis of Oil, Coal Carbon, Currencies etc
•Relative Strength Indicators
•Value at Risk analysis
•Supply margin status
![Page 17: Inenco RE Renewable energy management](https://reader035.fdocuments.net/reader035/viewer/2022062309/5681454f550346895db21fee/html5/thumbnails/17.jpg)
understanding energy
Virtual Floor
• Optimises risk management in a PPA contract
• Controlled decisions born out of a robust and defendable process
• Provides a price floor
• Budget income set
• Maximum income achieved from unlock and relock is unlimited
![Page 18: Inenco RE Renewable energy management](https://reader035.fdocuments.net/reader035/viewer/2022062309/5681454f550346895db21fee/html5/thumbnails/18.jpg)
understanding energy
Overview
• Your position is 100% contracted at the initial reference price – ‘Actual’ (£70)
• Virtual Floor set (£69) using agreed ‘buffer’ value (£1)
• Use ‘unlock’ ‘relock’ to improve ‘Net price’ + return of ‘buffer’ (£72)
Initial Contract (£70)
‘Benefit’ (£1) Energy sold using Virtual Floor period
Timeline
Final Net Price (£71 +£1)
Virtual Floor (£69)
£
Buffer £1
![Page 19: Inenco RE Renewable energy management](https://reader035.fdocuments.net/reader035/viewer/2022062309/5681454f550346895db21fee/html5/thumbnails/19.jpg)
understanding energy
Sell, Buy & Re-Sell
£50.00
£55.00
£60.00
£65.00
£70.00
£75.00
£/M
W
‘Initial net Sell’:
“profit/loss”: £ 0/MW
£ 54/MW‘Final net Sell’:
Re-Sell: £65/MW
£ 6/MW
£ 0/MW£ 0/MW
£ 5/MW
£ 65/MW£59/MW
Sell ‘Actual’: £54/MW
Buy: £60/MW
![Page 20: Inenco RE Renewable energy management](https://reader035.fdocuments.net/reader035/viewer/2022062309/5681454f550346895db21fee/html5/thumbnails/20.jpg)
understanding energy
What’s the catch?
• The development of a renewable energy project is complex and lengthy:– Extensive feasibility work
– Arranging finance
– Supplier selection
– Project management
– Electrical and heat network connections
– Power purchasing agreements
– Feed or fuel input management
– Ofgem requirements to claim ROCs LECs and REGOs
– In life support
![Page 21: Inenco RE Renewable energy management](https://reader035.fdocuments.net/reader035/viewer/2022062309/5681454f550346895db21fee/html5/thumbnails/21.jpg)
understanding energy
Inenco RE can help you
• With 40 years experience in the energy market we can help you by:– Producing commercial and technical feasibility
studies
– Producing the specification of the plant
– Project managing the installation, connection and commissioning of your equipment
– Providing a favourable power purchasing agreement and managing the sale of ROCs and LECs
– Delivering up to date management information
![Page 22: Inenco RE Renewable energy management](https://reader035.fdocuments.net/reader035/viewer/2022062309/5681454f550346895db21fee/html5/thumbnails/22.jpg)
understanding energy
Find out more
• John Dodds 07970 069054
• Visit our website
www.inenco.com01253 785000