1. Energy Policy: What happens next?
ESRI
4th October 2016
Dieter Helm,
Professor of Energy Policy, University of Oxford

2. Three perspectives The short term – The medium term –
Capacity, nuclear and BREXIT
The medium term –
More oil and gas, the new normal prices and the growth of electricity demand
The medium/long term –
Technology, digitalisation, zero marginal cost and the dominance of electricity

3. Short term British capacity margin = 0
All generation on state backed contracts – the single buyer
Decision on Hinkley
The allocation of fixed system costs
Interconnectors
BREXIT

4. Short term from interventions to more interventions
General ROC
Specific ROCS for each technology
Technology based FiTs
Special nuclear FiT
Capacity contracts
Intervention on embedded generation
Separate contracts for each type of capacity
B.o.E Debt purchases
Black start contracts
Golden shares

5. Supply chain industrial policies
Short term +++
Separate national SO
Regional SO
Supply chain industrial policies

6. Short term +++ R110 & Transmission regulation
R110 & Electricity & Gas regulation
Interconnector regulation
Offshore network regulation
CMA & supply
Prepayment meters
Switching regulation

7. Medium term The two parameters
The fossil prices
Climate policy

8. Medium Term The return to normal & end of the super cycle

9. Medium Term recent oil price spike

10. Medium Term Oil company forecasts

11. Medium Term why they may be wrong
Iraq
Iran US
Russia
10 million+
Saudi Arabia
Potential medium-term oil production
10 million?

12. Medium Term more electricity, less oil
Electric cars
Batteries
Digitalisation of manufacturing & Services

13. Long Term the age of electricity and technical change
Digitalisation of everything
Robots
3D printing AI
Digitalisation = electric
“Everything is electric”

14. Longer term low carbon electricity generation
Next Generation Solar
Graphene
3D Printing
Robotics
Batteries
Electric Cars
Large Scale Storage
Smart grids
Smart Meters
Surprises
Solar
Next generation nuclear
Batteries
Smart meters

15. Longer term the zero-marginal costs
Wholesale Electricity Spot price (GBP/MWh)
Capacity not energy
Decline of wholesale markets
Costs are mostly system-based
Decentralised generation models

16. conclusions Structural break in the short term
Structural break in the medium term
Technological transformation in the long run
Rethink energy & climate policy
Rethink market design
Rethink corporate strategy

17. BOOKS
THE BURN OUT
The end game for
fossil Fuels
March
2017

18. For Information www.dieterhelm.co.uk www.dieterhelm.co.uk
Energy Futures Network
Paper 20.
Greg Clark’s energy agenda
Dieter Helm
Feb 16
Energy Futures Network
Paper 19.
Flawed in almost all its parts – the final CMA report on electricity markets
Dieter Helm
Jul 16
Energy Futures Network
Paper 18.
After Hinkley – how to contract for the rest of the nuclear programme
Dieter Helm
Apr 16
Energy Futures Network
Paper 17.
The CMA Energy Market investigation: Companies 5-0 CMA?
Dieter Helm
Mar 16
The CMA Energy Market investigation: Companies 5-0 CMA? Paper 17, Mar 16
The new normal – oil prices after the crash, Paper 16, Feb 16
Stranded Assets – a deceptively simple and flawed idea, Paper 15, Oct 15
Reforming the FiTs and capacity mechanisms, Paper 14, Sep 15
The first 100 days of Conservative energy policy, Paper 13, Aug 15
Penalty tariffs, open ended regulation and embedding overcharging. Paper 12, Jul 15
British energy policy- what happens next? Paper 11, Jun 15
Energy Policy and the Coalition, Paper 10 March 15
What should oil companies do about climate change? Paper 9, Feb 15
Competition in the British electricity sector: a set or practical measures, Paper 8, Feb 15