INSTITUTO TECNOLOGICO Y DE ESTUDIOS SUPERIORES DE MONTERREY MASTER OF ENERGY ENGINEERING

ELECTRIC ENERGY MARKET IN THE UK REGULATION AND FINANCING OF ENERGY RESOURCES

FERNANDO LUCIO SALINAS MONTERREY, N. L. MAY 9th, 2011

Index Introduction ..................................................................................................................... 3 Chapter 1. Generation mix......................................................................................... 3 Chapter 2. The British Electricity Network................................................................ 6 Chapter 3. Sector Organization .............................................................................. 12 Chapter 4. Markets structure.................................................................................... 13 Chapter 5. Customers classification....................................................................... 15 Chapter 6. Type of Suppliers..................................................................................... 18 Annex 1. UK Energy Profile......................................................................................... 20

INTRODUCTION
Under many scenarios, demand for electricity is likely to double by 2050 compared to today. Changes in other sectors are likely to mean greater reliance on electricity for applications such as transport and heating, pushing up demand. At the same time, UKs existing power plants are coming to the end of their lives, with around a quarter set to close within the next decade alone. To cope with this, UK will need a new generation of secure, low carbon electricity, powered by a mix of renewable energy, new nuclear power and fossil fuel power stations fitted with new Carbon Capture and Storage (CCS) technology capable of locking away carbon dioxide emissions, and reusing as far as possible the waste heat that is generated. Much of this change is likely to need to happen between now and 2030, requiring in excess of 110 Billion ($160 USD Billion) of investment in generation, transmission and distribution over the next decade. As the largest single market in the world, the EU (European Union) has the opportunity to demonstrate to the rest of the world that a low carbon economy is firmly in their economic and energy security interests. Within the EU, UK will support the rapid transition to a low carbon European economy, including through the development of a robust EU low carbon roadmap to 2050 (and the steps that UK will take to 2020) and by encouraging the EU to adopt a 30% emissions reduction target for 2020.

CHAPTER 1. GENERATION MIX

The UK currently has 19 operating reactors at ten nuclear power stations, which provide up to 18% of the electricity generated in the UK. The 2008 White Paper on Nuclear Power and the Low-Carbon Transition Plan (published in July 2009), confirmed that new nuclear power has a key role to play in the UKs low-carbon future. Renewable energy is a vital component of the UKs diverse energy mix. In offshore wind, UK has one of the best natural resources in Europe, and the UK already leads the world in offshore wind farms. The UK is also leading the way in several developing technology areas like wave and tidal energy, where UK also have the best natural resources in Europe. Oil, gas and coal remain vital parts of the UKs energy mix and are used extensively for electricity generation. However, if UK is to avoid dangerous climate change, they need to find ways to substantially reduce the carbon dioxide emissions for these sources. Development and deployment of Carbon Capture and Storage (CCS) is critical to this, as it has the potential to reduce the CO2 emissions from power stations by around 90%, and make a significant contribution towards the UK and international climate change goals. Distributed energy is the supply of low carbon or renewable electricity and heat, to customers of all scales including domestic or industrial, and is generated on or relatively near the site where it is used. It includes combined heat and power (CHP), small scale and micro hydropower, micro and small wind turbines, photovoltaics (solar PV), biomass and district heating as a means of transporting renewable or low carbon heat to multiple consumers.

Table 1.1 Electricity production by fuel type

Nuclear Hydro Wind Coal Oil Gas Other renewables Other Total 2007 63,028 5,088 5,288 136,545 4,494 165,793 9,983 2,753 392,972 2008 52,486 5,168 7,114 125,376 5,743 176,215 10,034 2,444 384,579

GWh 2009 69,098 5,262 9,324 104,608 4,368 165,482 11,510 2,327 371,978

Table 1.2 Electricity demand

Production Other sources Imports Exports Total supply Total demand 2007 392,972 3,859 8,613 -3,398 402,046 401,669 2008 384,579 4,089 12,294 -1,272 399,690 399,387

GWh 2009 371,978 3,685 6,609 -3,748 378,524 378,714

Chart 1.1 Electricity supplied by fuel type

Maximum demand in the UK during the winter of 2009/2010 occurred in January 2010. At 60,231 MW, this was 0.1 per cent lower than the previous winters maximum in January 2009. In 2009/10 the maximum load in Great Britain occurred on 7 January 2010 at the half hour period ending 17:30 (58,510 MW). However, in Northern Ireland the maximum load occurred on 12 January 2010 at the period ending 17:30 (1,721 MW), which was 1.0 per cent below that of the previous winter. In Great Britain the highest ever load met was 60,118 MW on 10 December 2002. Maximum demand in 2009/2010 was 77% of the UK capacity of major power producers (MPPs) as measured at the end of December 2009, down from 79% in 2008/2009. The load factor of nuclear stations in 2009 at 65.4 per cent was 14.7 percentage points below the recent peak load factor of 80.1 per cent in 1998, but 16 percentage points higher than in 2008, when there were many planned and unplanned maintenance outages. The wet year of 2007 saw a greater use of large scale hydro plant, with hydros load factor the highest since 2000. 2008 saw a slight fall in load factor, as the increase in capacity was not quite matched by the increase in generation. With less rainfall in 2009, hydros load factor was lower still. CCGT efficiency has remained around the 46-47 per cent mark over the last few years, with little new (more efficient) capacity coming online prior to 2009. The efficiency of nuclear stations has been on a rising trend in recent years as older, less efficient stations have closed, with 2009 showing the highest efficiency yet, of 39.0 per cent. However, outages have tended to counteract these efficiency gains in some years, notably in 2008. Carbon dioxide emissions from power stations It is estimated that carbon dioxide emissions from power stations accounted for 31 per cent of the UKs total carbon dioxide emissions in 2009. Emissions vary by type of fuel used to generate the electricity and emission estimates for all electricity generation for 2007 to 2009 are shown in Table 1.3 below. Table 1.3 Estimated carbon dioxide emissions from electricity generation 2007 to 2009
Fuel Coal Oil Gas All fossil fuels All fuels (including nuclear and renewables) Emissions (tonnes of carbon dioxide per GWh electricity supplied) 2007 2008 2009 913 903 915 623 730 633 400 404 405 626 608 598 500 496 452

CHAPTER 2. THE BRITISH ELECTRICITY NETWORK

Electricity generators, including those generating electricity from renewable energy sources, normally connect to either the transmission grid or the distribution networks. The GB transmission grid consists of around 25,000 km of high voltage overhead lines (the national grid) and 800,000 km of overhead lines and underground cables (the regional distribution networks).

The difference between these grids is normally the voltage: Transmission grid voltages are normally 275 kilovolts and above in England and Wales; 132 kilovolts in Scotland and offshore. Distribution network voltage levels are normally 11 kilovolts, 33 kilovolts, 66 kilovolts and 132 kilovolts (except for offshore wind and Scotland). National Grid owns the England and Wales transmission system. Scottish Power Transmission (SPT) and Scottish Hydro Electric Transmission Limited (SHETL) each own part of the transmission system in Scotland. As transmission owners, these companies are responsible for building and maintaining safe and efficient networks, and are regulated by Ofgem. The grid in Northern Ireland is owned by Northern Ireland Electricity. As GB system operator, National Grid is also responsible for overseeing and managing the flow of electricity across the whole of the GB transmission network. This includes the elements owned and operated by SPT and SHETL. National Grid also co-ordinates connection offers to new generators. The system operator for Northern Ireland, SONI, manages the electricity system and flows in Northern Ireland. In all, there are 14 electricity distribution networks owned and operated by seven distribution network operators (DNOs). Initially the National Grid Company was owned by the 12 privatized regional electricity companies, but was floated on the Stock Exchange in 1995. National Grid (and its predecessors since 1990) has owned and operated the high voltage transmission system in England and Wales linking generators to distributors and some large customers. This transmission system is linked to the transmission system of continental Europe via an interconnector to France under the English Channel. Table 2.1 Inter-connectors
England - France Scotland - Northern Ireland Northern Ireland - Irish Republic MW 2,000 500 600

Chart 2.1 Electricity supply system in UK 2009

Table 2.2 separates the capacities of MPPs geographically to show England and Wales, Scotland and Northern Ireland. In 2009, 83% of the generating capacity in the UK owned by MPPs was in England and Wales, 14% was in Scotland and 3% in Northern Ireland. Out of the net increase in UK capacity of 1,472 MW in 2009, 721 MW was in Scotland, 667 MW was in England and Wales, and 84 MW was in Northern Ireland. Table 2.2 Plant capacity - England and Wales, Scotland and Northern Ireland
2007 Major power producers in England and Wales Total transmission entry capacity Of which: Conventional steam stations: Coal fired Oil fired Mixed or dual fired Combined cycle gas turbine stations Nuclear stations Gas turbines and oil engines Hydro-electric stations: Natural flow Pumped storage Wind Renewables other than hydro and wind Major power producers in Scotland Total transmission entry capacity Of which: Conventional steam and combined cycle gas turbine stations Nuclear stations Gas turbines and oil engines Hydro-electric stations: Natural flow Pumped storage Wind Renewables other than hydro and wind Major power producers in Northern Ireland Total transmission entry capacity 63,875 28,258 19,552 3,778 4,928 23,353 8,569 1,018 136 2,004 403 134 10,056 5,119 2,410 263 1,157 740 367 2,048 2008 64,115 28,447 19,613 3,778 5,056 23,351 8,569 1,018 137 2,004 420 169 10,383 5,119 2,410 264 1,255 740 552 44 2,284

MW 2009 64,783 28,455 19,621 3,778 5,056 23,955 8,569 1,037 140 2,004 454 169 11,104 5,869 2,289 265 1,255 740 642 44 2,369

Prices UK industrial energy prices are an important part of the energy departments work. They are widely used within government - in briefing, to assist in developing and monitoring policies, to assess price trends, to highlight (and therefore help to prevent) price discrimination, and to monitor the effects of liberalizing energy markets. They are also used extensively by industry, i.e. as price escalators in fuel purchasing contracts and as evidence in contract negotiations. Table 2.3 below shows the fuel price for the industrial sector from 2004 to 2010. Very high gas prices in 2006 resulted in a particularly low CCGT load factor but this recovered in the last three years to levels comparable to 2003 to 2005, with 2008 showing the highest load factor since 2000. With slightly less generation, and an increase in capacity, the CCGT load factor in 2009 fell back by 8 percentage points to 62.8 per cent. More intensive use of coal fired stations saw their plant load factor rise to 72.9 per cent in 2006, but these fell continuously over the next three years, to just 49.8 per cent in 2009, with the implementation of the Large Combustion Plant Directive, as well as higher prices relative to gas, restricting their use.

Table 2.3 Prices of fuels purchased Industrial Sector (1)

Great Britain Coal Size of consumer Small Medium Large Average Median Small Medium Large Extra large Moderately large Average Median Small Medium Large Average Median Small Medium Large Extra large Moderately large Average 10% decile Median 90% decile Small Medium Large Average Firm Interruptible 10% decile Median 90% decile 2004 1.344 1.147 0.766 0.826 1.252 2.304 2.164 2.033 2.020 2.056 2.114 2.311 3.538 3.381 3.231 3.262 3.386 7.584 5.849 4.640 4.363 4.854 5.116 5.041 6.972 9.749 2.221 1.923 1.509 1.573 1.668 1.493 1.619 2.114 2.789 2005 1.560 1.363 0.898 0.971 1.450 3.255 2.966 2.592 2.511 2.743 2.810 3.348 4.632 4.484 4.121 4.188 4.587 9.216 7.631 6.487 6.124 6.771 6.934 6.381 8.622 11.937 2.700 2.519 2.226 2.270 2.386 2.172 1.946 2.650 3.892 2006 1.646 1.349 0.851 0.928 1.632 4.093 3.514 3.501 3.504 3.494 3.583 4.147 5.569 5.368 5.016 5.082 5.550 11.397 10.045 8.435 7.671 9.024 9.013 7.628 11.006 14.685 3.776 3.411 2.871 2.952 3.033 2.885 2.371 3.715 5.093 2007 1.722 1.322 1.028 1.079 1.617 4.132 3.784 3.553 3.437 3.766 3.709 4.026 5.571 5.538 5.111 5.186 5.491 12.396 10.802 7.938 6.517 9.036 8.918 8.417 11.790 15.176 3.990 3.406 2.242 2.412 2.691 2.180 2.193 3.805 5.199 2008 2.071 1.554 1.336 1.404 1.761 6.643 5.857 4.785 2009 2.561 1.765 1.221 1.317 2.257 5.803 5.208 5.178 cUSD per kWh 2010

All consumers Heavy fuel oil

1.516 6.955 6.355 6.458

Of which: All consumers Gas oil

All consumers Electricity

Of which: All consumers -

Gas

All consumers -

5.402 6.769 8.199 8.005 7.619 7.690 8.109 14.175 12.056 10.622 9.055 11.832 11.188 9.820 13.584 19.066 4.740 3.893 3.365 3.460 3.609 3.336 2.831 4.419 6.024

5.271r 5.329 6.576 6.556 6.242 6.298 6.468 16.067 14.461 10.612 8.311 12.391 11.898 10.059 14.968 20.948 4.797 4.147 2.941 3.119 3.273 2.990 2.435 4.296 7.777

6.487 6.584 7.999 8.061 7.593 7.673 7.911 14.644 12.302 9.735 8.469 10.714 10.666 9.942 12.744 17.885 4.437 3.714 2.676 2.834 3.023 2.675 2.504 3.797 7.438

(1) Currency at 05/06/2011, 1 GBP = 1.6366 USD for comparison purposes only.

Chart 2.2 Fuel price indicators for the industrial Sector from 1980 to 2009

Coal Electricity Gas Heavy fuel oil Industrial prices

1980 208.4 161.8 136.5 139.7 152.4

1990 133.7 126.2 81.1 56.4 108

2000 81.6 86.9 48.9 70.3 76.2

2007 104.3 128.6 94.4 125.1 121.7

Real prices, 2005 = 100 2008 2009 128.7 119.4 153.5 164.3 137.5 117.6 176.6 167.6 155.1 155.5

Chart 2.3 Fuel Prices for Manufacturing Industry, Cash Terms, 1990 to 2010
13.0 11.0 9.0 cUSD per kWh 7.0 5.0 3.0 1.0 -1.0 2010p 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Coal Gas Electricity Heavy Fuel Oil

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Factors that affect the price of the energy Supply and demand These days there is relatively high demand for energy in summer (to power air conditioning units etc). However, as many power stations schedule their main annual maintenance programs at this time of year, a reasonable amount of generation capacity is removed from the market. Many of the UKs ageing nuclear power stations have been called upon in order to generate enough electricity to meet demand. This in turn supports higher wholesale energy costs. This supply shortage is compounded by the Large Combustion Plant Directive, which was introduced on 1 January 2008 to cut acid rain causing emissions from coal fired power stations. To comply, these power stations had to fit new equipment to reduce these emissions, which lead to extended maintenance shutdowns and higher operating costs. Around a third of the UKs coal fleet (c. 10% of total UK generating capacity) opted not to comply and as a result now have only 20,000 hours until their closure in 2015. As a result, these stations tend to operate only when prices are high to optimize their profitability and to fund the build of replacement stations. Cost of producing electricity Around 75% of the UKs electricity is produced by coal and gas fired power stations. Operators of these power stations also have to purchase emissions allowances via the EU Emissions Trading Scheme (EU ETS) to cover their CO2 emissions. Changes to the cost of coal, gas and emissions allowances have a dramatic affect on UK wholesale electricity prices, and for various reasons all three factors have risen dramatically: a. Gas: The UK is becoming more reliant on imported gas to meet local demand. Influential factors include the price of oil, reliability of gas import infrastructure and European weather; all of which affect the amount of gas the UK receives as well as the price producers pay. b. Coal: Coal prices have settled somewhat since 2008. The Government has pledged not to allow any new coal plants in the UK, unless a proportion of their CO emissions are buried underground. c. Emissions allowances: The cost of emissions allowances has continued to climb steadily since February 2009, when emissions allowances hit a record low. Airline emissions will be added to the EU ETS from 2012, which may drive prices up.

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CHAPTER 3. SECTOR ORGANIZATION

The UK has a privatized electricity sector, where generators and distributors trade electricity on a wholesale market. The largest power producer in the country is Electricit de France (EDF) Energy, which controls most of the nuclear power capacity and generates one sixth of the total electricity supply. Other important generating companies include E.ON UK, RWE-npower, Scottish and Southern Energy (SSE), and ScottishPower (SP). National Grid owns and operates the national transmission system in England and Wales, whereas SSE and SP operate the grid in Scotland, and Northern Ireland Electricity (NIE), operates the grid in Northern Ireland. Up to March 2005 the electricity industries of Scotland, Northern Ireland and England and Wales operated independently although inter-connectors joined all three grid systems together. The UK has slowly integrated the formally-separate electricity markets of its component parts (England, Northern Ireland, Scotland, and Wales). The British government formed the New Electricity Trading Arrangements (NETA) in 2001 to integrate the electricity markets of England and Wales. In 2005, the British government extended NETA to Scotland as the British Energy Transmission and Trading Arrangements (BETTA). There are plans to eventually incorporate Northern Ireland in to the BETTA. In addition, SP and SSE have increased the transmission capacity between England and Scotland to allow them to sell more electricity to English and Welsh customers. At the end of 2009, there were 32 major power producers operating in Great Britain. Competition developed in mainland Britain as follows: a) From 1 April 1990, customers with peak loads of more than 1 MW (about 45% of the non-domestic market) were able to choose their supplier. b) From 1 April 1994, customers with peak loads of more than 100 kW were able to choose their supplier. c) Between September 1998 and May 1999, the remaining part of the electricity market (i.e. below 100 kW peak load) was opened up to competition. EDF Energy is one of the UKs largest energy companies and it is the largest producer of low-carbon electricity. A wholly-owned subsidiary of the EDF Group, one of Europe's largest energy groups, they generate around one fifth of the UK's electricity and employ around 15,000 people. They supply electricity and gas to around 5.5 million residential and business customers, making them the biggest supplier of electricity by volume. The company is organized into the following business units: Existing Nuclear operates eight nuclear power stations in the UK with a combined capacity of almost 9,000 megawatts electricity that is vital to the UK economy. Nuclear New Build which is tasked with the delivery of the new generation of nuclear plants in line with EDFs global program of producing safe, affordable, reliable, lowcarbon production of electricity in the UK. Energy Sourcing and Customer Supply runs power stations and wind farms, buys and sells power to meet future generation and customer needs and deals with all their energy customers. EDF Energy operates gas- and coal-fired power plants, undertaking base load (the load used for heating, lighting, compressors and pumps when there is no production) and cycling duties. They operate three major plants in the UK with a total capacity of 4.8GW.

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Sutton Bridge in Cambridgeshire is a Combined Cycle Gas Turbine (CCGT) plant with a design capacity of 803MW, commissioned in May 1999. Cottam and West Burton in Nottinghamshire are both four-unit coal-fired plants, commissioned in 1970. Cottam has a capacity of 2,008MW and West Burton (which also has two open-cycle gas turbines) has a total registered capacity of 2,012MW. EDF Energy generated 25.4 TWh of electricity for sale in 2007.

CHAPTER 4. MARKETS STRUCTURE

How do the electricity trading arrangements work? Most of this trading is done in a forwards market, with generators and suppliers entering into contracts with each other for every half hour of every day; sometimes years in advance. Non-physical traders such as investment banks also participate in this trading. For each half hour, they can continue to trade up to 1 hour beforehand, at which point the market for that time period is closed. All generators and suppliers have to notify National Grid of their planned supply and demand for each half hour of the day. National Grid ensures that supply and demand match using a balancing mechanism, which includes the accepting of bids and offers from generators and suppliers to increase or reduce their supply or demand. The Balancing and Settlement Code (BSC) is a legal document which defines the rules and governance for the balancing mechanism and imbalance settlement processes of electricity in Great Britain. ELEXON is known as the Balancing and Settlement Code Company (BSCCo). They administer the BSC. ELEXONs systems capture the contracted volumes from generators and suppliers to see what they said they would produce or consume. They also capture data on actual supply and demand volumes. Any difference must be paid for. So, if a generator has supplied less than what it said it would for the half hour it must pay for the imbalance between its declared and actual position. Or, if a suppliers offer to reduce demand for a half hour was accepted by National Grid, then it will be paid for that balancing action. Prices and payment are managed by ELEXON through the settlement process. APX Power UK Established in 2000 as Britains first independent power exchange, APX Power UK (formerly named UKPX) offers an anonymous market place for integrated trading, clearing and notification for spot and prompt power contracts and a trading platform for cleared forwards contracts. APX Power UK is the cornerstone of the UK spot market and is used by members on a 24/7 basis for the majority of their within day balancing requirements. Auction The APX Power UK Auction is a day ahead auction, where trading takes place on one day for the delivery of electricity the next day. The auction is based on day ahead transactions whereby market members submit anonymous orders electronically, after which supply and demand is compared and the market price is calculated for each hour of the following day. The APX Power UK Auction facilitates the establishment of a market trusted index providing focus for liquidity and the creation of a transparent and reliable reference price for electricity in the UK.

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Spot Market APX Power UK offers physical electricity products for trading on its 24/7 electronic platform, EuroLight. The spot market is used for balancing and trading purposes and consists of half hourly products of electricity as well as discrete standardised blocks made up of the individual half hours. All Spot products traded on the EuroLight platform are automatically cleared and notified providing a fully integrated and efficient solution for members. The spot products, listed below, contribute to the APX Power UK RPD (Reference Price Data) and Spot Indices.

Contract Period Covered 4 Hrs block 6 blocks/day, block 1 begins 23:00; block 6 ends 23:00 2 Hrs block 12 blocks/day, block 1A begins 23:00; block 6B ends 23:00 1 Hr block Day Ahead Auction, 24Hrs/day, begins 23:00; ends 23:00 Half hour 48 periods/day, 1/2 Hr 1 block begins 00:00; 1/2 Hr 48 to end 00:00

Hrs Opens for Trading 4 Rolling 7 days 2 49 1/2 Hrs prior to start of delivery

Hourly auction opens for order entry at 00:00, 14 days prior to delivery; matching takes place at 10:30 daily 0.5 49 1/2 Hrs prior to start of delivery

Prompt Market APX Power UKs base and peak load day products, weekend products and combination blocks are listed on EuroLight for trading, clearing and notification by APX Power UK. In addition, APX Power UK lists base and peak week products.

Contract Base week Peak week Weekend base Base Peak Extended peak Off peak Blocks 3 + 4 Overnight

Period Covered 23:00 Sun 23:00 Sun 07:00 19:00 Mon Fri 23:00 Fri 23:00 Sun 23:00 23:00 07:00 19:00 07:00 23:00 23:00 7:00 + 19:00 23:00 07:00 15:00 23:00 07:00

Hrs 168 60 48 24 12 16 12 8 8

Opens for Trading Rolling 4 weeks, open at any time Rolling 4 weeks, open at any time Rolling 2 weekends, open at any time Rolling 7 days Rolling 7 days Rolling 7 days Rolling 7 days Rolling 7 days Rolling 7 days

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CHAPTER 5. CUSTOMERS CLASSIFICATION

The domestic sector accounts for about 32% of the UK energy consumption. Over the years, governments have made a series of efforts to reduce this consumption through a significant tightening of the Building Regulations and measures such as Warm Front and Affordable Warmth. However, domestic energy use is still growing. It is clear that a great deal more needs to be done to stabilize and reduce the amount of energy consumed by this sector if it is to meet the Governments 60% reduction target by 2050. The following chart shows the Electricity Demand by sector in 2009

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Average domestic electricity consumption per meter point in 2009 (kWh)

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Average industrial/commercial electricity consumption per meter point in 2009 (kWh)

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CHAPTER 6. TYPE OF SUPPLIERS

Following the restructuring of the electricity supply industry in 1990, the term "Major generating companies" was introduced into the electricity tables to describe the activities of the former nationalized industries and distinguish them from those of autogenerators and new independent companies set up to generate electricity. The activities of the auto-generators and the independent companies were classified under the heading "Other generating companies". In the 1994 Digest, a new terminology was adopted to encompass the new independent producers, who were then beginning to make a significant contribution to electricity supply. Under this terminology, all companies whose prime purpose is the generation of electricity are included under the heading "Major power producers" (or MPPs). The term "Other generators" (Autogenerators in the balance tables) is restricted to companies who produce electricity as part of their manufacturing or other commercial activities, but whose main business is not electricity generation. Other generators also covers generation by energy services companies at power stations on an industrial or commercial site where the main purpose is the supply of electricity to that site, even if the energy service company is a subsidiary of a MPP. Table 6.1 Plant capacity MPPs - Autogeneratos- United Kingdom
2007 Major power producers Total transmission entry capacity Of which: Conventional steam stations: Coal fired Oil fired Mixed or dual fired Combined cycle gas turbine stations Nuclear stations Gas turbines and oil engines Hydro-electric stations: Natural flow Pumped storage Wind Renewables other than hydro and wind Other generators Total capacity of own generating plant Of which: Conventional steam stations Combined cycle gas turbine stations Hydro-electric stations (natural flow) Wind Renewables other than hydro and wind All generating companies Total capacity Of which: Conventional steam stations Combined cycle gas turbine stations Nuclear stations Gas turbines and oil engines Hydro-electric stations: Natural flow Pumped storage Wind Renewables other than hydro and wind 75,979 33,734 23,008 3,778 6,948 24,854 10,979 1,445 1,293 2,744 1,121 134 6,764 2,924 2,076 126 246 1,392 82,743 36,658 26,930 10,979 1,445 1,419 2,744 1,042 1,526 2008 76,783 32,423 23,069 3,778 5,576 26,578 10,979 1,456 1,392 2,744 213 6,661 2,722 2,015 127 435 1,361 83,443 35,145 28,593 10,979 1,456 1,519 2,744 1,432 1,574 MW 2009 78,255 32,431 23,077 3,778 5,576 27,932 10,858 1,560 1,395 2,744 213 7,083 2,719 1,946 131 739 1,547 85,337 35,151 29,878 10,858 1,560 1,526 2,744 1,860 1,760

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Major power producers at the end of 2009 were: AES Electric Ltd., Baglan Generation Ltd., Barking Power Ltd., British Energy plc., Centrica Energy, Coolkeeragh ESB Ltd., Corby Power Ltd., Coryton Energy Company Ltd., Derwent Cogeneration Ltd., Drax Power Ltd., EDF Energy plc., E.On UK plc., Energy Power Resources, Gaz De France, GDP Suez Teesside Power Ltd., Immingham CHP, International Power Mitsui, Magnox North Ltd., Premier Power Ltd., RGS Energy Ltd, Rocksavage Power Company Ltd., RWE Npower plc., Scottish Power plc., Scottish and Southern Energy plc., Seabank Power Ltd., SELCHP Ltd., Spalding Energy Company Ltd., Western Power Generation Ltd. Additionally, the following major wind farm companies are included, beginning with data for 2007: Fred Olsen, HG Capital, Renewable Energy Systems, Vattenfall Wind Power. Generation from wind farms owned or operated by the following MPPs that had previously been excluded from the MPP category are now included for 2007 onwards: Centrica Energy, E.On UK plc, RWE Npower plc, Scottish Power plc, Scottish and Southern Energy plc.

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ANNEX 1. UK ENERGY PROFILE

Energy Overview Proven Oil Reserves (January 1, 2010) 3.1 billion barrels Oil Production (2009) 1.5 million barrels per day, of which 86% was crude oil. Oil Consumption (2009) 1.7 million barrels per day Proven Natural Gas Reserves (January 10.3 trillion cubic feet 1, 2010) Natural Gas Production (2009) 2.1 trillion cubic feet Natural Gas Consumption (2009) 3.1 trillion cubic feet Recoverable Coal Reserves (2005) 171 million short tons Coal Production (2009) 19.7 million short tons Coal Consumption (2009) 60.2 million short tons Electricity Installed Capacity (2007) 85 gigawatts Electricity Generation (2007) 369 billion kilowatt hours Electricity Consumption (2007) 346 billion kilowatt hours Total Energy Production (2007) 7.4 quadrillion Btus* Total Energy Consumption (2007) 9.5 quadrillion Btus*, of which Oil (38%), Natural Gas (36%), Coal (13%), Nuclear (11%), Other Renewables (2%), Hydroelectricity (0%) Total Per Capita Energy Consumption 156 million Btus (2007) Energy Intensity (2007) 4,300 Btu per $2000-PPP** Environmental Overview Energy-Related Carbon Dioxide 572 million metric tons Emissions (2008) Per-Capita, Energy-Related Carbon 9.4 metric tons Dioxide Emissions (2008) Carbon Dioxide Intensity (2008) 0.26 Metric tons per thousand $1000-PPP** Oil and Gas Industry Organization Major Oil/Gas Ports

Foreign Company Involvement

Major Oil Fields Major Natural Gas Fields Major Pipelines (length)

Private sector active in all aspects of industry. Bacton, St. Fergus, Teesside, Easington, Isle of Grain, Cruden Bay, Sullom Voe, Flotta, Nigg Bay, Southampton, South Hook. Extensive, including many European and U.S. firms. The largest include Total, Chevron, BHP, Amerada Hess. Schiehallion, Foinaven, Alba, Captain, Forties, Buzzard, Elgin, Franklin, Halley, Scoter, Shearwater Forties-Cruden Bay (110 miles), Ninnan-Sullom Voe (110 miles), Piper-Flotta (130 miles), CormorantSullom Voe (93 miles), Norpipe (220 miles), Shearwater-Elgin (SEAL), Scottish Area Gas

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Major Refineries (capacity, bbl/d)

Evacuation (SAGE, 200 miles), Central Area Transmission System (CATS, 250 miles), Far North Liquids and Gas System (FLAGS), Interconnector, Frigg. Fawley (329,500), Stanlow (272,000), Killingholme South Humberside (221,300), South Killingholme (221,000), Pembroke Dyfed (210,000) Grangemouth (195,700).

Source: http://www.decc.gov.uk http://www.eia.doe.gov http://www.nationalgrid.com http://www.edfenergy.com http://www.electricity-guide.org.uk http://www.elexon.co.uk http://www.energy.gov http://www.iesisenergy.org http://www.scotland.gov.uk http://www.ukpower.co.uk

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