Uncertain Future

There are three primary issues for industrial production plants concerning their electricity supply – security of supply, rising electricity prices and carbon footprint.

Security of Supply

The UK Government is committed to the EU’s Renewable Energy Directive which requires the energy mix to have at least 15% produced from renewable sources by 2020.[1]

There are several coal and oil plants which will be switched off by 2016 to be replaced by cleaner energy sources as a means of meeting this target. On top of this, there are several nuclear plants which are scheduled to be shut down by 2023 having reached the end of their lifespan.[2]

The current UK power demand peaks around 60GW. In total, a predicted 20GW of the current 90GW of available generation will be lost due to the power plants closing by 2023. Some nuclear plants will be replaced in the long term. However, the safety gap above the total peak demand will significantly decrease.

This increases the likelihood of a National Energy Emergency. Rota load disconnections are used in such an emergency to lower the net demand. The national grid is split into 18 blocks and consumers in each block will be switched off for a period of 3 hours with 2 days’ notice. There are some consumers which are protected from these disconnections, categorised as Vital (Hospitals, Railways, Water Treatment Sites etc), Food processes or Other (Continuous Processes – Steelworks, Pharmaceutical Producers etc). Many industrial production plants fall into the “Other” category and although they are protected from full disconnection, they will have to significantly reduce their electricity consumption at the specified times.[3] It should be stressed though that these emergencies are considered to be very unlikely and the net demand over the UK is expected to decrease in the long term due to improved efficiencies in various sectors.

The current level of blackouts is an expensive problem for constant process production plants. For example, in 2013 GlaxoSmithKline (GSK) reported a loss of several million pounds due to one blackout disrupting the batch process at their pharmaceutical plant in Irvine.

It is clear that due to the external factors of blackouts and rota disconnections, increased security of supply is a desirable aim for industrial plants which are reliant on constant processes.

Rising Costs

As low-carbon generation options are currently more expensive than fossil fuel sources, their increased implementation in the grid supply mix will continue to increase the cost of electricity.

One study investigating the effect of decarbonisation on electricity prices showed that for industry the increase will be predominantly due to low-carbon policies.[4]

In 2013, the price of electricity for industrial sites was 8.1 p/kWh of which 1.8 p/kWh comes from low-carbon policies.

In 2020 the price of electricity is estimated to be 8.9 p/kWh (3.5 p/kWh from low-carbon policies).

In 2030 the price of electricity is estimated to be 11.9 p/kWh (5.8 p/kWh from low-carbon policies – almost half of the total price).

There may be some compensation and exemption schemes which significantly reduce the prices though the extent of this is difficult to predict and may vary across different industrial sectors. Nevertheless, these figures give an indication that industrial companies can expect increasing prices in the next few years.

Carbon Footprint

Finally, companies are beginning to acknowledge the need for monitoring their own carbon footprint. There are financial incentives for industrial sites to reduce their emissions. One example is the EU Emissions Trading System(EU ETS), which puts a price on emissions. In the UK, it is anticipated that the sites currently under EU ETS will contribute over half of the emissions reductions needed to reach the targets set for 2020. [5] On top of this is the increased reputation companies can gain among their clients by being “green”.