In this article we aim to present a quick and easy to digest run-down of the main trends and developments in a highlighted sector of the process manufacturing industries in one of our covered regions. For more information on the areas we cover, click here.

In this issue, our Sector Manager – Energy Industry, Paul Bryant gives a run-down of the UK energy industry. Note: Energy & Gas markets are considered as defined by the criteria for Protel bulletins & any views or options expressed are those of the author.

Changing UK energy mix impact capex amid political uncertainty

The mood in the UK energy sector is currently mired by the political uncertainty surrounding Brexit and the recent UK general election. Couple the multiple sources of uncertainty with the delayed changes in the RHI and uncertain CfD outcomes and we are seeing a potential recipe for stagnation and lack of investment across UK energy in 2017 and into 2018.

Intelligence from industry sources are indicating a slower summer for the renewable energy sector, possibly also moving into a slow autumn. Year-on-year planning applications are down over 20% and investors are sitting on their hands as they await stability. The regulatory landscape is blurred by the likely, (or not – depending on one’s view) discarding of EU targets and potential political policy. We are seeing the potential for this deter potential investors and the UK is currently ranked the 10th most attractive country for renewable investment, having been at 4th four years ago. (EY RECAI issue 49: May 2017)

The most significant result of this is that the larger (>c.10MWe) EfW developments have slowed down significantly. There are some major energy users – mostly chemical & petrochemical processors – looking at implementing independence of heat & power supply with ‘over/inside the fence’ solutions. That said, they are mostly seeking partnerships with developers/operators and are not prepared to take all the risk alone. The situation might ease after the award of the next round of CfD (Contracts for Difference), but the awards are likely to favour off-shore wind as opposed to ACT (advanced conversion technology) and more traditional EfW developments.

There is likely to be a continued dip in biomass/biogas development until Q4 2017, with resurgence in 2018. The ADBA quotes 57 biogas plants in development, but expects only another 20 in the next 2 years – Protel are currently tracking 60 at various stages of development/construction (Contact Us for full details).

Coal-fuelled power is on the decline, as anticipated, output down 30% year-on-year from Q1 2016 and the UK experienced it’s ‘first coal-free’ energy days in Q1 2017.

For context, a ‘typical’ UK energy mix can look something like:

• Gas 48%
• Nuclear 24%
• Imported 9%
• Biomass 6%
• Wind 1.5%
• Hydro 0.5%

(Figures rounded up and don’t included c.11% .unmetered elements, such as solar.)

Technology & Trends

AD, Pyrolysis & Gasification technologies are established and in use with technical developments mostly confined to efficiency improvements and ‘proprietary’ solutions designed to give a competitive market edge. Major area for investment is seen as energy storage, with major R&D expenditure on battery technology.

Alternative feedstock sources are always being investigated – tyres, plastics, etc. and technologies exist and are coming to market all the time for these. Fundamentally the front end process differs, but the output will either be a synthetic gas or fuel, which will be used to drive engines or boiler-linked steam turbines.

Our Coverage

Energy Sector Project Bulletin Coverage

On our MyProtel project search engine we are currently tracking:
• 280 active process intensive energy & gas projects;
• totalling a potential value of £19.1bn.

Protel Analytics tells us to expect c.£1bn of projects to be implemented each quarter for the remainder of 2017 and into Q1 2018.

Selection of investors in the industry:

• Aviva
• Iona Capital
• Copenhagen Infrastructure Partners K/S
• Glenmont
• Green Investment Bank

Developers with multiple developments currently being tracked:

• Rolton Kilbride Ltd
• CoGen Ltd
• Wheelabrator Technologies Inc
• China Energy Engineering Corporation Ltd
• Peel Energy Ltd

Selection of EPC contractors and technology providers:

• Babcock & Wilcox Vølund AS (UK) & Lagan Construction Group Ltd partnership
• CNIM UK & Clugston partnership
• Outotec Oyj
• BWSC A/S
• Aalborg Energie Technik a/s

Major Projects in development/construction (full details available to subscribers):

• MGT Teeside – a c.£650M under construction
• Margam Green Energy – c.£100M under construction
• Endless Energy, Keighley – c.£135M under construction
• Newton Down Clean Power – c.£100M in development
• Egnedol Wales – c.£685M in development
• CalaChem – c.£150M in development

Summary

If the current slow-down of major energy project investment continues until 2018, it is thought that the existing pipeline of project opportunities, coupled with the AD projects and ‘inside/over the fence’ projects for major energy users will maintain a consistent level of opportunity. There is a ‘momentum’ in the portfolio due to the long development cycles of some plants, which will ensure project intelligence covering all stages of the project cycle for the next 4 quarters at least.

To gain information on specific projects or gain more insight into this sector, including all the contact details you need to start your sales process at the right time, get in touch.