EMR: the change you need. The download you want.

“You can’t always get what you want, But if you try sometimes you just might find, You get what you need”

For me, these lines from the Rolling Stones way back in 1969 capture how UK businesses and their energy managers should see Electricity Market Reform (EMR) in 2014 and beyond.

Because EMR is designed to change the UK electricity market around what both businesses and energy managers actually need. As Secretary of State, Ed Davey put it:

 “These reforms will ensure we can keep the lights on, bills down and the air clean. The reforms will also be better for the economy, leaving us less vulnerable to rising global energy prices and supporting as many as 250,000 jobs in the energy sector.”

That sounds like an attractive energy future for businesses. Energy security. Lower costs (compared to a future without EMR). Low carbon power. Surely businesses want that? It’s certainly what they need.

But after two months of explaining what EMR means to our customers and energy consultants, I’m worried businesses could miss the opportunities this change presents.

I understand businesses’ concerns about new costs from EMR. We all want lower costs now. But the UK needs a longer term answer to its energy needs. EMR addresses the issue of chasing short term gains over long term cost reduction. It provides a framework that gives price stability for those investing in future energy projects, which should lead to lower prices (than otherwise) for businesses.

The opportunity for energy managers comes from the changing make up of business electricity prices and costs. In a future where the wholesale power market has progressively less influence on business electricity prices, the volume part of the energy cost equation demands more attention. That means more active control of energy use: more energy efficiency, load management or self generation. Just what many energy managers I’ve met really like doing. What they want and need.

So how do you see these reforms from the right perspective?  With our EMR Made Simple story.

You can download it now.

Here’s what you get.

1. The whole picture: pages 2-6 give you an easy way to make sense of the Capacity Market and Contracts for Difference and explain it confidently to anyone who asks you about it.
2. The costs: page 7 outlines the costs to help you update your budgets.
3. The what happens next: the timeline of events on page 8 will help you prepare for what happens next in the exciting world of Electricity Market Reform.

EMR might not seem what you wanted but if you try approach it in the right way, you just might find, you get what you nee-eed.

 

Bio

Posted by Nicholas Pender, Senior Manager of Structuring and Pricing

Nick Pender heads up EDF Energy’s B2B Industrial and Commercial Structuring & Pricing Team. The team deliver risk management services and structured contract solutions for our medium to large I&C customers, in addition to pricing and contract management. He has over ten years of experience across the energy industry with roles in B2B customer product development, trading EDF Energy’s fleet of assets (wind, CCGT, coal, nuclear), Upstream asset optimisation and hedging and Commodity research.

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