EMR: Ordeal or adventure? How to choose adventure

A few weeks ago at the Major Energy User Councils members’ meeting in London, I pitched the idea that Electricity Market Reform (EMR) is a gift for energy managers’ careers.

Call me the optimist, but here’s my argument:

1. Energy managers would see greater standing in their companies
2. They could use their technical skills in more personally rewarding ways
3. All because in the new electricity market, the declining influence of variable wholesale power prices on business electricity prices will continue
4. So increasingly a company’s energy budget will be controlled by its ability to manage consumption
5. Which requires the specialist knowledge possessed by energy managers with technical backgrounds.

Were they convinced? I’m not so sure.

I think many energy managers (and businesses) continue to see this change to the electricity market, and the ambitions to reduce the UK’s carbon emissions as unnecessary, wrong, too costly, or all three.

Why? Because it’s complex and controversial. It’s simply easier to judge something as large and complex as EMR by the headlines it generates.

I get that. But the direct costs of the EMR schemes should be seen against the context of the problems they are designed to prevent – power shortages; vulnerability from dependency on too few generation sources; a high carbon mix that adds to the cost of climate change.

For me, EMR is like weighing up whether it’s cheaper to regularly service a car or wait until there’s a serious problem and the car won’t go. When properly analysed, it looks like this change is just what the UK needs and in the long run, UK business will be much better off for it.

So here’s an easy way to look beyond the headlines

 I believe with a more positive view of EMR businesses can succeed in the EMR adventure, rather than be overwhelmed by the ordeal.

So I’m going to present a few brief arguments to counter ‘unnecessary, wrong, too costly’ set of concerns. I hope they’ll encourage more energy managers to help their businesses leave the “Ain’t It Awful” Club for a more positive place. You can subscribe here to have my arguments emailed to you.

For now, let me leave you with an appeal and an offer for energy managers.

The appeal

If you find your business in the “Ain’t It Awful” Club, chances are EMR and other events in the energy market will be a costly ordeal. But if you spread your knowledge of how the energy market works and how reduce carbon emissions can bring short and long term business benefits, then changes like EMR can be a great, positive adventure filled with opportunities.

The offer

Start your adventure with our EMR Made Simple stories:
Download this factsheet about how the Capacity Market and Contracts for Difference work

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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