Released on: August 14, 2008, 2:04 am

Press Release Author: Aily Armour-Biggs

Industry: Energy

Press Release Summary: EU Directives require the UK to source increasing amounts of
energy from as yet undefined renewable sources and to close a number of productive
coal-fired power stations by 2015. Consequently, the UK will be generating 60% of
required power from gas by 2018 with three-quarters of this being imported at the
prevailing market price. Are households and businesses simply at the mercy of future
supply risks and ever rising prices? How can UK business set a strategy to survive
these challenges?

Press Release Body: London, United Kingdom, August 14, 2008 -- The impacts of the
drive to cleaner fuels and the exhaustion of domestic gas supplies are already
impacting on the UK Energy Market. Global Energy Advisory - a specialist energy
think tank and advisory business - fear that UK businesses have not set energy
strategies to avoid, at best, forthcoming higher prices, and at worst, frequent
interruptions to power supplies.

EU renewable targets require that the UK uses renewable energy sources for 15% of
total power, heat and transport needs by 2020. This will require around 30-40% of
power generation to come from, most likely, wind power. Unfortunately, the wind
doesn't blow all the time, therefore generation from wind turbines can be
"intermittent" at best. This will cause considerable engineering challenges at times
of high or low wind to maintain adequate power supplies.

Global Energy Advisory also predicts that 13GW of new gas power stations will have
to be built to replace predominately coal power stations that will close on New
Years Eve 2015. These closures are due to another European Directive called the
Large Combustion Plant Directive. With such fundamental changes necessary to the UK
electricity generation infrastructure, it is far from certain that the required
investment will be made in time to ensure that the lights will stay on. It is also
highly likely that prices will continue to rise and not everyone will be able to
afford the energy lifestyle that is enjoyed today.

Currently the UK power generation mix is roughly 40% gas, 40% coal, with the 20%
balance from nuclear and a small amount of renewable generation. By 2018, Global
Energy Advisory forecast that this could change to become approximately 60% gas, 20%
coal 10% nuclear and the remaining 10% from renewable generation - short of the EU
target. These dramatic changes will give power companies investment and logistical
challenges, but more worryingly, it will lead the UK to further increase it's
reliance on gas imports which, by 2017, are predicted to be 76%.

So where does this gas come from?

Last year 67% of the UK's gas, 67bcm, came from the North Sea, but this source is
depleting and this year will account for only 62% of total consumption. Norway is an
important gas supplier to the UK, but there is also heavy reliance, with some
concern, on gas flows from Europe and from Liquid Natural Gas (LNG) sources.
Although the UK has invested in pipelines and LNG terminals, these are often
unutilized as the gas does not flow on to UK shores. Last year the Grain LNG
terminal was only utilized 17% of the time and the BBL gas pipeline with the
Netherlands only 40%.

So where is the gas going to?

Some countries, such as Japan, rely heavily on LNG as a vital source of energy and
are prepared to outbid other countries to secure tanker supplies. Soaring costs have
stopped new LNG production projects and the International Energy Agency (IEA)
predicts current delays could lead to a short fall in global LNG supply as soon as
2012. Worryingly, the IEA has also turned its global gas focus to security of
supply. The agency describes gas as "vulnerable and expensive" and notes that the
world does not have a "strategic store" of gas with the only global surplus existing
in the LNG cargoes that transcend the globe: put very bluntly unlike oil, gas
security of supply is inadequate and impossible to accumulate. The IEA also say that
there is gas energy security only until 2015, by which time, Global Energy Advisory
expects 30% of UK gas supplies to be LNG.

How Bad Can it Get?

The current European energy policy and the increasing dependence on foreign gas have
put UK businesses and households at unprecedented risk. Factories and businesses
will have to adopt energy risk management practices and find new ways of working if
production and commercial operations are not to be impacted. Market reaction to the
recent high energy prices has been to reduce costs and many firms are already
shedding jobs.

But then what? Businesses particularly need to consider their energy future
carefully and review or set a sustainable energy strategy which identifies, and aims
to avoid, the numerous energy pitfalls that lie ahead. As seasoned energy market and
risk professionals, Global Energy Advisory can assist firms in this important task.
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Web Site: http://www.globalenergyadvisory.com

Contact Details: Contact :
Aily Armour-Biggs
Global Energy Advisory Limited
Fourth Floor
3 Tenterden Street
Hanover Square
Mayfair
London
W1S 1TD
+44 (0) 207 692 0888
contact@globalenergyadvisory.com
http://www.globalenergyadvisory.com