New Market Report: United Kingdom Power Report Q3 2014

Our muted outlook for the UK power sector is predicated on stalling investment in new thermal capacity and continued uncertainty over government energy policy. While the UK's Energy Bill has been signed into law , and we have seen some positive developments in the nuclear segment, the highly politicised nature of the domestic power sector and the unfavourable economics of gas generation have deterred invest ment in much-needed new capacity .

The outlook for the country's power sector is complicated by numerous sector-specific factors - with the most pressing being the uncertainty over future energy policy and the highly politicised nature of the power sector. While the coalition government's long-awaited Energy Bill has been signed into law, and there has been an uptick in activity in the domestic nuclear segment since the government agreed on a strike price for two new nuclear reactors at Hinkley Point in Somerset, investment in traditional thermal generation capacity continues to stall.

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This freeze in investment has been brought into sharp focus in recent months. Vast amounts of thermal baseload capacity (mainly coal-fired capacity) continue to be shutdown or mothballed at an alarming pace as utilities decide to cut their losses rather than upgrade power plants in order to comply with costly European emissions reduction policies (such as the Large Combustion Plants Directive). With the Department for Energy and Climate Change (DECC) stating that one-fifth of the UK's existing installed capacity is due to come offline over the next decade, the risk of a capacity deficit by 2015/2016 is growing.

Furthermore, while gas-fired capacity appears to be one of the favoured options with regards to replacing aging coal-fired capacity, unfavourable dark-spark spreads have continued to take a toll on investment in new gas-fired power plants. This problem has been exacerbated by the rows over rising energy bills, with the Conservative and Liberal...

The United Kingdom Power Report features Business Monitor International (BMI)'s market assessment and independent forecasts covering electricity generation (coal, gas, oil, nuclear, hydro and non-hydro renewables), electricity consumption, trade, transmission and distribution losses and electricity generating capacity.

The United Kingdom Power Report also analyses the impact of regulatory changes, recent developments and the background macroeconomic outlook and features competitive landscapes comparing national and multinational operators by sales, market share, investments, projects, partners and expansion strategies.

Key Benefits

* Use BMI's independent industry forecasts for United Kingdom to test other views - a key input for successful budgeting and strategic planning in the power market.

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