Protel tracks capex project activity across the main process sectors to help suppliers win new business. 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 – the UK energy industry. For more information on the areas we cover, click here.
The UK energy sector has seen rapid changes in the last several years. The continued drive toward decarbonisation has seen capex project activity change slightly in our covered areas of process intensive energy projects.
The UK has set decarbonisation targets to reduce reliance of conventional energy sources and hasten the switch to renewable energy sources. Under the EU Renewal Energy Directive, the UK has a target to source 15% of energy consumption from renewable by 2020. This target and others are playing their part in capex activity on national, local and regional levels.
Brexit has had an impact on investment and industry confidence. Uncertainty around future regulation and the potential for continuation of European targets is affecting decision-making and planning.
The upcoming Capacity Market Auction is still pending, with a decision expected later in 2019 which has held up the progress of some project schemes, with a few having dropped out of the previous allocation due to missed development milestones.
The Energy-from-Waste (EfW) market has further developed over the last several years. There were 40 EfW facilities in the UK in 2017, up from 26 in 2014. The trend is set to continue into 2019 and beyond as local authorities grapple with the challenges of an oversupply of residual waste.
Current plant capacity handles approx. 12m tonnes of waste a year, a figure which some expect to rise to nearly 16m tonnes per year by 2022, highlighting the need for further capex to handle this growth in the years ahead. However, EfW remains a challenging landscape in which to make a success, as many major players have dropped out of the market, such as Interserve, Lagan Construction and others.
Renewable energy continues to be the fastest growing source of energy, contributing half of the growth of energy supplies and is set to become the largest source of power by 2040. For Protel, this impacts on process intensive renewable capex, such as that involved in biogas, EfW and biomass plants.
Technologies and innovations are tending toward a smaller scale or pilot level development in areas such as plastics. Large scale gasification/pyrolysis plants have struggled to get support following Air Products abandonment of TV1 and TV2 in 2017. Protel have noted a switch of technologies to advanced thermal combustion and the latest incineration designs. An exception to this trend seems to be Chinook looking at TV1. They believe there is the potential for their proprietary RODECS technology to make it viable.
The circular economy has been pushed to the fore in light of recent environmental campaigns and the prominence of the importance of combating climate change.
Plastics to fuel and energy, along with hydrogen technologies are being explored mostly on a small scale at pilot level (full details available to subscribers). Biomass is expecting to remain buoyant as companies experiment with feedstock sources. Innovative sources of waste ensure continued investment into EfW.
As such, there remains significant potential for suppliers of capital equipment and services in the UK energy sector for 2019, with opportunities in fabrication, steelwork, pipework, gas compression and treatment and grid connection/utilities.
On our MyProtel project search engine we are currently tracking 248 active UK energy industry & gas sector capex projects with a combined potential investment value of just over £19.3bn.
Of these projects, over half are in the £15m-£60m range and contain ample opportunity for suppliers.
Selection of major UK energy industry investors (data on all the following companies and projects is taken from our MyProtel project search engine, full details available to subscribers):
Developers with multiple UK energy schemes currently being tracked:
Selection of EPC contractors and tech providers active in the UK energy industry:
Major projects in development/construction (full details available to subscribers):
In general we have seen a slow-down in the quantity of energy and gas projects entering the pipeline, but the next 4-6 quarters sees many large schemes reaching implementation and construction and the project pipeline remains buoyant.
As such, there is a need for suppliers to stay connected to the industry to track both smaller-scale investment as well as the fortunes of larger scale capex which is reaching procurement and project implementation.
For more information on any of the organisations, projects or trends covered, including key information required to target specific projects, please contact us.