3 minute read
Outlook
The global energy crisis and the immense challenges it presents to power suppliers shows no sign of abating soon. This will continue to put upward pressure on both wholesale and retail energy prices. We remain confident in our strategies for meeting these challenges and achieving our Vision.
Our current supply framework agreement with EDF in France runs until the end of 2027 and our electricity purchases are materially hedged for 2023 and 2024 and for a portion of 2025-2027. Whilst this ispresentlyaffordingtheIsland significantprotectionfromwholesale price volatility, it cannot protect completely if wholesale prices remain at present levels. The war in Ukraine and consequential energy crisis show no sign of abating and, on this basis,arelikelytoflowintohigher retail energy prices in Jersey. Jersey Electricitywillcontinueitseffortsto beasefficientaspossible,restrain any price increases as well as help consumers mitigate the other driver of bills, consumption, which we believe presentsasignificantcostsaving opportunity for many households in Jersey.
Secure long-term future
Despite the short to medium term challenges, the Company and the Island remain well placed to do what is necessary to deliver a sustainable and secure long-term future. The current vulnerability in European energy systems and Europe’s continued reliance on imported fossil fuels, if anything, further emphasise the importance of our strategy and its focus on sustainability and the continued exploration anddevelopmentofcosteffective, indigenous renewables. Supplying cleanenergyinanaffordableand secure way is as important as ever in thefightagainstclimatechangeand we are well placed to play a key role in helping Jersey achieve its net-zero ambitions. Whilstwehaveconfidenceinour supply chain and continued access to large volumes of low-carbon nuclear and hydro power from Europe, and we believe our smart-enabled electricity system is very well invested for the future, we will continue to innovate with new products and services to help Islanders switch from fossil fuel to low-carbon electricity in the high carbon emitting areas of heating and transport. These bring opportunities for growth for the Company and for local businesses and partners.
Optimising investments
Driving scale across our network should enable Jersey to better utilise its assets and this should lead to lower prices than otherwise would be the case. We know what additional investment is needed in the network to meet the increase in both peak demand and annual consumption that the energy transition should bring. New technologies and the digitalisation of our business are enabling us to optimise those investments and create other efficienciesthroughoutJersey’senergy system, including the provision of new value-adding services for consumers. The publication of the Government’s Carbon Neutral Roadmap in May 2022 and the election of a new Government in June with a conviction to pursue net-zero Jersey by 2050, possibly earlier, coupled with what we hope will be regulatory stability and certainty, shouldgiveusconfidencetomake these investments at our target returns.Thereisasignificantamount of work to be done for the Island to get onto a trajectory of net-zero by 2050
butthefirst£23mofGovernment funding from the Climate Emergency Fundissecureforthefirstfouryears of the Roadmap and we are actively involved in supporting Government to develop workable initiatives in the heating and transport sectors, the two largest carbon emitting sectors.
Energy sovereignty
The Carbon Neutral Roadmap and the Bridging Island Plan provide support for more on-Island renewables, and the global energy crisis has renewed the Island’s focus on the issue of energy sovereignty. We will continue to enable and invest in utility and commercial scale solar PV – which is the most viable of the renewable technologies albeit requiring large land areas – while also accelerating ourresearchintooffshorewind whichisreducingsignificantlyincost and which we believe now enjoys significantpublicsupport.Boththe Roadmap and Bridging Island Plan identifyanoffshorewindfarmas being of potential strategic value to the Island. Not only would such a project provide greater energy independence, but the scale of local resources would also provide several times the Island’s need, providing a commercial opportunity for Jersey to become a net exporter of energy, with the consequential licensing income stream for Jersey. We believe that Jersey Electricity has a critical enabling role to play with such a development. Building the right skills and experience within our organisation, and developing a modern, progressive culture is more important than ever. We will continue to invest in a diverse workforce to ensure we have the capacity and capabilities to execute our strategies for achieving net-zero, seize the opportunities it presents and secure a prosperous future for the Company and our community.
