Strikingly, China has excluded LNG from a list of additional tariffs to be levied on U.S. imports despite the nascent trade war between the two super powers. Beijing’s move shows “LNG is clearly seen as an essential good," and in the event of an escalation Wood Mackenzie expects LNG to remain outside the bounds of any additional tariffs.
The Trans-Anatolian Pipeline (TANAP), feeding Azerbaijani gas from Shah Deniz into Europe’s $38 billion Southern Gas Corridor, has been delivered on time and under budget. Azerbaijan and Turkey just inaugurated the 16 Bcm/year pipeline in Eskisehir, Turkey.
Dealing a blow to the industry, China’s National Development and Reform Commission (NDRC) has significantly reduced solar subsidies by setting new on-grid power tariffs that range between $7.8-11c/kWh, effective June 1. Distributed projects are capped at 10 GW and all utility-scale projects are mandated to set power prices through competitive auctions.
China’s LNG trucking capacity is set to double in medium term and WoodMackenzie analysts see trucked LNG and distributed generation have the potential to create synergies. Yet, few distributed generation is currently fuelled by trucked LNG because most of these power units are in areas with pipeline coverage and enjoy discounted gas prices already.
South Korea coal-fired power plants will be mandated to meet a new 0.4% sulphur limit in coal consumption, effective from July 2018. The new law is meant to diversify the energy mix away from fossil power sources but WoodMackenzie analysts warn the new policy will push up the cost of power generation, impacting on electricity prices.
Bangladesh has become the first new LNG importing nation in 2018 with the arrival of Excelerate Energy’s FSRU Excellence at Moheshkhali Port on April 23, carrying a commissioning cargo from Qatar. “Bangladesh suffers from two crippling energy shortages: electricity and gas. This is the first step of a significant ramp up of LNG.” commented Wood Mackenzie's director of gas and LNG research, Nicholas Browne.
Falling costs for renewables and energy storage will squeeze out gas-fired generation in some markets as early as 2025. South Australia's peak loads are currently managed by open-cycle gas turbine (OCGT) plants; but by 2025, battery storage will be cheaper than OCGTs – even at gas price of A$7/mmbtu, a WoodMackenzie study finds.
The full impact of China’s latest price cap on thermal coal prices will be truly felt only after the Lunar New Year, according to Wood Mackenzie’s Northeast Asia senior consultant, Zhai Yu. “Spot coal purchases are currently limited,” Zhai Yu said. “However, once the ‘Golden Week’ holiday period is over [on February 22], thermal coal demand will rapidly return to normal, especially since gencos have very low inventories.”
Imposing a more stringent output cap on the Dutch Groningen field, Europe’s largest onshore gas reservoir, due to another earthquake in the area, would leave Europe dependent on importing more natural gas from Russia through the Nord Stream pipeline, Wood Mackenzie warns, saying “upside potential from Norway will be limited until 2019.”
China's proposed dual-credit scheme can reshape the electric vehicles (EV) market for a more sustainable development beyond the abolishment of subsidies in 2020, according to Wood Mackenzie. As growth accelerates, the EV penetration rate is projected to hit 17% in 2035.