US State Department officials have asked European utilities where they would source natural gas from if the escalating conflict between Russia and Ukraine impairs supplies. Gazprom already reduced deliveries since the autumn, creating artificial tightness, but the US promises to ship LNG if contracted Russian gas flows get halted due to conflict or sanctions.
China may triple electricity generation to cover 60%, instead of currently 23% of total energy demand to reach Net Zero by 2060, Royal Dutch Shell reckons. The oil major also predicts green hydrogen to play a key part in China’s future energy mix as the country’s carbon price will quadruple to 1,300 yuan ($204.82) per tonne in 2060.
The International Energy Agency (IEA) has dismissed rumours that Europe’s high gas and electricity prices are caused by the clean energy transition. “This is not a renewables crisis; it’s a gas market crisis,” IEA head Fatih Birol said, pointing out Gazprom lowered export to Europa by 25% since November 2021 and currently delivers one-third less than it could.
Switching to synthetic e-fuels – like carbon-neutral methanol or bio-ethanol – will not be a solution to decarbonise transport in Germany, simply because not enough e-fuel is available. “We will predominantly need e-fuels for aviation,” the transport minister Volker Wissing said, suggesting the public can drive in a carbon-neutral way using e-mobility.
The EU taxonomy’s classifies new gas power as ‘transitional investment’ if the rate of unabated gas declines over time. At least 30% of low-carbon gas needs to be co-fired by 2026, and the rate is envisaged to reach 100% by 2035 – though utilities will struggle to source enough hydrogen in time.
Tapping the power of the sun, Siemens Energy will set up a hybrid plant to supply stable baseload electricity to 10,000 households in French Guiana. An intelligent combination of 55 MW photovoltaics, an electrolyser to produce green hydrogen, fuel cells and energy storage is scheduled to be commissioned in the autumn of 2023.
Remote telemetry units (RTUs) monitor the grid-connection of conventional 1 GW power stations, but these RTUs need to get smaller to control the vast range of renewable options like solar, biomass and wind that are measured in kilowatts. On-site, the RTU fine-tunes the plant’s operation in coordination with the local TSO and relays information to the asset owner.
Concerns about exposure to Russia push gas buyers towards LNG contracting. “Both oil- and Henry Hub-indexed longterm LNG contracts will trade at a considerable discount to local spot prices through to 2025/6,” Wood Mackenzie reckons, though utility companies need to commit to longer duration contracts to take advantage of the current spot price premium.
Concerned about an excessive onshore wind buildout, Germany’s biggest TSO TenneT underlined the vital role of new hydrogen-ready gas power plants. “If we want to exit coal already by 2030 already, the economy ministry needs to honour his commitment to H2-ready power. TSOs need stable capacity to balance the grid,” says TenneT COO, Tim Meyerjürgens.
Classifying unabated gas-fired power plants as “transitional investments” – as in the EU taxonomy proposal – attracts financial and utility investors. As it stands, both will be able to increase their corporate “green scoring” by investing in gas, including outside Europe. The CO2 cap for new power plants build by 2030, meanwhile, paves the road for hydrogen co-firing.
With over 124 GW of coal, gas and nuclear capacity to be displaced in Europe by 2030, investment in new solar combined with energy storage is set to surge. The rising diversification of asset ownership in distributed energy storage could unlock a 40-GWh market, with some analysts anticipating 12x market growth in this decade.
Capturing carbon emissions directly from the air requires a lot of electricity, hence the German government prioritises the renewable build-out. “Carbon Capture and Utilisation (CCU) with direct air capture should only be used once renewables have reached a share of more than 80% of power supply,” analysts at the Federal Environment Agency (UBA) stressed.
Coal has staged a surprise return in the global power gen market in the face of sky-high LNG prices, but this phenomenon will be short-lived, the International Energy Agency (IEA) says. Most of the recent switching from gas back to coal will reverse as gas prices retreat from early 2022 highs.
Brussel has given EU member states time until January 21 to react to the contested Taxonomy, which labels fresh investment into gas and nuclear power as “climate friendly.” The scheme can only be stopped if at least 20 EU countries oppose it, which is unlikely as France and Poland want new small-scale nuclear reactors and Germany more flexible gas generation.