2019 could be a “year of incongruity,” Energy Aspects says, pointing to a rush of supply FID for gas liquefaction and export terminals happening against a backdrop of a market in oversupply. Analysts expect four new LNG Trains to start up or ramp up in Q1-2019, and considering the mild Asian winter, this leaves some 5.7 Bcm y/y of incremental supply available for the European market that quarter.
South Australia’s large-scale Hornsdale battery (100 MW) has helped save nearly $40 million in grid stabilization costs in its first year running, but the success of energy storage undermines the role of gas peaking plants. Flexible combined-cycle plants get dispatched less, also due to higher gas prices, leaving some at risk of mothballing.
As the global sentiment turns against coal, the Institute of Energy Economics Japan (IEE Japan) has modelled a case in which all new coal-fired power plant projects would be banned from 2020. If natural gas was to replace coal in the energy sector, global primary gas consumption would surge by 1.3 trillion cubic metres (Tcm) to reach 7.3 Tcm in 2050.
Demand for LNG in Japan is anticipated to fall for the third year in a row as the renewable energy build-out accelerates and nuclear reactors restart gradually. According to the Institute of Energy Economics Japan (IEE Japan) LNG supplies will ease from 82.3 mt in fiscal 2018, down 0.3% to 82 million ton in fiscal 2019, which starts on April 1.
Growth prospects for gas-distribution utilities are at risk in several American states, as decarbonization policies on state level and rising cost-competitiveness of renewables undermine the role of gas. According to McKinsey analysis, this could pose a challenge to gas distributors in some states as early as 2026, and in most of them by 2030.
Power producers in Europe, as well as parts of the U.S. and Australia, have been feeling the pinch due to a decline in wholesale energy prices brought about by stagnant demand, low gas prices and higher output of generation with low marginal costs, notably renewables. New-builds are no longer profitable which puts reserve margins at risk, hence the International Energy Agency (IEA) calls for a re-design of competitive power markets.
Mitsubishi Hitachi Power Systems (MHPS) chief executive Kenji Ando has used his New Year address to warn of a difficult business environment in 2019, with “turbid conditions” in the thermal power generation sector. “Our competitors are also seeing sharp declines in business results,” he said, stressing MHPS will forge ahead with business restructuring.
The spread in natural gas spot prices between the Henry Hub in Louisiana and the Appalachian region continued to narrow over the year just past. Prices fell at Henry Hub throughout December, and as of January 2, 2019, they were at around $2.79/mmBtu while Appalachian prices kept trading at a discount due to pipeline constraints.