High fuel prices and a cooling economy will lower China’s electricity hunger this year, partly reversing 2021’s staggering 10.3% growth. The Asian powerhouse consumed 8,312.8 TWh of electricity in 2021, National Energy Administration data shows and analysts expect electricity demand growth to slow to 4.5% for the years through 2024.

Spot LNG prices into northeast Asia have fallen nearly 30% after two of China’s state gas companies issued large LNG cargo sale tenders, indicating they are well-stocked amid sluggish demand. Sinopec offered 2-5 LNG cargoes each month between February and October delivered on an ex-ship basis, while CNOOC is selling cargoes for May through November.

Snow storms have made Japan’s utilities scramble to secure spot LNG as gas-burn for power generation rises to compensate for unplanned coal power outages. One utility buyer reportedly snapped up several spot LNG cargoes for February delivery – though the JKM spot LNG price, benchmark for cargoes to Northeast Asia, last traded as high as $18.945 per MMBtu.

Siemens Energy has reduced its target for fiscal 2022 as revenue from its gas and power segment fell 5.9% to €4.140 million and amid a profit warning from its Spanish wind power arm Gamesa. Management now expects FY2022 revenue to be in a range of 2% decline to 3% growth, compared with -1% to 3% in earlier guidance.

Electricity demand growth in China is forecast to exceed 8% in 2022, driving up global coal and LNG prices, which forces power generators to think twice whether to import natural gas or rather keep burning coal. Wood Mackenzie expects a “doubling of spend by Chinese NOCs in 2022,” up from its current US$4 billion guidance.

The International Energy Agency (IEA) was mistaken when stating in July 2021 that global demand for fossil fuel-based electricity peaked. On the contrary, coal- and gas-burn rebounded 9% and 2%, respectively, once lockdowns were lifted and analysts now say this trend will not change before 2024, when renewables could outpace fossil power additions.

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.

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.

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.

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.

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News in Brief

Oman inaugurates 500 MW solar plant

Jan 26 – ACWA Power has inaugurated Ibri 2, an $417 million solar power plant with a capacity of 500 MW. The large IPP will sell solar power to Oman’s national grid over a 15-year period, backed up by flexible gas power plants.

GenCell raises funds

Jan 24 – Israel-based fuel cell maker GenCell Energy has raised $35.9 million in its latest funding round. CEO Rami Reshef said the fresh capital will accelerate developments in the field of green ammonia, pursued with TDK, as well as charging stations for electric vehicles.

German utilities invest record amounts

Jan 21 – Energy companies in Germany invested a record €20.5 billion in 2021, and the industry association BDEW expects capital expenditure will stay high throughout 2022. Out of the total sum, €4.3 billion were invested in electricity generation plants, €9.9 billion in transmission and distribution plants and €1.2 billion in other assets, such as metering points and information technology.

H2-powered plant for French Guiana

Jan 20 – 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.

Decarbonising UK homes

Jan 19 – Just 9 million hot water cylinders are currently installed in British homes, leaving a gap of 18 million homes whose heating would need to be decarbonised for the UK to meet Net Zero. According to the trade body HWA, the political focus of decarbonising heating has been solely on the heat source; such as boilers and heat pumps – while little to no focus has been on hot water cylinder. This gap in in government policy, which could result in unnecessary costs to consumers.

Cresta to fund Lapis Energy’s CCS projects

Jan 18 – Texas-based Cresta Fund Management has agreed to finance Lapis Energy’s CCS and clean hydrogen projects. The two partners are now looking to identify, design and develop projects for the permanent sequestration of CO2, targeting customers within the heavy industry and petrochemical companies.

GE to repower Long Lake plant

Jan 17 – GE will modernize four generors at the Long Lake hydropower plant in northwest US, operated by Avista Utilities. Once refurbished, the plant will have an installed capacity of more than 100 MW. The first modernized Long Lake unit is scheduled to go into operation at the end of 2024 and the last one in 2029

mtu to power Romania’s largest data center

Jan 14 – mtu Series 4000 gas generators will provide electricity heat and cooling for Romania’s largest data center. ClusterPower is building a 273,000-squaremetre technology campus near Craiova by 2025, where it will host five data centers with a Power Usage Effectiveness (PUE) of 1.1

Green hydrogen from Quebec

Jan 13 – Charbone has agreed to provide the US propane distributer Superior with green hydrogen from its Sorel-Tracy facility in Quebec, Canada, starting from the third quarter of 2022. The hydrogen will be delivered directly from Charbone’s H2 plant to Superior’s customers which include mining, power generation, transportation and industrial energy users. 

Cresta to fund Lapis Energy’s CCS projects

Jan 12 – Texas-based Cresta Fund Management has agreed to finance Lapis Energy’s CCS and clean hydrogen projects. The two partners are now looking to identify, design and develop project for the permanent sequestration of CO2, targeting customers within the heavy industry and petrochemical companies.

US rivals Australia as world’s largest LNG exporter

Jan 11 – Analysts at the US Energy Information Administration (EIA) are confident that the growth in US LNG exports could see America’s liquefaction and send-out capacity exceed that of Australia and Qatar – the world’s two largest LNG exporters. Looking ahead, the EIA expects US exports of the super-chilled gas will rise 17% from 2021 levels to average 11.1 Bcf/d from December through March.

Africa’s first FLNG plant arrives in Mozambique

Jan 10 – Coral Sul FLNG, Africa’s first-ever floating LNG facility has arrived in Mozambican waters. The plant is critical to develop the US$7 billion Coral South project, led by the Italian oil and gas company Eni. Some of the produced gas will be used for power generation in Mozambique, though most will be liquefied and sold to global markets.

GE snaps up Opus One Solutions

Dec 23 – GE Digital has agreed to acquire Opus One Solutions Energy Corp, a Californian software company that helps utilities integrate renewables and Distributed Energy Resources (DERs) at scale across the electric grid. The transaction is expected to close within 30 days, GE stated without disclosing what price was paid for the takeover.

Qatar invests in Rolls-Royce’s nuclear power business

Dec 22 – Qatar Investment Authority, the state’s sovereign wealth fund, has agreed to invest £85 million in Rolls-Royce SMR, the company’s new technology for small-scale, low carbon nuclear power. UK business and energy secretary Kwasi Kwarteng called the investment a “clear vote of confidence” in the UK’s nuclear innovation. It follows £210 million Qatari investment in the development in Small Modular Reactors. Now fully funded, Rolls-Royce SMR business also received £490 million through commercial equity and UK Research and Innovation (UKRI) grant funding. 

JERA helps Japanese film producer curb emissions

Dec 20 – Toho, a Japanese film producer and entertainment company, will get support from the country’s largest power producer JERA to reduce CO2 emission from film production. To that end, JERA will supply zero-emissions energy to Toho and draw up a roadmap to decarbonise the media company as a whole.

Tractebel develop concept to store H2 offshore

Dec 17 – Tractebel Overdick and partners have developed an offshore infrastructure and processing facilities concept that relies on the storage of hydrogen (H2) in offshore caverns. The design study outlines a scalable offshore platform for the compression and storage of up to 1.2 million cubic meters of hydrogen.

Ethatec uses CO2-free power to produce ethanol

Dec 15 – ESG Clean Energy has signed a letter of intent (LOI) with Ethatec to use ESG’s patented CO2-free gensets to its ethanol production. Ethatec uses waste from bakeries and pizza factories which is being crushed and then mixed with water and enzymes and heated in a multi-stage mashing process to saccharify the starch. It is then cooled and fed into fermentation tanks, where yeast is added. for alcoholic fermentation of the sugar. After 72 hours, the mixture is fed to a distillation system where ethanol is obtained.