Markets

The profit margin of gas-fired power plants in Germany has dropped to a 4-year low, as the clean spark spread for baseload 2013 delivery has plunged to minus Eur8/MWh at the end of last week. Utilities can only operate their gas plants profitably for generating power for higher priced peak load hours between 8am and 8pm local time.

The price advantage of US LNG exported to Europe over gas prices at the UK National Balancing Point (NBP) is seen to drop to "virtually nil" over the 2016-2020 period. The lack of a price discount means that "US LNG exports cannot directly displace gas into Europe, but could free up flexible LNG supplies which otherwise would have been imported into Asia," analyst Michael Lewis said in a report today.

French-Belgian utility GDF Suez is planning to mothball a total of 1.6 GW of fossil – mainly gas-fired – generation capacity in the period in this and the coming year, Jean Francois Cirelli, the company's vice chairman and president said.

India's power ministry has appointed an expert committee to investigate the reasons for the massive grid failure that affected 600 million people, nearly half of the country's total population on Tuesday, July 31, across all northern states. The new power minister, Veerappa Moily, who took charge late yesterday, declared that the grid is now functioning normally.

An unabated speed of the current switch from coal to gas generation in the U.S. would place at least 49 GW of coal-fired capacity at risk for retirement by 2020, according to the reference case in EIA's Annual Energy Outlook 2012 (AEO2012).

Texas-based Global Power Equipment Group has closed a $31.5 million deal to buy Koontz-Wagner Custom Controls Holdings ahead of schedule in a bit to strengthen its position as a leading manufacturer of natural gas turbine auxiliary equipment. The acquisition "marks the first of what we believe could be many more", said Global Power CEO Luis Manuel Ramírez.

Swedish state-owned energy group Vattenfall today said it expects demand and power prices to remain on low levels as it posted a 10 percent drop in second-quarter core earnings, dragged down by the lower prices.

US power plant owners and operators plan to retire almost 27 GW of coal-fired capacity between 2012 and 2016, shifting the energy balance further towards gas generation. Key drivers behind the rise in coal plant closures are the modest growth in US energy demand combined with a continuous drop in relative fuel prices of gas compared with coal, the EIA said in its Annual Electric Generator Report.

Natural gas is the energy source that most countries are shifting towards as it becomes "permanently cheap," the CEO of GE forecasts. "It's really a gas and wind world today," Jeff Immelt was reported as saying on Monday.

Germany's third largest utility EnBW today reported a 26.3% drop in revenue 1.97 billion euros for its power generation and trading segment in the first half of 2010. EnBW was hit by the forced shut-down of two nuclear reactors last year as part of the German nuclear phase out.

Electricity consumption in Germany has dropped 1.4% to 261.5 TWh in the first half of 2012, mainly due to reduced demand from power-intensive industries such as steel production, preliminary data published by energy industry association BDEW shows.

Electricity generated from UK gas-fired plants has plunged to its lowest level in 15 years in April as a result of high gas prices, the Department of Energy and Climate Change (Decc) said on Thursday. Gas demand for power generation decreased by 16.7 percent, reducing the share of gas in the UK's energy mix to 40 percent, down from 46 percent last year.

The European Commission today revealed further detail on three options for a set-aside of carbon allowances, which could lift the price of carbon by up to €6/ton, according to estimates of Thomson Reuters Point Carbon. Higher carbon prices would help lift the profit margin (spark spread) of gas-fired power plants.

The spot price of natural gas at the Tennessee Gas Pipeline (TGP) Zone 4 Marcellus trading point has fallen below the spot price at Henry Hub in Louisiana. TGP Zone 4 is currently the least expensive gas traded in North America, according to EIA figures.

Electricity produced from nuclear and fossil fuels in the U.S. will start to decline between 2020 and 2025, due to an expansion in renewable generation. "Natural gas represents the largest source of displaced generation," the U.S. Energy Information Administration (EIA) forecasts.