Markets

The first LNG cargo from the Magnolia LNG project in Louisiana, U.S., is scheduled to arrive in May, or early June, at the $4 billion LNG-to-Power project in Bac Lieu in southern Vietnam. Singapore-based Delta Offshore Energy in late January was handed an investment permit to develop a 3,200 MW combined-cycle power plant with adjacent regas terminal.

Europe’s largest coal-fired power plant Drax has decided to stop burning coal at the Selby site as of March 2021, well in advance of the UK’s 2024 deadline. The operator said coal generation has been “challenging” amid falling power prices and rising fuel competition from cheap natural gas.

With U.S. election looming large in November, analysts say it is unlikely that President Trump will facilitate real breakthroughs on trade with China. Russia’s Gazprom might turn out to be the ‘laughing third’ as it ramps up deliveries to China through the 38 Bcm/y Power of Siberia pipeline.

Summer spot gas prices at the Dutch TTF trading hub are likely to plunge towards €9/MWh as the coronavirus outbreak in China effectively keeps displacing LNG cargoes to Europe. At these record low fuel prices, gas power plants with just 57 percent efficiency would be “in the money” for peakload power generation in most of 2020.

Abundant production and mild temperatures has left working gas in storage in the  Lower 48 states at 12 percent higher levels at the end of the winter heating season than the previous five-year average. Some 1,935 billion cubic feet (Bcf) of gas are forecast to remain in storage at the end of March, despite rampant pipeline gas sales to Mexico and LNG exports.

Though Chinese workers have returned to factories of Airbus, General Motors and Toyota in recent days, many remain shuttered due to coronavirus quarantine measures. The recovery of Chinese gas demand is likely to stay subdued well into March, Energy Aspects says, forecasting a drop in LNG offtake volumes at least until early April.

The OPEC+ alliance, dominated by Saudi Arabia and Russia, is reacting to the global coronavirus spread by considering additional cuts to oil and associated gas production. As an emergency measure, crude oil output could be cut by 0.6 million barrels per day (mb/d) on top of the 1.7 mb/d already pledged, in a bid to stabilize prices.

Energy intensity keeps falling in the United States, with the Government forecasting energy consumption will grow more slowly than gross domestic product (GDP) through 2050. In the AEO2020 High Economic Growth Case, more effective energy use of U.S. industry is set to lower energy intensity by 1.6 percent annually.

Asian markets will be able to absorb most of the global gas and LNG supply growth from the mid-2020s, as new supply slows from 30 million tons of new liquefaction capacity last year to less than 20 mtpa by 2025, Royal Dutch Shell said. Europe will hence cease to be a balancing market.

Gazprom’s latest international gas marketing strategy is refocusing the company’s remit on growth in Asia. Having just started pipeline gas deliveries to China, the Russian gas giant seeks to scale up LNG supplies to Asia-Pacific while trying to maintain its strong position in Europe.

The International Energy Agency (IEA) has urged German policy makers to promote the development of hydrogen technology and start importing LNG to advance its energy transition. The IEA lauded Germany’s “extraordinary progress with renewables,” but noted the “nuclear phase-out as well as higher electricity exports have offset some of the emissions benefits."

Not much unabated gas (without CCS) will be burnt in the European Union after 2040, as industry and transport sectors will be electrified to comply with low-carbon regulations, Energy Aspects finds. While Europe seeks to boost electricity in end-use sectors to 27 percent, and ultimately 30 percent, China and India just started on their electrification journey.

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News in Brief

EPRI tests early warning system

July 6– The Electric Power Research Institute (EPRI) is conducting trial tests with multiple utilities across the United States of an early warning system. It can detect an off-gassing event as a precursor to thermal runaway up to 30 minutes prior to a cascading failure. This gives plant operators time to mitigate the problem or shut down the system.

KKR buys stake in First Gen

July 3 – Valorous Asia Holdings, owned by KKR investment funds, has bought a 11.9% stake in First Gen through a voluntary tender offer. First Gen, one of the Philippines’ largest independent power producers with 3,492 MW installed capacity, is owned by First Philippine Holdings which is controlled by the Lopez family. KKR’s acquisition of the First Gen stake is worth nearly $192.3 million.

Gazprom’s ‘BBB’ rating affirmed

July 2 – S&P Global Ratings, Moody's Investors Service and Fitch Ratings have affirmed Gazprom's long-term credit ratings as part of their annual reviews. The ‘BBB’ ratings for Gazprom from S&P and Fitch are in line with the sovereign credit rating of the Russian Federation, while Moody's ‘Baa2’ rating is a notch higher.

MHIEC to refurbish WtE plant in Kushiro

July 1 – Mitsubishi Heavy Industries Environmental & Chemical Engineering Co (MHIEC) has received an order from the Kushiro Wide-Area Federation to repair and improve the core equipment at the local Waste-to-Energy plant in Takayama. The WtE plant has a capacity of 240 tonnes per day (tpd). Renovation will increase the energy efficiency of the fluidized bed type gasification and ash melting furnace facility, reducing emissions by around 15% annually. Works are due completed in September 2023.

Nigeria: Only two of six power projects on target

June 30 – Nigeria’s Bureau of Public Enterprises has disclosed that only two out of six privatized power plants were delivered on target. Only Transcorp Power Ltd and Geregu Power Ltd out of the six privatised electricity generation companies (GENCOs) were said to have met their performance targets since taking over.

German investors prefer solar over wind

June 29 – Energy infrastructure investors are keen to build solar power projects in Germany, but shun wind parks. In the latest solar power auction, investors offered to build almost 450 MW of capacity – more than four times the 96 MW of volume on offer– with the average successful bid at 5.27 cents per kilowatt-hour (ct/kWh). The wind auction, in contrast, was undersubscribed: The German network agency  (BNetzA) tendered around 826 MW, but successful bids only totalled 464 MW, at an average price of 6.14 ct/KWh.

MAN ventures into synthetic fuels

June 26 – MAN Energy Solutions has entered the hydrogen economy with the recent pro rata acquisition of H-TEC SYSTEMS, an electrolysis tech firm. The German OEM also committed itself to upgrading its gas turbines to run on 100% hydrogen by 2030.

Varegro starts using Cummins gas genset

June 25 – Belgian-based horticultural company Varegro, has started to use a Cummins HSK78G gas generator to power its greenhouses in Oostrozebeke, West Flanders. Varegro said it selected the Cummins HSK78G genset to produce combined heat and power (CHP) on its premises at a competitive cost for use in energy-intensive greenhouse facilities.

GE names Deloitte as independent auditor

June 24 – GE’s audit committee has selected Deloitte as the company’s independent auditor for the 2021 fiscal year, replacing KPMG. The selection of Deloitte concludes GE’s latest audit tender process.

Northern German states push for hydrogen pilot cluster

June 23 – Northern German states are pushing for greater hydrogen use with a pilot project cluster. Some 12 large demonstration plants for the production and use of green hydrogen are meant to be realised in Hamburg, Schleswig-Holstein and Mecklenburg-Western Pomerania. The aim is to demonstrate how 75% of CO2 emissions can be saved in the region by 2035.

Wärtsilä to design and equip battery-powered ferries

June 22– The Finish engine maker Wärtsilä has been awarded a contract to design and equip two new zero-emissions ferries on behalf of the Norwegian operator Boreal Sjö. For each ferry Wärtsilä will supply the thruster motors, batteries, onboard and shore-based battery charging equipment, the back-up generators, and various electrical systems. The equipment is scheduled for delivery to the yard in early 2021 for the ships to start commercial operations in autumn 2021.

Subsidy cut slashes Chinese wind turbine margins

June 19 – China’s wind turbine original equipment manufacturers (OEMs) could have their gross profit margins halved due to subsidy cuts, Wood Mackenzie forecasts. Commissioned onshore wind power capacity is expected to drop by more than 16% to 19 gigawatts (GW) from 2020 to 2021 as government subsidies were terminated. This could also lead to a 27% drop in turbine prices over the next five years, slashing OEMs’ gross profit margins by half.

PowerPHASE converts gas peakers into storage engine

June 18 – U.S. emergency power provider PowerPHASE has developed an upgrade to convert 7F gas turbine-based peaking plants (350 MW each) to a so-called Storage Engine (400 MW). The unit would be able to store 3500 MWh daily and discharge 4800 MWh daily. CEO Bob Kraft claims utility customers could dispatch the Storage Engine, despite its lower heat rate (4000), ahead of higher heat rate options (9000 for gas peakers) in a competitive market like ERCOT in Texas.

Cummins names Davis head of New Power unit

June 17 – Cummins has appointed Amy Davis as Vice President and President of the company’s New Power Segment, effective July 1. The new unit includes Cummins’ electrified powertrains, battery design and assembly, battery management, fuel cell and hydrogen generation.

GE powers USS Zumwalt

June 16 – The US Navy has taken delivery of the USS Zumwalt, its first full-electric power and propulsion ship, equipped by GE’s Power Conversion. The ship features a high-voltage system, propulsion drive trains with multi-phase VDM25000 power converters and advanced induction motors. Kevin Byrne, head of GE’s North America marine segment said “the full-electric power and propulsion ship has the flexibility to direct energy where it is needed on the platform.”

New England power prices down 40%

June 15 – Spot electricity prices in New England (NE) has fallen since winter 2019/20 when it stood at an average $28/MWh, down 40% from an average $47/MWh in the previous winter. Low natural gas prices, warmer-than-normal temperatures, lower loads, and reduced needs to run expensive peakload generators were the cause for the substantial drop in NE’s winter electricity prices, the U.S. Energy Information Administration (EIA) finds.

Calpine closes $1.1bn in financing for Geysers Power

June 12 – Calpine Corp has closed $1.1 billion Climate Bonds Certified financing for its subsidiary, Geysers Power, the largest complex of geothermal power plants in the U.S. Geyers will use the proceeds to repay some debt it owes to Calpine and to fund ongoing operations and maintenance.