Markets

Investment in combined-cycle gas turbine (CCGTs) power plants in Germany are "highly problematic" as decreasing, even negative clean spark spreads resulting from reduced runtime hours have cut profit margins to zero". Unless capacity remuneration mechanisms are introduced, PricewaterhouseCoopers sees no market signals that could convince operators to build new plants.

During the first half of 2012, new gas-fired and renewable capacity has dominated power plant additions in the United States. As total of 165 new electric power plants were added in the 33 federal states, with combined new capacity of 8,098 megawatts (MW), according to the US Energy Information Administration (EIA).

Whether US operators choose to dispatch electric generators largely depends on system demand for electricity and the relative cost of operating the plant, a report by the US Energy Information Administration (EIA) shows.

Doosan Heavy Industries (Doosan HI) is considering local investment in India with the aim of better tapping into the country's rapidly growing power generation market.

Russian gas exports to Europe have dropped 14.5% to 32.8 Bcm in the second quarter of 2012 on reduced offtake volumes from Gazprom's continental European buyers who prefer coal over gas generation.

Germany's second-largest utility RWE on Tuesday announced it will cut more than 2,400 jobs as first-half year profit came in 'unchanged', while electricity sales fell 8 percent and gas sales dropped 11 percent. "The present framework conditions are anything but favourable", Peter Terium, RWE chief executive said when presenting the H1 results in Essen today.

As profitability at several of E.on's conventional gas- and coal-fired power plants across Europe is squeezed due to reduced operating hours and low power prices, E.on chief executive Johannes Teyssen said plant closures may have to be considered.

Average on-peak wholesale electricity prices in the US have plunged between 24% and 39% across major price hubs from January to June this year as natural gas prices fell to a 10-year low, according to EIA statistics.

German utility E.on today posted a Eur2.4 billion increase in its H1 earning to Eur6.7 billion, largely due to successful gas negotiations with suppliers.

Global Power Equipment Group said it "remains optimistic regarding future prospects for new natural gas-fired power generation projects", despite posting a drop in Q2 revenue to $94.7 million, down from $138.3 million due to shipment delays and reduced maintenance services.

Japan's high gas-to-power to backfill nuclear generation capacity will be a key driver to prolong the diversion of LNG cargoes from Europe to Asia until 2015, UK investment bank Barclays said in a research note.

Power generation companies have built fewer power plants in the US during the first six months of 2012. New-build capacity dropped by 927 MW as operators realised 54 plant units less than in the first half of 2011, according to the U.S. Federal Energy Regulatory Commission (FERC).

Spot-price elements in long-term gas purchase contracts (LTCs) are required for new gas power projects to ensure enough gas is supplied at a sufficiently low price. "Since the end of 2008, the price level of supply contracts for [gas fired power plants] has often been above the level required for a commercially attractive use in power generation," Uli Brunner, energy expert, PA Consulting Group told Gas to Power Journal.

German utility E.ON said today it expects its first-half underlying net income to be around EUR 3.3bn, more than trippling in value from EUR 0.9bn in the previous year.

The Indian state of Andhra Pradesh is facing further cuts in gas supply from the Reliance-operated Krishna-Godavari basin which will reduce gas-to-power generation by another 400-700 MW, exacerbating the energy shortage in the region.