Markets

Meeting Asia-Pacific's energy needs will require investments of $11.7 trillion through 2035 in a business-as usual scenario, but may swell to about $19.9 trillion under an alternative approach with deployment of more costly super-critical coal- and efficient gas-fired generation technology and higher renewable penetration, a report launched by the Asian Development Bank (ADB) shows.

China is at the beginning of its shale gas journey. Though unconventional resources rival the ones in the US, break-even cost for shale gas fracking in China at $8/MMBtu makes it unattractive for developers, according to William Durbin, president of global markets research at Wood Mackenzie.

Composing energy futures to 2050, the World Energy Council (WEC) is contrasting a market-liberal 'Jazz' and government-interventionist 'Symphony' scenario to portray pertinent alternatives for the future fuel and technology mix of power generation, capacity expansion plans and emission levels. The 'large turning radius' of the global energy system will likely delay substantial changes to the fuel mix in power generation and renewable deployment until 2050 (see graph).

'Securing Tomorrow's Energy Today' is the theme of the 22nd World Energy Congress whose portals will swing open in Daegu, Korea, on Monday to host delegations from some 140 countries. The resurgence of coal demand in fast-growing Asian economics, the impact of US gas exports on global LNG trade flows and gas pricing, post-Fukushima nuclear challenges and the transitioning towards clean energies are some of the key topics of 272 confirmed speakers.

Demand for natural gas in Mexico, both from power producers and industries, outpaces supply and spurs pipeline gas and LNG imports predominantely from the US. The government is advancing structural reforms of the energy sector, aimed at increasing foreign investment in the upstream and downstream gas sectors to reduce the dominance of state-controlled Pemex.
"There is a long way to go [for the reforms] and we will likely see some of the more ambitious plans watered down but the outlook is positive for natural gas in Mexico," Patricia Garip, South America analyst at Argus told Gas to Power Journal.

Dismissing SSE's claim that its 8.2% hike in gas and power prices comes in response to "government-imposed levies collected through energy bills," the UK energy secretary Ed Davey stressed wholesale price rises had "contributed more than policy costs to this price increase" adding that "half of an average energy bill is made up of the wholesale cost of energy."

US gas prices will see a steady long-term rise from current low levels but healthy storage levels will help reduce the risk of sudden price spikes, the winter fuel outlook of the US Energy Information Administration (EIA) reads. New England is seen as an exception due to pipeline constraints which could propel up prices in the event of a cold spell this winter.

In a mammoth effort to curb air pollution, the Chinese capital of Beijing is freeing up investment of Yuan 47.7 billion ($7.8) to replace its entire coal-fired power generation capacity with gas-fired plants by the end of next year.

Siemens and Wood Group have announced plans to form a $1bn joint venture (JV) to provide integrated turbine services. The JV will be majority owned by Wood Group (51%) with the remaining stake owned by Siemens (49%).

Gas-fired power plants in Japan are operating at maximum rates as gas burn was already close to 83% utilization before the shutdown of the island nation's sole operating nuclear reactor in mid-September, according to Bentek estimates. Scope to raise LNG imports any further is however limited from October onwards due to bottlenecks at both receiving terminals, so coal- and oil-fired plants will have to fill the vacuum.

Forward fuel prices for winter 2013/14 predicted by the UK's gas and power TSO National Grid strongly favour coal burn over gas. The spark spread versus clean dark spread shows that coal is a clear winner for profitability, with a continued difference of over £10/MWh in favour of coal. For gas and coal to be equitable the gas price needs to fall by about 40% or around 30p/therm, alternatively coal prices would need to see a near doubling and increase by about $80/tonne.

The Kenyan Ministry of Energy and Petroleum has invited bids for a 700-megawatt gas-fired power plant near Mombasa, that is expandable to 800MW, in an effort to dent demand and avert the risk of power shortages.

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News in Brief

Wärtsilä to retrofit CHP in Spain

May 26 – The Finish engine maker Wärtsilä has bagged an order to supply and install a 34SG gas-fuelled engine generating set for Rofeica Energia's combined heat and power plant in Barcelona, Spain. The installation of the gas engine will allow Rofeica to switch the CHP from heavy fuel oil to gas-fuelled operation, reducing emissions.

New York body rejects William’s plans for gas pipeline expansion

May 21 – New York’s and New Jersey’s state bodies for environmental conservation have rejected Williams’ plans for the Northeast Supply Enhancement project, designed to transport 400 million cubic feet per day of gas from Pennsylvania to New York. The state bodies had already denied wetland permits in 2019, but Williams pipeline subsidiary Transco filed another application with the U.S. Federal Energy Regulatory Commission (FERC), arguing firm services under the project were agreed with UK’s National Grid for customers in New York City districts of Brooklyn, Queens, Staten Island and Long Island.

UK inflation at 4-year low amid falling energy costs

May 20 – The rate of inflation in the UK has fallen to a four-year low as the pandemic pushed down global oil and fuel prices which translate into lower wholesale power prices. The consumer price index fell to an annual rate of 0.8% in April, down from 1.5% in March, according to the Office for National Statistics.

Deficit grows in German green energy fund

May 19 – German regional grid operator TransnetBW has warned of a growing shortfall in the country’s fund for green energy sources, financed under the so-called renewable energy (EEG) levy. TransnetBW, the TSO in southwest Germany, said “due to the EEG cost allocations defined for 2020, we anticipate there will be a negative year end bank account balance in the high three-digit million euro range for 2020.”

Spanish gas companies ‘resilient’

May 18 – Spain’s regulated gas companies “should prove to be resilient” to external shocks arising from coronavirus containment measures, Standard & Poor’s analysis finds, calculating with an average drop in EBITBA at less than 3% in 2020. A new remuneration framework for 2021-2026, recently enacted by the Spanish government, provides enhanced visibility rated grid operators amid the pandemic.

German electricity prices second highest in EU

May 15 – Taxes and the renewable energy surcharge have pushed up Germany’s household electricity prices to the second highest level in Europe, topped only by prices in Denmark. While Danish households paid 29.2 Euros per 100 kWh on average in the second half of 2019, prices in Germany averaged 28.7 Euros, according to the EU statistics office Eurostat.

Calpine’s Q1 earnings fall

May 14 – Calpine, America’s largest generator of electricity from gas and geothermal, has reported a net income of $128 million for the first quarter of 2020, down from $175 million in the prior year period. Lower commodity margins and unfavourable change in income taxes were partially offset by earnings from hedge positions for the three month ending March 31.

Siemens to supply hybrid plant in the Philippines

May 13 – Berkley Energy has contracted Siemens Energy to build a hybrid power project on the island of Mindoro in the Philippines. The project links 16 MW wind power with battery storage, stabilizing energy supply in a remote location with a weak link to the grid and reducing its dependence on diesel.

U.S. energy emissions fall

May 12 – Energy-related carbon emissions in the United States have fallen more than energy consumption, down 2.8% over the course of last year to 5,130 million metric tons (MMmt). Power sector emissions were down 145 MMmt, due to a switch from coal to gas and renewables. In April 2020, emissions experienced another unprecedented fall in due to Covid-19 lockdowns.

MAN expands Omincare concept

March 11 – MAN Energy Solutions’ service brand has extended its ‘PrimeServ Omnicare’ concept from turbomachinery to the marine and power segments. The one-stop service solution is now also applicable for maintenance of third-party machinery, including engines, turbochargers and related auxiliaries.

MIVOLT launches cooling fluid

May 7 – MIVOLT, part of the British company M&I Materials, has launched two specialist fluids to improve cooling efficiency at data centres. The electricity demand of data centres is forecast to rise to 20% of global supply to accommodate lifestyle changes like 5G internet network, autonomous vehicles and bitcoin mining.

Germany adds 1,300 km to power grid

May 6 – Germany has made progress in expanding its strained power grid. According to the Federal Network Agency (BNetzA), over 1,300 kilometres of new power transmission lines have been built and another 830km approved. A further 3,600km are planned to be built by 2030 to alleviate grid bottlenecks and allow transporting rising volumes of offshore wind southbound.

 

 

 

Oman nationalizes first IPP

May 5 – Manah Power, the first privately-run Independent Power Project (IPP) in Oman, has been transferred to state ownership, following the expiry of a Power Purchase Agreement (PPA) between United Power Company and state-owned OPWP. Manah IPP was developed under Build-Own-Operate-Transfer (BOOT) model, which stipulates an eventual nationalization of the assets – a feature absent in subsequent IPPs.

U.S inventories at record highs

May 4 – Inventories for crude oil and natural gas have reached a new record high in the United States, as fuel demand declines both for transport and the electric power sector. From March 13 – when a national emergency was declared due to the Covid-19 pandemic – to April 24, U.S. commercial crude oil inventories increased by 74 million barrels, or 16%, according to government figures. The acute scarcity of crude storage on April 20 led to a sell-off of future contracts at negative prices.

Wärtsilä to service Argentinean power plant

May 1 – Wärtsilä has signed a 10-year maintenance and service agreement with one of Argentina’s upstream companies. Under the deal, Wärtsilä provides a guaranteed performance for a 57.6 MW onsite power plant in the southern part of Argentina, with excess power sold to the national grid.

Zink-Air batteries for NY

April 30 – Zinc8 Energy Solutions has entered a cooperation with the New York Power Authority (NYPA) to install a zinc-air battery energy storage, backed by $2.55 million in state funding over a three year period. The Zinc8 ESS units can deliver power in the range 20-50 MW, with capacity of 8 hours of storage duration. The project will help New York State achieve its goal of installing 3 GW of energy storage by 2030.

UK again ‘coal-free’

April 29 – The UK continues to break its coal-free record as thermal coal-fired power plants currently remain off the system, according to National Grid data. Faltering demand due to the pandemic and high renewable energy supply radically altered the energy mix in many developed countries, with power in-feed from solar PV reaching 10 GW in Britain at the start of this week. “Coal is due off the system by 2025 and renewables have shown they are cost competitive with a viable route to market,” Delta-EE director Andy Bradley commented.