Markets

Natural gas will surpass oil and coal as the primary fossil fuel consumed by industries and power producers around 2030, provided and expansion of pipeline, storage and a virtual LNG pipeline to allow for more decentralised gas-fired generation, forecast Steve Bolze, GE president and CEO.

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.

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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.