Markets

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. 

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.

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News in Brief

SPIG wins contract for Al Dur Phase II

Sept 23 – Italy-based SPIG, part of Babcock & Wilcox Enterprises, has won a contract to provide seawater cooling tower system to SEPCOIII for the Al Dur Phase II project in Bahrain. The Al Dur Phase II is a combined-cycle gas-turbine plant to generate 1,500 MW of electricity and approximately 50 million gallons fresh water per day.

MHI-MME to take over turbocharger production

Sept 20 – Mitsubishi Hitachi Power Systems will no longer produce MET turbochargers, the standard worldwide exhaust gas turbochargers used in stationary engines. Starting from January 1, 2020, these devises will be produced by Mitsubishi Heavy Industries Marine Machinery & Equipment (MHI-MME) instead.

Japan starts electricity futures trading

Sept 19 – Tokyo Commodity Exchange (TOCOM) has launched trading in electricity futures to advance price competition in Japan’s liberalized energy market. The East Area peakload electricity contract for October delivery first traded at 10.9 Yen per kWh, lower than the standard price of 11 Yen set by TOCOM in advance.

Duke to reduce rates in 2020

Sept 18 – Duke Energy Florida (DEF) customers will see lower bills in 2020. The utility filed a proposal with the Florida Public Service Commission to reduce rates for electricity and gas by more than 3% while adding more solar power and making grid improvements.

Myanmar approves three power projects

Sept 17 – Myanmar’s Ministry of Electricity and Energy has given the green light to plans for a 1,230 MW gas-fired power plant in Kanpauk, Taninthayi region, a 377 MW gas-fired unit in Ahlon, Yangon region and a 1,390 MW thermal plant in Milaunggyine in Ayeyawady region. The conflict-ridden country is currently producing electricity from 5,600 MW installed capacity, derived both from state- private-owned power stations.

Bonny Train-7 to cost $6.5bn

Sept 16 – Nigeria LNG is preparing to add a seventh processing train to Bonny LNG, bringing total capacity from 22 million tons per annum (mtpa) to 30 mtpa. Estimated to cost $6.5 billion, Bonny Train-6 will include a new liquefaction unit, a storage and a condensate tank as well as three gas turbine generators.

Schneider to complete L&T takeover by early 2020

Sept 13 – Venturing into India, Schneider Electric hopes to finalise the Rs 14,000 crore acquisition of Larsen & Toubro's electrical and automation business by early 2020. After the transaction is completed, Schneider will have a 65% stake in L&T, while the remainder will be held by Temasek.

MHI to advice China on energy conservation

Sept 12 – Mitsubishi Heavy Industries Thermal Systems, part of MHI, has set up a joint venture withan affiliate of State Grid Corporation of China (SGCC) to perform technical consulting for energy conservation projects in China. The focus of SGCC lies on building new decentralized power stations, biomass-derived power gensets and energy saving solutions.

Tender extended

Sept 11 – Turkmengas has extended a tender for the overhaul of the gas turbine engines of the NK-12ST and NK-14ST brands. Bidders need to pay to receive the tender documents, and then submit a written application to Turkmenistan’s state gas company.

Gas power units to buffer Germany’s coal exit

Sept 10 – Electricity output of Germany’s fleet of gas-fired power plants has risen to a over 13,5 billion kilowatt-hours in the three months from June to August, Fraunhofer ISE figures show. These productivity gains put CCGTs in pole position to balance supply swings in connection with the German coal exit.

Power of Siberia gas flows to start on Dec 1

Sept 9 – Russian gas supplies to China via the eastern route are going to start on December 1, 2019, Gazprom chairman Alexey Miller told his counterpart at CNPC in Beijing. The huge Chayandinskoye field, containing some 1.2 trillion cbm of gas, had already been connected to the 38 Bcm per year ‘Power of Siberia’ gas pipeline in August.

Hurricane Dorian causes havoc in the Bahamas

Sept 6 – In the aftermath of Hurricane Doran, a Category 5 storm, Bahamas Power and Light has said there is a total blackout in New Providence, the most populous island of the archipelago. Dorian made landfall twice on Sunday, ripping off roofs and electricity lines. In most parts, electricity has not been restored.

LNG cargoes via Bab-el Mandeb decrease

Aug 30 – Northbound LNG shipments via Bab el-Mandeb, a sea route chokepoint between the Horn of Africa and the Middle East, have fallen over the past three years as Egypt imports less natural gas from the Persian Gulf. In 2015 and 2016, both Jordan and Egypt imported up to 1.4 Bcf/d of LNG into Red Sea ports but these shipments fell sharply following the development of large gas finds in the Mediterranean.

Hokuriku Electric buys LNG cargo

Aug 29 – Japanese utility Hokuriku Electric has purchased an LNG cargo for delivery in November as soaring temperatures drew down gas in storage for the autumn. The cargo is understood to be scheduled for delivery in the second half of November from Malaysia’s Petronas and may well be destined for Hokuriku Electric’s first LNG-fired power generation unit,  the Toyama Shinko plant.

Technip spins off LNG activities

Aug 28 – TechnipFMC, has decided to spin off its European-based engineering and construction operations into a separate business, leaving the American half of the firm as an equipment supplier to the oil and gas sector. The split is due to be completed in the first half of 2020.

FLNG power market to top $930m by 2023

Aug 27 – The global market for floating LNG power vessel is projected to reach $ 931.6 million by 2023, up from $ 860.1 million seen last year, according to ReportsnReports. Major vendors of FLNG power vessels are Siemens, MAN, Wärtsilä, Caterpilar and GE which are targeting to use the technology to supply decentralized power to island nations in Southeast Asia and along the coast of sub-Saharan Africa and the Americas.

EIA monitors grid hourly

Aug 26 – The U.S. Energy Information Administration (EIA) has launched a beta release of its hourly electric grid monitor. The enhanced version analyses hourly generation by energy source and hourly sub-regional demand for certain balancing authorities in the Lower 48 states.