Markets

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.

Demand for new highly efficient gas power plants will not abate in Japan and South Korea regardless of high costs for LNG as a fuel, says GE's regional general manager power generation for Asia Pacific, Ramesh Singaram. As for Japan, he sees an annual demand for 3.5 to 4 gigawatt of new-build capacity over the next ten year. "Anything coming from nuclear would be upside," he told Gas to Power Journal.

The operator of Dabhol, India's largest gas-fired power plant, are considering renting out the 1,967-megawatt plant to private electricity producers under a tolling model, after operations were halted due to domestic gas shortages. Burning LNG instead is not an option: "We cannot recover the high cost of imported gas," said the plant operator RGPPL.  

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News in Brief

Orbital signs MSA with Midwestern utility

Dec 3 – Orbital Energy has signed a master service agreement (MSA) with a US Midwestern investor-owned utility. The accord is expected to generate monthly revenues from the fourth quarter and increase revenues by 30% on an annualised basis.

Wärtsilä to use Shell engine oils

Dec 2 – The Finish engine maker Wärsilä has selected Shell as its test oil partner for engines during stress tests and fine-tuning at engine manufacturing sites. Shell’s Mysella, Argina and Gadinia range of engine oils have been developed to provide top class engine cleanliness, enhanced wear protection, long oil life, and high system efficiency.

Hamburg CHP runs fully on hydrogen

Dec 1 – Field testing has started for HanseWerk’s combined heat and power (CHP) plant in Hamburg to run fully on hydrogen. The converted 1 MW pilot plant, powered by Jenbacher engines, provides district heating equal to 13,000 MWh/year to 30 residential buildings, a sports facility, a daycare center, and the Othmarschen Park leisure centre.

Oil majors in the red

Nov 30 – For most oil majors worldwide, higher prices are needed to get their business out of the red. Breakeven prices for Saudi Arabia are $85 per barrel, around $64/bbl for Iraq, $49/bbl for Kuwait and as little as $40/bbl for Russia. As business confidence plummets, major oil companies have already slashed planned CAPEX spending by almost $89 billion in first quarter of 2020, with further cuts being made throughout the summer and autumn.

EU invests into battery cells

Nov 27 – Germany's EU Council Presidency has pledged Europe should develop an integrated value creation chain for battery cells, starting with the processing of raw materials over battery cell production to recycling. Germany is investing 3 billion Euros into the two projects that foster novel methods of battery production.

Rolls-Royce wins order from Hinkley Point C

Nov 26 – Rolls-Royce has been awarded an order from Hinkley Point C to deliver 140 Bibloc pressure transmitters for the two EPR nuclear reactors currently under construction in Somerset, UK. The transmitters will measure the flow, level and pressure of the Nuclear Steam Supply System (NSSS).

CHP industry to grow 14.4% through 2025

Nov 25 – The combined heat and power (CHP) market, evaluated at $12.152 billion, is expected to expand nearly 14.4% per year to reach $27.196 million by 2025. Growth is primarily driven by government funding and subsidy schemes. According to the U.S Environmental Protection Agency, the country aims to install 40 GW of new, cost-effective CHP to save $10 billion per year, compared to current energy use.

Rolls-Royce opens US customer center

Nov 24 – Rolls-Royce has opened its latest US customer support center in Savannah, Gerogia. The 62,000 square feet facility houses a power plant completion center, a wing services repair unit and a warehouse, all under one roof.

Lithium Werks grows manufacturing

Nov 23 – US-Dutch manufacturer Lithium Werks is growing the output and sales fuel cells and battery modules for use as power, pulse, and stand-by applications. The company’s 26650 Nanophosphate cells are used as single cells, as well as to build cell-packs and modules like Lithium Werks P40-24 battery modules. The Austin and Enschede-based company said it can “produce millions of 18650 and 26650 cells a month in China.”

AGL plans 1,000 MWh battery

Nov 20 – Australian power producer and retailer ALG wants to realise a large grid-connected battery storage unit of up to 250 MW rated output and four hours’ duration of storage, equalling 1,000 MWh. The battery will be built in stages on the site of Torrens Island Power Station in South Australia. AGL vowed to reach net zero emissions by 2050, but is currently still operating some 40 GW of coal-fired generation.

Fusion demo plant to be designed in Canada

Nov 19 – Vancouver-based General Fusion has entered a partnership with the architecture firm AL_A to design a demonstration plant, based on magnetized target fusion (MTF). Once operational, the demo plant will showcase MTF technology under power plant-relevant conditions.

Toshiba opens H2One fuelling station

Nov 18 – Toshiba has opened the first ‘H2OneMulti Station’ which fills fuel cell vehicles with green hydrogen and supplies for green electricity at Tsuruga City in Fukui prefecture. The station consists of H2One ST Unit and H2One, using hydrogen produced from wind and solar power sources.

Shale gas market grows at 7% rate

Nov 17 – Unconventional gas markets are poised to grow by $41.76 billion through 2024, rising at a rate of almost 7%. According to Technavio, about 87% of the supply growth this year is coming from the Americas.

Agua Blanca pipeline expanded

Nov 16 – Austin-based WhiteWater Midstream and MPLX have completed a 1.8 billion cubic-feet-per-day (Bcf/d) expansion of their joint venture Agua Blanca pipeline system. Christer Rundlof, CEO of WhiteWater CEO, said the expansion will be brought into service ahead of schedule. Testing and commissioning will begin this month, for the new pipeline stretch to be brought into full service in early 2021.

Wärtsilä integrates clean energy

Nov 13 – Finish technology group Wärtsilä strives to integrate variable clean power sources to achieve a 100% renewable energy future. The necessary operational flexibility will come from gas generation assets running on synthetic renewable fuels and by the extended use of energy storage.

First German-Belgium power link to start operation

Nov 12 – The two TSOs Amprion and Elia are preparing to launch the first electric interconnector between Germany and Belgium. The 1,000 MW interconnector stretches between Aachen and Lüttich, from where it links to the Rhineland region and Wallonia. It will go into operation as of 18 November, with intraday capacities to begin trading on 8 December.

Sachsen Energie takes on E.ON and RWE

Nov 11 – A small regional energy provider in Saxony seeks to counter the dominance of E.ON and RWE. Sachsen Energie, set up in a merger between two local utilities, claims it will become "the largest municipal utility in eastern Germany," catering to about one million customers, when it begins operation in 2021.

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