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Gas-fired combined-cycle power plants (CCPPs) will dominate the US power generation market, as economics of low-cost gas generation and more stringent emissions regulation continue to erode the competitiveness of coal-fired plants, forecasts John Wilson, vice president for product sales Americas at Siemens.

Tuesday, 11 December 2012 / Markets

GE bets on 25-year gas super-cycle

GE is betting on a 25-year super-cycle of natural gas generation, underpinned by cheap shale gas supply, hence the company heavily invests to increase this side of the business, says Paul Browning, President and CEO of Thermal Products, GE Power & Water.

Coal generation will regain ground from gas in the US power sector in the coming year leaving less coal available for export to Europe and Asia, investment bank Barclays Capital forecast.

Coal-to-gas substitution in the US power generation sector is set to decline amid a rise in natural gas prices beyond 2012 levels. Prices for gas delivered to power plant operators during 2013 will average about 22 percent higher than during 2012, while the average cost of delivered coal will go up only 1 percent, the US Energy Information Administration (EIA) forecasts.

Japan's industrial conglomerates Mitsubishi Heavy Industries (MHI) and Hitachi are gearing up to merge their thermal power plant activities with the aim of increasing their market share at the expense of rivals Siemens, Alstom and GE.

The BRIT countries – Brazil, Russia, [India] and Turkey – are what E.ON Generation has singled out as growth markets.

"Europe is still our core market but we are not seeing the greatest growth in this area at the moment. You might want to call the UK 'an exception', but it is the BRIT countries that we at E.ON target as growth markets," Jim Lightfoot, director fleet management Gas CCGT at E.ON Generation told Gas to Power Journal in an interview.

Energy trade between the United States and Canada has exceeded $100 billion dollars in 2011, with the two countries forming the world's largest integrated energy market, according to the US Energy Information Administration (EIA).

A 'dash for gas' strategy to bolster investment in new power plant capacity will be unveiled over the coming ten days as the UK government will reveal details over capacity payment mechanisms. A gas generation strategy will be published alongside the Chancellor’s Autumn Statement on December 5.

Persistently negative profit margins for generating electricity will lead to the closure of 14 GW of thermal power plants in Germany by 2015, pushing up power prices, Deutsche Bank analyst Mark Lewis forecasts.

South Korean utilities are stepping up gas imports in an effort to avert the risk of power cuts following the shut-down of nuclear reactors. South Korean Prime Minister Kim Hwang-Sik reiterated a warning, highlighting the risk of possible power shortages and rolling blackouts triggered by forecast of a harsh winter.

Utilities in Germany can trigger some power price upside if they embark on a "conspicuous plant retirement programme", French investment bank Societe Generale said in a report, suggesting E.on has been "the first utility to blink".

Caught in an era of stagnation - that is how Juliana Passadore, Frost & Sullivan's Business Unit Leader for Energy & Power Systems describes the Brazilian gas-to-power market, as a supply shortage and high gas prices hamper investment in new projects. 

Sellers of diesel and gas generators are enjoying a flurry of interest across Africa and Asia as energy hungry countries such as China, India and Nigeria step up investment in small to medium-size gensets to backfill power shortages, GlobalData's report 'Diesel and Gas Generator, 2012' shows.

Despite of India's surging electricity demand, the economics of gas generation hinge on peak production, says Rajeev Mathur, executive director marketing at Gas Authority of India Ltd (GAIL). "If anyone wants reliable power [during hours of peak demand] he can pay more. That's where the economics of imported gas for power generation will work," he told Gas to Power Journal.

Siemens, the German engineering giant, is hopeful to break ground in Singapore for its H-class gas turbines as it builds on the market penetration of its F-class technology, says Thomas Hagedorn, Vice-President, Sales, GT Power Plant Solutions Asia Pacific.

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News in Brief

Rio Tinto uses battery to power Pilbara mine

Feb 18 – Australian mining company Rio Tinto has freed up $98 million for a new solar PV unit and a lithium-ion battery energy storage system to help power its entire Pilbara mining network. The 12 MWh battery storage at Tom Price will provide spinning reserve to help stabilize the local grid.

Japan and Korea eager to build ‘hydrogen economy’

Feb 17 – Liquid hydrogen is meant to become the basis of Japan’s and South Korea’s new energy economy. Several public-private partnerships accelerate efforts to produce hydrogen fuel cell vehicles and use hydrogen as a clean energy source, gradually replacing oil and natural gas.

MHPS teams up with KBR to expand sales

Feb 14 – Mitsubishi Hitachi Power Systems (MHPS) has agreed to cooperate with U.S. firm KBR to expand sales of SDA pitch-fired power plants. The fuel for these plants is insoluble matter (SDA pitch), which remains when light oil fractions are recovered from heavy oil fractions using the solvent de-asphalting (SDA) process. The petroleum industry can now utilize this residual material for power generation.

Turboden provides CHP to First Nations

Feb 13 – Brescia-based Turboden, part of Mitsubishi Heavy Industries (MHI), has agreed to an 8,000 kW combined heat and power (CHP) plant, running on woody biomass to indigenous First Nations in Saskatchewan, Canada. The Organic Rankine Cycle (ORC) power gen system will uses sawmill residual woody biomass as fuel and help electrify some 5,000 homes.

Himoinsa gensets win award

Feb 12 – Himoinsa has received an Innovation Trail Live award for its rental gas generator sets. Three gensets – HRGO 30, HRGO 40 and HRGO 70 – were distinguished due to their long running time, low operational costs, as well as reduced emissions and sound level.

Ofgem lowers default price cap

Feb 11 – UK energy regulator Ofgem has announced it will lower the default price cap by £17 to £1,162 for the six months effective from 1 April 2020. Analysts say Ofgem’s decision comes amid a “warm winter” and “healthy LNG supply,” which pushed down wholesales gas prices to a 13-month low. Looking ahead, there might well be “another slight reduction to the cap later this year.”

Opel plans Gigafactory for battery cells

Feb 10 – German carmaker Opel, part of French PSA, plans to manufacture enough battery cells for half a million e-cars annually in a new factory in the western German town of Kaiserslautern from 2024. Two billion Euros would be invested in the factory, designed to house three units with 8 GWhs each, which would be the largest in Europe so far.

GE adds 235 MW in Ivory Coast

Feb 7 – GE is carrying out a gas turbine extension at the Azito power plant in the Ivory Coast. Under the contract, GE will supply its GT13E2 gas turbine in combined-cycle configuration, one HRSG, one steam turbine and associated equipment. The upgrade will boost the plant’s capacity by 30 percent, or 253 MW to reach a total of 710 MW.

FID on Azito extension

Feb 6 – Independent power producer Globeleq and IPS have reached financial close on expanding the Azito gas-fired power plant in Ivory Coast. The plant currently has 460 MW installed capacity and provides 25 percent of the country’s power supply. Once the lasted upgrade will be completed, Azito’s capacity will be boosted to 713 MW.

Batteries vs. hydro power

Feb 5 – More than 28 GW of lithium batteries deployed for stationary storage applications by the year 2028, according Navigant Research. Pumped hydro power plants, however, dominate the market as they account for 96% of installed energy storage worldwide.

Ofgem expects green energy to cost more

Feb 4 – Britain’s energy regulator Ofgem has been seeking to incentivize investment in green energy. However, the watchdog’s new head, Johnathan Brearly, cautioned “more investment does mean higher cost.” Though investors’ returns could come down, technology improvements will reduce down capital costs further in the long run.

FES takes over 1.3 GW Pleasants Power Station

Feb 3 – FirstEnergy Solutions (FES), soon to be renamed Energy Harbor, has completed the ownership transfer of the Pleasants Power Station, a 1,300-MW thermal plant located in Pleasants County, West Virginia. FES took over the power unit from Allegheny Energy Supply Company.

Körte heads Siemens Strategy

Jan 31 – Peter Körte, aged 44, has been appointed the new head of Siemens’ Strategy Department, effective February 1, 2020. In his new role, he will develop Siemens’ strategies for digitalization and the Internet of Things (IoT) which are deemed “crucial growth drivers.”

SP40 engine oil launched

Jan 30 – Petro-Canada Lubricants has launched SENTRON SP 40, new oil for gas engines with steel pistons. The lubricant is built to withstand severe operating environments and enables optimum output from stationary engines.

Asian NOCs enact energy transition

Jan 29 – From Tokyo to Jakarta, the energy transition is the hot topic, as most of Asia’s national oil companies (NOCs) that doing nothing is no longer an option. PTTEP and CNPC have both made carbon reduction commitments, but others are yet to follow.

Saudi Aramco spends $5m to join VAKT

Jan 28 – Saudi Aramco Energy Ventures has invested $5m into VAKT, a blockchain platform for commodity post-trade processing. The platform, launched in London in December 2017, is backed by the likes of BP, Equinor and Shell, Gunvor, Koch Supply & Trading, Mercuria, ABN Amro, ING and Société Générale.

Air Products profits surge

Jan 27 – U.S. industrial gases company Air Products has achieved a 37 percent rise in fiscal first-quarter net income to $489 million and said it would spend up to $4.5 billion in 2020 on projects. First-quarter sales of $2.3 billion were up 1 percent amid 3 percent higher pricing, partially offset by 5 percent lower energy pass-through.