Markets

Turkey keeps getting the attention of players from every corner of the natural gas-based power generation industry, even though the government complains about the country's dependency on natural gas and pledges to bring it down from today's 70% market share.

To break the vicious cycle of high gas prices leading to demand destruction, no downstream investment and gas generation being displaced coal, analysts at the French investment bank Société Générale recommend to adapt pricing to the source of demand.

Britain is preparing to make a 'dash for gas generation' which may pove to be the more affordable option than renewables.

"Following the government's change in policy direction, it is now time and money that will determine whether a power plant, equipped with viable Carbon Capture and Storage (CCS) technology, will be in operation by 2020," says Howard Rogers, Director, Gas Programme, Oxford Institute for Energy Studies (OIES).

GE has revealed plans to add 12.5 GW to its portfolio of operational gas turbines in Brazil by 2020, as the country turns to gas generation to dent a shortage in peak-load power supply.

Gas generation is the quickest way to dent India's energy hunger and underpin economic growth, but "what matters is the delivered price of gas in India," says B.C. Tripathi, chairman and managing director at GAIL, India's largest gas transmission and marketing company.

Supply woes notwithstanding, gas-based power generators are gaining in importance in India, according to country's Central Power Research Institute (CPRI). “Gas is a good, alternative solution for peaking problems,” an analyst with CPRI told Gas to Power Journal.

Coal has been displacing gas generation in Europe since 2009 and the International Energy Agency expects this trend to continue: "We will have a Golden Age of Coal in Europe, at least over the next five years," says Anne-Sophie Corbeau, senior gas analyst for the International Energy Agency (IEA).

Austria's Econgas foresees no imminent growth in Germany's gas demand, according to Norbert Kint, head of trading at the Austrian utility. "In 2013, renewable energy supply will continue to eat into consumption levels of gas for power generation," he said in a panel session at the Gastech conference in London.

SSE, formerly known as Scottish & southern Energy, has completed the acquisition of Endesa Ireland Ltd for a total cash consideration of 308m plus an estimated 53m for working capital, the UK utility said on Tuesday. Once completed, the acquisition makes SSE the third largest generation capacity owner in Ireland's all-island Single Electricity Market (SEM) with 1,568 MW, or around 13% of installed capacity, in operation.

Gazprom is considering laying down a third 27.5 Bcm/year pipeline leg of Nord Stream as it aims to increase gas supplies to Germany, Netherlands and the UK. "Investment decision will be made in a short time," the Russian energy minister Alexander Novak said at a press conference at the Gastech conference in London today.

China, the fastest growing gas market globally, is forecast to keep growing at annual rates of around 13 percent, Anne-Sophie Corbeau, senior analyst at the International Energy Agency (IEA) said today, but she cautioned that the two-tier pricing system, with high prices paid for LNG imports and regulated low domestic gas prices, will keep hampering the growth of gas generation.

BG Group chief executive Frank Chapman has today said US LNG exports would add flexibility to global gas market, but he cautioned that exported volumes will not big enough to change the regionalized pricing structure of global LNG markets.

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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.