Power generation in Nigeria dropped to 3,059 MW on May 28 and stayed below 4,000 MW for the following seven days, 6% below average production. Low pressure on the Escravos-Lagos Pipeline System (ELPS) had left several gas turbine power plants with insufficient fuel, leading to widespread blackouts that “could have been avoided,” Wärtsilä claims.
Commissioning is underway for Nord Stream 2 and once the pipeline starts up in late August, or early September, cheap Russian gas supply will likely reduce US LNG exports to Europe. These days, the arbitrage between the United States and Europe is still “very healthy” at $6/MMBtu, analysts noted, hence 36% of US LNG cargoes were headed to Europe through mid-May.
Transporting electricity to the UK costs dearly, particularly on the Nemo Link from Belgium where the May 2021 auction resulted in a price of €19.42/MWh – the most expensive in Europe. Researchers at the market data platform EnAppSys explained the high export price with “regulatory differences” between the GB electricity market and its EU neighbours.
Build-out of electolysers in Europe will rise 50-fold, consultancy Delta-EE finds, with EU markets on track for 2.7 GW operational hydrogen production capacity by 2025. Research shows Germany leads the market for now, with Spain, Netherlands and Denmark aiming towards the 100s MW in four years’ time.
Industry, transport and the heating sector in Germany will need significantly more hydrogen than the current 57 Terrawatt-hours (TWh) per year, produced almost entirely from fossil fuels. Come 2030, the demand for green hydrogen and derivatives will be around 80 TWh and could surge to 300 TWh by 2040, the Fraunhofer institute forecasts.
Strengthening economics of coal-to-gas switching has pushed up prices at the TTF, Europe’s most liquid gas trading hub. With carbon and coal prices up by 33% and 26%, respectively, TTF gas prices increased $3/MMBtu to nearly $9/MMBtu. Restriction to coal-burn also boosts the dispatch of gas-fired power plant in South Korea and Taiwan.
Japanese turbine maker Mitsubishi Power has set up the ‘Gas Turbine Combined Cycle EMEA Business Unit’ in Dubai to sell more J-series air cooled (JAC) turbines into Europe and the Middle East. JAC turbines can operate on a 30:70 fuel mix of hydrogen and natural gas, and are meant to run fully on hydrogen in the future.
Developers of LNG-to-Power projects are advised to secure flexible gas delivery terms through an aggregator before the market flips again and demand outstrips supply. According to Watson Farley & Williams, this is likely to happen by 2022 or 2023 as current Capex cuts delay new liquefaction projects.