Markets

Natural gas prices as delivered to power plants in the U.S. plunged to a ten-year low in April, allowing gas to reach parity with coal in net electric power generation for the first time since the Energy Information Administration (EIA) began collecting data.

Gazprom has entered negotiations with E.ON on a special pricing mechanism for gas used for power generation, which prompted Societe Generale to forecast that the majority of gas in Europe will not be priced under an oil-linked formula as of 2014e.

German utility E.ON raised its 2012 earnings outlook on Tuesday after settling a fierce and lengthy dispute with Gazprom, Russia's gas export monopoly, over pricing conditions of long-term gas import contracts.

The introduction of a carbon floor price under Britain's Electricity Market Reform (EMR) is estimated to make natural gas catch-up with coal in terms of profitability. "Using our forward-price assumption for coal, gas-fired generation and coal-fired generation are very nearly on equal footing in the April 2015 timeframe in the UK," Deutsche Bank forecast today.

One of India's largest gas-fired power plants, the 1,967 MW Dabhol facility, is operating at less than half of its installed capacity due to the severe shortage of natural gas, a source at Ratnagiri Gas and Power Private Limited (RGPPL), the plant operator, told 'Gas to Power Journal'.

Coal-fired power plants will continue to be the mainstay for India's power generation, despite growing demand for natural gas, consultant Anand Sharma told 'Gas to Power Journal' today. 
"Gas prices are rising in tandem with shrinking domestic supplies and costs are prohibitive for importing [large volumes of] gas through pipeline or in LNG ships," Sharma said, who is the director of Mumbai-based Mantrana Maritime Advisory that also tracks power utilities.

The U.S. Energy Information Administration (EIA) has examined 29 alternate scenarios for the future U.S. energy market in its Annual Energy Outlook 2012 (AEO2012). In the EIA reference case scenario, the share of gas-fired power generation is forecast to rise from 24 percent in 2010 to 28 percent in 2035. "Uncertainty is inherent in long-term projections," EIA Administrator Adam Sieminski said when unveiling report.

Russia's Gazprom has entered talks with Italy' Enel, France's EDF and Denmark's Dong with the aim of purchasing a stake in one of their European gas-fired power plants, according to Gazprom CEO Alexei Miller.

Turkey has been an island of high energy demand in Europe, with electricity demand growing by just under 6% in Turkey in 2000-2007, compared to 2% in OECD Europe, Alexander Antonyuk, Energy Analyst at the International Energy Agency (IEA) said today.
"Turkey was one of the countries where power demand recovered fasted from the recession," he said cautioning that electricity demand growth has slowed down to 4.5% over the past two years. "This recent dip is mainly due to lower demand growth in energy-intensive industries," he told 'Gas to Power Journal' at the sidelines of a conference in Istanbul.

EnerjiSA, a Sabanci/Verbund joint venture, sees a growing need for LNG imports to Turkey as a flexible supply source of natural gas to underpin the growth of installed power generation capacity. "Gas-fired plants may well grow in number as LNG as a fuel is increasingly considered as an interim option by plant operators," Kivanc Zaimler, Commercial Director - Natural Gas, EnerjiSA said in Istanbul today.

Investment bank Société Générale today questioned the affordability of natural gas as a fuel for European power plant operators. „At today's prices, gas is too expensive a fuel for Europe," the bank said today, suggesting the "overprice" in terms of the bill is $315/1,000cm or $153bn for 2012e.

The drop in LNG supply to Japan is negatively impacting on the utilisation of gas-fired power plants. „If we were to measure a 30 mcm/d fall in LNG supply against higher gas-fired generation in Japan, then the drop in LNG supply is equivalent to power generation from 7.3 GW of gas-fired capacity," Deutsche Bank analysts said.

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News in Brief

MHPS expands Browning’s role to Americas CEO

June 5 – Mitsubishi Hitachi Power Systems Americas has appointed Paul F. Browning t to an expanded role as Chief Regional Officer of the Americas and co-Chief Regional Officer of Europe, the Middle East and Africa (EMEA). As CEO of the Americas, Browning will lead two global businesses headquartered in the United States and three regional businesses in North and South America.

Siemens to service Kalamkas gas turbines

June 4 – JSC Mangistaumunaigaz, one of Kazakhstan’s largest oil and gas producers, has contracted Siemens to service two STG-800 gas turbines at a power plant, designed to meet the entire energy needs of the nearby Kalamkas oil and gas field. The nine-year contract covers turbine maintenance and eventual upgrades as well as remote monitoring of operations.

NamPower to invest $575m on grid expansion

June 3 – Namibia’s state-owned utility NamPower is planning to spend $575 million over the next three years in upgrading and extending its power transmission infrastructure. Namibia imports 60% of its total electrical energy requirement, primarily through bilateral contracts from South Africa’s Eskom and to a lesser extent, the Southern Africa Power Pool (SAPP).

UK TSOs call for £900m green gas investment

June 2 – Britain’s five gas network companies – Cadent, National Grid, NGN, SGN and Wales & West Utilities – have urged the Government to unlock over £900 million (€1bn) for new green gas infrastructure. Research by the Energy Networks Association (ENA) shows that if investment into zero-carbon hydrogen infrastructure started today, the UK could save energy bill payers £89 billion (€99.2bn) by 2044 – five years prior to its 2050 net-zero targets.

Exxon, INNIO about to launch gas engine oil

June 1 – ExxonMobil and INNIO have announced the imminent launch of their first co-engineered and co-branded natural gas engine oil. The U.S. oil major and the Austrian engine maker have just extended their global lubricant collaboration agreement for INNIO’s Jenbacher Type 2, 3, 4, 6 and 9 natural gas engines.

BelGAS launches new pressure regulator

May 29 – BelGAS has introduced its new P1098 High-Capacity Pressure Reducing Regulator, a large-volume regulator for natural gas, propane and other fuels. The pilot-operated device has a large-area actuator diaphragm, allowing for fast and accurate response to modulating gas flow conditions. It is adaptable for low to extra-high pressure—up to 400 psi main valve inlet.

GE to sell lightning business

May 28 – GE has signed a definitive agreement to sell its lighting business to Savant Systems, a provider of smart homes. CEO H. Lawrence Culp called the divestment “an important step in the transformation of GE into a more focused industrial company.” The transaction is expected to close in mid-2020.

China’s fuel demand recovers

May 27 – The Chinese government has lifted restrictions on private travel since April which pushed up demand for transport fuels. Gasoline demand has recovered particularly fast and is expected to return to last year’s levels by June 2020. Wood Mackenzie estimates gasoline consumption to reach 3.4 million barrels per day (b/d) in the second quarter, down just a 0.8% year on year. Diesel or gasoil demand is expected to reach 3.4 million b/d in Q2 2020, a 3% decline year-on-year. Overall, China’s oil demand is seen rise a “modest” 13.6 million bpd, or 2.3%, in the second half of 2020.

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.