Markets

Gas markets are a different animals than power markets, so the integration of European gas trading hubs cannot replicate the integration of European power markets, panalists at a gas trading session the EMART Energy conference agreed on today. "Financially, it has already happened; physically, however, gas market integration works different from electricity markets," APX-ENDEX CEO, Bert den Ouden, said at the conference in Lyon.

LNG exports from the U.S. are likely to go to China, where new U.S. LNG imports will be in a price competition with not-yet contracted gas from Russia via the proposed Altai pipeline and with LNG imports from upcoming Australian liquefaction projects, Thierry Bros, senior analyst at Societee Generale said.

The lack of incentive to build new gas-fired power plants may cause problems for balancing supply and demand in European electricity markets, Evariste Nyouki, head of economic research at GDF SUEZ Trading told 'Gas-to-Power Journal' at the sidelines of the EMART Energy conference in Lyon today.

"New gas-fired plants are needed but the market is not prepared to pay for it," Nyouki said, arguing it is only economical for upstream companies to invest in new gas plants at the current price levels. His reasoning is that Gazprom has the means to free up enough CAPEX in order to build new gas-fired power plants in Western Europe, while utilities currently do not have an incentive to do so.

Dan Smith, Head of Corporate Development at Trayport, has cast doubt over the European Commission's drive to introduce more stringent financial regulation.

"The European Commission supports the creation of liquidity in the wholesale energy markets via the 3rd Energy Package. However, another potential outcome is that the introduction of financial regulation could have a negative impact on liquidity in the wholesale energy markets," said Smith told 'Gas-to-Power Journal' today.

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News in Brief

American ISOs to delay grid investments

March 27 – North America’s independent system operators (ISO) are considering delaying investments in grid upgrades and enhancement as electricity demand weakens due to industry shutdowns to contain the coronavirus pandemic. PJM Interconnection, the largest U.S. bulk power market which spans 13 Mid-Atlantic and Midwestern states, revised its daily forecast of about 100,000 MW of load but actual demand came in at 95,500 MW.

Wärtsilä starts combustion trials using ammonia

March 26 – The Finish technology group Wärtsilä has initiated combustion trials using ammonia in an effort to reduce emissions. Based on initial results, the tests will be continued on both dual-fuel and spark-ignited gas engines, followed by field tests in collaboration with ship owners from 2022, and potentially also with energy customers.

Xodus sees growth in cable services

March 25 – Xodus Group has stepped up services related to subsea power cables over the last twelve months. The number of new consulting assignments grew by more than 50%, resulting in more than 70 active work streams that are handled by more 30 permanent staff.

Electricity “more indispensible than ever”

March 24 – Disruptions caused by the coronavirus crisis lay bare how much modern societies rely on electricity, according to the International Energy Agency (IAE). Millions of people are mandated to stay home, causing a surge in teleworking, e-commerce and video streaming which pushes up domestic electricity use.

U.S. frackers cut Capex

March 23 – Sharp cuts in capital spending among Appalachian gas producers are now being replicated in other U.S. basis, with Energy Aspects anticipating the deepest impact on production and earnings to take place starting from the second half of 2020. So far, E&P companies just hedged 52% of this year’s expected production even though some Appalachian producers are seen “lock in some pure gas volumes at prices above the curve.”

EV makers face bankrupcy

March 20 – Electric vehicles (EVs) remain particularly exposed to the corona effect of supply-side constraints and demand erosion. Gigafactory facilities are likely to be delayed and fledging EV manufacturers could face bankruptcy, Wood Mackenzie warns. On the flip side, declines in EV sector demand may be gains for the stationary energy storage segment.

Manufacturing rebounds in Asia

March 19 – Asian-dominant supply chains for solar and energy storage are gradually rebounding after contractions in February. Moving forward, Wood Mackenzie expects near-term development activity and local logistics in leading European and North American markets will outweigh lingering supply issues.

Italy’s gas demand plunges

March 18 – Corona-struck Italy has seen demand for natural gas plunge 8% from the previous week, with similar declines likely in other EU countries as national governments impose lockdowns to contain the virus. Industrial demand is “particularly volatile,” while gas generators will bear the brunt of demand loss, Wood Mackenzie says, as a carbon price decline is bolstering thermal coal.

Nexif raises funds for Rayong CHP

March 17 – Nexif Energy, a joint venture between Singapore-based Nexif and Denham Capital, has raised project financing for the Rayong gas-fired cogeneration project in Thailand. The 92 MW plant is being developed project with Ratch Group, based on 25-year power purchase agreement with Electricity Generating Authority of Thailand (EGAT).

ADB provides $10m loan for Afghan IPP

March 16 – The Asian Development Bank (ADB) has agreed to provide $10 million in debt financing for a gas-fired power unit in Mazari Sharif with a capacity of nearly 60 MW. Phase-1 of the Independent Power Project (IPP) will get another $10 million loan from the Leading Asia's Private Sector Infrastructure Fund (LEAP).

IEA models 50% Carbon-Free Generation

March 13 – Analysts at the U.S. Energy Information Administration (EIA) have drawn up the 50% Carbon-Free Generation case - assuming a stark shift in state-level policies. In this event, the U.S. would have 19% more nuclear power generation, 10% more wind power and 17% more solar PV contribution than in its Annual Energy Outlook 2020 (AEO2020) reference case.

E-charging market to top $15bn by 2030

March 12 – By 2030, the U.S. market for energy-optimisation in support of charging electric-vehicles could be worth $15 billion per year, McKinsey finds. The consultancy expects high demand for home-charging appliances as residential power tariffs are comparatively cheap and most charging can happen overnight when off-peak electricity prices are lower.

Oversupply builds up

March 10 – Energy Aspects’ end-March forecast has added on another 100+ billion cubic feet of natural gas supply while demand remains subdued. In the U.S., the seasonal decline in heating degree days nearly halved the natural gas withdrawal rate. Gas-burn in the power sector and residential/commercial demand are forecast to fall by 1.7 billion cubic feet per day (bcf/d) and 4.0 bcf/d, respectively.

Small-scale LNG cuts cost for power plants

March 10 – Decentralized gas power plants in remote locations can source cheaper fuel from small-scale LNG regas terminals than from trucking the super-chilled gas across long distances. “Trucking LNG further inland would entail additional costs as well as logistical challenges,” IEA analysts noted. For example, a 100 MW baseload power plant would require, on average, around 20 daily deliveries from tanker trucks.

Abu Dhabi investor expands Uzbek CCGT

March 9 –Some key Uzbek energy infrastructure is being modernized with foreign monies. Abu Dhabi-based Mubadala Investment Company recently agreed with JSC Thermal Power Plants and the Uzbek government to acquire, finance, develop and operate the 1.7 GW Talimarjan Power Complex.

Oversupply keeps growing

March 6 – In its fourth quarter report, Awilco LNG warned that demand is now unable to keep up with strong gas production growth. Gas demand from China’s industry and power utilities, the world’s second largest LNG importer last year, has fallen by 10-14% thus far in 2020.

Simatic IOT2050 gateway launched

March 5 – Siemens’ newly launched Simatic IOT2050 links cloud, in-company IT and production. Energy companies, and others, can retrofit the solution in existing plants, where it then harmonizes communication between different data sources, analyzes the data, and passes it on for evaluation to a cloud.