Markets

Southern has burned more natural gas than coal for power generation during the first quarter of this year as plunging gas prices due to abundant domestic supply makes gas the cheapest fossil fuel in the U.S.

The impact of today's strike at E.ON's gas- and coal-fired power plants in France is expected to be "minimal" and will not curtail electricity output as the German utility is not planning to operate the affected plants.

February 2012 was an "outlier" in electricity consumption and should be considered as such, Societe Generale  analysts, led by Paolo Coghe and Thierry Bros, wrote in the Energy Pulse report issued today. The prolonged and record-breaking cold spell endured by Europe during the first half of February resulted in strong electricity  consumption – but just for the month itself.

Gas prices across Europe need to drop by 20% to make the fuel competitive with coal for power generation during hours of peak demand, Vitol's gas head David Gallagher said. At that level it would make economic sense for electricity producers to switch from burning coal to gas.

Reliance Industries, India's biggest company by market capitalisation,  has filed for arbitration this week, claiming the Indian government is restricting it from recovering cost on developing an offshore gas block. The dispute prompted Reliance to curtail gas supplies to Indian power plant operatiors, leaving India with a severe electricity shortage.

International Power (IP), a London-based energy group, has posted a 5% rise in  revenues to €4,257 million in the first quarter driven by strong growth in Asia and Lation America. In an interim management statement, IP said revenue in Asia surged 22% to Eur491 million while revenue in Latin America increase by and 16% to Eur1.021 billion.

Gains for gas demand in the power and industrial sector will offset a decline in gas demand for residential use, Howard Gruenspecht, acting administrator, U.S. Energy Information Administration (EIA) said today. The share of natural gas in the U.S. energy mix is forecast to rise 27% by 2035, from 24% in 2010, according to EIA forecasts.

Ofgem, the U.K. energy regulator, warns Britain might face a gap in power generation capacity as ageing plants are being retired while construction of new nuclear, gas-fired or offshore wind power projects are delayed. "Britain is facing pretty frightening times with regards to spare capacity," Alistair Buchanan, Ofgem CEO said today.

Except for Europe, the global gas-to-power sector is expanding rapidly driven by rising electricity demand in emerging markets. "Even if gas is regulated to death in Europe, the growth of gas-to-power generation will continue outside Europe," Stefan Judisch, chief executive of RWE Supply & Trading said today.

The share of gas-fired power generation is likely to rebound in the mid-term future in line with growing renewable power production. "The key driver for gas demand growth in Europe will come from the power generation sector," Klaus Schäfer, CEO, E.ON Trading & E.ON Ruhrgas forecast today.

Gas does not get to play its rightful role in the European energy mix, Rune Bjornson, senior vice president natural gas, Statoil said today. Adverse economics currently hamper the rise of gas in the energy sector, he said, suggesting "the price of carbon is far too low to incentivise a switch from coal to gas".

China is set to become "the engine of global gas demand" in the coming years, as opportunities for a greater share of gas in power generation arise due to Government concerns about air pollution, Fatih Birol, chief economist at the International Energy Agency (IEA) said today.

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News in Brief

China seen overtake Japan as worlds’ largest LNG buyer by 2025

July 15 – The International Energy Agency (IEA) expects China to overtake Japan as the world’s biggest LNG buyer with imports of 128 Bcm a year by 2025, equivalent to around 174 million tonnes. However, IEA analysts cautioned this scenario is “highly dependent on China’s future policy direction” and whether that includes an ongoing push for coal-to-gas switching for industry, residential heating and power generation.

IEA stages Clean Energy Transitions Summit

July 14 – Ministers from dozens of countries, accounting for over 80% of the world economy, have participated in the first Clean Energy Transitions Summit organised by the International Energy Agency (IEA). Dr Fatih Birol, the IEA’s Executive Director, said there “clearly is momentum” behind a sustainable recovery from the economic impacts of the Covid-19 pandemic. Participants agreed to reconvene in mid-2021.

Siemens Energy to exit coal

Jul 13 – Newly formed technology company Siemens Energy wants to phase-out any operations and technology to related to coal-fired power generation, CEO Joe Kaeser said, without giving a specific timeline. Siemens had been harshly criticised earlier this year for participating in the Adani coal mine project in Australia.

Statkraft, GE enhance GB grid stability

July 10 – Statkraft and GE Power Conversion are working together to stabilise Britain’s power grid. To that end, GE will manufacture and install two Rotating Stabiliser synchronous machines at Statkraft’s site in Keith, Moray. Statkraft was awarded four stability contracts (two at Keith and two at Lister Drive) by National Grid ESO (NGESO) earlier this year.

Siemens Energy spin-off approved

July 9 – A large majority of Siemens shareholders have voted to approve the spin-off of the company’s energy business. The spin-off was approved by 99.36 percent of capital stock represented at today’s extraordinary shareholders’ meeting.

Central Hudson links solar farms to VPP

July 9 – Central Hudson Gas & Electric Corp has established its distributed generation program within the broader context of New York State’s energy plan. Together with Sensus and their Remote Telemetry Module (RTM-III), the Central Hudson will monitor decentralized solar PV backed up by flexible gas gensets.

Siemens and GREEN Solar turn German town CO2-free

July 8 – GREEN Solar and Siemens Energy are jointly developing a concept for making Herzogenrath CO2-free. The plan is to provide an energy-efficient and economical combination of solar power plants, wind turbines, batteries, CHP and combined cycle power plants, as well as heat and hydrogen storage. The hybrid system will be built on the grounds of Nivelsteiner Sandwerke and will be large enough to cover the city’s entire energy demand with zero CO2 emissions by 2030.

Denmark paves the way for Nord Stream 2

July 7– Denmark on late Monday gave the Nord Stream 2 consortium permission to utilize pipe-laying vessels with anchors in Danish waters, paving the way for the Gazprom-led consortium to complete the interconnector. Construction of the 1,230-kilometre pipeline is nearly complete, except for a final stretch of about 120-kilometers in Danish waters. The project was halted in December when the Swiss-Dutch pipe-laying company Allseas suspended works over threats of U.S. sanctions.

EPRI tests early warning system

July 6– The Electric Power Research Institute (EPRI) is conducting trial tests with multiple utilities across the United States of an early warning system. It can detect an off-gassing event as a precursor to thermal runaway up to 30 minutes prior to a cascading failure. This gives plant operators time to mitigate the problem or shut down the system.

KKR buys stake in First Gen

July 3 – Valorous Asia Holdings, owned by KKR investment funds, has bought a 11.9% stake in First Gen through a voluntary tender offer. First Gen, one of the Philippines’ largest independent power producers with 3,492 MW installed capacity, is owned by First Philippine Holdings which is controlled by the Lopez family. KKR’s acquisition of the First Gen stake is worth nearly $192.3 million.

Gazprom’s ‘BBB’ rating affirmed

July 2 – S&P Global Ratings, Moody's Investors Service and Fitch Ratings have affirmed Gazprom's long-term credit ratings as part of their annual reviews. The ‘BBB’ ratings for Gazprom from S&P and Fitch are in line with the sovereign credit rating of the Russian Federation, while Moody's ‘Baa2’ rating is a notch higher.

MHIEC to refurbish WtE plant in Kushiro

July 1 – Mitsubishi Heavy Industries Environmental & Chemical Engineering Co (MHIEC) has received an order from the Kushiro Wide-Area Federation to repair and improve the core equipment at the local Waste-to-Energy plant in Takayama. The WtE plant has a capacity of 240 tonnes per day (tpd). Renovation will increase the energy efficiency of the fluidized bed type gasification and ash melting furnace facility, reducing emissions by around 15% annually. Works are due completed in September 2023.

Nigeria: Only two of six power projects on target

June 30 – Nigeria’s Bureau of Public Enterprises has disclosed that only two out of six privatized power plants were delivered on target. Only Transcorp Power Ltd and Geregu Power Ltd out of the six privatised electricity generation companies (GENCOs) were said to have met their performance targets since taking over.

German investors prefer solar over wind

June 29 – Energy infrastructure investors are keen to build solar power projects in Germany, but shun wind parks. In the latest solar power auction, investors offered to build almost 450 MW of capacity – more than four times the 96 MW of volume on offer– with the average successful bid at 5.27 cents per kilowatt-hour (ct/kWh). The wind auction, in contrast, was undersubscribed: The German network agency  (BNetzA) tendered around 826 MW, but successful bids only totalled 464 MW, at an average price of 6.14 ct/KWh.

MAN ventures into synthetic fuels

June 26 – MAN Energy Solutions has entered the hydrogen economy with the recent pro rata acquisition of H-TEC SYSTEMS, an electrolysis tech firm. The German OEM also committed itself to upgrading its gas turbines to run on 100% hydrogen by 2030.

Varegro starts using Cummins gas genset

June 25 – Belgian-based horticultural company Varegro, has started to use a Cummins HSK78G gas generator to power its greenhouses in Oostrozebeke, West Flanders. Varegro said it selected the Cummins HSK78G genset to produce combined heat and power (CHP) on its premises at a competitive cost for use in energy-intensive greenhouse facilities.

GE names Deloitte as independent auditor

June 24 – GE’s audit committee has selected Deloitte as the company’s independent auditor for the 2021 fiscal year, replacing KPMG. The selection of Deloitte concludes GE’s latest audit tender process.

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