Markets

European utilities are profiting from a rebound in a power prices and production margins, Societe Generale commodity analysts said, estimating that between 20% and 50% of hedge for 2012 has been achieved by higher generation margins post Fukushima. "Some utilities have delayed their hedging strategy and will thus benefit from higher margins post-Fukushima that should flow into the accounts as soon as 2012," the bank said in a recent report.

International Energy Agency's Executive Director, Maria Van der Hoeven sees "golden prospects for natural gas. However she urged the gas industry in Riyadh today to step-up security standards in unconventional gas production.

Coal is forecast to increase in its competitiveness against gas, Société Générale said in a research note on Tuesday. "Demand for imports [of coal] will in our view keep on increasing, even if more slowly," analyst Emmanuel Fages said with reference to the expected recession in the Eurozone throughout 2012.

The gas value chain is integrating as upstream companies such as Gazprom and Taqa have an incentive to venture beyond their midstream activities into gas-to-power. "Upstream players - producers of oil and gas – have an incentive to go downstream," Sybren Hettinga, head of European gas structuring at Cargill, told 'Gas-to-Power Journal' in an interview.

The Russian gas giant Gazprom and Essen-based RWE are in negotiations to form a joint venture (JV) on power generation, an RWE spokesperson confirmed to 'Gas-to-Power Journal' today. "We do not comment on the status of negations," he said, adding joint projects in gas-to-power would be "one of the options".

The European Network of Transmission System Operators for Electricity (ENTSO-E) has alerted grid operators of the risk of reduced margins of available power generation overload in Europe this winter. ENTSO-E published its Winter Outlook 2011-2012 and Summer Review 2011 on Thursday this week, indicating that under severe conditions, December and January could be the most stressed months of the winter for security of electricity supply.

The power generation sector is forecast to be the main driver for global gas demand, according to projections of the International Energy Agency (IAE). "Global gas demand will be driven by power generation", IEA analyst, Warner de Kate, said at the EMART energy conference in Lyon.

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

Growth in turbine air filtration tops 3%

July 22 – The turbine air filtration market is expected to grow 3.27% annually from $1.92 billion in 2020 to reach $2.29 billion in 2026. Demand from the oil & gas industry and electric utilities had plunged during the corona crisis and subsequent economic downturn, but the latest trend towards clean energy is driving robust growth for turbine air filtration which can be widely and easily applied in the power sector.

US oil exports stay high

July 21 – Despite volatile prices, U.S. crude oil exports reached a record high in 2020 and remained strong this year, averaging 3.51 million barrels per day (b/d). Expanded ports at Houston and Corpus Christi allow for oil to be exported from the Permian Basin and Eagle Ford Basin.

CVEC to be converted to hydrogen

July 20 – Cricket Valley Energy Center (CVEC) is taking steps to run the  combined-cycle plants on hydrogen. Works to convert the plant will be carried out by GE and are scheduled to start in late 2022. One of three GE 7F.05 gas turbines at CVEC will be introduced to a 5% hydrogen blend with natural gas.

MAN ETES labelled solar impulse efficient

July 16 – MAN Electro-Thermal Energy Storage (ETES) was attributed the “Solar Impulse Efficient Solution” label by independent auditors. In January, the German manufacturer supplied to ETES heat pumps to DIN Forsyning for a heat and power plant in the Danish port city Esbjerg.

Electricity sales to US industry rebounds

July 14 – Economic recovery has caused a 5.1% rise electricity sales to US industry this year, dwarfing 2.8% more retail sales and a 2.1% rise in the commercial sector as many office workers continue working from home. The US Energy Information Administration’s (EIA) acting administrator, Steve Nalley, called the rebound in electricity sales to industry a “strong sign of rising levels of economic output as the Covid-19 pandemic recedes.”

Solar PV to triple in Asia by 2030

July 13 – Asia Pacific solar photovoltaic capacity could triple to 1,500 gigawatts (GW) by 2030. According to Wood Mackenzie estimates, China will add 619 GW of mainly utility-scale capacity while most other nations in Asia prefers distributed solar due to land constraints. Solar PV tends to be backed up by flexible gas gensets and energy storage, forming hybrid power units.

Kinder Morgan closes on Stagecoach assets

July 12 – US energy infrastructure major Kinder Morgan has closed its acquisition of Stagecoach Gas Services. The deal include 4 gas storage facilities with a 41 bcf working gas capacity and a transmission network with multiple interconnects to major interstate pipelines, including Tennessee Gas Pipeline. The Stagecoach assets add to Kinder Morgan’s approximately 83,000 miles of pipelines and 144 terminals.

Dortmund cancels electrotechnik fair

July 9 – The elektrotechnik fair, planned for 29 September to 1 October 2021, will now not be taking place in Dortmund due to requests from the industry. The next trade fair for building, industrial, energy and lighting technology will now open its doors again in spring 2023.

Hitachi to change name of ABB Power Grids

July 7 – Hitachi ABB Power Grids will become Hitachi Energy in October. The Japanese manufacturer bought a controlling stake in ABB’s grid business a year ago and is about to fully take the name of the merged company while expanding its direction towards e-mobility and data centres.

Tapping wind energy for hydrogen

July 6 – Spanish utility Naturgy and the gas grid operator Enagás are evaluating the use of 350 MW offshore and onshore wind capacity to produce green hydrogen. The fuel will be used to decarbonise the steel industry and shipyard in northwest Spain.

EU seeks to expand Green Deal to Africa

July 5 – The European Green Deal should be expanded to also include African states as partners, the German development minister Gerd Müller said. Green hydrogen production in Africa, in his view, should be a “cornerstone for economic cooperation with the Europe.”

Decom Engineering updates PCR

July 2 – Northern Ireland-based Decom Engineering has invested more than £700,000 to develop tools for repurposing and clean decommissioning of energy infrastructure. Through updated Pipe Coating Removal (PCR) equipment, decommissioned or surplus pipelines can be cleaned of multiple coatings, so they can be repurposed for used on other projects.

Cummins buys half of Momentum Fuels

July 1 – Cummins has signed a letter of intent to acquire a 50% equity interest in Momentum Fuel Technologies from Rush Enterprises. The transaction is expected to close before year-end, and the combined venture will produce Cummins-branded natural gas fuel delivery systems for the commercial vehicle market in North America.

Gazprom evaluates cost of grey hydrogen

June 30 – Scientific studies by Gazprom and the Russian Academy of Sciences (RAS) seek to solve technical challenges in producing grey hydrogen through steam reforming in the most cost-efficient way, as well as transporting the fuel to end-users. The findings of the studies will be factored into Gazprom's sustainable development scenarios up to 2050.

Redox about to overtake Li-ion batteries

June 28 – Li-ion batteries have dominated the energy storage field, but are expected to lose their leading role in stationary applications. According to IDTechEx findings, Redox flow batteries are gaining traction and are likely to overtake the installed Li-ion battery energy capacity before the end of 2030.

B&W proceeds with waste-to-energy projects

June 25 – Babcock & Wilcox’s (B&W) renewable segment has received limited notice to proceed for a waste-to-energy project in Europe as it finalizes terms for a $24 million contract with the customer. Ohio-based B&W said it looks to capitalize on an estimated addressable market of more than $7 billion in Europe over the next three years.

Japan’s gas-burn on the rise

June 24 – LNG imports for power generation in Japan have rebounded with steady volumes from the Middle East and Australia and higher cargo numbers from Russia and the US, though LNG deliveries were outpaced by thermal coal shipments. The May 2021 LNG shipments amounted to 4.95 million tonnes, or around 73 cargoes, a 8.2% rise on volumes received in May 2020, according to trade figures by the Japanese finance ministry.

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