Electricity demand has plunged in China’s Hubei province, where factories and construction sites are dormant as workers are told to stay home to contain the coronavirus. Industry accounts for nearly 70 percent of electricity demand, so the quarantine in Hubei slashed peak power load to 22.5 GW, some 21 percent lower than planned.
All eyes are on China’s health crisis and its impact on economic and energy demand growth. Though a U.S.-China trade deal includes a promise for $52.4 billion in further purchases of American energy exports in 2020 and 2021, Beijing has left import tariffs in place. This could allow Russian pipeline gas to gain the upper hand over US LNG imports.
British utilities SSE and EDF Energy are among the winners of the latest T3 auction for capacity in 2022/23. Contracts for 45.06 gigawatts (GW) of back-up power generation capacity were awarded at a price of £6.44 per kilowatthour per year. SSE’s Keadby 1&2 gas power units as well as the Hinkley Point B nuclear reactor failed to get contracts.
Natural gas prices at Henry Hub are forecast to stay lower than $4 per million British thermal units (MMBtu) through 2050 amid an abundance of low-cost resources, primarily in the Permian Basin.“With continued technologically-enabled growth in production, we see the United States remaining a net exporter of energy for some time,” said the head of the U.S. Energy Information Administration (EIA), Linda Capuano.
Electricity generation from renewable energy sources in the United States is forecast to double between now and 2050. Declining capital costs, and higher renewable portfolio standards (RPS) targets in some U.S. states, will prolong the sharp growth in renewables seen during the past ten years while gas-fired generation stays rangebound.
LNG and pipeline gas have still a long way to go to reduce, let alone replace, the current “massive coal consumption” by Asian nations. In contrast to Europe, where gas is regarded as one of the fossil fuels amid strives for net-zero emissions, "coal-to-gas switching is important in Asia," the Institute of Energy Economics in Japan (IEEJ) noted.
Wärtsilä has missed Q4 expectations as order intake plunged 17 percent and the operating result fell to 202 million Euros, or 12 percent of net sales. Anticipating “soft” demand, Wärtsilä CEO Jaakko Eskola said “the year 2019 was characterised by a difficult environment and poor financial performance.”
Crude oil and associated gas production in the United States will keep growing, albeit at a much slower rate due to a decline in rigs. Projections of the U.S. government, revised in January, expect growth rates in crude oil production to slow down from 9 percent to just 3 percent by 2021, and remain subdued.
Germany's gas industry plans to establish a 5,900 kilometres pipeline network to enable the large-scale use of hydrogen use. FNB Gas, representing German gas TSOs, intends to use mainly existing infrastructure to transport hydrogen from future generation sites in the north of the country to industrial centres in the west and south.
Rising upstream spending, notably in unconventional oil and gas resources, will drive the related gas turbine market to an estimated $1.2 billion, growing at 3.5 percent annually through 2024. Major suppliers in this sector are GE, Siemens, Mitsubishi Heavy Industries, Solar Turbines, and Kawasaki Heavy Industries.
With solar PV set to become India’s largest power source by 2035, more energy storage capacity is needed to balance supply and demand when the sun is not shining. According to the International Energy Agency (IEA), battery storage will account for more than one-third of India’s total deployment by 2040.
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.
