Markets

Aksa Energji, a Turkish Independent Power Producer (IPP), has asked regulators to temporarily close a gas-fired power plant (147 MW) in the southeast province of Şanlıurfa. “It has become less possible to produce electricity at a competitive price,” Aksa said in a filing to the Istanbul Stock Exchange.

Dirty king coal is seen to shed 13 percent market share, accounting for just 22 percent of the global power mix in 2050 amid a massive build-out of renewables and some gas-fired backup power units. According to U.S. government analysis, wind and solar will rise 20 percent by mid-century and provide nearly half of the world’s electricity needs.

Importers of LNG to India strive to lower the per-unit-costs of natural gas to unlock the huge demand potential from fuel switching in the power sector. In eastern India, however, a severe lack of pipeline capacity hampers the distribution of regasified LNG, though works on the 2,655km Pradhan Mantri Urja Ganga (PMGU) pipeline are due completed by year-end.

China’s hunger for gas surpasses initial estimates, hence Gazprom is evaluating a second interconnector in the Far East. With the launch of the landmark ‘Power of Siberia’ pipeline, Gazprom’s focus shifted to its Chinese offtaker CNPC who agreed to import 38 Bcm annually over the next 30 years, under a deal worth some $400 billion.

With plentiful supplies of cheap pipeline gas and LNG available, Europe in 2020 will once again become the ‘market of last resort.’ Record low prices at the Dutch TTF gas trading hub, last seen at $3.55 per MMBtu, incentivizes a significant step-up in coal-to-gas switching across northern Europe.

Energy-related carbon dioxide (CO2) emissions in the United States are forecast to continue falling year-on-year through 2021. Coal-to-gas switching in the power sector led to a 10.8 percent fall in emissions in 2020, after plunging 12.7 percent in 2019 due to record-low gas prices. However, EIA analysts say this rate will be less this year and in 2021, at 2.7 percent.

Germany’s prime carmaker Volkswagen Group, producer of Audi and VW, has committed to invest €30 billion in battery-powered vehicles until 2023. Despite limited raw materials and few available e-car charging stations, there is "significant opportunity," analysts say, suggesting; "For auto manufactures, it could be a case of evolve or die out.”

National Grid, the UK power and gas system operator, is working towards launching a ‘pathfinder to evaluate constraints and encourage innovation and investment in supply stability. Analysts say this could lower cost for balancing services and ultimately lead to lower energy rates for consumers.

The German finance ministry has made clear it will not pay more into the EU budget to bolster the Commission’s ambitious €1 trillion Green Deal. The ministry said if the EU budget remained at 1 percent of economic output, this would give "enough leeway for mustering the necessary funds through priority setting."

Bearish sentiment prevails at the U.S. benchmark Henry Hub where gas prices have tumbled to multi-year lows, dragging down wholesale electricity prices at several major hubs like PJM Interconnection and the ISOs in New England, and New York. In Texas, however, high demand and low reserve margins pushed up prices in the peak summer season.

Surging supply from the U.S. and stuttering demand growth in Asia means that in 2020, “Europe will again be called upon to save the day,” said Wood Mackenzie research director Robert Sims. With gas inventories at record highs, European gas buyers are looking for flexible supply, or increased demand creation from within the power sector.

Flow data shows U.S. natural gas output in the Lower 48 states has gained 7.0 billion cubic feet per day y/y to date in January, as shippers struggle with restrictions across the TETCO pipeline network in Appalachia. The return of cold weather this week, and long-term rig decline across Appalachia, starts to drag down production and pushes up gas prices.

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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.