Regulation & Policy

Dealing a blow to the industry, China’s National Development and Reform Commission (NDRC) has significantly reduced solar subsidies by setting new on-grid power tariffs that range between $7.8-11c/kWh, effective June 1. Distributed projects are capped at 10 GW and all utility-scale projects are mandated to set power prices through competitive auctions.

Bowing to industry pressure, the British government has indicated it will make a direct investment of public money into the much-contended Wylfa nuclear project in north Wales, backed by Hitachi. Critics dismiss this move as state aid, a reversal of 40 years of UK energy sector privatisation, and unfair prioritisation of nuclear power to the detriment of renewables and new gas-fired power projects.

Energy industry stakeholders have unanimously condemned U.S. President Trump’s latest market interference by directing the Department of Energy (DOE) to stop, what he calls, “impending retirements of fuel-secure power facilities.” Rebuking the move, several energy industry associates called the action “misguided” as it would be effectively subsidizing “failing coal and nuclear plants.”

Improving power system flexibility is vital for cost-effective management of variability and uncertainty in both supply and demand, the International Energy Agency (IEA) finds. Hence the agency calls for a proactive response from regulators and policy makers to help manage today’s fundamental a transformation of energy markets.

China's National Development and Reform Commission (NDRC) will unify China’s residential and industrial city-gate natural gas pricing systems from June 10 to better reflect rising demand and costs. The new mechanism will allow gas prices to rise by no more than 20% from a benchmark price, NDRC stated, which is “more flexible” than the existing one which since 2010 kept a ceiling on residential gas prices at at 1.4 yuan (about $0.22) per cubic metres.

Canada’s current policies, combined with energy efficiency investment, could deliver final energy savings of 1.9% per year on average through 2050, the International Energy Agency (IEA) finds. Sectors with the greatest energy savings potential would be buildings (28%), followed by transport (25%), oil and gas extraction (21%) and industry (12%).

Dirty king coal is no longer vital for Germany’s security of power supply. In fact, about half of the country’s coal-fired power generation capacity could be shut down over the coming years if planned grid extension and the additional gas-fired plants start operating according to schedule, said Jochen Homann, head of the German energy regulator.

Deployment of electric vehicles so far has fallen short of expectations hence penalizing policy measures, like London’s new Emissions Surcharge, or T-Charge, have been introduced to spur growth. Penalising offending vehicles is one part of the solution, finds Jacob Klimstra, Senior Energy Consultant and Member of the Advisory Board for Electrify Europe. He highlighted plans by the Dutch government for all new cars to be zero-emissions vehicles by 2030 – others, including Paris, are already following suit.

Mexico, the largest buyer of US pipeline gas and LNG, is preparing a tender for strategic storage at depleted oil and gas reservoirs. Cenagas, the Mexican National Natural Gas Control Centre, has already selected four underground sites – Acuyo, Brasil, Jaf and Saramako – from a list of 15 proposed sites. Registering strong bidding interest from foreign players, the Mexican Energy Secretariat (Sener) will hold the tender in September 2018.

Chicago-based Exelon has approached the U.S. Federal Energy Regulatory Commission (FERC), suggesting it would keep operating two gas-fired power plants and the LNG import facility in Everett between 2022 and 2024, if it gets permission to collect about $1 per month from all electricity customers in New England. The Mystic gas-fired power plants are some of the largest generators in New England, but they are not economical in the current market environment.

Painting a bleak picture of the planet’s climate, the International Energy Agency (IEA) has warned if countries limit their clean energy efforts to their  nationally determined contributions (NDCs) in the Paris Agreement, this will set us on a path consistent with about 2.7°C warming by 2100. Yet, as the adage goes, “that which is measured, improves,” says IEA Climate Change Policy Analyst, Caroline Lee, so there is hope that natural gas and renewables will help turn the tide towards more sustainable electricity supply.

Beginning June 1, New England will become the first US grid operator to fully integrate demand-response (DR) resources into its daily energy dispatch and reserve processes. The ISO estimates that about 408 MW of DR will be available which will participate in real time in the energy markets. Pay-for-performance incentives will be in effect starting June 1.  With this instrument, the ISO is confident to meet peak summer demand. 

Federal financial interventions and subsidies in U.S. energy markets have been in a steep decline over the past five years. According to the U.S. Energy Information Administration (EIA), federal monies spent in energy markets nearly halved in the period 2013-16, falling from $29.3 billion in the 2013 fiscal year to $15.0 billion in FY2016.

Michigan Public Service Commission (MPSC) has approved DTE Electric’s certificates of necessity filing to build a 1,100 Gigawatt gas-fired power station in St. Clair County at a cost of nearly $1 billion. Construction will now start in early 2019, DTE said, aiming to get the plant commissioned by 2022.

The Government of Vietnam has approved plans by PetroVietnam Power Corp, or PV Power, to build two gas-fired power plants in southern Vietnam at an estimated cost of $1.5 billion. The Nhon Trach units 3 and 4, with a combined capacity of 1,500MW, are scheduled to start operation in 2020 and 2021.

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