Regulation & Policy

Just prior to the first meeting of Germany’s newly installed ‘climate cabinet’ this week, Finance Minister Olaf Scholz has tabled his vision of the country’s energy transition. In his ‘Energy Concept 2038’, Scholz urges the government to show “more commitment for climate action” and focus on electricity supply and grid stability.

The German government is evaluating the launch of CO2 pricing across various emission-intensive economic sectors, including transport. So far, no proposal for a CO2 tax has been included in the German Transport Ministry’s official recommendations because the Conservative CDU/CSU alliance prefers to expand the scope of the European Emissions Trading System (EU-ETS) instead.

The CEO of German regional utility EnBW, Frank Mastiaux, has forecast Germany will see a significant number of new gas-fired power stations being built over the coming years. Flexible combined-cycle gas turbine (CCGT) capacity, in particular, is deemed vital to guarantee cost-efficient supply of electricity and grid stability as the country exits coal and nuclear energy.

China has chosen April 1 as the date when two-digit reductions in Value-Added Tax (VAT) will have to be implemented by key industries, including electric power producers, in bid to lower fuel costs and ultimately reduce electricity prices. Manufacturing companies will benefit from 13% to 16% VAT cuts, while construction and transport firms will pay around 10% less VAT and industrial users of thermal coal, including power producers will see VAT drop by 3%.

Striving to streamline China’s energy market, the National Development and Reform Commission (NDRC) is advancing plans to create a single oil and gas pipeline company by mid-2019. The new China-wide TSO will integrate the pipeline assets of former competitors, notably CNPC and its listed arm PetroChina, Sinopec and CNOOC.

Since the start of the February billing cycles, customers of the Dominion Energy subsidiary SCE&G are enjoying a 15% drop in their expenses for electricity. Dominion had to commit to lower energy bills to get approval from South Carolina’s state regulators for the $7.9 billion SCANA takeover.

Alarmed by an air pollution crisis in Seoul and other key cities, the South Korean government is proposing measures to help utilities to convert their power plants from coal to natural gas in order to reduce worsening levels of toxic fine dust and mercury emissions in Seoul and other northern cities.

U.S. Democrats have voiced concern that Andrew Wheeler, the new head of the Environmental Protection Agency (EPA), will undermine the Obama-era Clean Power Plan by rolling back regulation on power plant emissions. President Trump-nominee Wheeler was instated at the top of the EPA after winning a vote in the Senate by 52-47.

Andrew Cuomo, the Democratic Governor of New York, has proposed to phase out less efficient gas peaking plants to meet the state’s target of reducing greenhouse gases by 40% by 2030, and achieve zero-carbon electricity supply by 2040. The new rules lower the NOx emission threshold, with more stringent controls set to start in five years’ time.

Nearly half of the German public wants a nuclear exit to happen before a coal phase-out: 49.5% of respondents of a Verivox survey say closing the last nuclear plant by 2022, and the last coal plant by 2038, is ‘the right order’. But 44.1% of respondents say nuclear closures are ‘wrong’ from a climate perspective.

Pakistan’s Economic Coordination Committee (ECC) has approved the terms of a power purchase agreement (PPA) and a gas supply deal for what will be the fourth LNG-fuelled power project in Punjab province. Built by a Chinese EPC company near the city of Jhang, the start-up of the 1,263 MW plant is being fast-tracked to help avert a regional energy crisis this summer.

Voters in a referendum have approved developers to proceed with a long-delayed gas power plant in central Mexico, one of seven projects halted in the region. About 60% of the votes cast were in favour of finalizing construction of the $1.3 billion power plant project in Huexca, southeast of Mexico City.

Proposals to put a price on carbon emissions – in the form of a CO2 tax – will not be realise in the current legislative period, Germany’s energy state secretary Andreas Feicht said. The Conservative-led Government had earlier dismissed the initiative, saying it was not in the governing coalition’s agreed agenda.

Reacting to blackouts during Australia’s latest heatwave, the federal government is proposing to underwrite and partially fund new fossil power generation capacity. On the cards are large-scale fossil generators as well as decentralized hybrid plants, consisting of wind and solar plus energy storage.

Los Angeles Department of Water and Power (LADWP), the city’s municipal utility, has abandoned plans to retrofit three gas-fired power plants from water- to air-cooling. Instead, the utility will phase out the Scattergood, Haynes and Harbor gas-fired power units by 2029, and invest renewables to lower its carbon footprint.

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News in Brief

Shell Energy ordered to refund overcharged UK customers

June 17 – UK energy regulator Ofgem has ordered Shell Energy Retail to refund around 12000 customers who were overcharged after the Government’s cap on gas and electricity prices came into force in January. Shell Energy Retail s agreed to refund these customers by paying £29,000 in compensation (£5 per fuel), and also pay an additional £200,000 into Ofgem’s voluntary redress fund.

BASF enters battery market

June 14 – German chemical company BASF is using NGK Insulators’ sodium sulfur batteries as its entry point into the energy market. The Japanese manufacturer NGK is currently the only maker of the large-scale sodium sulfur (NAS) batteries, capable to store several hours of energy. A joint project in northern Germany uses NAS batteries that store energy for five hours, while a recently completed project in Abu Dhabi using 108MW / 648MWh of the systems with a full six hours storage duration.

CNPC boosts domestic gas production

June 13 – China National Petroleum Corp (CNPC), the largest Chinese oil and gas company, has announced plans for domestic natural gas output to reach 55% of overall domestic supply by 2025. Last year, CNPC managed to boost production by 5.9% to reach 138.02 billion cubic metres, while also increasing imports of pipeline gas and LNG.

Gazprom taps new gas deposits for Nord Stream 2

June 12 – Gazprom is fast-tracking hydrocarbon production in northwest Russia to boost reserves for export through the Nord Stream 2 pipeline (55 Bcm/y), currently being built through the Baltic Sea. At a meeting with Nord Stream shareholders, Gazprom noted that its Yuzhno-Russkoye field has yielded about 276 Bcm of natural gas, including 0.9 Bcm of hard-to-recover Turonian gas, since the start of operations. Turonian gas reserves, consisting of about 99% methane with no heavy residues, lie at a depth of 800–850 meters in reservoirs with low permeability. Commercial production at the Turonian deposit is scheduled to start in late 2019.

PG&E turns off electricity to avoid wild fires

June 11 – Pacific Gas and Electric Company (PG&E) has turned off electricity for some Californian communities at risk of a wildfire during the lastest heat wave. The authorized blackout started on Saturday in Napa, Solano and Yolo counties, with electricity being gradually restored over the course of Monday. Approximately 16,000 customers have been affected.

Gazprom to build power plants in Serbia

June 10 – Gazprom Energoholding has signed an Agreement of Intent (AoI) to build an upgrade several gas-fired power plants in Serbia. Together with Novi Sad, Gazprom Energoholding is already building a CCGT with some 200 MW capacity near a refinery in the Serbian town of Pancevo.

U.S. fund splashes out $4bn to buy El Paso Electric

June 7 – Infrastructure Investment Fund (IIF), a private investment vehicle within J.P. Morgan Inc., has agreed to acquire the U.S. utility El Paso Electric Co for $68.25 per share in a cash transaction. The enterprise value on the transaction is estimated at $4.3 billion. El Paso Electric customers will receive a total $21 million in bill credits over three years.

Caterpillar gensets back up Finnish data center

June 6 – The Swedish telecom giant Telia has ordered 12 Caterpillar gensets to provide standby emergency power to back up operations at its new data center in Helsinki. The Cat dealer Witraktor figured a system which includes eight Cat 3516B and four 3516E generator sets. The Telia Helsinki Data Center is the largest such facility in Finland, and its primary electric power supply comes from a combination of wind, hydroelectric and biomass.

Capstone wins orders in Iraq

June 5 – Micro-turbine producer Capstone has secured an order for two C600 Signature Series microturbines to provide 1.2 MW of energy to power a triethylene glycol (TEG) dehydration facility near Basra, in southern Iraq. The contract also includes Capstone’s new self-cleaning pulse filtration system, allowing the turbines to better withstand hot and sandy conditions with minimal maintenance.

Gas to supply record 43% of US power needs

June 4 – This summer, natural gas is forecast to cover between 40% and 43% of 2019 peak electricity demand in all U.S. states except Texas, according to projections by the Energy Information Administration (EIA). Gas demand soared to nearly 10,700 billion cubic feet (Bcf) last summer, a 16% rise from 2017 levels. Should there be another heat wave this year, that record may well be broken. Capacity wise, natural gas is on course to top its 45% share in the U.S. power mix.

Lukoil to upgrade CHP at Krasnodar

June 3 – Russia’s oil and gas company Lukoil has received government approval to modernize and expand three combined heat and power units in Krasnodar. The gas-fired CHP units have more than 400,000 hours and ran an average 74% utilization rate, the operator said. The upgrade will add 150 MW of power generation capacity and Lukoil said it expects the revamped power plant to be ready for commissioning as early as 2022.

GE commissions Al-Qudus CCGT in Iraq

May 31 – GE Power has installed and commissioned a new 9E gas turbine at the Al-Qudus combined-cycle gas power plant, run by the Iraqi Ministry of Electricity’s (MoE). The CCGT was previously capable of generating up to 1,125 MW and the turbine upgrade adds another 125 MW of capacity.

Groundbreaking takes place for Ohio CCGT project

May 30 – This Thursday morning, groundbreaking will take place for the $500 million Long Ridge Energy Generation Project in Hannibal, Ohio. Long Ridge, a 485 MW combined-cycle power project, is being developed by Fortress Transportation and Infrastructure Investors (FTAI). It will create up to 350 construction jobs and some 25 permanent jobs. The CCGT is expected to open in 2021.

Asia to spend more on renewables than oil & gas by 2020

May 29 – Utilities in Asia-Pacific region will invest more in renewables than on oil and gas exploration by 2020. Total capital expenditure in renewables will rise above $30 billion in the region by 2020, according to forecast of the consultancy Rystad Energy. India, Australia, Japan, Vietnam and South Korea will led the way in Asia’s green energy transition.

Ichthys LNG looses court claim against power sub-contractor

May 28 – JKC Australia LNG consortium, developer of the US$34 billion Inpex-built Ichthys LNG plant near Darwin, has lost a US$1.9 billion court case claim against a power station sub-contractor. Construction of the power station was subcontracted to UGL-led group which CIMIC took over in 2016 and subsequently cancelled the Ichthys power contract. The Western Australian Supreme Court in Perth now dismissed an application by JKC Australia LNG for upfront payment of damages. The power plant’s five gas turbines have already been handed over to Inpex, and KBR aims for the plant to be ready for commissioning this autumn.

San Miguel Energy claims $6.19bn subsidy for Ilijan plant

May 24 – South Premier Power Corp. (SPPC), San Miguel Energy’s development vehicle for the 1,200-MW Ilijan gas power project, has claimed that it already paid $6.19 billion in subsidies to state-run Power Sector Assets and Liabilities Management Corp (PSALM) for its financial obligations as independent administrator. The build-operate-transfer (BOT) contract for the Ilijan plant will expire in 2022; and by that time, SPPC will get ownership of the plant.

Evolve approved as energy storage for VPPs

May 23 – Eguana Technologies’ new Evolve system has been officially approved as an energy storage system for Simply Energy’s Simply Extra VPP (virtual power plant) offer in South Australia. Customers who purchase an Evolve system can sign up for the Simply Extra VPP offer and receive up to $5,100 in VPP Access Credits. These credits will be calculated on a daily basis at $3.49 per day to a maximum of A$5,100, credited over a five year period.