Regulation & Policy

Dealing a blow to concerted multi-national efforts of mitigating emissions from the energy and transport sector to help prevent global, the U.S. President Donald Trump has vowed to pull out of the 2015 Paris Climate Agreement. “I was elected to represent the citizens of Pittsburg, not Paris,” he said, indicating that he will put US business interests first.

The International Energy Agency (IEA) has singled out Norway’s large hydropower generation as a “valuable asset” for European electricity markets at a time when renewable energy supply is growing. More interconnectors will allow for hydropower to balance regional variations in demand and supply, the IEA said, but it called on Nordic countries to better coordinate their renewable energy incentives.

As mankind enters a period of change akin to the last industrial revolution, Rudy Koenig, Principal at QENIQ Advisory and POWER-GEN Europe, discusses three trends – digitalisation, decarbonisation and decentralisation. Peter Terium, CEO of Innogy, called attention to these mega-trends last year. Koenig examines the three Ds through the prism of Germany as a key industrial nation, and suggests they will shape the power generation industry for years to come.

Risk of power cuts in Britain seems unheard of for most electricity customers. But if coal power capacity comes off the grid more quickly than in 7 to 10 years’ time, subsidy-free renewables expand, and less interconnectors get built in the wake of Brexit – fast-ramping gas generator sets are best placed to fill the supply gap, Phil Grant partner at Baringa consultancy told industry stakeholders at the Finish embassy in London.

The cleanest and safest power plant is the one you don’t have to build thanks to higher energy efficiency, says Noé van Hulst, OECD ambassador of the Netherlands and IEA board chairman. Dubbed the “hidden fuel”, energy efficiency is demand-side driven, meaning it lacks the headline-grabbing milestones of big power plant projects, or other energy supply infrastructure. And through the energy efficiency trend accelerates, “progress on a global scale is still happening too slowly.”

Mexico has published a preliminary schedule for a third power auction and is calling for bids, with the winners set to sign long-term power purchase agreements (PPAs) for clean energy supply, the energy secretariat SENER and the state energy control centre CENACE stated.

The spread of policy drivers, as well as falling costs of solar and wind power, will ensure the de-carbonisation of the energy system continues globally, according to projections made by the Economist Intelligence Unit (EIU). Analysts cautioned however that the extent to which Mr Trump reverses the momentum of the Obama administration on green issues, and whether he will pull out of the 2016 Paris Climate Agreement, will be a key development to watch.

Nigeria has approached the World Bank for a $5.2 billion loan to expand power generation capacity and help the West African nation recover from its first recession in over two decades. Observers doubt, however, that the government in Abuja can reach its goal to triple Nigeria’s installed electric capacity by 2025.

In the run-up to the 2017 UK General Election, Theresa May has promised to impose a cap on standard variable power tariffs in the Tory manifesto to end what she calls the “injustice” of rising energy costs. Under the proposed plan, the energy regulator Ofgem would set a limit for the standard variable tariffs that customers move to by default after their existing deals run out. This measure is meant to save about 17 million customers up to £100 a year.

The UK energy regulator Ofgem has been reviewing, and revising downward, some incentive schemes for small gas- and diesel-fired power plants. Proponents of decentralized power solution warn a withdrawal of subsidies could make developers scrap 2,000 MW of planned capacity. In contrast, operators of larger power plants claim that larger payouts to distributed gensets would lead to a ‘market distortion’ and discourage investments in flexible combined-cycle gas power units.

Decentralized power generation is high on the agenda in Tanzania, with the Rural Energy Agency (REA) pleading support for individuals or companies that intend to supply ‘mini-grid electricity’. This initiative is meant to help close Tanzania's 1,290MW power deficit and give more of its rural population access to electricity.

Ofgem, the UK energy regulator, has awarded National Grid’s gas distribution arm together with DNV GL a £4.8 million, three-year contract to improve the way gas bills are calculated. The new billing method seeks to specifically assign the energy content of gas, rather than using the present flow-weighted average calorific value.

As Ireland moves towards an Integrated Single Electricity Market (I-SEM), the regulator has just set out a methodology for a transition to competitive power auctions in a bid to attract investment in new capacity. The first auction will be held on December 15 for the rest of the delivery year 2017/18.

Activists have staged an animal-themed invasion of a public relations firm to protest against fracking in the UK.

U.S. energy-related carbon dioxide (CO2) emissions in 2016 totalled 5,170 million metric tons (MMmt), 1.7% below their 2015 levels, after dropping 2.7% between 2014 and 2015, according to the Energy Information Agency (EIA).

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News in Brief

ExxonMobil enhances turbine oils

Jan 17 – New high performance turbine oils, developed by ExxonMobil Lubricants, are  entering the market which are formulated to prevent build-up of lacquer, varnish and deposits. The oils are designed to protect against thermal and oxidative degradation, one of the root causes of deposit build-up.

Wärtsilä signs O&M deals in the Bahamas

Jan 16 – Following the commissioning of a Wärtsilä-built 132 MW power plant in Bahamas in December, the Finish manufacturer now signed a two-year operation and maintenance (O&M) accord with the plant owner, the Bahamas Power and Light Company (BPL). Wärtsilä will transition, train, and develop the owner’s Bahamian work force and provide key performance guarantees.

China, S'Korea curtail coal to tackle air pollution

Jan 15 – Beijing city government’s aggressive approach to tackling air pollution is working and South Korea’s spring coal-fired curtailments show some success in cutting seasonal emissions. According to Wood Mackenzie, this should benefit LNG, particularly while spot prices remain low.

Sri Lanka at brink of power shortages

Jan 14 – Sri Lanka could face power cuts by March, after plans for a large-scale coal power plant were been cancelled just prior to start of construction, and a tender for a 300 MW diesel plants ended up in court. On the demand side, pressure is building up as the region is moving into the dry season in February and March. Weather warnings say the island is likely to receive lower than average rainfall in the first quarter of 2020.

Caterpillar’s new genset comply with UK & German grid codes

Jan 13 – Caterpillar Inc. has launched a series of new generator sets that comply with the new G99 United Kingdom, VDE-AR-N 4110 German and Belgium C10/C11 grid codes. The following gensets – G3500H, CG132B, CG170, and CG260 (rated from 280-4,500kVA) – have been verified to be able to accommodate different reactive power modes, active power functions, and connection conditions for normal operation or reconnection after mains decoupling.

Transneft launches battery-based power supply for ILI tools

Jan 10 – Transneft Diascan, the largest Russian inspection service provider for pipelines, has developed and put into operation a power supply system for in-line inspection (ILI) tools based on rechargeable batteries. Flaw detectors performing inspections of trunk oil pipelines, gas pipelines and oil product pipelines can now use the energy from rechargeable batteries, which helps save time and reduces the cost of in-line inspection.

Pavilion starts trading LNG out of Madrid

Jan 9 – Singapore-based Pavilion Energy has completed the acquisition of all gas and LNG assets of the Spanish utility Iberdrola. From its new European headquarters in Madrid, Pavilion said has launched 2020 LNG trading operations with supplies focusing on Spain and the UK market.

Gazprom extends gas transits via Belarus until 2021

Jan 8 – Gazprom and Gazprom Transgaz Belarus have sealed additional agreements to extend the contracts for gas supplies to and gas transportation across Belarus until 2021. According to the newly-signed documents, the contractual supply and transit volumes in 2020 will remain at the level of 2019.

EastMed pipeline to take FID by 2022

Jan 7 – Greece, Cyprus and Israel have signed an agreement to build the 1,900-kilometre EastMed pipeline at an estimated cost of 6 billion Euros. The subsea pipeline, spanning over 1,900-kilometres would initially carry 10 Bcm of gas per annum from Israeli and Cypriot waters to Crete and then on to the Greek mainland and into the European gas network via Italy. A final investment decision (FID) is meant to be reached in 2022, given that the pipeline is scheduled for completion by 2025.

U.S. energy-related emissions drop over 2%

Jan 6 – Fewer emissions from coal consumption, combined with lower energy demand, have helped to significantly reduce the overall energy-related carbon emissions in the United States. According to government statistics, energy-related CO2 emissions fell 2.2 percent last year, and the downward trend is forecast to continue into 2020.

Brent crude prices surge

Jan 3 – North Sea Brent crude prices have risen to their highest level since September 2019, up nearly $3 per barrel because of Middle East tensions coupled with improved Chinese economic forecasts. Brent crude futures for March 2020 delivery were last seen trading at 69.21 per barrel the Intercontinental Exchange (ICE). This bullish price sentiment will feed through to oil-indexed natural gas contracts and LNG deliveries, linked to the Japanese crude cocktail (JCC) basket price.

IEA says coal’s fate tied to Asia

Dec 23 – Rapid rise of wind and solar power in many parts of the world has pushed coal-fired power generation into steep decline in most developed countries. "But this is not the end of coal, since demand continues to expand in Asia," analysts at the International Energy Agency commented: "The region’s share of global coal power generation has climbed from just over 20 percent in 1990 to almost 80 percent in 2019, meaning coal’s fate is increasingly tied to decisions made in Asian capitals."

Drop in coal-burn makes Germany edge closer to climate targets

Dec 20 – In 2019, Germany managed to increase its greenhouse gas emissions for the second year in a row, mainly due to a 20 percent drop of coal use for power generation and a growing contribution from renewables. Energy savings and efficiency increases also helped. According to calculations by energy research group AG Energiebilanzen (AGEB), Germany’s primary energy consumption declined by 2.3 percent this year, overall energy use fell more than 2 percent, and energy-related CO2 emissions fell by as much as 7 percent.

Glencore buys Orsted’s lgas business unit

Dec 19 – UK-listed mining company Glencore has agreed to take over a loss-making natural gas business from Orsted, including long-term import capacity at the Gate regas terminal in Rotterdam and five other LNG purchase agreements. “The transaction entails a payment from Orsted to Glencore and will result in a loss that exceeds our current provision related to the LNG activities,” stated Copenhagen-based Orsted without disclosing the value of the transaction.

Carbon-intensive firms may shed over 40% in value

Dec 18 – Energy- and carbon-emissions intensive companies could lose up to 43% of their value if national governments enact more stringent policies to reduce air pollution and tackle climate change. Companies using green energy, in contrast, could gain up to 33% in value, research by the United Nations-backed Principles for Responsible Investment (PRI) finds.

COP25 – a “lost opportunity”

Dec 17 – UN Secretary António Gutierrez has dismissed the outcome of the COP25 climate talks in Madrid as “disappointing” and “lost opportunity“. Some of the world’s largest emitters, including Australia, Brazil, China and Saudi Arabia had joined the U.S. in pushing for accounting loopholes to weaken commitments to reduce emissions in the transport and power generation sector.

Industry produces over 13% of Germany’s electricity

Dec 16 – Decentralized power generation at industrial sites keeps rising in Germany. According to the Federal Statistical Office (Destatis), industry produced 55 Terawatt-hours (TWh) of in 2018, meaning local units of mining and manufacturing generated 12.6 percent of the country's gross electricity output, mostly from gas-fired power units. The use of gas as a fuel for industrial power plants has consequently risen from around 35 percent to almost 50 percent over the last ten years.