Regulation & Policy

Faced with high costs for retrofitting coal-fired power plants to comply with the Environmental Protection Agency's (EPA) Mercury and Air Toxics Standards (MATS), operators are keen on developing cost-effective measures to curb emissions, acid gas, toxic metals and mercury.

In a bid to increase the reliability of the U.S. power sector the Federal Energy Regulatory Commission (FERC) has ordered gas and electric providers to create closer ties to improve shipping and dispatch timetables. Providers must “better coordinate the scheduling of natural gas and electricity markets in light of increased reliance on natural gas for electric generation,” according to a FERC statement.

The chief executive of UK energy firm Centrica has stated the company has ‘concerns’ over the recently announced Competition and Markets Commission (CMA) inquiry into the UK energy market and suggested the company may hold off on any  investments in new gas power plants in the short term.

Any delay to the UK’s proposed capacity market mechanism could result in power brownouts and hold ups for power plant construction, according to the chief of National Grid's Electricity Market Reform team. “The risk has clearly increased and we are close to being in the position of experiencing brown outs". Mark Ripley, project director at National Grid said at the Future of Utilities conference in London.

The U.S. Federal Energy Regulatory Commission (FERC) has approved plans to ship natural gas from Texas to Mexico via a border-crossing interconnector. FERC noted that the project was needed to “meet [Mexico’s] expanding fuel demand for power generation and industrial activity.”

Gas-fired power plants in Spain may be in line for government subsidy to prevent further closure of facilities. The government is understood to be in private negotiation with power providers in a bid to reduce the countries €30 billion electricity deficit.

The UK Department of Energy and Climate Change (DECC) has disclosed final aspects of the much discussed Capacity Market design ahead of the first auction being held in December this year, subject to state aid clearance. Capacity should then be in place by the winter of 2018.

UK chancellor George Osborne today announced that he would abandon any further increases in the Carbon Price Floor (CPF) in a bid to help reduce costs for fossil fuel based power producers. As part of his 2014 budget the chancellor announced a freeze at £18 per tonne from 2016 for the rest of the decade, up from currently around £16/t, and highlighted the need for lower energy prices to make British manufacturing more competitive globally.

The California Public Utilities Commission (CPUC) ruled this week that it was not feasible to replace output from the retired San Onofre nuclear plant without including new natural gas-fired plants as part of the plan. Opponents had been pushing for a renewable-only option but this latest ruling will ensure that gas-fired power is included in the mix.

Keen to block tough new regulation of the Environmental Protection Agency (EPA) on new coal-fired power generating capacity Republicans in the U.S. House of Representatives have voted through a bill aimed at thwarting the rules. The vote in the Republican-controlled House passed by 229 to 183 but commentators are sceptical it will make it past the Democrat-controlled Senate.

Security at power plants in the United States is under threat from cyber-attacks, according to a recent report from the Bipartisan Policy Center (BPC). “Evidence collected by the U.S. Department of Homeland Security (DHS) suggests that cyber-attacks on key energy infrastructure—and on the electricity system in particular—are increasing, both in frequency and sophistication,” said Margot Anderson, lead author of the report and director at the BPC.

Republicans in the U.S. have tabled a bill in the House of Representatives in an attempt to block pending Environmental Protection Agency (EPA) rules that require new coal-fired power plants to use carbon capture which opponents claim would effectively ban new coal projects. In a debate this week Congressman Ed Whitfield challenged EPA rulings that are due to come into force next year and called for representatives to overturn the “latest threat by the Obama administration”.

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News in Brief

China’s fuel demand recovers

May 27 – The Chinese government has lifted restrictions on private travel since April which pushed up demand for transport fuels. Gasoline demand has recovered particularly fast and is expected to return to last year’s levels by June 2020. Wood Mackenzie estimates gasoline consumption to reach 3.4 million barrels per day (b/d) in the second quarter, down just a 0.8% year on year. Diesel or gasoil demand is expected to reach 3.4 million b/d in Q2 2020, a 3% decline year-on-year. Overall, China’s oil demand is seen rise a “modest” 13.6 million bpd, or 2.3%, in the second half of 2020.

Wärtsilä to retrofit CHP in Spain

May 26 – The Finish engine maker Wärtsilä has bagged an order to supply and install a 34SG gas-fuelled engine generating set for Rofeica Energia's combined heat and power plant in Barcelona, Spain. The installation of the gas engine will allow Rofeica to switch the CHP from heavy fuel oil to gas-fuelled operation, reducing emissions.

New York body rejects William’s plans for gas pipeline expansion

May 21 – New York’s and New Jersey’s state bodies for environmental conservation have rejected Williams’ plans for the Northeast Supply Enhancement project, designed to transport 400 million cubic feet per day of gas from Pennsylvania to New York. The state bodies had already denied wetland permits in 2019, but Williams pipeline subsidiary Transco filed another application with the U.S. Federal Energy Regulatory Commission (FERC), arguing firm services under the project were agreed with UK’s National Grid for customers in New York City districts of Brooklyn, Queens, Staten Island and Long Island.

UK inflation at 4-year low amid falling energy costs

May 20 – The rate of inflation in the UK has fallen to a four-year low as the pandemic pushed down global oil and fuel prices which translate into lower wholesale power prices. The consumer price index fell to an annual rate of 0.8% in April, down from 1.5% in March, according to the Office for National Statistics.

Deficit grows in German green energy fund

May 19 – German regional grid operator TransnetBW has warned of a growing shortfall in the country’s fund for green energy sources, financed under the so-called renewable energy (EEG) levy. TransnetBW, the TSO in southwest Germany, said “due to the EEG cost allocations defined for 2020, we anticipate there will be a negative year end bank account balance in the high three-digit million euro range for 2020.”

Spanish gas companies ‘resilient’

May 18 – Spain’s regulated gas companies “should prove to be resilient” to external shocks arising from coronavirus containment measures, Standard & Poor’s analysis finds, calculating with an average drop in EBITBA at less than 3% in 2020. A new remuneration framework for 2021-2026, recently enacted by the Spanish government, provides enhanced visibility rated grid operators amid the pandemic.

German electricity prices second highest in EU

May 15 – Taxes and the renewable energy surcharge have pushed up Germany’s household electricity prices to the second highest level in Europe, topped only by prices in Denmark. While Danish households paid 29.2 Euros per 100 kWh on average in the second half of 2019, prices in Germany averaged 28.7 Euros, according to the EU statistics office Eurostat.

Calpine’s Q1 earnings fall

May 14 – Calpine, America’s largest generator of electricity from gas and geothermal, has reported a net income of $128 million for the first quarter of 2020, down from $175 million in the prior year period. Lower commodity margins and unfavourable change in income taxes were partially offset by earnings from hedge positions for the three month ending March 31.

Siemens to supply hybrid plant in the Philippines

May 13 – Berkley Energy has contracted Siemens Energy to build a hybrid power project on the island of Mindoro in the Philippines. The project links 16 MW wind power with battery storage, stabilizing energy supply in a remote location with a weak link to the grid and reducing its dependence on diesel.

U.S. energy emissions fall

May 12 – Energy-related carbon emissions in the United States have fallen more than energy consumption, down 2.8% over the course of last year to 5,130 million metric tons (MMmt). Power sector emissions were down 145 MMmt, due to a switch from coal to gas and renewables. In April 2020, emissions experienced another unprecedented fall in due to Covid-19 lockdowns.

MAN expands Omincare concept

March 11 – MAN Energy Solutions’ service brand has extended its ‘PrimeServ Omnicare’ concept from turbomachinery to the marine and power segments. The one-stop service solution is now also applicable for maintenance of third-party machinery, including engines, turbochargers and related auxiliaries.

MIVOLT launches cooling fluid

May 7 – MIVOLT, part of the British company M&I Materials, has launched two specialist fluids to improve cooling efficiency at data centres. The electricity demand of data centres is forecast to rise to 20% of global supply to accommodate lifestyle changes like 5G internet network, autonomous vehicles and bitcoin mining.

Germany adds 1,300 km to power grid

May 6 – Germany has made progress in expanding its strained power grid. According to the Federal Network Agency (BNetzA), over 1,300 kilometres of new power transmission lines have been built and another 830km approved. A further 3,600km are planned to be built by 2030 to alleviate grid bottlenecks and allow transporting rising volumes of offshore wind southbound.

 

 

 

Oman nationalizes first IPP

May 5 – Manah Power, the first privately-run Independent Power Project (IPP) in Oman, has been transferred to state ownership, following the expiry of a Power Purchase Agreement (PPA) between United Power Company and state-owned OPWP. Manah IPP was developed under Build-Own-Operate-Transfer (BOOT) model, which stipulates an eventual nationalization of the assets – a feature absent in subsequent IPPs.

U.S inventories at record highs

May 4 – Inventories for crude oil and natural gas have reached a new record high in the United States, as fuel demand declines both for transport and the electric power sector. From March 13 – when a national emergency was declared due to the Covid-19 pandemic – to April 24, U.S. commercial crude oil inventories increased by 74 million barrels, or 16%, according to government figures. The acute scarcity of crude storage on April 20 led to a sell-off of future contracts at negative prices.

Wärtsilä to service Argentinean power plant

May 1 – Wärtsilä has signed a 10-year maintenance and service agreement with one of Argentina’s upstream companies. Under the deal, Wärtsilä provides a guaranteed performance for a 57.6 MW onsite power plant in the southern part of Argentina, with excess power sold to the national grid.

Zink-Air batteries for NY

April 30 – Zinc8 Energy Solutions has entered a cooperation with the New York Power Authority (NYPA) to install a zinc-air battery energy storage, backed by $2.55 million in state funding over a three year period. The Zinc8 ESS units can deliver power in the range 20-50 MW, with capacity of 8 hours of storage duration. The project will help New York State achieve its goal of installing 3 GW of energy storage by 2030.