Regulation & Policy

Timing of UK's first capacity auction next year for delivery in 2018 is "not perfect", as it risks a gap in power supply in the face of tightening reserve margins starting from 2016, no new capacity by then and a lack in demand response, says Stephen Woodhouse, director at Pöyry Management Consulting.

The drive for low-carbon power generation in the UK through the new Contract for Difference (CfD) scheme is hampered by a Capacity Market that seeks lowest cost capacity with no consideration of carbon emissions or efficiency, says Tim Rothary, head of policy at the British CHP Association.

Eager to curb China's notorious air pollution, the State Council has announced it will ban the construction of new coal-fired power plants in three key industrial regions surrounding Beijing, Shanghai and Guangdong. In an action plan, the Chinese cabinet aims to slash the share of coal in the country's energy mix from currently 70 percent to below 65 percent by 2017.

Rather than supporting new gas-fired power generation capacity, Britain's capacity auctions in 2014 will help the Big 6 energy companies get mothballed assets back into the market, a senior London-based banking source told Gas to Power Journal.

The US Environmental Protection Agency (EPA) is working to finalize its re-proposal of a pollution standard for new power plants in light of reviewing stakeholder comments. Details on a so-called 'carbon rule' are due for release on September 20.

Disputes among German policy makers over rising power prices and cuts in renewable subsidies will continue even after the general election on September 22, says environment minister Peter Altmaier.

In an open letter to UK energy secretary Ed Davey, the chairman of the Committee on Climate Change Lord Deben has called for caution on shrinking subsidies for offshore wind power projects, warning "required investment" would decline. Investors into new renewable as well as gas-fired capacity are sitting on their hands amid a persistent lack of clarity on the Electricity Market Reform Delivery Plan.

Turkey's government is plagued with a new headache over costs of gas imports after Abu Dhabi-based energy group Taqa decided to pull out of a $12 billion coal-fired power project. Domestic coal is seen as a leeway to reduce Turkey's annual $55bn energy import bill, and policy makers in Ankara have introduced tax breaks in favour of coal generation.

Tension is rising between policy makers and utilities amid rising urgency to invest in new power generating capacity in the UK. Policy makers keep urging utilities to fund much-needed new capacity, but cash-constraint utilities need to first reorganise their balance sheet before they can fund new-build projects, says Ben Caldecot, head of government advisory at Bloomberg New Energy Finance (BNEF).

As the regulatory clock continues to tick and deadlines loom large on implementing new EU rules like EMIR and REMIT, some utilities "face an uphill battle" to understand and meet the obligations, warns James Brown is senior energy consultant, EMEA for Allegro Development.

"When the current ambiguities are cleared up and firm deadlines reset, everyone will be expected to switch on quickly," he said, warning "Failure to comply will be met with stiff penalties."

A new independent, cross-party report urges the UK Government to clarify its energy policy beyond 2020. "The Government should work with industry to narrow the debate by identifying 'low regrets' investments for the power sector beyond 2020," finds the report which will be presented in Parliament today.

Nine out of ten businesses in the UK believe the government's flagship energy policy under the Electricity Market Reform (EMR) will burden the industry by making cost more difficult to predict, shows research released today by Npower. The £10 billion EMR programme guarantees a fixed price for green energy production, which is feared to increase electricity prices and reduce competitiveness of the UK economy.

US Charge d'Affaires for South Africa, Catherine Hill-Herndon, has said a new gas field south of Cape Town, Ibhubesi, could potentially be used as a source of natural gas to fuel the South African government's plan for gas-fired power plants.

India's federal government has allotted natural gas supplies from new production areas of Oil and Natural Gas Corporation Ltd. (ONGC) and Gujarat State Petroleum Corporation (GSPC) to operators of 25 power plants in an effort to alleviate supply shortages and keep the plants operational.

Capacity markets will provide stable cash flows to thermal generators in the UK to enable them to finance new projects at lower discount rates, reflecting lower risk. However, financiers may find that regulatory uncertainty exceeds the price risk in energy-only markets, warns Dr. Jim Fitzgerald, associate partner at The Advisory House.

Page 41 of 54

News in Brief

Slow start of STT pipeline

Oct 18 – U.S. gas exports to Mexico have not picked up substantially despite the start of the Sur de Texas-Tuxpan (STT) pipeline. Exports are still below 6.0 billion cubic feet per day (bcf/d), although there no current postings regarding maintenance on the Sistrangas pipeline that feeds from NET Mexico.

EIB defers ban on fossil projects

Oct 17 – Luxembourg-based European Investment Bank (EIB) has bowed to pressure from Germany and the European Commission and deferred its decision to ban loans to fossil-fuel projects until mid-November. Germany wants the bank to keep financing gas-fired power projects as it views the cleaner-burning fossil fuel as a vital backup for renewable energy sources.

Brexit will not impact UK gas supply

Oct 16 – Security of power and gas supply in the UK will not be jeopardized this winter by the country’s imminent departure from the European Union, even in the event of a hard Brexit, National Grid said. In its assessment, the TSO factored in a halt to flows via the Belgium and Dutch gas interconnectors “from EU exit day one”, but said ongoing deliveries from Norway, the UK Continental Shelf and storage will continue as usual.

Ferrybridge C gets demolished

Oct 15 – Four cooling towers at the Ferrybridge Power Station have been taken down as the coal-fired power station will make way to a new, high-efficiency gas power station. Operator SSE shut down the 500 MW Ferrybridge C unit in March 2016 and now started to tear it down.

Global energy storage tops 10 GW by 2025

Oct 14 – The global market for grid-connected energy storage will grow by 6,900 MW, or 16.6% to reach over 10,500 MW by the end of 2025, according to Reportlinker.com. Germany will add over 267 MW energy storage installations over the next five to six years, while 330 MW will come from other European markets. These numbers are dwarfed by China, where up to 1,200 MW energy storage units could be connected to the grid by 2025.

Wärtsilä services EDL plant

Oct 11 – Energy Developments Ltd (EDL) of Australia has awarded Wärtsilä a service contract for gas engine-based baseload power plant at the McArthur River zinc mine in Northern Territory. The maintenance approach for the 53 MW onsite power plant is no longer pre-planned and scheduled but has been changed to condition-based and predictive maintenance, with an advisory contract.

EPH buys CCGT in Galway

Oct 10 – The Czech energy company EPH has received regulatory approval to purchase an 80% stake in the 400 MW Tynagh Energy combined-cycle gas power plant in Galway, Ireland. Mountainside Partners will continue to own the remaining stake in the CCGT, which operates based on a security-of-supply contract from the Irish TSO based on guaranteed power prices.

ITM gets £38m boost from Linde

Oct 9 – Sheffield-based ITM Power, maker of electrolysers for hydrogen production, has been boosted by a £38 million cash injection, as Linde acquired a 20% stake in ITM at 40 pence per share. Looking ahead, ITM said it is seeking to raise £14 million from new and existing institutional investors.

Drax to convert two power units

Oct 8 – Drax Group has received government approval to convert up to two coal-fired generating units at its power station in North Yorkshire to run on natural gas. With this ruling, the UK regulator overturned objections by ClientEarth, stressing some fossil power is vital for the UK to backup intermittent renewable power source.

Storage use tops 80% in key U.S. regions

Oct 7 – Gas storage utilization in the United States is rising in the autumn, with net injections topping 112 billion cubic feet (Bcf) in the first week of October. According to EIA figures, underground storages are at least 80% full in the East, Midwest, and South Central non-salt regions, allowing for seasonal withdrawals to help meet peak-day gas demand throughout the upcoming winter.

Maine, NY aspire to 100% clean energy

Oct 4 – Three U.S. states—Maine, New York, and Ohio—have updated their renewable portfolio standards (RPS), since May 2019. As a result, Maine and New York joined California, Hawaii, Nevada, New Mexico, and the District of Columbia in requiring 100% clean electricity by 2050.

TransAlta to built CHP in Alberta

Oct 3 – Canada-based Transalta and SemCAMS Midstream have agreed to develop, construct and operate a new cogeneration facility at the Kaybob South No. 3 sour gas processing plant in Alberta. To be built at a cost of some 105 million, the CHP will have an installed capacity of 40 MW. Start of commercial operation is targeted for late 2021.

GE’s 100th HA turbine sold in Greece

Oct 2 – Greek industrial firm Mytilineos has ordered a GE 9HA.02 gas turbine to be the heart of the 826 MW Agios Nikolaos combined-cycle gas power plant. This deal also marks the 100th unit of GE’s HA gas turbine sold. Construction of the CCGT is due to start before the end of the year.

ABB launches M4M analyzer

Oct 1 – Swiss technology firm ABB has launches its first Bluetooth-equipped network analyzers, called M4M. The system gathers data from distribution grids and connects them to a cloud-based control system, allowing users to react on energy consumption and on-site power generation trends.

Microsoft invests in wind power

Sept 30 – Microsoft and ENGIE have entered a long-term solar and wind energy power purchase agreement (PPA) in the United States. The deal will see Microsoft purchase a total of 230 MW from two ENGIE projects in Texas, bringing Microsoft’s renewable energy portfolio to more than 1,900 MW.

Gazprom tackles issue of ownerless gas grid

Sept 27 – Gazprom, the main supplier of pipeline gas to Europe, is trying to settle the issue of ownerless gas pipelines – a relic of the former Soviet Union. Abandoned gas transmission pipeline spanned 6,651 kilometers as of March 1, with the issue seen as “especially acute” in the North Caucasus region where half of this infrastructure is located. If no owner registers these facilities within three months, Gazprom will take over to ensure reliability and safety.

Investors flock to Myanmar

Sept 26 – Fitch Ratings has singled out Myanmar’s power sector as one of the largest beneficiaries of foreign direct investments (FDI) worldwide. Nearly $21.2 billion was poured into power generation and energy infrastructure projects thus far in 2019, which is 27% of total FDI under the Myanmar Investment Law.