Regulation & Policy

UK energy minister Ed Davey has written to the chief executive of Ofgem, the market watchdog, urging for tougher regulation of Britain’s big 6 energy companies and suggested a future break-up of British Gas and Scottish & Southern Energy (SSE). “This might lead to more contracting in the wholesale market, so greater liquidity across the power market, but the intent of the split would be to make the retail end more competitive,” Trevor Skiroski, analyst at Energy Aspects told Gas to Power Journal.

The growth of the gas industry is under threat from a worldwide skills shortage, delegates at GE’s Oil & Gas annual meeting were told this week. “We are running out of capable people – technicians, field service support through to engineers in this particular space. We need to develop a competency base dramatically higher than it what it is now,” said Erik Bonino, vice president of project & engineering services  at Shell.

In a move to maximise production from the UK’s estimated 1,300 trillion cubic feet (Tcf) of shale gas, the government has announced generous tax breaks to producers and promised local councils 100% of fees from resultant business rates. Figures from the Department of Energy and Climate Change (DECC) predict that widespread UK shale gas production could reduce the implied price of dispatchable gas-fired power generation to around £50/MWh.

The U.S. Environmental Protection Agency (EPA) has published revised limits for carbon dioxide emissions from power plants today, for the first time providing separate rules for coal-fired and natural gas-fired plants. The new proposal outlines a limit for coal-fired plants with attached carbon capture and storage (CCS) of 1,100 lb CO2/MWh.

Malta Environment and Planning Authority (MEPA) finds that new gas-fired power on the island will improve air quality. The environmental impact assessment, compiled by consultants ERSLI, states that the proposed 215-megawatt power plant at Delimara will contribute towards a "substantial reduction" in air pollution.

The European Commission has been urged to consider renewed support for industrial combined heat and power (CHP) plants by parliamentary vice-president, Alejo Vidal-Quadras. "Current national energy market policies could lead to decreasing use of CHP in a number of countries because of growing investor uncertainty and a lack of clearly-defined long term policy structures," he warned, commenting on the EU's current regulatory environment.

The Latvian parliament has approved amendments to energy regulation with a view to liberalising the gas markets and encourage greater competition in the power sector. The new laws will ensure third party access to gas transport infrastructure and reduce Latvia's reliance on Russian gas supply.

Determined to switch from coal to gas power generation to improve air quality, China's CNPC, PetroChina and Sinopec Group have been given the target to produce 6.5 billion cubic meters of shale gas by 2015 to help source more domestic gas supplies to fuel power plants.

The leader of German's Social Democrats (SPD), Sigmar Gabriel, will head a new combined Economics and Energy Ministry after his party voted over the weekend to enter a grand coalition with the Conservatives (CDU/CSU). Gabriel said he will focus on finalising the Energiewende without threatening the Germany's attractiveness for industrial production.

Political haggling continues over new US greenhouse gas emissions standards for existing power plants, due to be imposed by Environmental Protection Agency (EPA) in June 2014. Calling for "sensible regulations" based on proven technology, Paul Bailey, senior VP for Federal Affairs and Policy, ACCCE said "Performance Standards should be based on what is achievable... and states should have flexibility to implement them."

The European Commission (EC) has told member states involved in the South Stream pipeline that they must renegotiate the terms of contracts they have signed with Russia's Gazprom or face "infringement procedures" and fines. An EC statement asserts that contracts signed by member states contradict European legislation on unbundling, as the pipeline would be under sole control of Gazprom and would not allow third party access.

The UK parliament rejected plans for tougher regulation on coal-fired power on Wednesday, giving older coal plants a longer lease of life and raising further uncertainty over the shape of proposed capacity markets. "The government is already worried about peak capacity issues given the loss of the LCPD plant and losing more would have meant that the UK would really have struggled to keep the lights on," Trevor Skiroski, analyst at Energy Aspects told Gas to Power Journal.

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News in Brief

Denmark paves the way for Nord Stream 2

July 7– Denmark on late Monday gave the Nord Stream 2 consortium permission to utilize pipe-laying vessels with anchors in Danish waters, paving the way for the Gazprom-led consortium to complete the interconnector. Construction of the 1,230-kilometre pipeline is nearly complete, except for a final stretch of about 120-kilometers in Danish waters. The project was halted in December when the Swiss-Dutch pipe-laying company Allseas suspended works over threats of U.S. sanctions.

EPRI tests early warning system

July 6– The Electric Power Research Institute (EPRI) is conducting trial tests with multiple utilities across the United States of an early warning system. It can detect an off-gassing event as a precursor to thermal runaway up to 30 minutes prior to a cascading failure. This gives plant operators time to mitigate the problem or shut down the system.

KKR buys stake in First Gen

July 3 – Valorous Asia Holdings, owned by KKR investment funds, has bought a 11.9% stake in First Gen through a voluntary tender offer. First Gen, one of the Philippines’ largest independent power producers with 3,492 MW installed capacity, is owned by First Philippine Holdings which is controlled by the Lopez family. KKR’s acquisition of the First Gen stake is worth nearly $192.3 million.

Gazprom’s ‘BBB’ rating affirmed

July 2 – S&P Global Ratings, Moody's Investors Service and Fitch Ratings have affirmed Gazprom's long-term credit ratings as part of their annual reviews. The ‘BBB’ ratings for Gazprom from S&P and Fitch are in line with the sovereign credit rating of the Russian Federation, while Moody's ‘Baa2’ rating is a notch higher.

MHIEC to refurbish WtE plant in Kushiro

July 1 – Mitsubishi Heavy Industries Environmental & Chemical Engineering Co (MHIEC) has received an order from the Kushiro Wide-Area Federation to repair and improve the core equipment at the local Waste-to-Energy plant in Takayama. The WtE plant has a capacity of 240 tonnes per day (tpd). Renovation will increase the energy efficiency of the fluidized bed type gasification and ash melting furnace facility, reducing emissions by around 15% annually. Works are due completed in September 2023.

Nigeria: Only two of six power projects on target

June 30 – Nigeria’s Bureau of Public Enterprises has disclosed that only two out of six privatized power plants were delivered on target. Only Transcorp Power Ltd and Geregu Power Ltd out of the six privatised electricity generation companies (GENCOs) were said to have met their performance targets since taking over.

German investors prefer solar over wind

June 29 – Energy infrastructure investors are keen to build solar power projects in Germany, but shun wind parks. In the latest solar power auction, investors offered to build almost 450 MW of capacity – more than four times the 96 MW of volume on offer– with the average successful bid at 5.27 cents per kilowatt-hour (ct/kWh). The wind auction, in contrast, was undersubscribed: The German network agency  (BNetzA) tendered around 826 MW, but successful bids only totalled 464 MW, at an average price of 6.14 ct/KWh.

MAN ventures into synthetic fuels

June 26 – MAN Energy Solutions has entered the hydrogen economy with the recent pro rata acquisition of H-TEC SYSTEMS, an electrolysis tech firm. The German OEM also committed itself to upgrading its gas turbines to run on 100% hydrogen by 2030.

Varegro starts using Cummins gas genset

June 25 – Belgian-based horticultural company Varegro, has started to use a Cummins HSK78G gas generator to power its greenhouses in Oostrozebeke, West Flanders. Varegro said it selected the Cummins HSK78G genset to produce combined heat and power (CHP) on its premises at a competitive cost for use in energy-intensive greenhouse facilities.

GE names Deloitte as independent auditor

June 24 – GE’s audit committee has selected Deloitte as the company’s independent auditor for the 2021 fiscal year, replacing KPMG. The selection of Deloitte concludes GE’s latest audit tender process.

Northern German states push for hydrogen pilot cluster

June 23 – Northern German states are pushing for greater hydrogen use with a pilot project cluster. Some 12 large demonstration plants for the production and use of green hydrogen are meant to be realised in Hamburg, Schleswig-Holstein and Mecklenburg-Western Pomerania. The aim is to demonstrate how 75% of CO2 emissions can be saved in the region by 2035.

Wärtsilä to design and equip battery-powered ferries

June 22– The Finish engine maker Wärtsilä has been awarded a contract to design and equip two new zero-emissions ferries on behalf of the Norwegian operator Boreal Sjö. For each ferry Wärtsilä will supply the thruster motors, batteries, onboard and shore-based battery charging equipment, the back-up generators, and various electrical systems. The equipment is scheduled for delivery to the yard in early 2021 for the ships to start commercial operations in autumn 2021.

Subsidy cut slashes Chinese wind turbine margins

June 19 – China’s wind turbine original equipment manufacturers (OEMs) could have their gross profit margins halved due to subsidy cuts, Wood Mackenzie forecasts. Commissioned onshore wind power capacity is expected to drop by more than 16% to 19 gigawatts (GW) from 2020 to 2021 as government subsidies were terminated. This could also lead to a 27% drop in turbine prices over the next five years, slashing OEMs’ gross profit margins by half.

PowerPHASE converts gas peakers into storage engine

June 18 – U.S. emergency power provider PowerPHASE has developed an upgrade to convert 7F gas turbine-based peaking plants (350 MW each) to a so-called Storage Engine (400 MW). The unit would be able to store 3500 MWh daily and discharge 4800 MWh daily. CEO Bob Kraft claims utility customers could dispatch the Storage Engine, despite its lower heat rate (4000), ahead of higher heat rate options (9000 for gas peakers) in a competitive market like ERCOT in Texas.

Cummins names Davis head of New Power unit

June 17 – Cummins has appointed Amy Davis as Vice President and President of the company’s New Power Segment, effective July 1. The new unit includes Cummins’ electrified powertrains, battery design and assembly, battery management, fuel cell and hydrogen generation.

GE powers USS Zumwalt

June 16 – The US Navy has taken delivery of the USS Zumwalt, its first full-electric power and propulsion ship, equipped by GE’s Power Conversion. The ship features a high-voltage system, propulsion drive trains with multi-phase VDM25000 power converters and advanced induction motors. Kevin Byrne, head of GE’s North America marine segment said “the full-electric power and propulsion ship has the flexibility to direct energy where it is needed on the platform.”

New England power prices down 40%

June 15 – Spot electricity prices in New England (NE) has fallen since winter 2019/20 when it stood at an average $28/MWh, down 40% from an average $47/MWh in the previous winter. Low natural gas prices, warmer-than-normal temperatures, lower loads, and reduced needs to run expensive peakload generators were the cause for the substantial drop in NE’s winter electricity prices, the U.S. Energy Information Administration (EIA) finds.