Regulation & Policy

Developers of gas-fired power plant projects in the UK can take some reassurance from the strike price and risk mitigation measures agreed for the Hinkley Point C nuclear power plant, suggests Jim Fitzgerald, associate partner at The Advisory House.

The US Supreme court has announced it will hear a challenge to the Environmental Protection Agency's (EPA) recent climate directives as the beleaguered coal power generation sector in the country fights the regulation. "Whatever happens will undoubtedly be important for the economic case for new gas-fired generation...what this does is buy some time for coal-fired plants," Trevor Skirkoski, analyst at EnergyAspects told Gas to Power Journal.

As South Korea transforms into a creative economy "the energy industry is one of the areas where this creative paradigm can shine," Park Geun-hye, President of the Republic of Korea told the World Energy Congress today, referring to her signature policy targets to utilise enhanced technology for energy storage and demand side management to reduce peak-load power consumption.

The cost of cancelling two high profile combined-cycle gas-fired power plant (CCPP) projects in the Canadian province of Ontario could hit taxpayers with as much as C$1.1 billion, the Auditor General of Ontario, Bonnie Lysyk estimated in a special report.

The US government shutdown looks set to weaken the ability of legislators to regulate energy policy related to natural gas as uncertainty hangs over the world's largest economy. "It reflects very poorly on the government's ability to pass legislation and this will have an impact on their ability to implement future energy bills," Trevor Sikorski, lead analyst at Energy Aspects told Gas to Power Journal.

India's cabinet agreed new rules for the allocation of domestic shale gas resources this week, in an effort to boost gas-fired power production and feed fuel-starved power plants. To dent rising gas demand, India was forced to import 1.2 million tons of LNG in August at prices between $12-15/MMBtu – a substantial premium to Henry Hub gas prices around $3.5/MMBtu.

Capacity markets look set to strengthen their role in assuring reliable power supply in the US, following a conference, hosted by John Norris of the Federal Energy Regulatory Commission (FERC), on Wednesday. Topics discussed ranged from the metrics used to measure success, design elements, key challenges and effective accommodation of federal and state policies in centralized capacity markets.

A tax on the use of fossil fuel for power generation in France was announced by prime minister Jean-Marc Ayrault this week. Scheduled to be in place from 2014 onwards, the carbon tax will be levied on power producers in proportion to carbon emissions.

Rebuking plans of Labour leader Ed Miliband to freeze gas and electricity prices for 20 months if he wins the 2015 election, the UK Big 6 energy companies have condemned this proposal – at a cost of £4.5 billion – as a roadblock to investment in new power plants which exacerbates the risk of blackouts.

Members of the US Federal Energy Regulatory Commission's (FERC) expert technical conference will discuss the impact of rising intermittent power supply on the country's capacity markets and potential solutions when they meet this Wednesday.

Germany's re-elected chancellor Angela Merkel is seeking a coalition partner before the new Government can jointly tackle rampant electricity costs that resulted from the 'Energiewende' policy of phasing-out nuclear energy in replacement of subsidised renewable power. Curbing the EEG levy – an extra charge for renewables imposed on the taxpayer – is one of the most likely options.

SSE sees an "acute need" for Capacity Auctions to stop further plant closures and bring mothballed power plants back into the market to help counter the imminent shortages in Britain's power generation capacity, says policy and research director, Dr. Keith MacLean.

"If the capacity auctions planned for next year were also targeted at immediate delivery, with payments starting straight away, this would help keep existing, but loss-making, plants operational, which is cheaper than building new ones at a later stage," he told Gas to Power Journal.

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News in Brief

BelGAS launches new pressure regulator

May 29 – BelGAS has introduced its new P1098 High-Capacity Pressure Reducing Regulator, a large-volume regulator for natural gas, propane and other fuels. The pilot-operated device has a large-area actuator diaphragm, allowing for fast and accurate response to modulating gas flow conditions. It is adaptable for low to extra-high pressure—up to 400 psi main valve inlet.

GE to sell lightning business

May 28 – GE has signed a definitive agreement to sell its lighting business to Savant Systems, a provider of smart homes. CEO H. Lawrence Culp called the divestment “an important step in the transformation of GE into a more focused industrial company.” The transaction is expected to close in mid-2020.

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.