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Regulation & Policy

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.

While both Portugal and Spain are weighted down under a sizeable electricity tariff deficit due to excess renewables capacity, that Portugal hopes to pay off by 2020 while Spain has no definite plan, Portugal has a better chance of ever climbing out of debt than Spain, found ratings agency Fitch Energy in its report Electric Shock: Iberian Tariff Deficit Comparison.

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).

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News in Brief

Italy’s power exports Montenegro surge

Jan 22 – Italian electric power exports increased by 28% in 2020, largely driven by flows to Montenegro which surged 26% to 8.6 TWh. In contrast, domestic power demand fell 6% last year to 271.6 TWh with electricity sales from conventional plants down nearly 9% to 140.5 TWh, figures by the Italian energy exchange GME show.

US considers new nuclear

Jan 21 – The new US President Joe Biden has said his country could construct new nuclear power plants and reiterated plans to “swiftly rejoin” the Paris Climate Agreement swiftly. Germany’s environment minister, Svenja Schulze, called it illusionary to believe that newer, smaller reactors will be a technology of the future.

Mitsubishi produces methanol in Trinidad

Jan 20 – Mitsubishi Gas Chemical Company has launched commercial operations of a methanol and dimethyl ether plant in Trinidad and Tobago. The plant has an annual production capacity of one million tons of methanol and 20,000 tons of dimethyl ether, which can be used as an alternative fuel for cars and power generation.

First 8-cylinder B36:45 engine delivered

Jan 19 – Rolls-Royce has delivered the first 8-cylinder variant of its Bergen B36:45 gas engine to a tomato producer in Belgium. The medium speed genset is planned for delivery this spring and will drive an onsite power plant that generates 4700 kW electricity and 5520 kW heat. The new engine offers a 20% increase in power per cylinder and will replace an existing Bergen 12-cylinder B35:40 genset.

Moody’s upgrades Enel to Baa1

Jan 18 – Moody’s Investors Service has upgraded Enel’s long-term rating to Baa1, with a stable outlook. The upgrade reflects Enel’s progress in reducing its risk profile, analysts said, pointing at the Italian utilities ongoing investment in networks and renewables, growing geographical diversification and focus on centralised financing.

GE sues Siemens Energy

Jan 15 – General Electric has sued its German rival Siemens Energy over the alleged use of stolen trade secrets to win gas turbine contracts worth several billion dollars. GE told the US district court in Virginia that Siemens received the secret information from a Dominion Energy employee.

Orbital Energy launches Eclipse

Jan 14 – Nasdaq-listed Orbital Energy Group has launched a new subsidiary, Eclipse Foundation, a drilled shaft construction company. The new company specialises in providing services for power transmission and substations, communication tower and a disaster restoration through emergency power.

S’Korean coal and LNG imports slide

Jan 13 – South Korea’s imports of thermal coal and LNG have fallen 12% and 11%, respectively, as the government cracks down on fossil fuel usage to curb air pollution. Customs data shows that coal imports amounted to 10.2 million tons in December, down 1.4 million tons from the same month last year but up from November’s imports of 9.5 million tons.

SMC builds 1.7 GW CCGT in Batangas

Jan 13 – Excellent Energy Resources, part of SMC Global Power Holdings, is building a 1,700 MW combined cycle gas power plant in Barangay Dela Paz and Ilijan in Batangas City with investments of about 67.863 billion Philippine Pesos ($1.41bn). The project is estimated to be completed in 36 to 40 months.

UK’s National Grid issues supply warning

Jan 12 – Natural gas prices in the UK surged as National Grid issued warnings on supply deficit as LNG cargoes are being diverted to North Asia. Prices at the British NBP gas trading hub soared to the equivalent of $8.95 per MMBtu, while the JKM price for North Asian spot LNG cargoes for February 2021 was last at $19.700 per MMBt.

Fortistar invests in hydrogen

Jan 11 – Fortistar, a privately-held fund, has joined an equity investment of up to $157 million in hydrogen producer BayoTech. Cottonwood Technology Funds and the New Mexico State Investment Council also participated in the latest financing round. BayoTech’s systems produce local hydrogen close to the application, serving end users in the industrial gas and petrochemical segment as well as those who use of hydrogen to power fuel cells.

Ashtead appoints new CFO

Jan 5 - Ashtead Technology has appointed a chief financial officer (CFO) and five managers for newly created roles across its international team. The appointments are meant to cement the company’s position in the offshore energy market, including offshore wind and decommissioning of thermal power plants

NFE secures LNG for Puerto Rico, Mexico and Nicaragua

Dec 23 – New Fortress Energy (NFE) has agreed to purchase Henry-Hub-indexed LNG for its integrated gas and power businesses in Puerto Rico, Mexico and Nicaragua. The New York-based project developer said it now has covered 80% of its expected needs throughout Latin America, thus reducing its need for spot purchases and its exposure to changes in the market price for LNG.

China and Korea mandate coal-to-gas switch

Dec 22 – The Chinese government has launched a coal-to-gas boiler switching programme, targeting 7.1 million homes, which makes gas demand more weather-sensitive this winter. Similarly, South Korea mandated the closure of 15 coal-fired plants since the start of December in an effort to reduce air pollution. Analysts expect this will accelerate the drawdown of LNG terminal inventories going into Q1-2021.

GE repowers oil field in Brazil

Dec 21 – GE Power Conversion has been awarded a contract by Sulzer Pumps UK to supply motors for four water injection pumps of a Floating Production Storage and Offloading (FPSO) vessel. The 8,000 kW, two pole motors will run at 3,600 rpm with a limitation of the starting current at 300%, enabling the oil and gas field operator to optimise the generator which supplies electricity on the FPSO.

VELO distributes Sapphire Metal 3D-Printers in the US

Dec 18 – California-based VELO3D has formed a distribution partnership with GoEngineer for Flow pre-print software, Sapphire metal AM printer, and Assure quality assurance and controls. GoEngineer will be VELO’s only distributor in the United States.

Indian electric boats to achieve zero emissions

Dec 17 – Cochin Shipyard, India’s largest shipbuilder, has asked Siemens Energy to equip India’s first fleet of 23 boats with electric propulsion drive train, integrated with batteries and vessel automation. Combining the electric propulsion drive trains, energy storage, and automation systems is expected to significantly reduce fuel consumption.

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