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Regulation & Policy

With about 10 GW of offshore wind power expected to come on the system in the UK by 2020, balancing the additional intermittent capacity, mostly through gas-fired plants, will "not pose a major challenge," Dong Energy's UK country manager, Benji Sykes said in an evening debate in Westminster on 'Cutting the costs of Carbon'.

Impending reforms of Spain's electricity market will reduce Red Electrica's regulated revenues by up to 100 million euros this year from 1,628 million euros, the TSO said with the aim of limiting downside risk for investors.

The European Commission will open a state aid infringement case against Germany on Wednesday to investigate alleged state aid for the energy-intensive under the country's renewable energies act (EEG), a report in Der Spiegel states today.

Plans to allow more natural gas exports from the US will become more difficult in two years once the proposed emissions restrictions on existing power plants come into effect, Juscelino Colares, law professor at Case Western Reserve University told Gas to Power Journal.  

"Power plants are subject to regulations that are designed to turn them towards fewer emissions, and the way they are meeting them is by switching to [cleaner burning] natural gas," he said calling the process "a very dramatic transformation in the history of the US in the past 6-7 years."

Development banks with a combined annual lending pot of $166 billlion (€130 billion) should stop to support fossil power generation projects, the European Commissioner for Climate Action, Connie Hedegaard has urged.

Robert Bradley, CEO of The Institute for Energy Research (IER), has denounced the US President's Climate Action Plan for its subsidies for clean coal. "The new proposal would throw good money after bad," he said. "Not only is taxpayer money being wasted, businesses are being enticed into investments that are costing their shareholders dearly as real-world experience shows."

Diminishing price spreads between peak and off-peak load, and a flattening seasonal profile of price differentials have emerged in Germany as a consequence of the expansion of renewables, says Dr. Kathrin Thomaschki, Vice Chair of the Ruling Chamber 6, Access to Electricity Grid at the German Federal Energy Regulator (BNetzA).

Competition in Europe's energy sector is shrinking and investment has stalled amid growing regulatory intervention in the market, Olga Mikhailova, Advisor Market Units at Eurelectric warned at Gas to Power Journal's conference in Düsseldorf. 

"The European energy sector is unable to invest, as credit rating of utilities is deteriorating and most generation assets are valued at close to zero by financial investors," she said, suggesting regulatory risk has become the main cause of concern, overtaking market risk.

The political tide in Berlin is turning in favour for a strategic reserve, ideally implemented on a regional level, though there is no sense of urgency as reserve margins are healthy until 2018/19, Franzjosef Schafhausen, Head of Department for Energy at the German Federal Environment Ministry (BMU) said in a keynote speech at Gas to Power Journal's conference in Düsseldorf. "What we need is an evolution, not a revolution towards a capacity mechanism."

Capacity auctions in the UK are due to be launched in 2014 to bring forward investment for new projects that will start operations in 2018 or 2019. However, this is "not fast enough" to avert the risk of blackouts amid tightening reserve margins, Keith Anderson, chief corporate officer at Scottish Power warned.

The UK Department of Energy and Climate Change (DECC) has today announced plans to exploit newfound shale gas reserves, but this may not mean cheap power. “Shale gas’s impact on price will be much less than what we have seen in the US. The roll-out is likely to be a bit slower [than in the US] due to community resistance against fracking,” Tim Yeo, Chairman of the UK Energy and Climate Select Committee said at a conference in London. 

First auctions under the UK's capacity market will take place - subject to State Aid approval - in 2014, for the delivery of flexible electricity capacity from the winter of 2018-19, the government said today. The Capacity Market, along with long-term Contract for Differences (CfDs) is meant to spur infrastructure investment of up to 100 billion pounds.

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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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