Regulation & Policy

Smart electrically-driven heating is a “valuable field in which to invest”, Delta-ee research finds, pointing at the substantial installed base of electrically-driven heating – 30 million units across Europe. In the UK, new business models are emerging providing heat-as-a-service, with the customer avoiding the need for buying fuel and appliances by simply buying the heat, and comfort that comes with it.

Flexibility and system integration of renewable energy sources will be in focus of a Ministerial Summit co-hosted by the German government and the International Energy Agency (IEA) in Berlin in September. Tackling the intermittency challenge will be critical for 33 countries are likely to have up to 20% variable renewables in their power systems by 2023.

The Chinese government is watering down its pledges to reign in climate change and focuses on stepping up energy imports instead. Over the past year, China’s has demand surged 15% and a big part of these additional needs will soon be met through the Russian ‘Power of Siberia’ pipeline project as well as more LNG.

U.S. Environmental Protection Agency (EPA) is about to initiate more rollback regulations in favour of coal in the power sectors. The proposals included loosening the New Source Performance Standards which mandate how much CO2 new power plants can emit. However, these rollbacks are unlikely to stop the demise of the U.S. coal industry as natural gas is outcompeting coal on cost.

Adamant to end coal-burn in Israel’s power sector, the energy minister Yuval Steinitz foresees natural gas to make up 83% of the country’s energy mix by 2030, and renewables account for the remainder. If implemented, Israel’s new energy policy would herald a quantum shift in the county’s resource use given that the transport sector is also meant to run entirely on gas.

Distributed energy sources will be tested as a way to restart of electricity supplies under a £11.7 million project, partly funded by the UK energy regulator Ofgem. The project will see National Grid, SP Energy Networks and TNEI explore how distributed gensets can be put to use to get the grid up and running again, should a ‘Black Start’ event occur.

German authorities want to test the country’s resilience to a severe natural gas shortage with a large-scale emergency drill held over two days, the energy regulator BNetzA and Federal Ministry for Economic Affairs & Energy (BMWi) announced. “Germany’s gas supply is very secure and reliable,” said BNetzA head Jochen Homann. “However, it is prudent to be also prepared for unlikely emergencies.”

The German Chancellor Angela Merkel has extended the deadline for a much-awaited report from the country’s coal exit commissions. Elections in three coal states in eastern Germany in 2019, as well as lobbying from utilities prompted her to effectively axe the opportunity of having a report on pre-2020 action ready before the COP24 climate meeting in Poland in early December.

Leaked drafts of a report of Germany’s coal commission show the country’s coal exist will likely be delayed to 2022, rather than starting in 2020. The pathway of the coal exit is now in focus, rather than the exit date. Forced plant closure should be avoided, the commission said, stressing shut-downs need to agreed with operators who will claim compensation.

Flexible gas power plants will have to fill the capacity gap after Toshiba abandoned its £15 billion Moorside nuclear power venture in Cumbria, and will start to wind up NuGen in January. Moorside could have covered 7% of the UK’s electricity needs by 2025 – a share that now needs to be filled by fossil fuels, notably natural gas.

Northern Indiana Public Service Co. (NIPSCO) has alerted state regulators about plans to retire four coal-fired power units by 2023, and another one by 2028. The utility’s latest Integrated Resource Plan details NIPSCO’s efforts to produce 65% of its electricity from renewables and at least 25% of its output from natural gas.

Weakened by losses in state elections in Hesse and Bavaria, the German Chancellor Angela Merkel has decided to give way for a new leader of her conservative CDU party. Merkel’s decision could help the ruling coalition regain focus and make important decisions on energy, climate and other key areas. Uncertainty abounds about the timeline for Germany's coal exit.

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News in Brief

Zhonghua’s profits halve

April 1 – Hong Kong-listed Zhonghua Gas Holdings has recorded a staggering 46.7% fall in profit, citing a lower margin for LNG supplies and reduced subsidies, although full-year revenue rose by 7.3%. In December, Zhonghua partnered with Shanghai Shenergy to supply LNG in the Yangtze River Delta region, and also has strong business relationships with Tractebel Engineering and Tianjin Jinre Heat-Supply Group.

Endesa donates $28m to fight coronavirus

March 31 – Endesa has created a 25 million euros ($27.8 million) fund to help fight the coronavirus pandemic in Spain. The Spanish utility, subsidiary of Enel, said the fund will be designated for purchases of protective equipment for health-care workers.

 

MAN develops liquid methane terminal in Swedish port

March 30 – OxGas has commissioned MAN Energy Solutions to act as ‘owners engineer’ to develop and build a liquefied methane-based fuels terminal in the Swedish Port of Oxelösund. The terminal will feed both LNG and green methane derived from bio gas to SSAB ’s local steel production, and to re-distribute it via train and trailers to other parts of Sweden for use in the steel industry and decentralized power generation.

American ISOs to delay grid investments

March 27 – North America’s independent system operators (ISO) are considering delaying investments in grid upgrades and enhancement as electricity demand weakens due to industry shutdowns to contain the coronavirus pandemic. PJM Interconnection, the largest U.S. bulk power market which spans 13 Mid-Atlantic and Midwestern states, revised its daily forecast of about 100,000 MW of load but actual demand came in at 95,500 MW.

Wärtsilä starts combustion trials using ammonia

March 26 – The Finish technology group Wärtsilä has initiated combustion trials using ammonia in an effort to reduce emissions. Based on initial results, the tests will be continued on both dual-fuel and spark-ignited gas engines, followed by field tests in collaboration with ship owners from 2022, and potentially also with energy customers.

Xodus sees growth in cable services

March 25 – Xodus Group has stepped up services related to subsea power cables over the last twelve months. The number of new consulting assignments grew by more than 50%, resulting in more than 70 active work streams that are handled by more 30 permanent staff.

Electricity “more indispensible than ever”

March 24 – Disruptions caused by the coronavirus crisis lay bare how much modern societies rely on electricity, according to the International Energy Agency (IAE). Millions of people are mandated to stay home, causing a surge in teleworking, e-commerce and video streaming which pushes up domestic electricity use.

U.S. frackers cut Capex

March 23 – Sharp cuts in capital spending among Appalachian gas producers are now being replicated in other U.S. basis, with Energy Aspects anticipating the deepest impact on production and earnings to take place starting from the second half of 2020. So far, E&P companies just hedged 52% of this year’s expected production even though some Appalachian producers are seen “lock in some pure gas volumes at prices above the curve.”

EV makers face bankrupcy

March 20 – Electric vehicles (EVs) remain particularly exposed to the corona effect of supply-side constraints and demand erosion. Gigafactory facilities are likely to be delayed and fledging EV manufacturers could face bankruptcy, Wood Mackenzie warns. On the flip side, declines in EV sector demand may be gains for the stationary energy storage segment.

Manufacturing rebounds in Asia

March 19 – Asian-dominant supply chains for solar and energy storage are gradually rebounding after contractions in February. Moving forward, Wood Mackenzie expects near-term development activity and local logistics in leading European and North American markets will outweigh lingering supply issues.

Italy’s gas demand plunges

March 18 – Corona-struck Italy has seen demand for natural gas plunge 8% from the previous week, with similar declines likely in other EU countries as national governments impose lockdowns to contain the virus. Industrial demand is “particularly volatile,” while gas generators will bear the brunt of demand loss, Wood Mackenzie says, as a carbon price decline is bolstering thermal coal.

Nexif raises funds for Rayong CHP

March 17 – Nexif Energy, a joint venture between Singapore-based Nexif and Denham Capital, has raised project financing for the Rayong gas-fired cogeneration project in Thailand. The 92 MW plant is being developed project with Ratch Group, based on 25-year power purchase agreement with Electricity Generating Authority of Thailand (EGAT).

ADB provides $10m loan for Afghan IPP

March 16 – The Asian Development Bank (ADB) has agreed to provide $10 million in debt financing for a gas-fired power unit in Mazari Sharif with a capacity of nearly 60 MW. Phase-1 of the Independent Power Project (IPP) will get another $10 million loan from the Leading Asia's Private Sector Infrastructure Fund (LEAP).

IEA models 50% Carbon-Free Generation

March 13 – Analysts at the U.S. Energy Information Administration (EIA) have drawn up the 50% Carbon-Free Generation case - assuming a stark shift in state-level policies. In this event, the U.S. would have 19% more nuclear power generation, 10% more wind power and 17% more solar PV contribution than in its Annual Energy Outlook 2020 (AEO2020) reference case.

E-charging market to top $15bn by 2030

March 12 – By 2030, the U.S. market for energy-optimisation in support of charging electric-vehicles could be worth $15 billion per year, McKinsey finds. The consultancy expects high demand for home-charging appliances as residential power tariffs are comparatively cheap and most charging can happen overnight when off-peak electricity prices are lower.

Oversupply builds up

March 10 – Energy Aspects’ end-March forecast has added on another 100+ billion cubic feet of natural gas supply while demand remains subdued. In the U.S., the seasonal decline in heating degree days nearly halved the natural gas withdrawal rate. Gas-burn in the power sector and residential/commercial demand are forecast to fall by 1.7 billion cubic feet per day (bcf/d) and 4.0 bcf/d, respectively.

Small-scale LNG cuts cost for power plants

March 10 – Decentralized gas power plants in remote locations can source cheaper fuel from small-scale LNG regas terminals than from trucking the super-chilled gas across long distances. “Trucking LNG further inland would entail additional costs as well as logistical challenges,” IEA analysts noted. For example, a 100 MW baseload power plant would require, on average, around 20 daily deliveries from tanker trucks.