IEA lays out stark global energy challenges

Fatih Birol à‚  “It has rarely been more critical in European history to have a sound energy policy as it is right at this moment”, according to Fatih Birol, the International Energy Agency ‘s chief economist.

He was speaking at the launch of the agency’s World Energy Outlook at in London.

van der Hoeven à‚  Birol, presiding over the event along with Maria van der Hoeven, IEA Executive Director, delivered the statement in the context of increased competitiveness from the US shale gas revolution, the shift in international trade to the Asia-Pacific Basin and the pressure the bloc faces inreducing carbon emissions during a period of economic stagnation.

He warned that, “within the EU, utilities contending with low economic growth and the push for renewable energies were not making enough revenues to make new investments.”

The analysis indicates that a major increase in renewables will be driven mainly by China over the next 20 years, which will be higher than the EU and US put together.

Birol was pointed in reinforcing the message of the significant challenge Europe faces from the impact of the US shale gas revolution to their overall competitiveness, and the consequences of a new global economic geography.

“There is a major disparity between US and rest of world because of the shale gas revolution. In Japan, gas is hugely expensive and it is a serious issue for both the Japanese and the EU. The price differentials will remain big, even if they narrow a bit. There is a structural issue these countries must address in terms of their competitiveness.”

“There is a shift in international trade to the Asia Pacific basin. Regional price gaps and concerns over competitiveness are here to stay but there are ways to react with efficiency first in line,” he said before adding, “It is very urgent to find low carbon solutions despite difficult economic times.”

The IEA’s chief economist elaborated on how the bloc and Japan can meet the challenges ahead. In terms of competitiveness he advocated that there is scope in both to increase energy efficiency within the industrial sector, saying, “Europe can make use of that and reduce the cost of energy.”

“Secondly, and specific to gas; two thirds of existing gas contracts are expiring over the next 10 years, When these contracts were drawn up it was a sellers market, but it is now a buyers’ market so there is room to renegotiate and bring prices down.”

“Thirdly renewable energy subsidies are crucial in many cases but the design of subsidies packages should be so as not to put excessive burden on consumers and economy.”

His other possible solution related to shale gas, a contentious subject in the EU at present with varying attitudes in various member states, the UK in favour for example and the French having imposed a ban.

“Another issue for the EU is the possibility of significant shale gas resources. Work towards developing that in a sustainable way within strict environmental regulations, and we may see the EU have its own domestic production.”

The agency’s other findings, as related at the press conference, largely dealt with the increasing dominance of Asia in terms of international trade and influence on energy demand.

In terms of growth of demand, the proportion of it coming from the Organisation for Economic Co-operation and Development (OECD) countries will look ‘almost negligible’ in comparison to Asian dominance. Two thirds of energy demand this decade will come from China but even here there is a change, as India will become the engine of growth in energy demand after 2020.

The attendees also heard that 40 per cent of new power plants will be built in China and India over the next two decades while two thirds of coal plants in OECD countries will close within that time scale, presenting a challenge for investment.

Birol also pointed out that despite the perspective of an increased share of the power generation pie being assigned to renewables the reality was that, “the share of fossil fuels in the energy mix is 82 per cent, exactly the same. After 25 years of efforts it is still the same.”

This report shows that the world remains on course for dangerous levels of global warming, and that fossil fuel subsidies are rising instead of falling.

He said that the forecast was that the planet is in line for a 3.6 degree increase in temperature if it maintains its present rate of emissions, adding that this was ‘more than a case of you feeling the need to take your jacket off.’

“Our aim is to limit the increase in temperature to 2 degrees celsius. To keep it there, only a certain amount of fossil fuels can be burned. But the window of opportunity for that 2 degree target is closing. It is very important to act now.”

In closing Maria Van der Hoeven referred to a big reason why the coal sector and emissions levels remain so resilient, despite the efforts of policymakers and technological breakthroughs.

“Coal is the biggest elephant in the room. Because less people are talking about it doesn’t mean it’s not there. It’s there in a very important way and there to stay. What we can see is that many countries with rapidly growing power demands, low cost, standard coal fired plants can be built easily, locally, as you see in China.”

From the outset the summary of what is found within the report shows the persistent challenge the international community faces from a global energy perspective. Despite renewed focus on energy efficiency, CO2 emissions continue to rise. That’s despite fossil fuel subsidies rising to $544bn in 2012. Meanwhile 1.3 billion people worldwide continue to lack electricity.

All in all, Birol’s succinct stated objective of the report, as an aid ‘for policy makers to have an orientation in this fast paced energy world’ understates a stark presentation of the huge difficulties that remain in marrying environmental, energy security and economic considerations.

See January’s PEi for a full sector-by-sector breakdown of the IEA’s World Energy Outlook.


EUROPE

Ristori set to replace Lowe as EC’s director-general for energy

The European Commission has appointed Dominique Ristori of France as the new director-general of its department for energy, replacing Philip Lowe, who is set to retire at the end of the year, after three years in the role.

Ristori à‚  Ristori (pictured) will take up the post on January 1, leaving his current post as director-general of the European Union’s joint research centre, the Commission’s in-house scientific advisory service, which he has headed since December 201

Ristori, a career civil servant, has been. Ristori was the first non-scientist to be appointed head of the JRC.

Ristori previously held three senior posts in the European Commission’s energy department: deputy director-general, leading on nuclear energy, from 2006 to 2010; director in charge of general affairs and resources from 2000 to 2006; and director in charge of European energy policy from 1996 until 1999.

Alstom to upgrade UK’s biggest combined-cycle gas plants

Alstom has agreed plans for a major upgrade with RWE Generation to implement its high performance MXL2 upgrade package on all nine gas turbines at the 2200 MW Pembroke and 1650 MW Staythorpe facilities – Britain’s two biggest natural gas-fired combined-cycle power plants.

The five GT26 gas turbines at Pembroke, in Wales, and four at Staythorpe, in England, will each be retrofitted with the multi-mode MXL2 upgrade.

This, says Alstom, offers increased performance, substantial improvements to operational efficiency and enhances availability through increased maintenance intervals.


In the October issue, we incorrectly used an image of an Alstom turbine in the story headlined MHI’s M701F4 gas turbine heads to Uzbekistan. We apologise for this error and any upset caused.


MIDDLE EAST

Coal-fired power to dominate Yemeni new builds

China is to assist Yemen in the building of 2000 MW capacity of new power plants according to an announcement by the country’s electricity minister.

During President Abd Rabbo Mansour Hadi’s visit to China in November, agreements were signed to build two coal-fired power plantsin Belhaf and Ma’abar, each with a capacity of 400 MW and two others each with a capacity of 600 MW using coal and Diesel, minister Saleh Sumai said at a news conference.

Besides building power plants, the agreements also include installing power cables and Safer-Ma’abar gas pipeline, the minister added.

A Yemen news agency reports that the minister said the Chinese had been asked to assist Yemen in funding power projects to assist developing capacity of up to 5000 MW.

He added that “the Chinese president has agreed in principle to finance these projects in phases and to begin projects that have been studied.”

GE clinches $700m Saudi Arabian gas turbine deal

GE has signed a massive deal worth nearly $700m to provide Saudi Arabia with combined-cycle gas turbines.

The contract is with Saudi Electricity Company (SEC) and will see GE provide the turbines plus associated equipment and services to supprt SEC’s large, combined-cycle power plants to generate more than 3.8 GW of power.

GE has previously provided equipment for four SEC plants. The two new projects will feature 12 GE 7F-5 gas turbines, four GE steam turbines and 16 generators.

The first plant will be located in Dhurma and the second south of Riyadh.

All equipment will be manufactured in the US – the 7F-5 gas turbines at Greenville and the steam turbines and generators coming from GE’s Schenectady site. Shipment of the equipment is expected to begin at the beginning of 2015.

Meanwhile, GE has won 545 MW of turbine orders in this week’s round of wind farm auctions held in Brazil.

A total of 867 MW was auctioned, with GE securing 63 per cent of that capacity.

GE won deals to provide its turbines for a total of 26 wind farms being developed by Casa dos Ventos, Eletrosul, Contour Global, CEEE, PEC, Rio Energy and Chesf in the states of Rio Grande do Sul, Bahia and Piaui.

In the auction, wind capacity was contracted at an average rate of $54/MWh).


LATIN AMERICA

Electrobras signs up Areva for $1.67bn nuclear reactor contract in Brazil

Electrobras signs up Areva for $1.67bn nuclear reactor contract in Brazil

Areva is to construct the Angra 3 nuclear reactor in Brazil after signing a $1.67bn contract with Electrobras Electronuclear.

The French company will provide engineering services and the digital control and command system for the nuclear centre, which is scheduled for completion by 2018.

The contract brings the number of nuclear reactors built globally by the group to 103.

Last month, Areva won a contract worth more than $2.7bn to supply two nuclear reactors and control systems for a new station at Hinkley Point in England which is being built by a consortium led by EDF, showing that a six-year lull in orders may be coming to an end.

“The completion of Angra 3 confirms Brazil’s ambitions for its nuclear programme and illustrates the pertinence of the source of energy as a solution for sustainable economic development,” Areva chief executive Luc Oursel said in a statement.

Brazil plans to add as much as 5 GW of nuclear power by 2030, and has started talks with various suppliers including Areva and rivals from countries such as Russia, China, the US and Japan, he added.


EUROPE

Tomato grower ripe for savings with CHP

Tomato grower ripe for savings with CHP

The installation of a CHP system running on gas engines has sown the seeds for significant savings at a tomato-growing facility in Belgium.

The system, running on Perkins gas engines and installed by Belgian company E. Van Wingen (EVW), is already making a difference to the facility, which is just outside Ghent and produces 600 tonnes of tomatoes a year.

Previously it used central heating to warm its greenhouses – now heat from the 500 kW engine is pumped back into the greenhouse.

“Everything that comes out of the engine goes into the greenhouse,” said EVW boss Jean-Pierre Van Wingen. The new installation included 14 km of hot pipes and 7 km of low-temperature pipes across grower Gery Persoon’s 10,500 m2 facility.

The CHP system cost €500,000 ($680,700) and is expected to save Persoon around €100,000 a year – therefore it should pay for itself in five years’ time.

Perkins and EVW have also collaborated on two other projects in Germany. At Euro Pool Systems in Bornheim, near Bonn, and Biogas Oberhessen in Wàƒ¶lfersheim, near Frankfurt, EVW installed in-house engineered-and-built CHP units – running on natural gas and biogas respectively. Euro Pool Systems cleans fruit crates at a rate of 7500 an hour and the Bornheim plant marks the company’s first use of cogeneration. It benefited from a German tax reduction for CHP systems but added that it would have opted for system even without the tax break: “Cogen is the best system for our business,” said a company spokeman.

Biogas Oberhessen – which uses silage and maize as biomass – inaugurated its CHP system using the Perkins genset a year ago and since then has topped 8000 running hours.

EVW has strengthed its alliance with UK-based Perkins following the British company’s unveiling of a new gas strategy.

EVW is one of five companies chosen by Perkins to form a worldwide service network for the development of its gas business. The engine OEM says this will give it a huge boost to strengthen its market potential.

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