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Credit: Europa

Second vote set for EU ETS backloading

The European Parliament is to vote for a second time in early July on reforms to the EU’s emissions trading scheme.

The parliament narrowly rejected draft proposals last month, but the vote is to return to the agenda after a decision was made on the matter by the Environment Committee.

MEPs last month voted 334-315 against a backloading proposal which would have temporarily removed some 900 million carbon allowances from the oversupplied scheme.

The rejection sparked another plunge in prices, calling into question the very future of the ETS.

E.ON chief Johannes Teyssen called for the ETS to be rescued following the vote result.


EIB gives €50m for renewables and T&D projects on Azores

The European Investment Bank is providing €50m ($65m) to Portuguese energy company Electricidade dos Acores for power generation projects on the nine islands of the Azores archipelago.

The programme of work comprises geothermal and oil-fired projects and the implementation of approximately 200 transmission and distribution schemes.

Once completed, it will result in the addition of around 15.5 MW of generating capacity.


Vattenfall’s profits steady at $1.7bn but cost-cutting will continue

Swedish energy company Vattenfall has posted a first quarter operating profit of SEK 11bn ($1.7bn), a result level to the same period of 2012.

Oystein Loseth   The profits came despite what chief executive Oystein Loseth called “challenging market conditions” and the company’s books were boosted by the SEK 8.2bn sale of its electricity distribution and heating business in Finland.

Despite the result, which Loseth said was “strong”, the market outlook remains weak and he said Vattenfall would continue with its cost-cutting programme, which has so far seen the loss of around 2500 jobs.

The company wants to lower costs by SEK 3 billion in 2013 and by another SEK 1.5 billion in 2014. In a press conference, Loseth said Vattenfall was looking at selling its stake in a German coal plant and three Danish plants with a combined capacity of 1400 MW.

He said the company was “on track” with its divestment programme and said of the market outlook now, compared to Q1 of 2012: “Not a lot has changed. We have relatively low prices and it looks like we are going to have them at this level for a very long time.”

He said “growth in the economy and growth in demand” could lift market conditions but added that the situation was flatlining at the moment: “There is not a lot of upside, but there is not a lot of downside either.”

He said that conditions would worsen if we have a “collapse of the EU ETS system – which is almost there now”, but stressed that he believed the “ETS is probably the best system to make sure we have an efficient market in Europe”.

Meanwhile, Vattenfall has decided to reduce its stake in the $353m European Offshore Wind Deployment Centre. Vattenfall said it was having to “prioritise its investments” but Peter Wesslau, Vattenfall’s UK country manager, has urged other backers to come in: “The EOWDC is a scheme that will benefit the whole offshore wind industry as it will help to drive down the cost of generation and secure industrial benefits for the UK.”


Ditch coal for biomass and gas and build nuclear, urges report

A cornerstone of the UK decarbonising its power sector is to switch from coal to biomass or gas and build a wave of new nuclear and renewable power infrastructure in the 2020s, according to a report.

The report has been compiled by independent think tank Carbon Connect and is part of an on-going 12-month, cross-party inquiry into the future of UK electricity generation.

It argues that significantly decarbonising the power sector by 2030 is the key to solving the energy trilemma of securing energy sustainability, security and affordability.

It states that switching the UK’s reliance on coal to gas while using fossil fuel power stations increasingly for backup will be the most viable method of achieving this.

The report, ‘Future Electricity Part 1: Power from Fossil Fuels’, warns that the future of many coal power stations is uncertain and could lead to high carbon emissions in the 2020s, at a time when they should be rapidly cut.

It says switching from coal to sustainable biomass or gas would solve this, although “it is also important that significant investments are made in energy efficiency and building new nuclear, wind and sustainable biomass power stations”.

It also highlights the importance of carbon capture and storage in keeping fossil fuels in the energy mix, but also in decarbonising industry.

The report acknowledges that the UK has one of the best CCS programmes in the world, but warns that government support for CCS will not be sufficient to meet carbon targets most cost effectively.

Inquiry co-chair Charles Hendry, a former UK energy minister, said: “Rhetoric in the energy debate has frequently sought to exploit political divides, often ignoring areas of consensus and driving political uncertainty. This uncertainty has far-reaching consequences in a sector where power stations are built and operated by companies, often with international portfolios and investment opportunities.”

He added: “Consensus amongst politicians and parties is therefore particularly important in keeping investment flowing and the costs of finance down.”

His inquiry co-chair, Baroness Worthington – the opposition Labour party’s House of Lords’ spokesperson on climate change and founder of emissions trading campaign group Sandbag – said that “the future of gas has dominated the energy debate in recent months, but this report restores much needed balance by clearly showing the uncertainty surrounding the future of UK coal power stations”.

She said that there are “risks of prolonged high carbon emissions from both coal and gas power stations”.

“Fossil fuels will continue to make a contribution to our energy mix for some time but this cannot come at the expense of our leadership on climate change.

“This welcome and detailed report explains the importance of investing in carbon capture and storage to provide a future for fossil fuels and also touches on other solutions such as demand reduction and biomass conversion.”


Dong drops German gas plant plans

Dropping control: Dong has pulled out of plans for the 1100MW gas plant<br>Credit: Dong Energy
Dropping control: Dong has pulled out of plans for the 1100MW gas plant
Credit: Dong Energy

Dong Energy has opted to drop plans to build a 1100 MW gas-fired power plant in the German state of Hesse, blaming fuel prices and current German energy policy for its decision.

The Danish utility is searching a buyer for the rights to build a plant at the same site.

“We’ve started the sales process for the project rights and aim to find a buyer by the end of this year,” spokeswoman Iris Franco-Fratini told Gas to Power Journal.

The Luwigsau project has already been granted all the necessary approvals and planning permits but Dong was not prepared to go ahead following an unfavourable market evaluation.

The company said that “it is not possible to operate a gas-fired power plant in Germany in a profitable way under current market conditions, and the outlook is unlikely to change.”


Investors are shunning energy firms because of policy inertia

Investors
Credit: Dreamstime

Institutional investors are turning their backs on energy companies at a time when €1 trillion of funding is needed in the European power sector.

That’s the damning verdict of a report published by a UK government committee, which also concludes that the value of energy companies has slumped in recent years and will not recover without policy stimulus.

The report by the House of Lords’ EU Sub-Committee for Agriculture, Fisheries, Environment and Energy follows an eight month inquiry in which the committee heard evidence from a host of organisations and individuals, including the European Commission, UK Energy Secretary Ed Davey, the Confederation of British Industry and environmental group the WWF.

The committee was alarmed at the degree of uncertainty and complacency surrounding affordable, secure and low carbon energy and concluded that more funds held by institutional investors would be invested in energy projects if there was a clear EU policy about how to deliver green power.

Committee chairman Lord Carter of Coles said: “It is clear to us that investment is urgently required, notably in a low carbon, interconnected and innovative energy system, that makes us less reliant on imports of highly volatile and dirty fossil fuels. Such investment would help to deliver secure and low carbon energy, boost European economic growth, and stabilise household and industrial costs.”

He added that the value of energy companies “has slumped since 2008” and said that while “the public purse is severely constrained”, there is “more than enough money is around in the investment community”.

“This should be a great time to invest in long term assets, such as energy, but clear policy is needed in order to release it. No country is an energy island, so EU policy is particularly important. We need leadership and direction from the EU and its Member States in developing and agreeing an energy policy framework through to 2030.”

That leadership and direction, he said, should come in the form of two core policies. Firstly, he called for an overhaul of the EU Emissions Trading System.

“The ETS has failed but it is not dead,” said Lord Carter. “It needs to include a minimum price for carbon, providing governments and investors with the confidence to support innovation through investment.”

The second policy stimulus should be a target for the proportion of energy to be delivered through renewable energy until 2030 – a target that the UK government has so far chosen not to impose.

Lord Carter added that there were “no easy answers to meeting these challenges and keeping Europe competitive in the global market”, but warned that “unless we find a way of doing this, our future energy could well be highly polluting, unaffordable and insecure”.

Among the committee’s other recommendations is a regulatory approach to boosting carbon capture and storage; the development of a regulatory structure for the exploitation of shale gas in the EU; and the development of electricity interconnections between EU member states.


E.ON mulls Slovakian gas plant storage

Teyssen: said E.ON's economic sitution remains difficult.<br>Credit: E.ON
Teyssen: said E.ON’s economic sitution remains difficult.
Credit: E.ON

Another gas-fired power plant in Europe may be put into storage after E.ON announced that it is “seriously considering” mothballing a state-of-the-art plant in Slovakia.

Chief Executive Johannes Teyssen – speaking as he delivered E.ON’s first-quarter earnings report – said the company’s power generation business across Europe remains under intense pressure as power prices are hovering around historical lows.

“The economic situation of our legacy business in Europe, particularly in conventional power generation, remains difficult,” he said.

The company is actively considering mothballing its 430 MW gas-fired power plant, which was commissioned in 2010.

Teyssen renewed his calls on lawmakers to help revitalise the European Union’s carbon dioxide emissions trade to help improve prospects for gas-fired power plants, “which are currently being crowded out of the market by renewables and carbon-intensive lignite”.

“That’s why we’re urgently calling for a new market design for the power market, one that has fair rules for maintaining generating capacity and long-term incentives to encourage the construction of new assets,” he said.


New 20 GW of gas and coal plant faces post-cash crunch challenges

More than 20 GW of gas and coal power stations are currently being built in Western Europe, a new report shows.

The study by Platts Powervision reveals that “despite stagnant demand and below-cost wholesale power prices”, 8.7 GW of gas-fired capacity and 11.9 GW of coal plant is under construction across the region.

An additional 15.4 GW of capacity comprising onshore wind, biomass, hydro and nuclear is also under way, as well as nearly 4 GW of offshore wind.

Platts editor Henry Edwardes-Evans said: “These power stations were planned, approved and financed pre-credit crunch in a world of rising prices and healthy demand. They are now reaching completion in the new reality of prices at €40 per megawatt hour, a demand slide of 4 per cent since 2008 and a market flooded with subsidised renewables.”

The report states that evidence of the post-credit crunch market conditions can be seen in the fact that some €8 billion of impairment charges were made last year by major utilities, largely relating to the declining value of gas-fired power stations.

“The near-term squeeze on thermal plant economics has caused new construction starts in West Europe to slow to a trickle in recent months,” it states, adding that meanwhile “existing power stations increasingly are being mothballed or ramped down in response to record levels of solar and wind power output”.

Edwardes-Evans noted that while “utilities and developers can live with market risk, price volatility, even technology risk, what they find much harder to quantify is regulatory and political risks, which have become dominant forces in the sector”.

He said this “is causing investment in thermal plant construction to slow down, if not dry up”.

The Platts Powervision data shows that from a medium-term perspective, Europe’s thermal plants are facing a vigorous schedule of closures. Platts indicates a 120 GW net decrease in installed nuclear, fuel oil and coal capacity across the European markets through to 2019, which it says is fueling uncertainty longer term.

“Currently, West Europe’s power system is underpinned by well-established thermal assets, many of which are fully amortized and running at well below cost in a supporting role to the green renewables revolution,” Edwardes-Evans noted. “This may be great for wind farm owners and superb for householders wealthy enough to afford PV panels, but industry observers fear it is not sustainable.”


Latin America

Gamesa sells Mexican wind farm to Iberdrola

Wind project developer Gamesa has sold fellow Spanish company Iberdrola a 70 MW wind project in Mexico.

The Dos Arbolitos plant is planned in the town of Juchitán de Zaragoza, Oaxaca and will feature 35 Gamesa wind turbines with 2MW capacity each.

The company estimates that the power generated from the project can cater to nearly 150 000 homes and reduces carbon dioxide emission into the atmosphere by around 560 000 tonnes annually.

It will bring Mexico’s wind generation capacity to 278 MW.


Honda to build wind farm in Brazil to power car plant

aHonda to build wind farm in Brazil to power car plant
Credit: Honda

Japanese car maker Honda is to build a $49m wind farm in Brazil to power one of its manufacturing plants.

It marks the first time an automobile manufacturer in Brazil has invested in wind power.

Honda subsidiary Honda Automoveis do Brasil will build the wind farm in the city of Xangri-la in Rio Grande do Sul, the southernmost state in Brazil. It is hoped it will be operational by September 2014.

It will be run on nine wind power turbine units and is expected to generate around 85 MW of electricity per year.

Honda has set up a new subsidiary – Honda Energy do Brasil – to plan the plant and further wind power opportunities in Brazil. Its president, Carlos Eigi, said: “Ever since Honda began local production in Brazil in 1976, Honda has been co-operating with the local community and striving to minimise the environmental footprint of our production activities. Wind power generation has proven to be very effective in reducing CO2 emissions. Through the utilisation of renewable energy, Honda will continue to be proactive in pursuing environmental conservation activities in Brazil.”

Honda has set a target to reduce CO2 emissions from its global products by 30 per cent by the end of 2020 compared to year 2000 levels.


NORTH AMERICA

US gas turbine revenues to plummet as China closes gap

US gas turbine revenues are predicted to drop to $231m<br>Credit: GE
US gas turbine revenues are predicted to drop to $231m
Credit: GE

The US gas turbine sector is expected to see its revenues plummet by 2018 but it will remain the largest market in the world in 2020.

Meanwhile, China’s market will climb steadily, bringing it close behind the US.

That’s the verdict of a new report from analysts at American research firm GlobalData.

The company anticipates US gas turbine revenue to fall from last year’s figure of $1.4bn to $231m by 2018.

However, it predicts that a large-scale decommissioning of coal plants will drive the need for more environmentally friendly gas-fired alternatives and push the US market value back up to $852m in 2020.

China’s gas turbine industry, however, “can expect to demonstrate a much steadier rate of growth until the end of the decade, with revenue climbing from last year’s total of $456m to $842m in 2020,” forecasts GlobalData.

China’s gains will be spurred on by its rising electricity demand and the continued implementation of a fuel diversification strategy aimed at reducing a reliance on coal.

Until 2004 there was virtually no gas-fired power generation in China, but that has changed thanks to several long distance pipelines coming online in recent years and the development of a number of new pipelines and liquefied natural gas import terminals. GlobalData says that this means “the country’s gas turbine sector looks set to exhibit significant expansion in the foreseeable future”.

Worldwide, the company anticipates gas turbine revenue to fall slightly in the coming years. Average annual global market revenue stood at $12.4bn during 2006-2012 and is forecast to hit $11.8 bn for the period 2013-2020.


WTO rules against Canada in renewable energy case

International private equity firm Denham Capital is investing $75m in a 1 GW portfolio of wind farms in Australia.

Denham has joined three companies including renewable energy firm Enersis Australia to form OneWind Australia, which will build three wind farms: the 100 MW Glen Innes in New South Wales; 250 MW Lincoln Gap in South Australia; and 240 MW Cattle Hill in Tasmania.

Denham has appointed Michael Toke as managing director of OneWind Australia, which is based in Sydney. Toke has more than 10 years of experience in the wind industry, most recently as chief executive of Cannon Power Group, a California company that developed, financed and built more than 1000 MW of wind capacity globally.

Scott Mackin, managing partner at Denham Capital, said: “We are delighted to be forming OneWind Australia with our partners and look forward to accelerating the near term pipeline of projects.”

He said the investment “underscores Denham’s commitment to Australia”.


ASIA

Solar firm REC opens Thai office as 9 MW plant launches

REC's solar facility in Singapore.<br>Credit: REC
REC’s solar facility in Singapore.
Credit: REC

Norwegian solar company REC has opened an office in Bangkok to tap into Thailand’s renewable energy market.

The move comes in the wake of the company launching its first solar plant in the country, the 9.5 MW Chiang Rai project.

Jose Luis Martin, REC’s project development manager in Thailand, said: “The best way to serve a market is simply to be there. A local presence in the country testifies that we’re taking a long-term view to our business activities in Southeast Asia.

He said the Chiang Rai installation “is the first milestone of many”.

Chiang Rai is powered by nearly 41,000 REC solar panels and generates electricity for 7200 homes. It is owned and operated by Chiang Rai Solar Company, a joint venture between independent solar power producer Sonnedix and CK Power, an affiliate of CH Karchang, Thailand’s second-largest construction company.

It is located across 24 hectares of mountainous land which required the solar panels to be ground-mounted on a special concrete structure.

Thailand wants to meet a quarter of energy needs by renewable sources by 2021.

“Thailand is an exciting market and a magnet for solar investment,” added Martin.


MIDDLE EAST

Oman set for three new power plants

The government of Oman is in the process of setting out tenders for up to three new power plants in the country, as they seek to boost generating capacity by 2000 MW to 5000 MW.

The tenders will be scheduled so that the new plants come on-line by 2017-18 in order to meet a growing demand for power in the country.

Dr Hilal Abdullah Al Nasseri of Oman Power & Water Procurement Co (OPWP) – the government-owned entity responsible for buying the nation’s power and water supply – said demand for power is set to grow by around 9.5 per cent a year over the next ten years, meaning that between 7190 MW-9133MW will be needed by 2019.

OPWP is also carrying out a detailed study to find a location for a new 200MW-300MW power plant in Duqm. Dr Al Nasseri said that tenders have been floated for an IPP at Raysut in Salalah with a capacity of 300 MW.


AUSTRALIA

Denham puts $75m into Australian wind farms

International private equity firm Denham Capital is investing $75m in a 1 GW portfolio of wind farms in Australia.

Denham has joined three companies including renewable energy firm Enersis Australia to form OneWind Australia, which will build three wind farms: the 100 MW Glen Innes in New South Wales; 250 MW Lincoln Gap in South Australia; and 240 MW Cattle Hill in Tasmania.

Denham has appointed Michael Toke as managing director of OneWind Australia, which is based in Sydney.

Toke has more than 10 years of experience in the wind industry, most recently as chief executive of Cannon Power Group, a California company that developed, financed and built more than 1000 MW of wind capacity globally.

Scott Mackin, managing partner at Denham Capital, said: “We are delighted to be forming OneWind Australia with our partners and look forward to accelerating the near term pipeline of projects.”

He said the investment “underscores Denham’s commitment to Australia”.


AFRICA

German bank to fund Mozambique hydro plants

German development bank Kreditanstalt fur Wiederaufbau (KfW) said it will grant funds of $23.5m to Electricidade de Mozambique (EdM), which will help to re-develop two hydro projects in Mozambique.

The funds to renovate the plants, 38.4 MW Chicamba and 52 MW Mavuzi, is said to be part of the contract which is signed by both the parties.

EdM has outlined revival plans with an investment of $120m after the company acquired the abandoned plants.

Meanwhile, the company has already secured remaining funds from overseas investors including $46.1m from Swedish investors and $65.5m from French investors.

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