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$108m contract awarded for line to serve Mexican gas-fired power plant

July 16th, 2015

State-owned Comision Federal de Electricidad (CFE) has awarded Sempra Energy's 81 per cent-owned MexicCFE power plantan energy infrastructure company a $108m natural gas transportation contract for a power plant in Chihuahua.

The project to be built by early 2017 includes a header facility and a 14-mile pipeline with that would supply gas to CFE's Norte III combined-cycle gas-fired power generation plant. The pipeline is to interconnect with three new pipelines into Mexico.

Sempra Infraestructura Energetica Nova SAB de CV (IEnova) won the contract through its Gasoducto de Aguaprieta S. de RL de CV subsidiary, which signed the 25-year capacity deal with CFE.

As of last year, IEnova had $3.5 billion of operating assets and projects under construction in Mexico, making it one of the largest private energy companies in the country. IEnova claims to be the first energy infrastructure company listed on the Mexican Stock Exchange.

 

Brazil to benefit from bet on distributed generation

July 15th, 2015

The Brazilian energy crisis may lead to greater investment in distributed generation.

Reuters reports that various investors and consultants are looking at the merits of distributed solar generation, such as rooftop solar, in particular to counter the country’s currently exorbitant high power prices.
Brazil flag
Start-up companies are already offering packages that include financing for installation, and Brazil's power sector watchdog Aneel is displaying interest. It is holding public hearings to discuss regulations to expand the system.

It expects distributed generation to reach 2 GW by 2024, up from nearly nothing now. At current installation costs, that would amount to $4.79bn - $6.38bn in investment.

"Power generation, particularly solar and wind, is basically the only sector detached from the current economic crisis in Brazil," said Mario Lima, a director with consulting firm EY in Rio de Janeiro told Reuters. "Solar is very quick to install so it has a huge advantage over other sources in the current situation."

Brazil's power prices rose about 17 per cent last year and will jump 41 per cent further this year, according to central bank estimates, as expensive backup thermal plants work around the clock.

Greek transmission network faces sell off as part of bailout deal

July 14th, 2015

The latest Greek bailout deal includes a provision to privatize the country’s electricity transmission network.

The deal was drawn up on Monday and today Greek Prime Minister Alexis Tsipras has to push the measures through parliament in order for them to move forward.

Among a raft on measures detailed in Monday’s Euro Summit statement, which breaks down the bailout deal, Greece is required to “proceed with the privatisation of the electricity transmission network operator, unless replacement measures can be found that have equivalent effect on competition”.Greece bailout

It is not the first time the country’s electricity sector has faced privatization. Two years ago Greek officials drew up a plan to sell off 66 per cent of the independent power transmission operator – known by its Greek acronym ADMIE.

Four companies were in line to bid for ADMIE – grid operators Terna, Elia and State Grid Corp of China – as well as a Canadian pension fund, PSP Investments.

But the privatization plan was put on hold in January following the election of Alexis Tsipras and the following month energy minister Panagiotis Lafazanis vowed that “not one single privatization will take place in the energy sector”.

However a sell-off is now not just back on the table, but being presented as a condition of the latest bailout.

Mujtaba Rahman at political consults Eurasia Group told the International Business Times that “privatization, especially on the energy side, is central to the bailout”.

However, Eva Kaili, a Greek MEP and member of the European Parliament’s energy and industry committee, has been reported as saying that “taking into account that the current government has a generally hostile attitude towards liberalization of any resource market, I think it’s highly unlikely that privatizations in energy sectors will get through”.

Related stories: Greek power sector suffers as referendum fallout hits new coal-fired power plant

Lignite power plants to take up 50 per cent of German cap reserve

July 14th, 2015

The head of RWE generation believes half of German capacity reserve will be drawn from his company’s lignite coal-fired power plant fleet.

The coal plants will backbone the country’s renewable power-based drive according to RWE Generation Chief Executive Officer Matthias Hartung, who said, “Further talks will show how many of our blocks will go into the reserve. We assume that the distribution of 2.7 GW will be roughly according to the current distribution of lignite power generation in Germany.”
Matthias Hartung
Lignite plants can apply to be included in the capacity reserve from 2017.

The plants will be paid to supply electricity during times of power shortages, a potentially more common situation given the intermittency of wind and solar power. While the plants won’t be allowed to sell on the market, they won’t have to buy extra European Union emission permits from that year, as originally planned for coal-power plants that are more than 20 years old.

Germany’s government parties reached a compromise earlier this month to cut carbon emissions by giving some of the dirtiest lignite plants until 2021 to shut permanently. RWE said being required to buy the additional carbon permits would have resulted in closing 17 of its 20 lignite plants and two of its three open-cast mines.

Lignite’s share in Germany’s electricity production rose to 25.6 percent in 2014 from 25.4 percent a year before, data from German utility lobby BDEW show. In the same period the share of renewable energy climbed to 25.8 percent from 24.1 percent.

Argentina and Bolivia to sign energy agreement

July 13th, 2015

The governments of Argentina and Bolivia are preparing to launch the construction of a power line between Yaguacua in Bolivia and Tartagal in Argentina.  

Both countries are planning to submit a project for the electrical interconnection in a forthcoming meeting in Buenos Aires.

The two South American leaders have announced the construction of the Yaguacua-Tartagal electric interconnection line, through which Bolivia plans to export 200 MW in the first year.

Evo Morales, the Bolivian president, will also use the visit to open a subsidiary Empresa Nacional de Electricidad (Ende) in Argentina.

Greek power sector suffers as referendum fallout hits new coal-fired power plant

July 13th, 2015

The results of Greece’s recent referendum is having a debilitating effect on the country’s biggest utility, Public Power Company S.A. (PPC), with the development of a new coal-fired power plant one such major project impacted.

Fewer customers than usual are paying their power bills and the company is seeing a shortfall of about €20m a day, according to Thucydides Koukoulios, with Pöyry Management Consulting, who spoke to Politico website.
Greek and EU flag jigsaw pieces
“The further reduction of cash inflows means that PPC has to rely on their cash reserves”, he said, which creates difficulties for its operations. Because of the cash squeeze, PPC is contemplating withholding a €200m down payment for a new €1.5bn coal-fired power plant in order to free up funds. 

According to the Ekathimerini website, “The dilemma is said to be serious and there can be no definitive decision for the disbursement of the advance payment without political support from the government. In fact, the contractor responsible for the plant’s construction is also facing funding problems due the credit controls in Greece.”

PPC is the biggest power producer and electricity supplier in Greece with approximately 7.4 million customers. The company holds assets in lignite (or brown coal) mines, power generation, transmission and distribution.

Sotiris Chatzimichael, head of the Strategy Directorate at PPC, told Politico. “People don’t have access to their money. The electricity bill is not their first priority.”

Well before the present crisis the company had difficulty in receiving payments for energy services provided, a situation which has now accelerated.

Earlier this year, the company announced it was sitting on unpaid bills worth around €1.9bn, more than its market capitalization of just over €1bn, according to Bloomberg. In 2014 it had revenues of €5.8bn.

“Of course this is not money we consider lost, it’s unpaid bills,” said Chatzimichael. “Nevertheless it presents a huge cash flow problem for PPC on top of all the others.”

The company also noted that it has had to provision €374 million for customer bad debts.

There is hope that the immediate problem will abate if Greece manages to unlock a bailout programme which allows banks to reopen.

Despite PPC’s financial problems, a major disruption to Greece’s power supply is unlikely, said Giamouridis.

About 70 per cent of the country’s power comes from locally-mined lignite and renewables such as hydro, wind, and solar. Greece’s ability to continue to use those sources would remain relatively unaffected, even if talks with creditors collapse and the country is forced out of the euro.

Meanwhile Greek renewable power projects aimed at reducing the country's dependence on energy imports from Russia will be on hold for some time, as the threat of exit from the euro prompts investors to delay initiatives.

Euractiv reports that two investment sources familiar with the plans said at least four major solar and wind projects in Greece had stalled.

"Business development decisions are on hold at the moment. There is too much risk," one of the sources said.

Small scale solar bucks global clean energy investment slump

July 10th, 2015

Global investment in clean energy dipped in the second quarter of this year compared to the same period in 2014.

A new report reveals that clean energy investment worldwide was $53bn in the second quarter of 2015, down 28 per cent on the $73.6bn in Q2 2014.

The study from Bloomberg New Energy Finance states that the slump is because “global investment this year is facing headwinds from the financial markets, with the sharp rise in the US currency over the last 12 months reducing the dollar value of deals struck in other countries”.

It adds that volatility in share prices, particularly in China, is holding back equity raising by specialist clean energy companies from both public market investors and venture capital and private equity funds.

However BNEF notes that there have been notable success stories in the second quarter. Small-scale solar enjoyed investment at $20.4bn, up 29 per cent on 2014.

Indeed it states that small solar projects of less than 1 MW are on course for a record year, with the US, Japan and China and other developing countries responding to “the improved cost-effectiveness of rooftop photovoltaics after the price falls of recent years”.

In Europe in the second quarter, there were two offshore wind deals that accounted for nearly $4.2bn of investment between them – the 402 MW Veja Mate array off Germany and the 400 MW E.ON Rampion project off England.

Meanwhile, Chile’s $1.3bn of investment in wind and solar is the highest that the country has committed in any quarter to date.

Of the total global second quarter investments of $53bn, China was the biggest contributor with $15.5bn – however this was down 36 per cent from its buoyant second quarter last year. Solar accounted for $6.4bn of the Chinese total, with one third of that in small-scale projects and two thirds in utility-scale PV parks.

In the US, investment in Q2 was $9.4bn, down 4 per cent on the first quarter and 21 per cent on Q2 2014.

After China and the US, the rest of the top five investment countries were Japan, Germany and the UK.

The largest category of clean energy investment was asset finance of utility-scale projects such as solar parks, wind farms, biomass and waste-to-energy generators, biofuel production units, geothermal plants, small hydro-electric schemes of less than 50 MW and marine energy projects. This amounted to $30.9bn between April and June.

Less than a week for GE to win over EU on Alstom

July 10th, 2015

General Electric has just over a week to offer concessions and head off E.U. regulatory concerns about its $13.7bn bid for Alstom’s power unit.

That was the word from an insider who spoke to Bloomberg this week. The European Commission warned that the deal could hurt competition as it would result in just two gas turbine companies in Europe – GE and German rival Siemens AG, however the US company wants to persuade Brussels with regard to the overlooked prospect of Chinese competition in the market.|
Immelt, Kron and Kaeser
It is not clear if GE managed to sway the EU competition enforcer at a closed-door hearing last week despite arguing that the merged company’s market power would not be as dominant as estimated by the Commission.

“The deadline for remedies is July 16,” said the source, who declined to be named because the date is not public knowledge. The Commission is scheduled to decide by August 21st whether to clear the deal.

GE Chief Executive Jeff Immelt has said the company is ready to offload intellectual property rights to some of Alstom’s assets but industry players suggest that it may have to do more, such as selling assets.

Meanwhile reports suggest Siemens may still be interested in acquiring the unit should it become available again, according to an unnamed senior management source who had spoken to Reuters.

 

Siemens and El-Sewedy complete 650 MW plant

July 10th, 2015

Siemens and its local partner El-Sewedy Electric announced Thursday that they had built a 650 MW gas-power plant in Ataqa, Egypt.

The plant located 12 KM from Suez was completed inside six months.

The Attaqa power plant is part of Egypt's emergency plan to face shortage of electricity production. The emergency plan is being carried out by the Egyptian Electricity Ministry to add 3632 megawatts to the national electricity network before summer.
Egyptian flag
The plant has four E-Class turbines, which are supplied by Siemens and characterized as well-proven, highly flexible and service-friendly.

The Siemens E-Class turbine is also especially suited to peak-load operation, making it an appropriate technology for Egypt, which experiences high demand for electricity during the summer months.

In March, Siemens has been awarded a contract to supply four E-Class turbines to Egypt's Attaka Power Plant near Suez City, under a supply contract with El-Sewedy Power System Projects (PSP), El-Sewedy Electric's subsidiary.

UK energy ministry rules out nationalisation option for CCS

July 8th, 2015

The UK government will continue to place its faith in a competition framework to drive carbon capture and storage (CCS) on the island, despite industry chiefs suggesting that a national corporation be set up to push the technology on a temporary basis.

Amy Clemitshaw, a top official at the department for energy and climate change, responded to that effect to a point from the floor at the Westminster Energy, Environment and Transport Forum on Tuesday that the UK ought to set up a 1980’s-style British national storage corporation in order to give CCS the lift it needs to succeed.

Lord Oxborough, President of the Carbon Capture and Storage Association, attempting to relate why progress had been so sluggish, told delegates that he had been asked by the Gordon Brown-led Labour administration to set up a small team aiming at just that brief.

“(Then energy minister) Charles Hendry had approached me to get off the ground a government-backed corporation which would then be sold off over the next 5-10 years. CCS has got to look like an attractive investment and government must give a fiscal nudge to make it attractive.”


“I am asked why big oil doesn’t get into this (investment). It’s not like the traditional business that oil companies have been doing – its waste disposal – a different approach is required and we are looking at utilities for investment."

“Why hasn’t it happened? It’s down to lip service. Because it’s a long term project, to politicians it doesn’t look urgent."

In response to the possibility of temporary nationalisation, Clemitshaw, deputy director with responsibility for fossil fuel generation and carbon capture and storage policy at DECC told the audience, “We have a market in place at the moment that provides incentives for companies and then looks to leverage their appetite to deliver and put that infrastructure in place. With contracts for difference, the competition will show what we can deliver that way and we need to test that model before considering a complete change of approach.”

Despite that, the energy spokesperson left delegates with no doubt but that CCS was to the forefront of the government’s mind when considering the country’s future energy mix.

“CCS is particularly attractive when considering satisfying the energy trilemma of affordability, sustainability and security of supply despite the tensions that exist between those imperatives. Its good news for the technology that can play a positive role in terms of all three.

“It helps keep coal and gas in the mix which is obviously important in terms of baseload and flexibility of generation and how we manage that transition is one of the policy challenges. Then for affordability no one can deny it is expensive but over the long term as the ETI has shown, CCS can make the cost of meeting our decarbonisation target substantially lower. Potentially, without CCS, the additional costs to run a decarbonised UK economy in 2050 will be £32bn according to ETI analysis. That’s clearly a long term affordability that’s not lost on ministers.”

“I take a lot of confidence from the fact that independent observers like the global CCS institute independently rate the UK policy regulatory environment for CCS really highly and that is a position we want to maintain while working with other countries to ensure that CCS is fostered elsewhere as well. While its early days for this government we have a strong record that we will want to maintain.”

Clemitshaw added that the government is in negotiation to develop a CFD that is tailored to the requirements of CCS, and stressed that it is not just important for phase 1, but also for phase 2 and everything that comes after it in the power sector as it will ‘hammer out a template of commercial terms that we can see’.

The British government has invested £130m on research and development since 2011 in a bid to help reduce costs associated with the technology from both a power generation and industrial perspective.

Clemitshaw told the forum, “We want to put aside half our R & D budget this year and focus that on the next stage of storage appraisal at some of the promising sites in UK waters and start the process of de-risking them for future investment appraisal and development.”

She then returned to the area of most concern with reference to CCS technology - its expense.

“Who pays for the cost? This is the challenge with industrial carbon capture that you can’t duck from a policy perspective and the question arises how much it costs and the other question is who pays for that cost? In the power sector we’ve taken the decision that it will be borne by the consumer. There is a legitimate political debate which will need to happen around how progress in industrial CCS can be supported and who pays for it.”

She reminded the audience that UK energy secretary, Amber Rudd stated last month that while she could not pre-empt the decisions being made by the cabinet over the next few months and years about the long terms support framework for any low carbon technology the government’s commitment to CCS is clear.

“It’s about really testing it potential and giving it the opportunity to succeed and that is the starting point for this government in terms of these big decisions over the next year.”

Earlier at the forum, Matthew Bilson, former head of strategy at DECC’s Office of CCS noted the progress made, paying tribute to the previous energy secretary Ed Davey for winning an EU-wide target for decarbonisation by 2030 that is technology-neutral.-He also reminded those present of the responsibility of talking up CCS

Prof Stuart Haszeldine, Professor of CCS at Edinburgh University pointed out the opportunity CCS provides for industry, particularly ‘ global shares of iron and steel, cement, refineries and chemicals – industries that could be taxed out of existence’ without it.

“CCS ensures these jobs are kept and industries protected in a decarbonised world” he added.

Peter Emery of Drax said there needs to be ways of decarbonising more effectively than depending on what he termed, ‘inflexible nuclear and intermittent renewables’, adding that backing industrial CCS would mean ‘a genuine northern powerhouse could be achieved with 100,000 jobs and £6.5bn in investment.’

 

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