German 2030 coal phase-out called into question

Market: Electricity, Hydrogen
03/12/24

Germany's coal phase-out targets are being reassessed owing to the likelihood of further delays to the passing of the power plant security act (KWSG), as well as decisions already taken on the future design of the electricity market.

Germany has pledged to phase out coal and lignite-fired generation by 2038 at the latest, but energy ministry BMWK said an earlier, market-driven phase-out by 2030 is possible. Grid regulator Bnetza said 21GW of new gas-fired capacity — which should in the future be hydrogen-ready — would be needed by 2031 for a complete coal phase-out.

Utility Leag said it does not see the current government changing the legal phase-out deadline. But "any further delay" to adding controllable replacement capacities would create an "urgent" situation, it said. And utility EnBW told Argus that it remains committed to phasing out coal by 2038 at the latest, while adding that "security of supply must not be jeopardised".

At a transmission system operators' (TSO) forum held in November, TSO Amprion's Peter Lopion said the KWSG is vital to encourage plant construction in the south, where more gas-fired capacity is crucial if coal is to be phased out. He also raised concerns about Germany's target to phase out gas-fired power by 2045 — the year in which the country aims to reach climate neutrality — given the lack of a hydrogen economy and hydrogen production.

Earlier this month, the CDU/CSU opposition parties commissioned an investigation into the feasibility of reactivating decommissioned nuclear plants, seeing the shutdown of Germany's final nuclear plant in April 2023 as "ideologically wrong". EnBW has told Argus that the decommissioning of its 1.4GW GKN II plant — the dismantling of which began in May 2023 — is "virtually irreversible".

By Bea Leverett and John Horstmann

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03/12/24

Argentina streamlines energy efficiency program

Montevideo, 3 December (Argus) — Argentina's government continues to fine-tune its energy efficiency program, eliminating red tape that slowed the import of appliances and machinery into the country. President Javier Milei's administration launched a new program in August to provide households and businesses with low-interest loans for energy efficiency. It has expanded the program to include more products and incentives. In late November, it announced a regulatory change for importing energy-efficient products, eliminating the need for performance testing, audits and other bureaucratic steps. Companies importing products now only have to provide an efficiency certification. The measure covers products from televisions for households to motors and pumps for businesses. The change is part of the government's efforts to deregulate the economy. It is juxtaposed to the president's skepticism for climate change. Milei eliminated the environment ministry and Argentina's delegation to the recent UN Cop 29 climate talks abruptly left the meeting. The change is part of the government's efforts to deregulate the economy to encourage investment and use of new technology. The government created in July the ministry of deregulation and state transformation and since then has eliminated hundreds of regulations, including more than 100 related to imports. The government has also eliminated more than 33,000 public sector jobs since Milei took office a year ago. "Any effort for energy efficiency has an immediate effect," said Nicolas Vizcaino, co-founder of Greempact, which creates energy-efficiency strategies for companies. "There is no excuse not to focus on efficiency." Greempact analyzes energy consumption data and other variables to create an energy baseline for clients. The data helps design strategies. Its strategies, which include changing technology, improving management and modifying production procedures, have helped some clients reduce consumption by more than 30pc, the company says. Vizcaino said efficiency is the key to the energy transition, because it not only saves a company money, but also has a positive impact on the entire system, from generation to distribution. "One megawatt of energy saved is less expensive and has a much greater impact than one megawatt of renewable energy added to a grid," he said. By Lucien Chauvin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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German stakeholders doubt power plant strategy passing

03/12/24

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03/12/24

German stakeholders doubt power plant strategy passing

London, 3 December (Argus) — The collapse of the German government on 6 November has led to uncertainty over the future of Germany's power market, particularly with regard to the passing of the power plant strategy (KWSG) before federal elections scheduled for 23 February. Under the power plant strategy, economic and climate ministry BMWK proposed tenders for the construction of 12.5GW of power plant capacity and 500MW of long-term storage over the next few years. This includes 10GW of hydrogen-ready gas-fired capacity, of which 5GW was planned to be offered next year, with the government aiming to hold tenders in early 2025 . Renewables association BEE announced on 26 November that BMWK had submitted a KWSG draft for industry consultation over 72 hours, indicating the minority government's urgent desire to enact the law before the elections. Incumbent energy minister Robert Habeck previously said politicians from the opposition CDU party had been "constantly" writing letters to ask when the power plant strategy would "finally" be passed. But the deputy head of the CDU/CSU, Jens Spahn, told an industry event last week that owing to the former coalition's sidelining of the opposition when drawing up the strategy, the CDU/CSU cannot be expected to support it. Utility EnBW told Argus in November that it expects the KWSG to be "supported" under the next government owing to a cross-party consensus on the need for more capacity. EnBW said it would be prepared to take part in the tenders "if the conditions allow it", whereas utility Leag told Argus that while "considerable progress" had been made in its preparations for the tenders, it is unable to do anything "concrete" until the regulatory framework has been clarified. But it voiced doubts over whether the KWSG will be passed before the elections. And utility RWE told Argus that while it would not "speculate" on the KWSG's passing, it will "not put planning efforts on hold" and will "proceed as usual" in its preparations. Vattenfall declined to comment, while Uniper was not immediately available. At an electricity market forum hosted by the country's four transmission system operators last month, grid regulator Bnetza's Tobias Lengner-Ludwig said that Bnetza and potential investors will need at least six months to prepare for the tenders, which could cause further delays. But in its position paper on the KWSG in response to BMWK's consultation, energy and water association BDEW said investing in the tenders in their current form is unattractive, as risks are too high owing to a potential lack of hydrogen supply, possible delays in the setting up of hydrogen infrastructure and short implementation timeframes. And while BEE told Argus that it does not expect the KWSG to be passed in this legislative period, it is not demanding its passage, as it views the proposal to invest in hydrogen-ready gas-fired plants unfavourably. Such a strong commitment to hydrogen risks fossil fuel lock-ins and high electricity prices, it said, particularly owing to the initially limited availability of green hydrogen. It said the government should focus on adding flexible renewable capacity by maximising the potential of existing sources, including hydropower, geothermal, battery storage and combined heat and power. German solar association BSW told Argus that alternatives to conventional generation — such as flexible bioenergy and storage systems — should be expanded to add dispatchable capacity. Even if the KWSG were passed in this legislative period, it would only have an impact in the early 2030s, it said. While clean spark spreads for lower-efficiency units for each year to 2027 have remained mostly negative this year, clean spark spreads for higher-efficiency units for 2025 turned negative in September after being in the money for most of 2024. And clean spark spreads for higher-efficiency units for 2026 and 2027 have averaged around €0.25/MWh and minus €1.40/MWh this year, despite the latter almost consistently being positive since the start of September. By Bea Leverett and John Horstmann Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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French government faces no confidence vote

02/12/24

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02/12/24

French government faces no confidence vote

London, 2 December (Argus) — The French government could be set to fall within days, leaving its energy programme up in the air, after far-right party Rassemblement National (RN) declared it would launch a vote of no confidence. Prime minister Michel Barnier today announced he would use a parliamentary manoeuvre to push through a budget for the social security system without a vote. Since his nomination in September, Barnier has been attempting to achieve consensus on state budgets for 2025, while lacking a majority in the parliament. Left-wing and right-wing groups responded to today's move by promising to launch motions of no confidence. The RN had previously tacitly supported Barnier, preserving him in office as he prepares the budget, which must be finished before the end of the year. A successful vote of no confidence on 4 December at the earliest would require 289 deputies, a majority of the national assembly, to vote in favour. A previous confidence vote on 8 October garnered 197 in favour, falling short. But the 121 RN deputies supported the government on that occasion, and their switch to the opposition could provide enough votes for the measure to pass. If the government falls, no new parliamentary elections can be held until June. President Emmanuel Macron could name a new prime minister, but this appointee would not have a majority either. And left- and right-wing groups have called on him to resign and trigger new presidential elections. If the budget does not pass, the government's energy programme could be delayed or ignored. A potential way forward out of the budget deadlock could be to pass a special budget law, which would carry forward measures already in place this year, extending them for a month at a time until a permanent budget can be voted through. Changes which could not go forward in this situation could include a mooted increase to the tax on electricity — taking it up to roughly €30/MWh from 1 February 2025, from current levels of €21-21.50/MWh. Others include changes planned to subsidies for domestic energy efficiency measures and electric vehicles. By Rhys Talbot Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Hapag-Lloyd buys bio, e-methanol from China's Goldwind

29/11/24

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29/11/24

Hapag-Lloyd buys bio, e-methanol from China's Goldwind

London, 29 November (Argus) — Germany-based containership owner Hapag-Lloyd has struck a long-term deal to buy 250,000 t/yr of blended biomethanol and e-methanol from Chinese wind turbine maker and project developer Goldwind. The deal lasts for more than 10 years and is legally binding, Hapag-Lloyd told Argus . Goldwind will supply Hapag-Lloyd with a smaller volume initially in 2026 and ramp up to 250,000 t/yr in late 2027. Hapag-Lloyd expects the initial volumes to largely fulfil demand from the five dual-fuel methanol ships it will operate from 2026, it said. Goldwind earlier this year started building a 500,000 t/yr plant in Hinggan League, northeast China. The so-called "hybrid" plants will make biomethanol and e-methanol, and Goldwind plans to add a second 500,000 t/yr plant in 2027, the shipowner said. Hapag-Lloyd's deal is for volume from the second plant, it added. The ratio of e-methanol in the deal is 30pc but could be raised to 50pc in the plant's lifetime, Hapag-Lloyd said. The fuel ensures greenhouse gas (GHG) emissions reductions of at least 70pc to comply with current sustainability certification requirements, Hapag-Lloyd said. This is likely to refer to the FuelEU Maritime definition of low-carbon fuels as cutting GHG emissions by 70pc compared with fossil benchmarks. Goldwind previously struck a deal to supply 500,000 t/yr of the sustainable methanol mix to Danish shipping and logistics firm Maersk from 2026. While methanol appears to be gaining momentum, shipowners are pursuing a range of fuels for future fleets. Hapag-Lloyd last month ordered 24 dual-fuelled LNG containerships for a combined $4bn. By Aidan Lea Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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LNG use poses risk to Cambodia's energy security: IEEFA

28/11/24

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28/11/24

LNG use poses risk to Cambodia's energy security: IEEFA

Singapore, 28 November (Argus) — Cambodia's increasing reliance on LNG for power generation could be detrimental to its energy security because of instability in LNG markets, according to Institute for Energy Economics and Financial Analysis (IEEFA). Rapid economic growth and electrification have led to Cambodia's electricity demand growing by 16pc/yr since 2009, according to IEEFA's report released on 26 November. Its power generation is mostly from hydropower and coal, but the country aims to boost its gas-fired power generation to meet its decarbonisation targets. Cambodia has a net zero by 2050 goal, and aims to reach 70pc renewable energy generation by 2030. The share of coal in Cambodia's power mix was 45pc in 2023, with hydropower representing 44pc, solar 5pc and imports from neighbouring countries making up the remaining 6pc. The country in 2021 declared that it would not build new coal plants beyond those already approved. Natural gas had not played a role in the country's power mix until recently, but "optimism has grown in recent years regarding the ability of new LNG-to-power projects to help the country meet rising electricity demand," stated the report. Gas operator Cambodian Natural Gas imported the country's first LNG shipment in 2020 from China's state-owned firm CNOOC, according to IEEFA. The firm also planned to complete a 1,200MW LNG-fired power plant and a 3mn t/yr import terminal by 2023, although there has been no progress as of June this year. Cambodian officials in November 2023 announced the cancellation of a 700MW coal project, which will be replaced with a 800MW gas-fired power plant instead. Cambodia is seeking to build these large LNG-fired power plants because of concerns over the intermittency of renewables such as wind and power, and LNG is viewed as a suitable transition fuel for grid reliability. The government expects LNG-fired capacity to reach 900MW by 2040, which would require roughly 840,000 t/yr of imports. When considering long-term wholesale prices of $8-16/mn Btu, Cambodia's LNG import bill could range between $361mn-722mn/yr, according to IEEFA. Some forecasts estimate that Cambodia's LNG-fired capacity could rise to as much as 2,700MW by 2040 and 8,700MW by 2050, stated the report. This would entail import requirements of 2.53mn t/yr in 2040 and 8.14mn t/yr in 2050. The fuel import costs for 2,700MW of LNG-fired capacity could amount to $1.08bn-2.17bn. LNG volatility LNG markets have been volatile over the past two years, because of factors such as geopolitical tensions and outages at supply facilities. Other emerging Asian economies such as Pakistan and Bangladesh faced fuel and power shortages because they have been unable to secure affordable LNG supplies, and this "demonstrates the evident risks of LNG importation for developing countries," states the report. Cambodia already has one of the highest electricity tariffs in Asia at $0.16/kWh, so higher LNG prices could require higher tariffs. LNG prices in Asia have been roughly $14/mn Btu and would have to fall below $5mn/mn Btu to compete with other electricity sources, according to IEEFA, but these low price levels are rare. The ANEA price, the Argus assessment for spot LNG deliveries to northeast Asia for the front-half month, stood at $15.08/mn Btu on 27 November. Cambodia's LNG demand and LNG-fired power plant expansions remain uncertain, so long-term offtake commitments will be challenging and the country will likely have to initially source cargoes from the sport market, according to the report. But the spot market poses risks in terms of supply security and price stability. Establishing an LNG supply chain also entails rigid long-term contracts that lock in fossil fuel infrastructure for decades. By Prethika Nair Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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