UK fuel mix disclosure ‘no longer fit for purpose’

Spanish Market: Electricity
05/12/24

UK company Smartest Energy presented a paper at today's RECS-led UK Rego Day seminar in London, calling for urgent reform of the electricity certification scheme to support decarbonisation goals.

Smartest Energy is calling for a shift to full production and consumption disclosure, with generators receiving a certificate of origin for every MWh they send into the grid — regardless of the fuel source. This would allow renewable and non-renewable generation to be tracked and enable consumers to make informed decisions, the paper argues.

Another proposal is to gradually move away from the current methodology for fuel mix disclosure, which is based on annual matching — this system effectively means consumption within a specific timeframe can be matched to output in any other period during the disclosure year. The paper suggests an initial shift to quarterly matching, followed by monthly and daily matching. Closer temporal alignment would "encourage investment in grid development and deeper decarbonisation", according to Smartest Energy. It would also give a clearer picture of seasonal and daily energy demand and the physical reality of electricity flows.

The paper suggests that more transparency is particularly important now that European guarantees of origin (GOOs) are no longer recognised in the UK, and while electricity continues to flow from the continent through interconnectors.

Argus assessments for non-biomass Regos generated in the current compliance period 23 (CP23) — April 2024-March 2025 — averaged £4.19/MWh in November, while CP23 biomass was assessed at an average of £3.88/MWh.

In Europe, full disclosure has already been implemented in Austria, Switzerland and the Netherlands. Dutch GOOs tend to trade at a premium to the rest of the continent, with consumer preference for local certificates driving demand.

France moved to monthly certificate matching at the beginning of 2021.

By Giulio Bajona

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11/12/24

Cop 29 grids, storage pledge signatories released

London, 11 December (Argus) — The final list of signatories for pledges on expanding energy storage and grid capacity taken at the UN Cop 29 climate summit, was released today, almost four weeks after the commitment was first finalised, with 58 countries out of almost 200 Cop parties taking part. Signatories commit to a collective goal of increasing electricity storage capacity to 1500GW by 2030, a sixfold increase from 2022. Another pledge is to add or refurbish 25mn km of grid infrastructure by 2030, and recognise the need for an additional 65mn km by 2040. Lack of firm, clean power generators to back up intermittent renewables is a major barrier to increasing renewable penetration, while distributed resources require large investments in power grids to transport electricity to consumers. The list of 58 signatory countries includes the so-called troika of Cop host countries the UAE, Azerbaijan and Brazil. The US and all other G7 member states are present, with the exception of France. Also absent among major economies are China and Russia, while Saudi Arabia spoke in support of the pledges during Cop but does not appear on the list of signatories. In comparison, almost 120 countries had signed a pledge to triple global renewable capacity double global energy efficiency by 2030 during the Cop 28 summit in Dubai last year. The grids and storage pledges were one of the centrepiece announcements made by the Azeri host, following on from the calls made in Dubai on renewable capacity and energy efficiency, but also on transitioning away from fossil fuels in energy systems. But divergences on mitigation — actions to cut greenhouse gas emissions — during the summit this year, meant that the completed pledge, as well as any other specific mentions of fuels and energy transition technologies, were not included in final outcome texts. By Rhys Talbot Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Brazil's inflation accelerates to near 5pc in November

10/12/24

Brazil's inflation accelerates to near 5pc in November

Sao Paulo, 10 December (Argus) — Brazil's headline inflation accelerated to a 14-month high in November, led by gains in food and transportation, according to government statistics agency IBGE. The consumer price index (CPI) rose to an annual 4.87pc in November from 4.76pc in the previous month, IBGE said. Food and beverage costs rose by an annual 7.63pc in November, accounting for much of the monthly increase, following a 6.65pc annual gain in October. Beef costs increased by an annual 15.43pc in November following an 8.33pc annual gain for the prior month. Higher beef costs in the domestic market are related to the Brazilian real's depreciation to the US dollar, with the exchange rate falling to a record-low R6.11/$1 at the end of November. The stronger dollar leads producers to prefer exports over domestic sales. Beef prices rose by 8pc for the month alone. Soybean oil prices rose by 27.75pc over the year. Transportation costs, another major contributor to the monthly acceleration, rose by an annual 3.11pc in November after a 2.48pc gain in October. On a monthly basis, transportation costs rose by 0.89pc in November, reversing a contraction of 0.38pc in October. Housing costs rose by 4pc over the 12-month period. Brazil's central bank last month hiked its target rate to 11.25pc, its second increase off a low of 10.5pc between May and September, to try to head off a resurgence in inflation. It was at a cyclical peak of 13.75pc from August 2022 through July 2023 as it sought to tamp down the post-Covid-19 surge in inflation. Fuel prices rose by an annual 8.78pc in November after a 7.22pc gain in October. Motor fuel costs fell by 0.15pc in November compared with a 0.17pc drop in October — thanks to lower ethanol and gasoline prices. Diesel prices contracted by 2.25pc in the 12-month period. Power costs slowed to an annual 3.46pc in November following a 11.58pc gain in October. Electricity prices contracted by a monthly 6.27pc after a decrease in power tariffs on 1 November. Monthly inflation slowed to 0.39pc in November from 0.56pc in October. The central bank's inflation goal for 2024 is 3pc, with a margin of 1.5pc above or below. By Maria Frazatto and Lucas Parolin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Mexico’s CRE lays off officials after reform

10/12/24

Mexico’s CRE lays off officials after reform

Mexico City, 10 December (Argus) — Mexico's energy regulatory commission (CRE) has dismissed high-ranking officials and other staff shortly after congress approved constitutional amendments to eliminate independent regulators, market sources said. At least two unit chiefs — the heads of the legal and hydrocarbons units — were let go in recent days, sources with close knowledge of the matter told Argus . These positions are now marked as vacant in the CRE's online directory. In addition, seven subunits within the hydrocarbons division — overseeing natural gas, fuel and LPG markets, including storage and transportation — also appear vacant. The CRE did not respond to requests for comment. The CRE's commissioner president Leopoldo Melchi has designated Guadalupe Hernandez, a legal official in the hydrocarbons undersecretary at the energy ministry (Sener), to oversee certain functions, a source said. The layoffs are also expected to extend to the electricity unit, including its chief, Francisco Varela, according to market sources. Yet, these positions are still listed as filled in the online directory. These dismissals follow congress' approval of constitutional amendments to dismantle seven independent regulators, including the CRE and hydrocarbons regulator CNH. While the regulators will continue operating until laws implementing these changes are enacted — expected by early 2025 — the finance ministry has proposed a 33pc budget cut for the CRE and CNH in 2025. Some recent departures are linked to commissioner Luis Linares, who announced in November that he will step down on 1 January 2025. But the recent layoffs may signal a broader restructuring of the energy regulator. Under the amendments, the CRE's functions will be absorbed by a new office within Sener. The specifics of this transition will depend on the upcoming legal framework. Industry experts and companies are calling for the new regulatory bodies to retain technical independence and sufficient funding to oversee energy markets effectively, even after the constitutional changes. By Édgar Sígler Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Meta sites largest data center in Louisiana

10/12/24

Meta sites largest data center in Louisiana

New York, 10 December (Argus) — Facebook-parent Meta will build its largest data center ever in northeast Louisiana, near one of the largest US natural gas fields. Meta plans to invest more than $10bn in the Richland Parish data center, which will "play a vital role" in advancing Meta's ambitions in artificial intelligence software, the company said. Construction of the facility is expected to continue through 2030, Meta said. Richland Parish is "an outstanding location" for Meta to build a data center because of its "access to infrastructure", "reliable grid" and "business-friendly climate", the company said. Meta's siting decision also was driven in part by "the availability of reliable, low-cost energy", according to Grow NELA, the economic development agency of northeast Louisiana. The parish is close to the prolific Haynesville shale of east Texas and northern Louisiana, which last year accounted for about 14pc of US dry gas production, according to US Energy Information Administration data. Securing gas supplies in a major gas-producing state like Louisiana may be easier because of the simpler regulatory process behind the construction of intrastate gas pipelines. Gas pipeline construction across US state lines requires the involvement of federal energy regulators, resulting in longer and more uncertain construction timelines. Meta said it will partner with US gas and power utility Entergy to add "enough clean and renewable energy to the grid to cover 100pc of the electricity use" of the Richland Parish data center, with Entergy adding "clean, efficient power plants to its system" to meet power demand. Meta and Entergy have looked at "options to invest in multiple clean energy options, including nuclear energy," Meta said in a statement to Argus . But it did not respond to an inquiry asking if it had secured supply deals for the facility with electricity generated by any particular fuel source, such as nuclear, gas or coal. Amazon, Google and Microsoft in recent months have said they expect to fuel their own planned data centers with nuclear energy , which could provide baseload, low-emission electricity to the new facilities. But long timelines and large upfront costs for conventional nuclear power plants, alongside the uncertain emergent technology behind nuclear small modular reactors, or SMRs, present obstacles to nuclear-powered data center development. For those reasons, the surge in expected US electricity demand through the end of the decade to fuel new planned data centers could, in the short term, translate largely into increased gas demand, Alan Armstrong, chief executive of Williams, the largest US gas pipeline company, told Argus earlier this month. Data center operators "are in such a hurry, they are just wanting the power", Armstrong said. By Julian Hast Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Brazil biomethane sales could cut diesel imports

09/12/24

Brazil biomethane sales could cut diesel imports

Sao Paulo, 9 December (Argus) — Expanding biomethane consumption in Brazil could squeeze inflows of foreign diesel, a slow-moving shift that could take up to a decade to be significant. Brazil's state-owned energy research firm EPE predicts domestic biomethane production can reach up to 3.3bn m³ in 2034, around 39pc of expected agricultural-linked demand for unblended diesel in that year. Brazil imports about 1mn m³/month (209,660 b/d) of diesel to bridge a domestic supply gap. Market participants predict biomethane substitution of some diesel is inevitable because diesel production is twice as costly as that of biomethane, and savings are passed to consumers, according to industry group Brazilian center for infrastructure. Imported diesel prices also depend on reference prices in the international market and exchange rate fluctuations, risks that could make it less attractive — depending on the pricing of cargoes in US dollars. And in the biomethane market, diesel is seen as a strong candidate for substitution because of the effect of the cost of imports on the final price of fossil fuel. Biomethane could displace diesel demand linked to agricultural machinery and trucks, according to EPE, particularly with farming operations making biomethane using waste from their own activities as feedstock. Production centers near farming operations could allow for the establishment of retail stations far from existing pipelines. Prices and receipts Pricing of biomethane in southeastern Sao Paulo state is pegged between natural gas and diesel, taking the energy efficiency of each fuel into account, according to an August study by industry federation Sao Paulo Fiesp. Average natural gas and diesel prices are R3/m³ and R6/m³, respectively, with R3/m³ seen by the sector as the minimum value economically viable biomethane production. In addition to potentially lowering consumer costs, using biomethane as a diesel substitute could increase revenue for producers certified to generate Cbio decarbonization credits under Brazil's national biofuel policy Renovabio. Cbio sales can represent 15pc of the value of the biomethane molecule, according to EPE. By Rebecca Gompertz and Gabrielle Moreira Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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