• Combustion Industry News

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      Patrick Lavery

      Combustion Industry News Editor

Business Trends

A Reuters poll to which 286 large Japanese companies responded has shown that 55 per cent support abandoning nuclear power if alternative energy sources are secured, while a further 18 per cent support abandoning it regardless. This is despite Japan’s biggest business lobby, Keidanren, voicing concern about a rise in electricity prices as a result of abandoning nuclear power. The poll also showed a general distrust towards power utilities, with only 11 per cent approving of utilities’ current efforts to secure power supplies and 12 per cent trusting their projections for electricity demand. In a report on the poll, the director of economic research at NLI Research Institute gave a sobering assessment. “We could live without nuclear power if we wanted but we would then have to rely on thermal power until alternative sources are found. The question is whether companies are willing to put up with higher costs and lower growth.”

The Wall Street Journal reports that Japanese companies have been buying shale gas from the US. The development has been brought on because Japan recently temporarily shut down the last of its nuclear reactors, which together once produced 30% of its electricity, following the 2011 Fukushima nuclear disaster. While many nuclear reactors are expected to restart, the demand for alternative supplies of power is likely to remain strong for years, according to the report. The deal-making is obstructed, however, by the need for US companies to obtain permits to sell to Japan, which is required because the US and Japan do not have a free-trade agreement. There is also internal opposition within the US, with some politicians opposed to the trading on the grounds that it will drive up power prices domestically.

Legislation and Regulation

Britain has ended liberalised power pricing in an effort to reduce price volatility and drive investment in low-carbon power projects. Under the new scheme, the government will set the required amount and price of power and leave delivery for the market. The announcement was at a strategic level; the details of price support will be announced in the second half of 2013, with the scheme expected to last up until 2020. While the government language was that the move was necessary to ‘keep the lights on’, it sparked concern that regulation will lead to a lack of innovation, and that the focus on supply was at the detriment of energy efficiency and grid improvements.

Germany has pushed for deeper EU carbon cuts, asking for a discussion over the matter to be held in June at a meeting of EU environment ministers. With the current low carbon price acting to drive investment in coal power generation rather than alternatives to coal, Germany sees deeper cuts as the way to push up the price and redirect investment. It is estimated that a price between €20-50 is required to spur clean energy investment; the current price is around €7. The low prices have also meant low volumes of trading, which recently prompted the German bourse to stop trading in carbon permits. The European Commission has previously said that it will review the auctioning timetable as a means of reducing the surplus of permits. There is strong opposition to any move to increase the carbon price from Poland, which is heavily reliant on coal.

Research, Development and Technology

The University of Edinburgh, Scotland, has announced the opening of a new research centre to study the use of CO2 to recover oil from reservoirs. The aim is to develop technology, known as enhanced oil recovery (EOR), to be used in the North Sea in conjunction with carbon capture and storage schemes. The centre is funded by the Scottish government, Scottish Enterprise, and the energy generator 2CO. EOR is already in use in North America, but the new centre wishes to make an environmentally, commercially and technically feasible version for the North Sea.

GE Energy, a division of General Electric, has been making 50 MW gas turbines for power generation out of aeroplane motors. The motors are assembled in Cincinnati in the US before being shipped to Hungary for transformation into turbines at GE’s Veresegyhaza factory. A recent deal for the generators was reached with Israeli Dorad Energy for their Ashkelon power plant. The scale of the turbines is such that they can be used with some degree of mobility – two will be used to generate power at the 2014 Winter Olympics in Sochi, Russia.


The International Energy Agency has announced that 2011 saw a 3.2% rise in global CO2 emissions, with Chinese increases more than accounting for falls in the US and in Europe. China’s contribution amounted to 9.2% of the global emissions of 31.6 billion tonnes, in line, according to IEA chief economist Fatih Birol, with a temperature increase of 6 oC by 2050. Such an increase would have devastating global consequences. The announcement comes as representatives from 180 countries meet in Bonn to work on a new global emissions-limiting pact. The US fall was due mainly to a switch to shale gas from coal, while in Europe a warmer winter than usual and the sluggish economy were responsible. Japanese emissions rose 2.4% as nuclear power generation was halted and some fossil-fuel power generation replaced it.

Company News

The Australian newspaper reports that the way has been cleared for AGL Energy to buy the 2000 MW Loy Yang A power plant in Victoria, Australia, after a competition ruling was overturned in court. AGL Energy had moved to buy the plant in 2003, but had been blocked by the Australian Consumer and Competition Commission, which feared the move would result in too much of a consolidation of power companies in Australia. The deal will mean AGL Energy will have a total generation capacity similar to Origin Energy, another major power company. AGL is buying from Tokyo Electric Power Co, which has been forced to sell its assets to stay afloat following the 2011 Fukushima nuclear disaster.

Danish technology company FLSmidth has announced it has secured a $US 136 million/€108 million contract to engineer, procure and construct equipment for a cement factory in the US. The aim of the project is to convert an existing wet process kiln into a preheater, precalciner kiln to achieve better emissions performances and reduce energy use. The equipment will include a drier-crusher, a preheater with calciner, a kiln bypass system, a cross-bar cooler, a coal dosing system, a solid fuel mill, three fabric filters and a reactor to enable the feeding of car tyres.

US company RG Steel announced last week that it is facing a liquidity crisis and is looking for a buyer. From June it will idle its three flat-rolled steel mills, located in Baltimore, Ohio and West Virginia, which it bought last year from Russian steelmaker Severstal. The reasons given for the liquidity problems were soft demand, rising costs, and shrinking margins. An analyst for Steel Market Intelligence said that the shut-downs would do little to raise the market price of steel, as supply from China is the main driver, and RG Steel’s contribution to US steelmaking was only 5%.

And steel supply from China is going to become more efficient. Reuters reports that the Chinese government’s National Development and Reform Commission has approved Baosteel’s  $US11 billion, 10 million tonne per annum steel project at the port of Zhanjiang in the south-eastern province of Guangdong. As well as the steel mill itself, the project includes a power plant and port facilities. Guandong will force the closure of 16.14 million tonnes of inefficient production as part of the deal that it reached with Baosteel, as China tries to limit the growth of its steel production capacity, which is currently estimated at 900 million tonnes (683 million tonnes were produced last year). The approval of the project fits nicely with China’s two goals of fast-tracking large infrastructure projects to stimulate growth and moving steel production to port areas to reduce logistics costs and improve urban environments.

The Business Standard reports that India’s Empee Group of Companies, which has interests in liquor, sugar, hospitality and power, is planning to invest in a 1,320 MW power plant in the state of Tamil Nadu. The 65 billion rupee/$US 1.18 billion/€940 million plant is something of a step up for Empee, as, according to the report, the company currently has two co-generation plants and a biomass plant with a combined capacity of 80 MW. A recent upswing in electricity tariffs has triggered the move. Work is to commence within six months, with the plant to be completed in three years.