New Engie head Isabelle Kocher looks to renewables
The Financial Times has profiled the new head of Engie, Isabelle Kocher, who was appointed CEO earlier this month. Ms Kocher, having studied physics at École Normale Supérieure and engineering at Ecole des Mines (alongside the future CEOs of Total and BNP Paribas), worked first in government before joining Suez in 2002. She is described as having a no-nonsense, engineer’s mind, more interested in the challenges facing the world’s largest non-state-owned electricity company than her status as the first French female head of a top 40 French company. Those challenges are sizeable: last year, Engie made a net loss of €4.6 billion (US$5.2 billion), and the company must navigate a shift towards more decentralized renewable power generation from its present reliance on centralized gas- and coal-firing. As Ms Kocher put it to the FT, “People [today] understand that we need more wind, solar and hydro. We need to replace coal with gas. We need to leave oil in the ground. This is fundamentally challenging the model of all the energy companies.” This is supported by the fact that 50,000 MW of fossil-fired generation capacity has been mothballed in Europe in the last seven years, partly because of replacement by renewables capacity (which has been subsidised), but also partly because of economic sluggishness. Ms Kocher’s first announcement as CEO has been that Engie will sell €15 billion (US$17 billion) of fossil-based assets over the next three years, afterwards investing €22 billion (US$24.9 billion) in renewables and heating and cooling networks. She is currently putting into action plans to reorganise Engie into 24 business units, mostly to correspond to geographical regions.
Price spike in UK demonstrates vulnerability of electricity supply system and unreliability of back-up generation
Britain’s electricity network experienced a price surge on May 9, with prices soaring to £1,250/MWh, miles above the usual summer price of £50/MWh, in a sign of stretched and possibly unreliable reserve capacity and alternative sources of supply. A string of simultaneous circumstances contributed to the National Grid’s issuing of a “notification of inadequate system margin” order – a request for emergency capacity to begin generation. First, the transmission interconnectors from the Netherlands and from France both experienced partial failures at a time when domestic power generation from wind turbines was low; next, it appears that several aging coal-fired reserve capacity plants experienced failure at the same time (which should raise alarm bells about maintenance). Concurrently, 3 GW of nuclear power generation was offline for maintenance, and in April 4.5 GW of coal-fired capacity was closed (leaving 13.5 GW of coal-fired capacity across Britain). Together, the events and circumstances demonstrated the vulnerability of the system as a whole, and an underinvestment in domestic baseload generation capacity because of the assumption that electricity could be imported from Europe. As the Financial Times notes, this may become more complicated if Britain leaves the EU, and the current unpredictability of renewable power generation also raises questions about how Britain will assure power supply in the future.
Hearing on US carbon emissions rules postponed
The US Court of Appeals for the District of Colombia Circuit has delayed its hearing of a challenge to the Obama administration’s carbon dioxide emissions rules for coal-fired power plants, shifting the date from 2 June to 27 September. As Reuters reports, it appears that the delay was made so that a panel of nine judges could consider the case, rather than the usual three. The rules are currently not in force after the Supreme Court ruled in February that they should be put on hold until litigation was resolved. The case is being brought by an alliance of 27 coal-reliant states.
US EPA publishes rules to limit methane emissions from oil and gas wells
Meanwhile, earlier this month the US Environmental Protection Agency published its rules to limit methane emissions from oil and gas wells, one of the last pieces of the Obama administration’s climate change mitigation strategy. The rules were first proposed in August last year to address the US’s largest source of methane emissions, and have been described as the “low hanging fruit” of greenhouse gas emissions. The EPA mean estimates are that complying with the rules will cost oil and gas companies US$530 million/€473 million up to 2025, while the climate benefits will amount to US$690 million/€616 million over the same period. The EPA has asked the relevant companies to measure and report details of their installations over the next two years as a first step in determining necessary reductions.
Oxford University report predicts Japan’s plans for expansion of coal-firing will leave assets stranded
A report from Oxford University’s Smith School of Enterprise and the Environment has forecast that Japan’s plan to expand its coal-fired power generation capacity would leave the country with US$50 billion (€45 billion) or more of “stranded” assets, those not able to be used because they would emit too much carbon dioxide or otherwise be uneconomic. Under Prime Minister Shinzo Abe, Japan has turned to coal and other fossil fuels as an alternative to nuclear energy following the 2011 Fukushima nuclear disaster, with 49 new coal-fired plant planned. The report argues that as renewables will be significantly cheaper than fossil-fired power within the lifetime of the planned new plant, some of the plant will become uneconomic – from the Financial Times’ coverage of the report (as well as that of Bloomberg), the argument does not appear to be based on carbon emissions. The author of the report, Ben Caldecott, believes that Japan’s currently planning has been inordinately influenced by fossil-fuel lobbyists, but it may be that Japan wishes to mix baseload supply from fossil-fuels with renewables, or some combination of both.
Indonesia to review ambitious power expansion plan
In other Asian power planning news, Indonesian President Joko Widodo has said that the country’s goal of adding 35 GW of generation capacity by 2019 should be reviewed. The breathtakingly ambitious plan involves building around 300 new power stations – mostly coal-fired – in order to raise total generation capacity by two-thirds, eliminating power shortages while assisting the domestic coal-mining sector. Although three years seems a remarkably short time for such construction, Energy Minister Sudirman Said has said that the review of the plan comes at a time when the deadline for completion is still “a long way off”, a lack of understanding which may help to explain why the plan has to be reviewed (and perhaps how it was made in the first place). With farcical understatement, he added that “Investors and business people have started to question if we can finish this or not.” A process of political backpedalling is sure to follow.
GE agrees deal to buy Doosan’s recovery steam generator business
Reuters has reported that GE has agreed a US$250 million (€223 million) deal with Doosan Engineering and Construction Co (of Korea) to buy the unit of Doosan that produces heat recovery steam generators used in combined-cycle power plants. Steve Bolze, the head of GE’s power division, has stated that demand for heat recovery steam generators as part of GE’s offerings has more than doubled, leading to the need to expand its capacity. The Doosan business unit employs 1400 people across one factory in Korea and two in Vietnam, and no job losses are said to be in the offing. The acquisition comes after GE’s “merger” with Alstom’s power generation division last year, and further underlies GE’s belief that gas-firing will grow sizably in the years to come. The sale is expected to go through in the second half of the year.
Jindal brothers power plant deal set to conclude
Some months ago, Combustion Industry News reported on a mooted sale of a 1,000 MW coal-fired power plant by Jindal Steel and Power Ltd (owned by Naveen Jindal) to his brother Sajjan’s company JSW Energy Ltd. A fee of US$900 million/€804 million has now been all but agreed, an amount which will go some way to relieving the US$6.91 billion/€8.58 billion of net debt weighing Jindal Steel and Power down. Conversely, it will help JSW Energy in its drive to triple its power generation capacity to 12 GW within a decade. It will also be of some help to India’s banking sector, which is reported to own a whopping US$121/€108 billion of bad debt, some of it assumedly from Jindal Steel and Power. While the deal is not quite finalised, it appears to be very close to being concluded.
Rwandan methane-fired plant inaugurated
The first 26 MW instalment of the KivuWatt gas-fired power plant in Rwanda has been inaugurated, with plans for the plant to expand to 100 MW in 25 MW instalments over the next three years. Developed by US company ContourGlobal, KivuWatt is fuelled by methane sourced from Lake Kivu, which is shared between Rwanda and Democratic Republic of Congo, and the extraction for fuel use helps to reduce the risk of a methane build up and explosion at the lake. While the plant is small (and expensive, at US$200 million/€179 million), it adds 14% to Rwanda’s installed capacity. Somewhat like Indonesia, Rwanda has ambitious power generation expansion plans, with the goal of increasing the total capacity from the current 212 MW to 563 MW within two years.