• Combustion Industry News

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      Patrick Lavery

      Combustion Industry News Editor

Business Trends

Mitt Romney, the Republican US presidential candidate, has been discussing his energy policy while on the campaign trail. At a rally in Ohio, he asked “We have 250 years of coal. Why the heck wouldn’t we use it?” and went on to state that “By the end of my second term…we will have North American energy independence. We won’t buy oil from Venezuela or the Middle East.” Such a scenario would be a marked change from the current move away from coal in the US towards gas, and seems to suggest a reliance upon Canadian and US tar sand and shale oil production. Barack Obama, meanwhile, has been voicing his support for extending tax credits to wind turbine manufacturers.

The Wall Street Journal has reported on the mixed reception to the European Commission’s proposal to lift carbon prices. In late July, the EC proposed that it would reduce the number of permits auctioned between 2013 and 2015, selling those taken out of the market during the period 2015-2020 instead. However, the lack of detail in the proposal meant that the trading price of carbon fell, showing a lack of confidence in its effectiveness, with a risk seen of an oversupply of permits in the 2015-2020 period. Carbon-intensive industries such as steel and chemicals are opposed to the action, while green technology companies are in support. Discussion of the proposal amongst EU countries is also likely to be fraught, with Poland opposed to a higher carbon price.

Xinhua has carried a report into the declining profitability of China’s coal industry. Excessive coal production across the country has led to falling prices and stockpiling of the resource, and has resulted in the closure of some small and medium sized mines. The stockpiling also means that coal transporters are feeling the pinch. Coal producers are now teaming with power generators in the hope of producing electricity at a lower cost and improving profits. However, the imbalance between coal prices, which are set by the market, and electricity prices, set by the state, suggest that such partnerships have significant hurdles to surmount.

Myanmar has been taking steps to drastically increase its power generation capacity by signing agreements with foreign companies, after numerous sanctions against the country were lifted following the April 2012 by-elections. The government is keen to build the country’s economy, and sufficient and reliable power generation is a prerequisite to doing so; foreign companies see Myanmar as a significant opportunity for new business. Recent agreements have included a memorandum of understanding with Toyo-Thai for a feasibility study for a 100 MW combined cycle gas-fired plant, agreements with Gamesa and SPCG for solar and wind projects, and deals with General Electric, Caterpillar, and J Power. A deal has also reported been reached with a South Korean firm for the construction of a 500 MW gas-fired plant in Tharkayta, and another gas-fired plant and a waste-to-heat plant in Thilawa Industrial Zone. Thailand’s Ratchaburi Electricity Generating Holding, Thailand’s largest power producer, has spoken of its desire to invest in two or three power plants in Myanmar in addition to the Dawei project it is already involved with. Currently, the bulk of Myanmar’s roughly 3,500 MW power generation capacity is through hydropower.

China has expressed its interest in investing in deploying its coal gasification technology in Ukraine, with Ukraine reciprocating the interest. Ukraine is currently heavily reliant on Russian gas imports to generate its energy, and sees a strategic and economic advantage in developing new coal gasification-based power generation capacity, as well as converting existing plants. China has the technology, and also the capital to invest, with China Development Bank ready to set up a $US 3.66 billion/€ 2.97 billion fund. China’s coal-water fuel production technology is also of interest to Ukraine. The two countries signed a protocol of cooperation on 16 July, which included the building of three new gasification plants. The switch from gas to coal bucks the current worldwide trend in the opposite direction.

Legislation and Regulation

The UK has finalised its renewable obligation certificate (ROC) scheme to 2017, the system through which it compensates power generators for producing power through renewable energy sources. Contrary to expectations, compensation for power generation from co-firing biomass increased only slightly, from 0.5 ROCs to 0.6 ROCs per megawatt-hour (an ROC being worth £40.71/€51.90/$US 63.79 for the 2012/13 period), while for biomass conversion plants, the ROC will rise from 1 ROC to 1.5 ROCs. There will be minor falls for offshore (to 1.8 ROCs) and onshore wind (to 0.9 ROCs), and a major rise for tidal power generation (to 5 ROCs). The news brought a 16 per cent fall in the share price of Drax, which said it would review plans to convert a plant to fire more biomass. RWE npower stated that it was disappointed with the finalised scheme, after converting its Tilbury plant, which formerly fired coal, to fire biomass this year.

Poland’s largest power utility, PGE, has criticised the Polish government’s draft renewable energy bill, saying that it will reduce the profitability of biomass co-firing power generation. The economy ministry’s renewable energy proposal, released in July, scaled back support for biomass and onshore wind generation in favour or offshore wind and solar power generation. Poland is obliged to increase its share of power generation by renewable to 15 per cent by 2020.

The International Energy Agency (IEA) has urged the federal government of Canada to implement a price on carbon. The IEA’s executive director, Maria van der Hoeven, used a visit to Canada to outline that a sustainable energy future requires energy prices that reflect the cost of environmental externalities as well as the cost of production and transmission of power.

Research, Development and Technology

The Peter Cook Centre for Carbon Capture and Storage Research has opened in Melbourne, Australia, funded by the Australian Government and Rio Tinto, and employing around 30 researchers. It forms part of the Cooperative Research Centre for CO2 (CRCCO2), which was established by the geologist Peter Cook. It will be linked to the Otway Project, a field site for carbon storage research which has been operating since 2008.

Texas-based firm Skyonic has begun a $US 125 million/€ 101 million project to capture CO2 from Capitol Aggregate’s cement plant in San Antonio, USA. The technology uses the CO2 to make sodium bicarbonate, which can then be sold as a byproduct, and is suitable not only for applications where the CO2 in a gas is high, but also when it is low. BP, ConocoPhillips and other firms have been early partners of Skyonic as it has developed its technology. The firm hopes to expand into Asia and Europe.

Company News

RWE npower have announced that its 2,000 MW combined cycle gas-fired power plant in Pembrokeshire, Wales, will commence operation in September. The plant cost RWE npower £1 billion/€1.27 billion/$US 1.57 billion, part of the £3.42 billion the company had invested in the UK over the last three years. Volker Beckers, the company’s CEO, stated that “RWE npower now has the largest and most efficient fleet of flexible gas-fired power stations in the country.”

Mississippi Power, a subsidiary of Southern Co, is in the process of consolidating the contractors building its Kemper County, USA, plant, in an effort to control construction costs. Mississippi regulators have set a maximum recoverable capital amount of $US 2.88 billion for the 582 MW integrated coal gasification combined-cycle (IGCC) plant, and it appears, with construction one-third complete, that the plant will cost very close to that amount. Three contractors have had their roles ‘re-aligned’. Construction of coal gasification plants is somewhat unusual in the US at the moment, given low natural gas prices and recent federal government carbon reduction proposals.