• Combustion Industry News

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      Patrick Lavery

      Combustion Industry News Editor

RWE and E.ON to shut conventional generation capacity

RWE has announced that it will shut about 6% of its power generation capacity, as the increase in solar power generation capacity in Germany puts economic pressure on conventional fuel firing. Of the company’s total capacity of around 52 GW, 3.1 GW will be shut, mostly in gas-fired capacity. In addition, it is to terminate three power sourcing contracts from coal-fired plants it does not own, totalling 1.2 GW, and furthermore it expects that because of regulatory reasons it may have to shut a coal-fired plant in the Netherlands in 2016. RWE’s operating profits from conventional plants decreased by two-thirds in first half of 2013, while its net profit overall dropped 38% to €979 million ($US 1.30 billion). It is planning to reduce operating costs by €1 billion ($US 1.32 billion) this year, and has stated “Further power stations are being assessed and all options to improve the company’s economic efficiency are being explored.”

RWE’s fellow utility E.ON is facing the same challenges and adapting in a similar way. Its half-year earnings were down by 42% when reported in August. Already it has retired 6.5 GW of capacity, and plans to increase that amount to 11 GW by 2015. Utilities have campaigned to be given financial payments by German and other European governments to keep conventional power plants online for the sake of energy security, but, according to The Wall Street Journal, analysts don’t expect such a system to eventuate in Germany. However, with Germany to elect a new federal government in September, subsidy arrangements for renewable energies may change, altering the economic circumstances for conventional power generation.

Danish pension group to fund UK straw-fired plant

PensionDanmark, one of Denmark’s largest pension funds, is to partner with Danish industrial group BWSC to fund the construction of a £128 million (€150 million/$US 198 million) straw-fired power plant in Lincolnshire, UK. The Brigg Renewable Energy Plant has been designed by UK firm Eco2, and is to generate 40 MW of electricity from firing dry stalk residue from cereal plants, an otherwise unused by-product of the local farming industry. It is to commence operation in 2016, and will become Eco2’s second straw-fired plant in the area, with a plant at Sleaford to begin generation this month. The investment from PensionDanmark is part of the fund’s policy to invest 10% of its money into renewable energy projects. Eco2, according to the Financial Times, is looking at similar projects in Spain and Romania where there are also areas with large amounts of unused straw.

Australia likely to elect government that repeals carbon pricing system

Australia is to hold a federal election on 7 September, with opinion polls showing that the opposition coalition of Liberal and National parties is very likely to be elected. A central component of the opposition’s campaign has been to repeal the carbon pricing system which was introduced nationwide in July 2012. Under it, there would be a fixed carbon permit price for three years before a transition to a floating market-determined price, described by the opposition leader as “a so-called market in the non-delivery of an invisible substance to no-one.” The opposition coalition’s alternative is a ‘direct action’ plan, where the elected government would award tenders to projects that could demonstrate carbon savings within Australia (the current scheme allows for carbon savings in foreign countries), and has the target of reducing carbon emissions by 5% compared to levels in the year 2000, equal to the minimum target of the current government (which could increase its target to 25% depending on international action). It has been criticised as a more inefficient means of achieving the 5% target, and would be, to the best of the Combustion Industry News’ knowledge, the first time in the world a carbon market system had been repealed. The majority of supporters of the cancellation of the system say the benefit will be lower electricity and living costs in Australia; a minority have pointed towards the struggles of the European carbon market as evidence that market systems are ineffectual for reducing greenhouse gas emissions. Also to be scrapped are $AU 300 million ($US 268 million/€202 million) of carbon capture and storage research grants.

Vermont Yankee Nuclear Power Station to close under pressure from gas plants

In another sign of the changes wrought by the rise of shale gas in the US, the owner of the Vermont Yankee Nuclear Power Station has announced it is to close. Gas-fired power generation has made the nuclear plant uneconomic to run, says Entergy Corp – electricity prices have fallen by half since 2008, such that expected revenues at the plant would not exceed running costs. The move heralds what is expected to be nuclear power generation’s general retreat across the US in the face of the competition from shale gas firing. Environmental activists, who have been attempting without success to have the Vermont plant closed for environmental reasons for the past decade, have welcomed the news. The plant will close in 2014.

Chinese cement firms facing tough times

The Financial Times has reported that two of China’s largest cement companies – China Shanshui Cement and West China Cement – have had their outlooks downgraded by credit ratings firms. The downgrades have resulted from expectations of an industrial slowdown in China coupled with stricter environmental regulation, the latter of which has been the product of environmental protests across the country. The downgrades are thus representative of a challenge to cement manufacturers across China. The government has been encouraging consolidation within the industry, however, meaning that it will be more ready to face the coming challenges. Still, the consolidation is not complete, with the government planning to close up to 1,300 poorly performing companies across the aluminium, cement, steel and shipbuilding industries.

Seismic risks from fracking compared to other industrial activities

An opinion piece carried by Reuters has highlighted an interesting comparison of the tremor and earthquake risk involved in fracking compared to other industrial activities. According to the Induced Seismicity and Energy Technologies report by the US National Research Council, mining, hydroelectric dams, conventional oil and gas production, and geothermal power generation all carry a higher risk of tremors and earthquakes, and the piece suggests that carbon storage in geological formations will also carry a higher risk. The overall thrust of the piece is that as one would not ban geothermal power generation based on the tremor and earthquake risk, one should not ban fracking on the same basis. A broader comparison of risks across energy extraction and power generation technologies is unfortunately not provided.

BP delay of sale of US wind farms does not change strategy

Earlier in the year, Combustion Industry News reported on the trend by large oil and gas companies to pull out of their renewable energy ventures, seeing medium and long term profit as continuing to be in fossil fuels. One move that symbolised the retreat was BP’s decision to sell their US wind farms, but the company has now delayed the sale indefinitely, despite receiving a number of bids for the assets. While there is speculation this may herald a re-engagement with renewable energies, BP has denied that there has been a change of strategy at the company.

Veolia to install waste-to-heat system in London

French environmental firm Veolia is to install a district heating system in south London to utilise the waste heat from the existing South East London Combined Heat and Power (SELCHP) incinerator, in the London suburb of Deptford, which burns municipal waste. It will be the first waste-to-heat system in London, though Veolia already have schemes in two other parts of the UK. London increased the amount of waste it incinerated by 60% between 2001 and 2010, after heavier landfill taxes were imposed.

Abu Dhabi firm delays Turkish power plants

Abu Dhabi National Energy Co has announced that it has postponed its plans to begin construction of several coal-fired power plants in the lignite-rich Afsin-Elbistan region in eastern Turkey. In January, the state-owned firm had agreed with Turkey’s state-owned Electricity Generation Co on a $US 12 billion (€9 billion) package of power plants, with construction to begin mid this year; it is now scheduled to begin sometime in 2014. Abu Dhabi National Energy Co cited other spending priorities for the seemingly rather sudden decision.