Lithuanian LNG terminal providing energy security and lowering gas prices
A blog post in the Financial Times has ruminated on the security and economic aspects of the first major LNG terminal in the Nordic-Baltic region, at the Lithuanian port of Klaipeda, which became operational in November 2014. The terminal currently has a capacity to receive 1.4 billion cubic metres of LNG annually, and this will expand to around 4 billion cubic metres in 2016, an amount able to supply all of Lithuanian’s energy needs as well as 90% of those of Estonia and Latvia. Lithuania currently imports the majority of its energy from Russia, having had no other major supplier, but the new terminal will soon begin to import 540 million cubic metres of LNG annually from Norway’s Statoil. From a security of supply aspect, this is highly beneficial to Lithuania; from an economic aspect, the new supply channel has forced Gazprom to drop the price of its gas by more than 23%, so as to slightly undercut the price of gas from Norway. It is unclear what return on the capital cost of the LNG terminal this fuel saving supplies, but it is in any respect a hugely significant reduction. Still, the terminal will be running for the time being at only 15% capacity, a worry for earning enough revenue to keep the terminal afloat. This should not be a long-term problem, however, as projects are planned or underway to augment gas pipelines to neighbouring countries, and supply deals have already been signed or signalled with customers in Poland and Estonia. Overall, it appears a highly successful project on the part of Lithuania.
German government denies deal done to close some coal-fired power plants
The German government has denied a report in Der Spiegel that it has agreed a deal to pay for some coal-fired power plants to be closed. The report claimed that the Economy and Energy Minister had made a deal with Angela Merkel’s chief of staff and the head of the IG BCE coal union for the payment of €1 billion ($US 1.1 billion) to the plant owners. In return, the coal plants, which included RWE’s stations in Niederaussem and Frimmersdorf, to the west of Cologne, would serve as reserve capacity for four years before being closed, such that Germany could take a step closer to meeting its carbon emission reduction targets. However, the government has stated that “the agreement mentioned in the report does not exist,” which may mean that the agreement in some form exists.
US Court of Appeals decides challenge to carbon rules for existing power plants invalid
In an update to the story earlier in the year, the US Court of Appeals has ruled (as it previously had indicated it might) that a challenge to the Obama administration’s proposed rules to limit carbon emissions from existing power plants was invalid, on the grounds that the rules had not yet been finalised. The challenge to the Clean Power Plan had been brought by over a dozen states and Murray Energy Corp, a coal company. It seems certain that when the rules are finalised, which may be as soon as August, they will be challenged again.
South Korean government favours future nuclear over coal-fired power plants
The government of South Korea has announced a revision to its long-term power strategy, deciding to abandon plans to build four more coal-fired power plants, instead building another two nuclear power plants. Seoul expects power demand to grow by 2.2% annually up to 2029, and expects the energy shares by sector to then be 32.2% coal, 28.5% nuclear, 24.7% gas, 5.8% combined heat and power, 4.6% renewable, and 4.2% oil. The decision to favour nuclear over coal is designed to reduce national carbon emissions.
IS captures power plant outside of Sirte, Libya
Islamic State announced in early June that it had captured a power plant near the central-coastal Libyan city of Sirte, after the entire city fell under the control of the organisation. Libya is currently highly unstable, with two rival ‘governments’ competing for power in the wake of the fall of Muammar Gaddafi as IS begins to consolidate its foothold in the country, and the fate of the plant is symbolic of the problems the country faces. Until IS captured it, the plant had been in control of the government without international recognition, which controls the west and centre of the country. In late May, war planes loyal to the internationally-recognised government (which controls the east of the country) bombed a tanker that the plant’s operators claimed was carrying fuel-oil to the plant – the air force counter-claiming that the tanker was delivering weapons. The bombing resulted in the plant being without fuel and having to shut down, meaning further power shortages to the people of the country, with the state-owned warplanes being used to attack the state-owned tanker that was delivering fuel to the state-owned plant. It is precisely this chaos which IS is exploiting, and it would be no surprise if IS promises to deliver more stable services in the hope of achieving a level of local popularity.
El Sewedy Electric and Siemens win contract to build gigantic gas-fired plant in Egypt
Egyptian firm El Sewedy Electric announced in early June that it had won, in partnership with Siemens, a €2 billion ($US 2.28 billion) engineering, procurement and construction contract to build a 4,800 MW combined-cycle gas-fired power plant near Beni Suef, 150 km south of Cairo. The plant will be comprised of four modules, each consisting of two of Siemens’ H-class gas turbines, as well as two heat recovery steam generators, one steam turbine, and three generators. It will take over three years to be fully completed, though it is scheduled to start producing electricity in the northern hemisphere summer of 2017. The signing ceremony was attended by Egyptian President Elsisi, as well as German Vice Chancellor Sigmar Gabriel and the CEO of Siemens, Joe Kaeser. Egypt, long a net energy exporter, has in recent years suffered from power shortages, and the present government is having some success in seeking to reverse the situation, having brought the country to a net balance. El Sewedy Electric, a leader in power generation in the Middle East and Africa, claims to have made history this year by connecting a gas turbine generator package within 159 days of a contract signature date.
Indian power firms sign MOUs to build plants in Bangladesh
India’s Adani Power Limited and Reliance Power Limited both signed memorandums of understanding with the Bangladesh Power Development Board in early June. Reliance is to build three gas-fired power plants with a total generation capacity of 3,000 MW, for a fee of $US 3 billion (€2.63 billion), while Adani is to build two coal-fired plants at a combined capacity of 1,600 MW, at $US 1.5 billion. Details of the plants are yet to be decided, but both firms have said construction will take 13 months after final agreements are completed. According to the Times of India, Bangladesh currently has a power deficit of 1,500 MW, which the new plants will overturn, helping enable economic growth within the country.
Ivory Coast plant to be expanded as country seeks to expand role as regional energy provider
Azito Energie, co-owned by emerging markets power company Globeleq and IPS (West Africa), which in turn is majority owned by the Aga Khan Fund for Economic Development, has announced that its 139 MW expansion of one of its Ivory Coast gas-fired power plants will go online in the coming weeks. The $US 400 million (€355 million) project increases the plant capacity to 430 MW, and the country’s total generation capacity to around 1,790 MW. Ivory Coast is a net electricity exporter, supplying Ghana, Burkina Faso, Benin, Togo and Mali, and plans to strengthen its role as a regional power producer by increasing generation and supplying Liberia, Guinea and Sierra Leone.