Weekly News
4 July 2014
UK to procure 53.3 GW via first capacity market auctions Ed Davey, UK energy and climate change secretary, has announced that the government will procure a total of 53.3 GW of power generation capacity in upcoming auctions. A total of 50.8GW will be auctioned in December this year and a further 2.5 GW in 2017. hile the main parameters for the December auctions had already been outlined the total amount of capacity up for auction had remained uncertain.
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Final piece of the jigsaw in place The decision over the total capacity the UK requires has been open to much debate and to reach the figure of 53.3 GW the Department of Energy and Climate Change (DECC) has sought input from a wide range of sources including the Independent Panel of Technical Experts as well as analysis from National Grid. “The excellent news is that with today’s announcement we have the final piece of the jigsaw of our detailed energy security plans and can now say with confidence that we have de-
fused the ticking time bomb of electricity supply risks we inherited,” Davey said. The first capacity auction will be held by an independent body in December with operators bidding for delivery in 2018/19. Gas-fired power has struggled in the UK in recent years as total electricity generated by gas at the start of this year was down by 8.2% as the weak economy continues to depress demand.
Power Stations Oil fired Coal fired Dual fired Nuclear CCGT CHP plant 30MW & over Pumped storage Gas turbine Hydro Diesel Biomass Poultry litter
Capacity auctions to bolster economic case for gas power Official data released by DECC last week showed that the share of gas power in the country’s energy mix fell the lowest first quarter level in the last sixteen years or just 23% for Q1 2014. continued on page 2
“Natural gas – a just-in-time fuel”; MIT As the share of gas in the U.S. energy mix has doubled over the last decade, there must be greater flexibility and better integration between the natural gas and electricity markets, according to a new MIT Energy Initiative (MITEI) analysis. “Natural gas is a just-in-time fuel,” said Francis O’Sullivan, director of MITEI research, as unlike coal, where onsite storage is possible, gas-fired plants have limited to no storage capacity and are entirely reliant on pipelines for fuel delivery. ue to geographic constraints, regulatory hurdles, and economic barriers, underground storage and liquefied natural gas facilities will likely not become a major presence in the U.S., researchers at the MITEI forecast. While coal can be delivered by rail from essentially anywhere in almost any quantity, natural gas is limited to the capacity of the pipelines, the report reads, stressing the urgent need to expand existing pipelines or build new ones.
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carbon emissions by displacing coal with gas. Moreover, U.S. power producers use gas as a key backup source for intermittent wind and solar power sources.
MARKETS Gas power capacity falls to lowest Q1 share in 16 years
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Asia Pacific to drive global gas power growth – BNEF 4 India pipeline blast deepens power crisis
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PROJECTS & FINANCE MAN and EDF-PEI start up 220 MW Martinique plant
MIT sees further rise of gas use for power gen Specific constraints of domestic gas availability needs to be remedied, in the face of projections a further rise in its fuel use as regulators look to reduce
AGENDA
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Construction of 800 MW Mombasa plant to start in August
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Gigawatt Mozambique raises finance for 100 MW plant
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Enmax 875 MW Shepard Energy Center hit by delays
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GTP Journal
4 July 2014
Top story, continued from page 1
“Today’s announcement - coupled with our record amounts of investment in renewables and electricity infrastructure, our revival plans for the North Sea and the most healthy pipeline
of investment projects in new generating capacity and interconnectors ever – means we will remain a world leader,” Davey said. National Grid confirmed earlier this month
that it will proceed with new supplementary balancing reserves on both the demand and supply side to target near term electricity supply needs.
Computer virus infects control systems for over 1,000 energy firms A computer virus referred to as ‘Energetic Bear’ has infected systems at over 1,000 energy firms in the U.S. and six European nations, putting at risk SCADA systems that control a range of power plants. The virus is believed to have originated in Russia and allows hackers to cripple physical systems and monitor energy usage in real time. he virus was identified by cyber-security firm Symantec and is believed to have been created by a group known only as ‘Dragonfly’ as part of a state led cyberspying effort. “Dragonfly bears the hallmarks of a statesponsored operation, displaying a high degree of technical capability,” Symantec said in a statement, adding that infections not only gave the attackers a “beachhead in the targeted organizations’ networks”, but also gave them the means to mount “sabotage operations” against infected ICS computers.
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Systems targeted in U.S. and six European nations The Energetic Bear virus is the latest variation of the Havex Trojan, a virus that has been recognised since 2011 and is also believed to have been created by the Dragonfly group. There have been a number of variants to date, most of which use a backdoor approach and Gas to Power Journal Publisher Stuart Fryer Editor Anja Karl Tel: +44 (0)207 0173417 anja@gastopowerjournal.com Senior Reporter Malcolm Ramsay Tel: +44 (0) 207 0173 413 malcolm@gastopowerjournal.com
can also target power plant control systems. “Among the targets of Dragonfly were energy grid operators, major electricity generation firms, petroleum pipeline operators, and energy industry industrial equipment providers. The majority of the victims were located in the United States, Spain, France, Italy, GerThe latest variation of the Havex Trojan has can infiltrate many, Turkey, and Poland,” Syman- SCADA control systems tec said in a statement. The latest attacks by Dragonfly rely on two cybersecurity firm F-Secure. main pieces of malware both of which utilising The software has already been used to infilremote access tool (RAT) type malware to protrate vital pieces of energy infrastructure and vide the attackers with access and control of IT experts are still working to determine the compromised computers. The Oldrea software full extent of the threat. The virus is believed to used by Dragonfly appears to be custom malhave originally been released in response to ware, either written by the group itself or creU.S. efforts with Israel to limit uranium enrichated for it. ment centrifuges in Iran. While a direct link to the Russian government remains uncertain many analysts agree Security risk rises as Havex that evidence strongly points in this direction. Trojan mutates IT security provider Crowdstrike notes that the Both viruses can be introduced to operators group behind the virus has “a nexus to the networks when users download software from Russian Federation” and is an “adversary infected vendors and can let attackers breach group” that conducts intelligence collection critical infrastructure. Three unnamed software operations against a variety of global victims vendors in Germany, Switzerland and Belgium with a primary focus on the energy sector. have already been compromised, according to continued from page 1
Events Barbara Canals Tel: +44 (0)207 173410 barbara@gastopowerjournal.com
"Substantial policy changes, particularly in the energy sector, don't happen overnight," cautioned Richard Schmalensee, Howard W. Johnson Professor of Economics, who wrote a report overview for policymakers. He suggested "the industry needs a portfolio of solutions, at both the regional and federal levels, to mitigate short-term challenges while laying the groundwork for long-term change."
Subscriptions Stephan M. Venter Tel: +44 (0)207 0173407 venter@gastopowerjournal.com
Need for dual-fuel capabilities at new plants
Production Vivian Chee Tel: +44 (0) 20 8995 5540 chee@btconnect.com
To help gas power producers overcome fuel supply risks, MIT analysts suggests incentivizing dual-fuel capabilities at new power plants,
Reporter Ramadas Rao Tel: +91 80 4219 0096 raoramadas1@gmail.com Advertising Narges Jodeyri Tel: +44 (0)207 2533406 narges@gastopowerjournal.com
using fuels with separate supply chains such as coal and gas. A more predictable and reliable electricity output from gas-fired plants could be achieved by an improving the coordination and communication between natural gas and electricity markets. "Currently, the two markets operate on different schedules, leading to quantity uncertainty for generators, price increases for consumers and reliability risks for the grid," O'Sullivan said. "More effort needs to be made to sync the electricity market with the national gas market, especially when it comes to the market schedules."
4 July 2014
GTP Journal
MARKETS – EMEA
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Gas power capacity falls to lowest Q1 share in 16 years The share of gas power in the UK energy mix fell to just 23% in the first quarter of 2014, the lowest level for the first quarter in the last sixteen years, according to the Department of Energy & Climate Change (DECC). ECC’s Energy Trends and Quarterly Energy Prices report paints a sombre picture for gas-fired power as total electricity generated in the first quarter of 2014 was also lower than a year earlier, down by 8.2% as the weak economy continues to depress demand. Warmer weather was also to blame for the drop in consumption as the average temperature in the first quarter of 2014 was 3.1°C warmer than the same period a year earlier. As a result total gas consumption fell by 8%.
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Production falls but rate of decline slows The DECC data shows that electricity generated from gas fell 19.5% y-o-y to just 21.83 TWh while overall energy consumption was also down year on year (y-o-y) by 10.3% in the first quarter of 2014 also reducing gas demand for heating and industry. Total indigenous UK production of natural gas in the first quarter of 2014 was 113.3 TWh, 0.2% lower than a year before and imports of gas also decreased compared to Q1 2013 by 21.3%. While production is down the rate of decrease slowed from nearly -10% in recent years to just -0.2%. “Global competition for LNG has increased so there has been a substantial reduction in
LNG imports into the UK,” DECC states in the report. The UK will hold the first capacity auctions later this year in a bid to reinvigorate the gas power sector. It is hoped that capacity payments will ensure that reliable capacity is available and improve reserve margins that have shrunk substantially over recent years as more renewables have come online.
Coal dominant, though renewables edge up With a 37% market share coal still maintained
its lead as the dominant power source, followed by nuclear with 18% according to DECC but it was renewables that posted the largest increase. Output from renewable resources rose a staggering 43% y-o-y to deliver 18.10 TWh in the first quarter. As a result renewables share of electricity generation (hydro, wind and other renewables) increased from 12.4% in the first quarter of 2013 to 19.4% in the same period this year. Wind generation was the biggest gainer, rising 58% due to an increase in installed capacity as well as large increases in wind speeds.
UK gas power demand up 12% in June – Bentek Demand for gas by power plant operators in the UK picked up last month according to Bentek Energy analysis. Demand from combined cycle gas power plants averaged 47 million cubic meters of gas/day for the month of June, an increase of 12% compared with June 2013. his figure represented the second year in a row that gas demand for power generation in the month of June rose, after 41 million cubic metres in 2012 and 42 million cubic metres in 2013.
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High storage inventories and falling prices help boost sector The UK had milder than normal winter temperatures in 2013/2014 and as a result storage operators moved into the summer season with high storage inventories. The UK's storage facilities were approximately 92.7% full at the end of June this year, with stocks of 4.4 billion cu m of gas, according to Gas Storage Europe. This compared with stocks of just 2.7 Bcm, or 57% capacity, at the same point a year ago. Natural gas future prices have also improved as Platts data shows that National
Balancing Point (NBP) day-ahead gas prices fell below 40 pence/therm to a four-year low in mid-June. “The front-month is being led by a weak prompt, with maintenance at the Interconnector set to hit exports,” Tobias Davis, a gas broker at GFI Securities Ltd., said today by e-mail. “That coupled with warmer weather, high LNG flows, Troll being back online and still no sign of gas switching in power generation, are all factors contributing to the fall.”
UK spark spreads improving The drop in prices has had a positive effect on the fortunes of gas power operators in the UK as clean spark spread - an indicator of profitability from generating electricity from gas rose €9.6881/MWh, according to Platts. In comparison clean dark spread - which measures the profitability of coal power generation
including emissions charges – has fallen steadily over the last month. The UK is set to launch its first capacity auctions in December this year to procure a total of 53.3 GW of capacity. The latest data released by the Department of Energy and Climate Change (DECC) showed that renewables now supply a record amount of power in the UK, accounting for 18.1 terra watt hours (TWh) in the first quarter of this year alone. Renewable output rose from a 12.4% share of the country’s power mix in Q1 2013 to 19.4% in Q1 2014 with wind generation increasing even faster at a rate of 58% year on year. The high level of intermittency associated with renewables however mean that the government is likely to favour fast ramp capacity in future that can help balance the load when renewables are not available.
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GTP Journal
MARKETS – ASIA
Inpex eyes gas power market entry Japan’s biggest oil and gas company, Inpex, is expecting Japan’s demand for liquefied natural gas to remain strong as plans to restart part of the country’s nuclear reactors are progressing slowly. he company is considering building a third LNG tank at its Naoetsu import terminal with a view to venturing in the domestic gas and power business. Inpex anticipates its gas sales in Japan will rise by up to 3 billion cubic meters in the mid-term, from 1.7 Bcm in fiscal 2013/14. In a strategic move, it is subsequently expanding its gas network with a 102-kilometer pipeline between Itoigawa and Toyama, a major industrial area along the Sea of Japan. After those supply-chain extensions, we may need to construct a third LNG tank in the very same place of the Naoetsu terminal," Kimihisa Kittaka, vice president of corporate strategy and planning, said during a press briefing in Tokyo. "We still have some space for the third LNG tank."
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Venturing into gas power as nuclear stalls Inpex has to date been focused on upstream gas activities only but as the Japanese electricity retail market is set to be liberalised from 2016 onward the company is now eyeing opportunities in the power sector and may consider downstream development. "One thing all of our management are very carefully watching and analysing is which direction the Japanese domestic power and gas policy restructuring will go," Kimihisa Kittaka, vice-president of corporate strategy at Inpex said. "There could be some opportunity for us to seriously consider some type of new business in this domestic gas and power business." The company has seen its fortunes rise following the shutdown of Japan’s nuclear facilities which once counted for the lion’s share of the country’s electricity generation. Prior to the 2011 Fukushima disaster nuclear power supplied as much as 37% of Japan’s electricity needs but since then public opposition has resulted in blanket closures. The government’s plan to reopen plants is unlikely to cause a significant proportion of the 54 nuclear plants operating at the time of the Fukushima disaster to be restarted. “Last year, people expected about 10 nuclear power plants to be activated by the end of 2014,” Kittaka added. “Only one or two are under strict re-examination, so we do not expect to get near to 10.”
4 July 2014
Asia Pacific to drive global gas power growth – BNEF A massive $3.6 trillion is forecast to be invested in power capacity in the energy-hungry Asia Pacific region (APAC), with two-thirds of the sum likely to be spent on renewable, according to a new report by Bloomberg New Energy Finance (BNEF). “However, that does not mean that the days of fossil-fuel power are over,” said BNEF analyst Milo Sjardin, suggesting rapid economic growth in Asia will still drive 434GW of new coal-fired capacity and 314GW of new gas power between now and 2030. he BNEF ‘2030 Market Outlook’ provides forecasts for the three global regions of APAC, Americas and Europe and expects a total of $7.7 trillion to be invested in new generating capacity by 2030. Of this amount $5.1 trillion will be spent on renewables, with APAC accounting for $2.5 trillion, the Americas $816 billion, Europe $967 billion and the rest of the world including Middle East and Africa $818 billion.
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Asian gas power growth restricted by LNG prices While Asia represents the largest opportunity for new power plants, the report suggests that gas power growth in the region is being limited by high LNG prices. Overall fossil power will remain the largest contributor to the global energy mix but will slip from 64% currently to just 44% by 2030. “New fossil fuel assets are shifting to gas but high liquefied natural gas prices are preventing a full-scale gas revolution,” Sjardin said. “Only much lower gas prices and higher environmental costs for coal would shift the balance further from coal to gas.” As the two largest countries in the APAC region China and India are set to lead demand, China is forecast to add a net 1.4TW of new generating capacity between now and 2030, requiring capital investment of around $2 trillion. India likewise will see massive growth with power generation capacity quadrupling from 236GW in
Source: Bloomberg New Energy Finance
2013 to 887GW in 2030, of which new gas-fired power plants will contribute 55GW.
U.S. gas prices drive 134 GW capacity increase The outlook for gas-fired power in North America remains rosy according to the report as Henry Hub gas prices are expected to remain below $5 per MMBtu until 2024. While demand will not increase at anywhere close to the rate seen in Asia, the U.S. fleet of gas-fired power stations will still increase by a net 134GW between 2013 and 2030. Beyond 2024, U.S. gas prices are forecast to start rising sharply in response to the depletion of some of the main gas plays and to increased demand from power, industry and exports but prices are still likely to remain below European levels where high costs will make the profitability of gas power uncertain throughout the forecast period. In Europe the cost-of-generation is expected to favour renewables according to BNEF, with gas-fired capacity in the continent increasingly only minimally from 257GW currently to 280GW by 2030. “Our model suggests that power demand in Europe will increase by only 9% between 2014 and 2030, as energy efficiency improvements take effect,” Seb Henbest, section head at BNEF said: "Our research shows that further improvements in the economics of solar and wind will mean they are increasingly installed without subsidy in the years ahead.”
4 July 2014
GTP Journal
India pipeline blast deepens power crisis State power utilities in the east of India are struggling with serious power shortages this week amid gas shortages due to a blast at a GAIL-operated pipeline in Nagaram. The blast occurred on Friday and has resulted in an estimated loss of over 1,000 MW of power which is slow to come back online. total of 21 people were killed in the explosion with authorities warning that the gas network was at risk of further explosions. It is believed that the fire started after a tea vendor lit a stove above the leaking pipeline which runs 4 meters below the ground.
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Total gas power production in Andhra Pradesh state dropped by 50% The pipeline operated by GAIL is an 18 inch conduit that supplied 0.5 million standard cubic metres of gas a day to several power plants in the region including the Spectrum gas power station, Jegurupadu gas power plant, Reliance gas power station and APGPCL plant at Vijjeswaram. The state of disrepair in much of the pipeline network in the region has meant that India’s Oil and Natural Gas Corporation (ONGC) was forced to shut down two of its gas fields for fear of further explosions. The full extent of shutdowns required is still being assessed. "The total gas based power production capacity in the state is 3,031 MW. This dropped by 50% due to lack of gas," a senior ONGC official commented.
GAIL officials face inquiry Two senior company officials from GAIL have been arrested pending a full investigation into the causes of the leak and the resulting fire. "Pending the outcome of the inquiry set up both by the government as well as the company, two senior officials in-charge of regional operations and maintenance of the pipeline network have been suspended," GAIL said in a statement in New Delhi.
Country wide reforms face challenging landscape The state of Andhra Pradesh is not the only region of India facing challenges. The entire country has suffered from severe power shortages in recent months as the government struggles to cope with antiquated infrastructure and ongoing disputes over pricing have seen many operators shutdown plants. Narendra Modi, India’s newly elected president, has pledged to bring about sweeping power sector reform in an effort to help tackle chronic blackouts but analysts warn that any plans face numerous challenges and a functioning power market is still a long way off.
MARKETS – ASIA
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NEWS NUDGES USTDA awards grant for Kazakh gas power plant study The U.S. Trade and Development Agency (USTDA) has backed a feasibility study for a 25 - 100 MW gas-fired power plant project in northwest Kazakhstan. The USTDA awarded a grant for the study to the Batys Transit joint stock company (BTTR) with an aim to "address provincial power needs" and "encourage industrial development" in Aktobe.
Switch to gas will reduce Iranian power plant maintenance costs by 30% Iran's power generation company Tavanir has estimated that switching from oil and diesel to gas as fuel for the country's power plants will reduce maintenance costs by over 30%. Gholam-Reza Mehrdad, technical director of Tavanir, made the comments following the announcement that Iran's Petroleum Ministry has instructed power plants to switch to natural gas by March 2016.
ABB wins $78 million Saudi Arabian power contract Swiss power and automation company ABB has won an order vlaued at $78 million to supply transformers for two new combinedcycle power plants that will boost transmission capacity around the capital, Riyadh, and surrounding areas of the Central Region ABB will deliver generator step-up (GSU) transformers, power transformers and station service transformers for SEC’s combined-cycle power plants. Saudi Arabia plans to boost power-generation capacity by more than 50% from less than 60 gigawatts (GW) to approximately 91 GW by 2020.
GE buys UK biogas-to-energy firm General Electric has agreed to acquire Monsal, a private U.K.-based water, waste, advanced anaerobic digestion and integrated biogas-to-energy business. Building on Monsal's advanced anaerobic digestion technology, GE aims to help municipalities and industrial manufacturers shift from disposing wastewater treatment byproducts to generating renewable energy.
Gas power plant failure blamed for Venezuelan outage
The blaze from the pipeline blast claimed the lives of 21 people
A failure in a gas-fired power plant run by Venezuelan state run energy firm Corpoele is believed to be the cause of a major blackout that affected half of the country.
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4 July 2014
GTP Journal
PROJECTS & FINANCE
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MAN and EDF-PEI start up 220 MW Martinique plant German engine maker MAN Diesel & Turbo has completed the second of three power plants that are being built on behalf of France’s EDF Production Electrique Insulaire (EDF-PEI). The 220 MW plant in Martinique is powered by twelve type 18V48/60 engines and has started full commercial operation in late June. ocated in Bellefontaine, on the west of the island, the new plant replaces a 30 year old facility on the same site and MAN said it boasts fuel consumption reduction of 15% and nitrous oxide emissions reduction of 85%.
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Martinique seeks upgrades to meet power demand for tourism The Caribbean island of Martinique has been hit by power outages in recent years as a result of demand peaks from higher than usual tourist numbers, so there’s an urgent need to upgrade existing capacity and build new plants. Total installed electricity capacity on the island was just 397 MW in 2011, according to the U.S. Energy Information Administration (EIA). Since then EDF has worked with partners including APR Energy and MAN Diesel & Turbo to step up the country’s capacity, mainly through the addition of small-scale fast ramp gas plants. “The new power plant refreshes a decadesold cooperation,” Jean-Michel Lebeau, chief executive at EDF said. “It safeguards the is-
land’s reliable supply with electrical energy and satisfies high safety and environmental standards.”
MAN delivers second of three island power plants
Bellefontaine is expected to meet 60% of the island’s power needs and has been designed to meet specific environmental concerns as the island lies in a danger zone for earthquakes and hurricanes. “In its dimension and design, the chimney has been constructed to sway at its highest point by only one meter even in the event of an earthquake measuring 7 on the Richter scale and a simultaneous hurricane,” Kröger explained.
The new Martinique plant is the second of three power plants MAN Diesel & Turbo has committed to deliver for EDF in island territories. “Following the power plant on La Réunion last year, we are handing over the second of a total of three island power plants to EDF-PEI in Martinique,” Dr. Hermann Kröger, senior vice president at MAN Diesel & Turbo said, thanking EDF and consortium partners for their “professional cooperation” and the employees for their “unfailing dedication [which] has made this milestone possible.” The newly inaugurated diesel-fuelled plant in The new Martinique plant
Construction of 800 MW Mombasa plant to start in August The Kenyan government has approved plans to begin construction for an 800 MW gas-fired plant in August. The proposed Dongo Kundu plant will be located near the capital Mombasa with a ground-breaking ceremony to be held on the 27th next month. he government has shortlisted 12 companies for the tender process out of a total of 36 that expressed interest in the project.
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Dongo Kundu LNG terminal to drive gas power boom The new plant will be fed by the planned Dongo Kundu LNG re-gasification terminal to be built in the port city. Talks are currently underway to secure financing for the project and it is projected that the terminal will import 0.24 bcm of natural gas per year and cost at least $1 billion. The project will include construction of a floating storage and re-gasification unit to supply natural gas to power plants to enable a switch from heavy fuel oil. Electricity production from gas is expected to begin operation in 2016.
New plants to help meet 5,000 MW power capacity target The Dongo Kundu plant will be built near to a 500 MW gas power plant under development
in high-growth countries. “We need to lower energy costs, so as we make the country the preferred destination for investments in the region,” Kenyan energy secretary Davis Chirchir said. A large portion of the government's 5,000 MW target is expected to come from gasfired power as the government seeks to meet power demand that is forecast to The Kenyan government is targeting 5,000 MW of new gas power reach 15,000MW in Kenya by 2030. Authorities wish to cut the cost of electricity by 50% to around $0.09 by Qatari power company Nebras Power and per kilowatt hour. the Kenya Electricity Generating Company At present, peak electricity demand is lim(KenGen) as part of a push by the Kenyan ited to 1,357 MW by restricting access by government to increase electricity capacity some users at peak times. This is some 536 in the country to 5,000 MW by 2017. This MW short of the estimated 1,700 MW unsupwill be the largest Kenyan investment by pressed demand and an impediment to ecoNebras Power which was created in 2013 nomic growth in the country. to invest in foreign power and water projects
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PROJECTS & FINANCE
BHI awarded HRSG contract for 2,100 MW Rabigh II lant Korean developer Bumwoo Engineering (BHI) has won a contract to supply six heat recovery steam generators (HRSGs) for the 2,100 MW Rabigh II gas-fired plant in Saudi Arabia. The plant is under construction by Samsung C&T and BHI will use technology under license from Swiss engineering conglomerate Foster Wheeler. he plant is part of the massive Rabigh complex currently under construction in the west of the country and once complete will help power the world’s largest integrated refining and petrochemical facility.
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HRSGs matched to SGT6-5000F turbines BHI will work with turbine supplier Siemens to couple the six HRSGs to the SGT6-5000F gas turbines that will power the plant.“Based on the combination of Foster Wheeler technology and BHI design and production capabilities, BHI intends to continue its marketing activities in the combined cycle power plant market throughout the world,” Woo Jong-Ihn, president of BHI said. “ The Foster Wheeler technology that will be utilised in the plant will be distributed between three power plant units operating in combined-cycle configuration. Each unit will be equipped with two model SGT65000F gas turbines, one model SST6-5000 HI-L steam turbine, and three SGen61000A-series electrical generators.
Saudi's installed capacity to double by 2020 Once completed in mid-2017 the Rabigh II power plant will help contribute to swelling demand for gas fired power in the state. The government has stated its intention to increase domestic gas power consumption in order to replace current oil-fired plants. The state run oil company Aramco can fetch $100 per barrel of crude at export compared to around just $4 if sold to Saudi power plants. Driven by rapid industrialization and economic growth, the Kingdom's installed electrical generating capacity is forecast to double by 2020 to 140 GW, according to Siemens projections, which underlined Saudi Arabia’s huge potential for combinedcycle power plants.
4 July 2014
Gigawatt Mozambique raises finance for 100 MWplant Power plant developer Gigawatt Mozambique has raised $200 million to build a 100 MW gas-fired power plant in Ressano Garcia near the border with South Africa. The company has already finalised a take-off agreement with the state-owned utility Electricidade de Mocambique (EDM) and hopes to attract additional industrial clients on higher tariffs. he plant is scheduled to be in operation by the end of 2105. Debt financing for the deal was facilitated by South Africa's Standard Bank which acted as lead arranger and underwriter.
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to meet forecast power demand of 760 MW. The utility currently receives power from the Cahora Bassa dam at a price of $35 per MW, according to a World Bank report on the country.
Deal drums up investor interest
Mozambique vast gas reserves boost gas power growth
Gigawatt Mozambique was also advised by investment bank Eaglestone, which is one of a number of investors poised to take advantage of government moves to open the country up for foreign capital. The new Ressano Garcia plant has been backed by a wide range of shareholders including, Gigajoule Power, Old Mutual Life Assurance Company and WBHO Construction. "Construction will now commence on the project, with the intention being that the power plant will be onstream in Q4 2015," a spokesperson for Eaglestone said. EDM needs to source an additional 260MW
Investor interest in developing the country’s power sector has been driven by potential upside in Mozambique’s vast natural gas reserves. The Rovuma Basin holds an estimated 74 trillion cubic metres (Tcm) of technically recoverable natural gas reserves – nearly 10% of the world’s total. As estimates of reserves have risen the government of Mozambique’s Gas Master Plan has forecast 10 liquefaction trains will be in operation by 2026, with an overall capacity of 69 Bcm/y. This could make Mozambique one of the world’s top LNG exporters.
Proton Energy progresses plans for Nigeria’s Delta Sunrise Project Nigerian power plant developer Proton Energy has edged closer to signing a power purchase agreement licence for its proposed 500 MW Nigerian gas power plant in Sapele, Delta State after endorsement from the Nigerian Electricity Regulatory Commission (NERC). The plant is part of the Delta Sunrise Project (DSP) and is expected to cost $200 million once complete in 2015. he first phase of the plant will see a 150 MW power plant built on a 27 hectare site owned by Proton Energy with the company collaborating with project partner Siemens Industrial Power to supply turbine technology.
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Delta State key in nationwide gas power strategy The endorsement for the project from NERC was received by the Nigeria Bulk Electricity Trading Plc (NBET) as part of a bid process put in place under new market regulations. Reforms to the Nigerian power sector last year saw the dissolution of state monopoly Power Holding Co in a move designed to generate interest in the sector from investors. "We have sent a PPA draft and the first schedule to Proton to get it to understand the process and what is required of it. What we expect from the company now, are list of issues and those that it had complied with,” Rumundanka Wonodi, Managing Director at NBET said. The DSP project will be funded on a project
Mr Onosode and Mr Ikomi, chairmen of Proton Energy, have seen plans advance
finance structure on a 70% debt and 30% equity basis.
Government wealth fund to target 40 GW capacity The government has backed a new $1 billion sovereign wealth fund to help attract the estimated total investment of $3.5 billion needed yearly to achieve 40,000MW capacity by the year 2020, a significant rise compared with 2013 electricity capacity of only 3,563 MW. Gas-fired generation capacity in Nigeria is forecast to grow at an annual rate of over 9% over the next ten years. Real GDP growth of close to 7% year on year between 2013 and 2023 is driving the rapid growth in demand.
4 July 2014
GTP Journal
PROJECTS & FINANCE
9
Hickory Run Energy seeks approval for 900 MW gas plant U.S. power plant developer Hickory Run Energy has sought approval for water use plans for its proposed 900 MW gas-fired plant in North Beaver Township, Pennsylvania from the Department of Environmental Protection (DEP). The project is expected to cost a total of $750 million with the plant scheduled to be operational by 2016 or 2017. The role of shale fields in the U.S. gas treatment plant. The plant will reuse 5 million he project aims to take advantage of gas power sector has grown stronger with shale gas gallons per day of New Castle’s wastewater from the Marcellus Shale but the envirising to account for 40% or 129.4 Tcf of total treatment plant effluent water in its cooling ronmental impact of its water consumpU.S. wet natural gas proved reserves in 2012. process, before draining it back into the Mation has been contentious. The plans As natural gas production from the Marcellus honing River. submitted to the DEP now propose reusing Shale field has soared the price for gas at the “It will be cleaner when discharged than waste water rather than requiring fresh water nearby TCO Appalachia trading point has when it was received from the plant,” Linda from the ecosystem. dropped below that of Henry Hub and is foreNitch, director at Lawrence County Economic cast to become $0.3 per mmbtu cheaper by Development Corporation said. “It’s a positive Plant to re-use New Castle 2015, according to the Energy Information Adto the environment.” wastewater ministration (EIA). The plant will feature Siemens gas turbines Hickory Run Energy, a subsidiary of LS Power “The ability to access locally produced gas is operating in combined cycle configuration. proposed plans involve sourcing most of the important, given the current environment of new Hickory Run Energy is investing $75 million water for the steam turbine from the nearby EPA rules, older coal plants have announced rein the project and hopes to start construction New Castle Sanitation Authority wastewater tirement in the region,” Casey Carroll, LS later this year. Power project manager for Hickory Run said. As a result there has been a dash to build Tennessee Gas Pipeline to gas power plants such as the Beaver Town supply cheap shale gas project in Pennsylvania and neighbouring The proposed Beaver Town plant will be states to take advantage of low cost fuel. supplied by gas from the Marcellus “I think this is a good project. We need to Shale via the Tennessee Gas Pipeline generate electricity from the burning of natural that runs near route 551. The pipeline gas, and that’s the best there is right now,” covers 13,900 miles and connects the Steve Craig, a Lawrence County Commiseast coast of the U.S. from the Gulf of The proposed plant will take advantage of cheap sioner said. Mexico to upstate New York.
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Marcellus Shale gas
Enmax 875 MW Shepard Energy Center hit by delays Canadian power producer Enmax has applied for an extension to its construction schedule for its 875 MW Shepard Energy Center following natural gas supply issues on site. The Alberta Utilities Commission has previously stipulated a deadline of December 31 2014 but Enmax is now seeking extension until at least June 30 2105. he plant will be located about two kilometres south east of Calgary and once complete will be the largest natural gasfired power facility in Alberta.
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Shepard plant gas and water supply problems ‘unanticipated’ The plant has been under construction since 2011 and although heavily supported by regional authorities has seen slow progress to date. The latest issues stem from inadequate supply of natural gas to the site as well as water due to be supplied from the nearby Bonnybrook waste water treatment plant. “Unanticipated construction-related issues have arisen with respect to the supply of natural gas and the supply of water such that EGPI anticipates that the completion of construction will be delayed beyond December 31, 2014,” Deborah Emes, vice president at Enmax. Despite issues with gas and water supply the grid connection for the site is expected to be good due to its proximity to the existing
240kV transmission lines.
Alberta’s largest CCGT to feature M501G1 turbines
“Using combined-cycle technology, two natural gas-fired turbines and one steam turbine will add more than 800 megawatts (MW) of electricity to the provincial grid - enough to meet half of Calgary's current needs,” an Enmax spokesperson commented. “Shepard will also emit less than half the carbon dioxide per MW of conventional coal plants."
The Shepard project is being delivered as an engineering, procurement and construction (EPC) turnkey contract by a joint venture between Kiewit Energy Canada and Black & Veatch Canada. Once commissioned, the plant will be powered by two 240MW M501G1 natural gas-fired turbines manufactured by Japanese firm, Mitsubishi and supplied as part of Mitsubishi's Power Island. The plant will also feature two Vogt triple pressure heat recovery steam generators (HRSGs) and a 320MW reheat steam turRendering of the Shepard Energy Center bine.
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