





Natural gas-fired power plants accounting for almost 30 percent of Europe’s capacity are at risk of shutting or being mothballed as utilities opt to burn cheaper coal, according to the International Center for Natural Gas Information. --Isis Almeida, Bloomberg, 2 June 2014











1) Europe Turns To Coal Burning As Gas Power Plants Become Uneconomic - Bloomberg, 2 June 2014



2) Europe’s Struggling Utilities In Call For Subsidies For Conventional Power Generation - Reuters, 4 June 2014



3) German Official Signals Subsidies For Loss-Making Power Plants - Reuters, 4 June 2014



4) German State Approves Huge Expansion Of Brown Coal Mining - Reuters, 3 June 2014



5) Forget Europe’s Green Hype: EU To Subsidise Exports Of Coal-Fired Power Plants - EurActiv, 4 June 2014



6) Renewables Not Fossil Fuels Are A Threat To Energy Security Says New Report - City A.M., 3 June 2014









The eastern German state of Brandenburg approved plans on Tuesday to allow utility Vattenfall to mine a further 200 million tonnes of brown coal from 2026, a move critics say will cause pollution and also force 800 people from their homes. The decision by Brandenburg’s cabinet, made up of centre-left Social Democrats (SPD) and the more radical Left party, highlights the complexities of Germany’s energy policy, which aims to promote renewable energy. “In essence, this is about a safe, sustainable and an affordable as possible supply of energy,” said the office of Brandenburg state premier Dietmar Woidke after the decision. --Madeline Chambers,



--Madeline Chambers, Reuters, 3 June 2014





The heads of Europe's struggling utilities called on lawmakers to speed up legislative changes that they say would help them cope better with a drop in power prices and demand. European nations are currently debating whether to make payments to standby power plants to make them available for electricity production when wind farms or solar panels fail to generate. -- Reuters, 4 June 2014









Germany will soon develop plans on how to keep loss-making conventional power plants open, a senior energy ministry official said on Wednesday, a policy utilities have pushed for as Europe's biggest economy expands green energy. In one of the clearest signals yet that Berlin is committed to such a move, Uwe Beckmeyer, parliamentary state secretary in the economy and energy ministry, said Germany would have to explain how it would develop a so-called "capacity mechanism". Under such a mechanism, the government would raise funds [from taxpayers] to pay operators such as RWE AG and E.ON SE to keep open conventional power plants, many of which are loss-making. --Madeline Chambers, --Madeline Chambers, Reuters, 4 June 2014









European makers of coal-fired power plants could get financial help to export the equipment, according to a Commission policy paper, flying in the face of environmental opposition to any form of subsidy for coal. A paper prepared by officials from the European Commission trade department says export credits, or preferential loans to help cover exports costs, should be continued for the most modern coal plant technology. -- EurActiv, 4 June 2014









The widespread use of wind and solar energy poses a serious risk to the UK’s energy security and could undermine the reliability of the country’s energy supply, according to a new report from the Global Warming Policy Foundation (GWPF ). Far from providing energy security, the intermittent and non-dispatchable nature of renewables, such as wind and solar, mean they are unable to effectively respond to changing demand. --Guy Bentley, --Guy Bentley, City A.M., 3 June 2014











1) Europe Turns To Coal Burning As Gas Power Plants Become Uneconomic

Bloomberg, 2 June 2014



Isis Almeida



Natural gas-fired power plants accounting for almost 30 percent of Europe’s capacity are at risk of shutting or being mothballed as utilities opt to burn cheaper coal, according to the International Center for Natural Gas Information.



European Union power generators’ demand for gas plunged 33 percent, or 51 billion cubic meters, in the past three years, the organization said today in a report. That equates to a year of French consumption, said Cedigaz, as the center is known. Gas’s share of the EU electricity mix slumped to 19 percent in 2012 from 23.6 percent in 2010, it said.



Coal prices dropped 32 percent between the middle of 2011 and the end of last year as surging U.S. shale-gas production reduced the solid fuel’s share of the nation’s power generation, according to Cedigaz. That prompted producers to export coal, creating a glut, it said. Gas prices, mostly linked to oil, rose 42 percent between 2010 and last year, the report showed.



“If all gas power plants currently under review by major European utilities are closed, this may lead to the closure of about 50 gigawatts of capacity by 2015-16, or 28 percent of the current capacity,” said Cedigaz, based in Rueil-Malmaison in western Paris. “This capacity is needed to ensure security of supply when wind and sun are not producing.”



Gas-fired plants accounting for 14 percent of installed EU capacity were idled, shut or at risk of closing at the end of last year, the report showed. The clean spark spread, a gauge of profitability for gas plants, has been negative since the start of 2012, said Cedigaz. Generation from renewable sources surpassed gas in the EU for the first time in 2012, helping to curb gas-plant operating times, according to the organization.



“Faced with low running hours and declining/negative returns, gas power operators have started to mothball or close their loss-making plants,” it said.



Full story







2) Europe’s Struggling Utilities In Call For Subsidies For Conventional Power Generation

Reuters, 4 June 2014



The heads of Europe's struggling utilities called on lawmakers to speed up legislative changes that they say would help them cope better with a drop in power prices and demand.



Traditional European energy companies have so far failed to reinvent themselves to operate in a new energy world where high renewable output has depressed prices and expensive gas has made their power stations unprofitable.



Speaking at the annual conference of Europe's electricity association on Tuesday, executives called on the European Commission and national governments to speed up decision-making on schemes such as a stronger carbon support mechanism or capacity payments.



European nations are currently debating whether to make payments to standby power plants to make them available for electricity production when wind farms or solar panels fail to generate.



A capacity mechanism, which is already being introduced in Britain from 2018, would guarantee owners of power plants future revenue provided they have been successful at auction.



"Capacity mechanism systems are needed to ensure energy security," said Jean-Francois Cirelli, whose utility GDF Suez in France took a 15 billion euro writedown on its gas storage and power plants businesses in 2013.



Full story







3) German Official Signals Subsidies For Loss-Making Power Plants

Reuters, 4 June 2014



Madeline Chambers



Germany will soon develop plans on how to keep loss-making conventional power plants open, a senior energy ministry official said on Wednesday, a policy utilities have pushed for as Europe's biggest economy expands green energy.



In one of the clearest signals yet that Berlin is committed to such a move, Uwe Beckmeyer, parliamentary state secretary in the economy and energy ministry, said Germany would have to explain how it would develop a so-called "capacity mechanism".



Under such a mechanism, the government would raise funds to pay operators such as RWE AG and E.ON SE to keep open conventional power plants, many of which are loss-making.



The government wants utilities to keep gas- and coal-fired plants open to ensure a constant supply of power when there is a lull in wind or solar energy, which can fluctuate sharply.



"We have had two studies done whose results will be put forward soon," said Beckmeyer, a member of the Social Democrats who share power with Chancellor Angela Merkel's conservatives.



"We have to develop a capacity mechanism but this has to be developed in a synchronised way with our neighbours. We need an overall system," he told a Franco-German energy conference, adding it was not yet clear exactly what form Germany's plans would take.



Social Democrat Economy and Energy Minister Sigmar Gabriel is pushing through a first round of energy reforms to stem subsidies for renewable energy due to the ballooning cost, while hoping to maintain green growth.



He has signalled he will talk with utilities on a capacity market in the second half of the year.



Full story









4) German State Approves Huge Expansion Of Brown Coal Mining

Reuters, 3 June 2014



Madeline Chambers



The eastern German state of Brandenburg approved plans on Tuesday to allow utility Vattenfall to mine a further 200 million tonnes of brown coal from 2026, a move critics say will cause pollution and also force 800 people from their homes.

Giant machines dig for brown coal, or lignite, at Vattenfall’s mining operation near Jänschwalde, Germany, in the Lausitz region. Its planned expansion could force relocation of towns. Foto Patrick Pleul, DPA

The decision by Brandenburg’s cabinet, made up of centre-left Social Democrats (SPD) and the more radical Left party, highlights the complexities of Germany’s energy policy, which aims to promote renewable energy.



While Germany has seen a rapid expansion in green energy, which accounts for about 25 percent of power, Europe’s industrial powerhouse still needs to tap conventional sources for a secure supply, especially due to its nuclear phase-out. Coal is also cheaper than renewable energy.



“In essence, this is about a safe, sustainable and an affordable as possible supply of energy,” said the office of Brandenburg state premier Dietmar Woidke after the decision.



Brown coal – also known as lignite – has a high moisture content and can be susceptible to spontaneous combustion, making it difficult to store and transport. Therefore, it is often burnt in power stations near to mines. It also emits more carbon dioxide when burnt compared with other types of coal, making it more harmful to the environment.



Opponents of the fuel, which accounts for about a quarter of German power, have campaigned hard for its use to be halted because of the high levels of carbon dioxide emissions and because they say about 800 local residents will be forced to relocate to make way for the new open-cast mining.



But its advocates say brown coal allows the use of domestic raw materials for a reliable source of electricity, especially in industrial parts of Germany, and reduces the need for energy imports.



Full story







5) Forget Europe’s Green Hype: EU To Subsidise Exports Of Coal-Fired Power Plants

EurActiv, 4 June 2014



European makers of coal-fired power plants could get financial help to export the equipment, according to a Commission policy paper, flying in the face of environmental opposition to any form of subsidy for coal.



Coal is the most polluting fossil fuel, emitting around twice as much carbon dioxide as gas when used to generate power.



As a result, the European Union is phasing out subsidies for domestic coal plants by 2018 in line with its efforts to take a global lead in the fight against climate change.



But a paper prepared by officials from the European Commission trade department says export credits, or preferential loans to help cover exports costs, should be continued for the most modern coal plant technology.



"It has to be recognised that at a global level, coal as an important source of energy production is not going to disappear immediately," says the paper circulated among representatives of EU member states.



"The EU delegation would consider it logical to try to see how the OECD export credit community can create incentives to ensure that this continued use of coal as an energy source is at least done in the most climate-friendly way possible," it said, referring to the Organisation for Economic Cooperation and Development.

The Commission, the EU executive, does not comment on unpublished documents.



An EU diplomat, speaking on condition of anonymity, said the policy paper was informal, but had received positive reactions from "most member states".



The diplomat added the OECD export credit group would debate the issue later this month. The Paris-based OECD was not immediately available for comment.



Full story









6) Renewables Not Fossil Fuels Are A Threat To Energy Security Says New Report

City A.M., 3 June 2014



Guy Bentley



The widespread use of wind and solar energy poses a serious risk to the UK’s energy security and could undermine the reliability of the country’s energy supply, according to a new report from the Global Warming Policy Foundation (GWPF).



The crisis in Ukraine and Crimea has focused the minds of policy makers on energy security. One of the key arguments for subsidies to renewable energy has been that fossil fuels are running out and the UK must become less reliant on foreign imports.



However, the GWPF report argues, supplies of unconventional oil and gas have become ever more abundant in recent years.



Far from providing energy security, the intermittent and non-dispatchable nature of renewables, such as wind and solar, mean they are unable to effectively respond to changing demand.



The report points to three factors that show the risk to UK energy security from fossil fuels are wildly overblown.



Markets provide security

Both oil and gas can be bought securely and safely on the world market. Energy markets over the years have actually proved far more stable than the changing mix of government policies intended to aid renewables. Government policy has in fact become an unreliable guide for the future of the energy mix.



The GWPF point to the cuts in government funding for solar and wind feed-in tariffs and the beginnings of taxes on the profits made by generating electricity with renewables.



Furthermore, when it comes to energy policy, as in most other arenas, government failures are often more far reaching than those of their private sector counterparts. “If the government implements an energy policy that turns out to be a mistake, all market actors are affected because the government normally forces all companies and households to comply with its policies”, says the report’s author Philipp Mueller.



Large and flexible markets are better able to absorb supply shocks and allow supply and demand to respond to the problem. The GWPF cites the example of Venezuela’s oil workers strike in 2002. US consumers were protected by freedom to import and the absence of price regulation from the physical disruption of oil supplies.



Energy embargoes fail

Fears of energy embargoes are wildly exagerated, according to the report. This is because there is no such thing as a homogeneous national oil market; there is only the global oil market. Oil will naturally flow to where the best price is offered.



The 1973 oil embargo against the US failed because oil-producing countries continued to ship oil to Europe and the Carribbean, which was then shipped to the US, breaking the embargo.



The US and many European nations also have considerable stockpiles, which the GWPF believe can meet any “plausible” disruption of supply. Embargoes are also not in the interest of oil exporting countries. The incentive for fossil fuel producing nations is not to hold back from their customers, but to sell them. Oil revenues alone account for up to 40 per cent of Saudi Arabia’s GDP.



The shale gas revolution

The third reason why fossil fuel imports provide no credible security threat to the energy supply, is the impact of liquefied natural gas technology and the shale gas revolution. LNG can be transported in the same manner as oil or coal, removing the need for pipelines. In the past, gas buyers had few alternatives if natural gas sellers cut their shipments.



However, LNG has gained market share and is increasingly looking like the global oil market. This leaves the ability of countries like Russia to extract concessions from consumers seriously weakened. Thanks to growing demand, falling costs of liquefication and regasification, the next few decades may see the merger of previously regional natural gas markets into a single global gas market.



But the news gets even better for European consumers. America’s shale gas boom has meant that LNG supplies, which were originally destined for the US, have now been diverted to Europe. Europeans now have an alternative to Russian and North African gas.



Full story













