It is Friday again. So, traditionally, Ukrenergo review prepared the digest of the most important events in the world of energy.
1. Sweden to replace grids approaching an age of 70 and older. Swedish transmission system operator Svenska Kraftnat (SVK) reported that due to the works on replacing outdated electrical grids in the Scandinavian region, cross-border electricity flows could be affected.
Representatives of the company stated: “In 2018, the oldest parts of the transmission grid’s 400 kV power lines will approach an age of 70 years and parts of the 220 kV grid are even older.” Within the area, through which Swedish electricity flows to Denmark, Germany and other countries, about 400 km of transmission lines will be gradually replaced. At the same time, SVK does not provide detailed information on possible disruptions, since the grid upgrade is still in the planning phase.
The replacement of transmission lines along the western coast of Sweden will cost about SKK 3 billion (equivalent to USD 342 million). According to SVK, grid modernization constitutes only part of a large-scale reconstruction plan for 2018-2027. In particular, 30 substations, 15 control facilities and about 500 high-voltage devices will be replaced. This policy of the company is entirely justified, because if transmission lines are not replaced in time, the risk of disruptions and outages will significantly increase.
2. India to introduce 225 GW of renewable energy by 2022. The Government of India is convinced that it will reach the level of 225 GW of renewable energy by March 2022. It sounds like an ambitious forecast. Moreover, it is higher than the previous one (175 GW). “We have new schemes for offshore wind energy, floating solar parks and hybrid parks, which will help us outstrip the current target. We are now aiming at 225 GW,” said Power Minister RK Singh.
The minister also noted that India’s renewable energy capacity already reached the level of 70 GW. The projects in the stage of completion accounted for additional 12.5 GW, while the projects at the tender phase amounted to 25 GW. As for the government’s ambitious mission envisaging the electrification of every household in the country under the Saubhagya scheme, Singh stated that India would accomplish that mission by December 2018, which is also ahead of the preliminary plans for March 2019. Therefore, we can only wish India success in achieving its ambitious goals, which, taking into account the country’s previous energy projects, are quite achievable.
3. UK consumers to receive compensation for switching woes. Britain’s energy regulator plans to force companies to pay compensation to customers facing power supply problems when switching their supplier. Customers are guaranteed to be paid GBP 30 for any problem that may occur. The Competition and Markets Authority (CMA) found that from 2012 to 2015 households overpaid GBP 1.4 billion annually because of uncompetitive standard tariffs. This, in turn, prompted the government to encourage people to switch to other suppliers. Switching to smaller independent suppliers reduced the market share of Britain’s big six energy suppliers to a record low in 2017 of 79 percent for electricity and 78 percent for gas, down from 84 percent in 2016.
It is to be recalled that the largest suppliers in the UK are Centrica, SSE, E.ON, EDF Energy, Innogy’s Npower and Iberdrola’s Scottish Power. New rules that may be introduced by the end of 2018 should increase and restore consumer confidence in key energy players. The regulator also plans to set a price cap for standard tariffs by the end of the year, the fact of which in general will have a positive influence on interaction with customers. Such a model can serve as an example for other industries and become a guarantee of the quality of providing appropriate services.
4. World’s biggest solar tower for electricity storage. The world’s biggest solar tower power plant with molten salt storage has begun commissioning in Morocco. The launch of the project’s production operation is planned for October this year. The 150 MW solar receiver is called Noor Ouarzazate III. It accumulates energy with molten salt inside and is the second largest project of this type in the world, trumping its predecessor in size (the 110 MW Crescent Dunes solar tower in Nevada). The Noor solar tower is part of a massive 510 MW facility currently being built by Spanish group Sener. The solar tower has a capacity of 150 MW, but only 140 MW of net capacity will be delivered.
The remaining 10 MW of power will be used for so-called “parasitic” needs of the operation of the plant itself, which is a normal phenomenon for such power plants. 7.5 hours of power storage Noor Ouarzazate III is capable of are designed to meet demand for five peak hours daily, during which the price of electricity is on average 18 percent higher. Undoubtedly, the innovative technology of thermal solar power plants with salt accumulation can become very popular, given the fact that the need for renewable energy to cover peak consumption is increasing.
5. Egypt to reduce subsidies on electricity and raise prices simultaneously. Egypt announced a cut to electricity subsidies. At the same time, prices for electricity increased by an average of 26 percent. Electricity Minister Mohammed Shaker said that electricity costs for an industrial sector would increase by 42 percent, and for households by 21 percent.
Egypt has committed to significantly cut subsidies for electricity, as well as other tough fiscal measures, within the three-year loan program of the International Monetary Fund (IMF) in the amount of USD 12 billion, launched in 2016. The government of President Abdel Fattah al-Sisi, re-elected for the second term this year, intends to take additional tough measures, including reduction in energy subsidies expected in the summer.
It is worth recalling that the Egyptian economy suffered a blow after the riots of 2011. In turn, the IMF praised the economic reforms in Egypt, in particular in the energy sector. The government said that by the end of 2021-2022 fiscal year, electricity subsidies would be completely abolished, so economists see some grounds for the revival of the Egyptian economy, pointing to indicators such as GDP growth, which increased to 5.4 percent in the third quarter of 2017-2018, compared with 4.3 percent in the same period of the previous fiscal year. This is another example of how unpopular economic measures may become a necessary pill for developing countries.