Let us welcome the summer together with exclusively energetic news of the passing week. We hope that the next three months will be charged only with positive emotions. As always, Ukrenergo review prepared the most interesting digest of events in the world of energy. Fast facts:
1. Grid peak loads hit record numbers in China. China Southern Power Grid Co Ltd reported record power demand in its power system in May. This month, the total load reached the level of 164 GW, up 0.9 percent from the previous peak load and up 25.5 percent compared with the same period in 2017, the National Development and Reform Commission noted in its statement.
It is to be recalled that China Southern Power is one of two state-owned power companies, covering five provinces in the south, including Yunnan, Hainan, Guangxi, Guangdong and Guizhou, with the rest of the country being covered by the State Grid Corp, the second state-owned power company. This is another sign that China’s energy market is already under severe pressure, the fact of which is especially urgent since weather forecasters predict a hot summer this year. High air temperature traditionally increases demand for electricity as households switch on air conditioners or fans to maintain comfortable temperature. According to a statement by the International Energy Agency (IEA), about 60 percent of households in China use air conditioners.
At the same time, as previously reported by the International Energy Agency (IEA), an increase in the number of air conditioners is the most acute problem in today’s energy debate. Thus, China may be the first to demonstrate the depth of the problem this summer.
2. Developed countries reduce the consumption of fossil fuels in the electric power industry. The United States reduced the consumption of electricity generated from fossil fuels to its lowest level since 1994. In turn, the consumption of fossil fuels for electricity generation was reduced to 22.5 quadrillion British thermal units in 2017, which is also the lowest indicator since 1994.
The tendency to reduce the consumption of fossil fuels by an electric power sector is driven by the fact that coal and oil are gradually replaced by natural gas. Subsequently, it leads to an increase in the overall gas consumption. Changes in the fuel mix, as well as improvements in the electricity generating technology, have led to a reduction in the volume of fossil fuel used for electricity generation.
For example, coal consumption in the electricity sector in 2017 fell to its lowest level since 1982, while oil consumption in the energy sector reached its lowest values since 1949. Recently, natural gas consumption in the energy sector has been increasing, but in 2017, it was slightly lower compared with the record level reached in 2016. Back in 2000, the US power plants operating on natural gas were, on average, as productive as those operating on coal. Since then, new gas-fired power plants tend to use generators of a combined cycle, which are much more efficient. Thus, the exhaust heat from a gas turbine is directed to a nearby steam turbine, which generates additional power. Let us hope that such a trend will continue and spread to the rest of the world.
3. Poland strengthens control over its energy sector. The Polish ruling party Prawo i Sprawiedliwość (PiS) and the Polish government have considerably tightened control over the energy sector to its highest level in recent years. This was announced by Maciej Bando, the head of the energy regulator (URE). In his opinion, this could raise concerns within the EU about maintaining competition in energy markets.
There are four major power producers in Poland, namely PGE, Enea, Tauron and Energa. All of them are under government control. The conservative PiS party, which came to power in 2015, allowed restoring state control over many foreign companies with power and heating assets with the purpose of ensuring the country’s energy security. In particular, this refers to the acquisition by Polish PGE of energy heating assets in French companies EDF and Enea, which recently purchased Polaniec power plant from Engie. Earlier, PGE announced that it intended to acquire its smaller competitor Polenergia, one of the few private energy companies incorporated in Poland. Such a shift towards state control in 2017 was probably the most significant in the last 25 years. “De facto, there is one owner of Polish energy companies,” noted Bando. “Concentration in the Polish energy sector is striking in terms of ratios and I think questions from the European Commission may come up in relation to this issue,” he added.
URE reported that the share of the three largest energy companies in Poland, namely PGE, Enea and Tauron, in the volume of electricity supplied to the grid increased in 2017 by 14 percentage points compared with the previous year up to 69 percent.
4. Large sale in the energy sector of Kazakhstan. Kazakh State Fund “Samruk-Kazyna” plans to sell 100 percent of the shares of “Samruk-Energo,” the largest power generating company in the country. This was announced by Nurlan Rakhmetov, Managing Director for Transformation, Privatization and Restructuring at “Samruk-Kazyna.” “We plan to sell 100 percent of the package, these are our intentions. Currently, we are searching for a consultant who will help us to assess and choose the most advantageous way for the placement of the shares of “Samruk-Kazyna.” The final decision will be approved after the consultant’s assessment,” Rakhmetov said.
At the same time, Rakhmetov suggested that after receiving an expert assessment, the fund might change its plans and offer only a part of the company’s shares for sale. However, at that time, the 100 percent share was to be sold.
The share of “Samruk-Energo” in the market of electricity generation in Kazakhstan amounts to approximately 30 percent, while in the coal market it covers approximately 38 percent. As for generation sector, “Samruk-Energo” accounts for 31 percent of the total installed capacity of power plants in the IPS of Kazakhstan. The structure of JSC “Samruk-Energo” includes JSC “Ust-Kamenogorskaya HPP,” JSC “Shardarinskaya HPP,” JSC “Moynakskaya HPP,” JSC “Almaty Power Plants,” LLP “Ekibastuzskaya TPP-1,” JSC “Balkhashskaya TPP” (50 percent – 1 share), JSC “Ekibastuzskaya Station TPP-2” (50 percent) and LLP “Bogatyr-Komir” (50 percent). The company is one of the most “delicious pieces” on the energy market of Kazakhstan, and the change of its owner will affect the further development of the industry in the country.
5. Innovative hydrogen power plant for French Guiana. HDF Energy, a company engaged in developing energy projects on the basis of hydrogen technologies and innovative fuel components, has announced the launch of its new project – CEOG power plant, which will supply half of the energy currently consumed by the people of Saint-Laurent-du-Maroni and Mana in French Guiana.
The company is a pioneer in this field and manages several innovative and unique energy projects in its portfolio. CEOG will not be an exception since it is an innovative power plant designed to generate clean electricity from hydrogen, thus providing 10,000 households in the country with electricity. By means of combining photovoltaic installations and energy storages in the form of hydrogen, CEOG will become an alternative to the classic diesel power plants. CEOG will neither need fuel nor produce noise. And what is the most important thing here, it will not produce harmful gases.
CEOG will use only solar energy and water and will produce only electricity and steam. The launch of the project is scheduled for 2020. CEOG is currently the largest project of a power-generating hydrogen plant of this type in the world. HDF Energy chose French Guiana for a reason because the population of the country is growing very rapidly. This, in turn, causes a significant energy deficit. Therefore, innovative energy solutions can change the situation for the better.