Combustion Industry NewsFrom the IFRF's correspondent in Australia
From the Sydney office
Contributed by Patrick Lavery
Australia, Saturday 23rd June 2018
BP has released its annual Statistical Review of World Energy, and as always it has provided interesting reading. In his analysis of power generation trends, BP chief statistician Spencer Dale points to higher world economic output forcing up carbon emissions (a rise of 1.6% from power generation) and energy consumption in 2017. The largest driver was China, which experienced a 3% growth in energy consumption, a sharp uptick from the preceding years. Oil demand grew more strongly than in previous years, as did consumption of natural gas (by 3% worldwide), driven by a huge jump in Chinese gas demand, and coal consumption also grew, mostly through Indian and Chinese consumption, after falling for the last three years. Worldwide, power generation increased by 2.8% in 2017 (almost half the growth being in wind and solar), but it is over the last few decades that trends are surprising – in their stability. In 1998, coal firing made up 38% of global power generation, and in 2017 it made up exactly the same. Non-fossil power generation (nuclear and renewables) is also at similar levels over the 20 years, though they dipped and rose again, and similarly oil and gas has been relatively stable. The chart presented really is striking, yet it masks the important trends that are taking place, with coal firing falling in the West but rising in the developing world, and renewables rising while nuclear falls, amid the backdrop of worldwide energy consumption growing steadily. Based on these trends, one would assume that the share of non-fossil power generation will begin to tick up in the years that come.
Making an unlikely appearance in the Combustion Industry News is the Vatican, which has been the site of an energy summit earlier this month attended by influential delegates such as the chief executives of BP, ExxonMobil, Equinor and Eni. The summit, entitled “Energy Transition and Care for Our Common Home”, featured a speech from Pope Francis, who appeared to take both an understanding and admonishing tact, acknowledging that around a billion people in the world do not yet have access to electricity, and that oil and gas companies had taken commendable efforts in recent years in setting out plans to reduce their carbon emissions, but countering these points with the line that “Civilization requires energy, but energy use must not destroy civilization.” He went on to say that “…even more worrying is the continued search for new fossil fuel reserves, whereas the Paris Agreement clearly urged keeping most fossil fuels underground.” The summit was hosted by the University of Notre Dame, whose president, the Reverend John Jenkins, praised the chief executives for sitting down with the Pope, who at times can be their “severest critic”. Also attending was Lord Browne, the former head of BP, who said “When you go to the Vatican and see the Pope, it changes the tone of the debate. It makes it much more serious, and much more real.” (He also noted that the transition to low-carbon energy production would take longer than many people expect.) It will be curious to see if the summit has any lasting impact on the direction taken by the various companies that took part.
An interesting debate is underway in Germany, where grid operators have been scratching their heads trying to figure out how they would integrate the higher levels of renewable energies that the federal government wishes to pursue in order to meet its 2030 carbon emissions targets. While most grid operators have expressed concern at the challenges that a potential doubling of renewables in the energy sector to around 65% by 2030 would bring, saying that to integrate them would greatly increase grid management costs and require much new infrastructure, one operator, 50Hertz, has taken a contrarian position. Chief executive Boris Schucht has said that grid operators need to rethink the way the grid works, that the approach needs to change from ”from networks having to follow production capacity to renewables having to tap into where the networks are”. It is not entirely clear what Mr Schucht means by this comment, but he provided more detail by saying “I expect that […] there will be a new mix of measures, including installing more photovoltaics, more onshore wind also in the south and boosting networks with batteries.” This suggests an end to shedding of electricity produced by renewables when it is not required, with a focus instead on producing as much electricity as possible when the wind is blowing and the sun shining, and using it at the time or storing it in batteries for later use. Whether this would be economic or practical remains to be seen, but if it was the approach would likely be adopted by grid operators across the world. For his part, Mr Schucht is optimistic that Germany will be able to get close to 65% renewables by 2030.
Keeping with German news, Forbes has covered comments made by the director general for energy policy at the German Federal Ministry for Economic Affairs and Energy, Thorsten Herdan. In comments that tie into those of Boris Schucht of 50Hertz, Mr Herdan suggested that the grid should learn to adapt to flexibility in order to avoid the need to have baseload power generation, which Mr Herdan described “poison for our electricity transition in Germany”. In his view, flexibility appears to mean making demand follow supply, rather than the other way around, which has been the conventional approach to the workings of grids around the world until now. Electricity would be consumed according to weather conditions, though there would be mechanisms to provide for more flexibility than that – gas peaking plants or battery storage might be used (the market would decide), and grid interconnectors to balance out the variability in generation would be employed, for instance the interconnectors now being built between Germany and Norway so that German wind power and Norwegian hydropower can complement each other. With this in mind, the approach may not be as radical as it first appears, but it still represents quite a change in mindset, and would still present technical challenges. Mr Herdan, however, pointed to the fact that in the last year, Germany experienced only 12 minutes of grid disruption, despite its high proportion of renewables, which at rare times have provided 100% of the electricity demand in the country. It is perhaps a slight flaw in Mr Herdan’s point that fossil fuels still provide a large proportion of Germany’s electricity, and how a supply-driven grid would work in winter, for instance, seems somewhat unresolved.
Efforts to improve air quality are spreading in China, leading to closures of industrial facilities, as a report by Reuters has described. A determined effort to improve air quality began in Beijing and the surrounding province of Hebei, the heart of Chinese steelmaking, some years ago. More recently, however, the coastal province of Jiangsu near Shanghai has also begun a drive to improve air (and water and soil) quality, leading to the temporary closure of steel, cement, petrochemical and coal-fired power plants, especially in the industrial cities of Xuzhou and Lianyungang. Local governments appear to have been motivated by a comment by President Xi Jinping during a visit last December, in which he said that “the new concept of green development should be strictly followed”. According to China’s National Environmental Monitoring data, PM2.5 levels in Xuzhou have been between ~30-130 µg/m3 month to month, with World Health Organisation guidelines recommending a safe level of 10 µg/m3 as an annual mean. There is thus very good reason for China to be acting to reduce pollution, though the affected companies and workers may not see it solely in terms of the environment. It appears that local governments may see deindustrialisation as the solution to the problem of balancing environmental quality and economic development, with the regional economy moving away from heavy industry and into information technology and business services.
A new report from the Clean Coal Centre of the International Energy Agency has looked at the supply chain costs of producing electricity from biomass. Unsurprisingly, it finds that the levelized cost of electricity from biomass is higher than that for coal, though it identifies two areas of improvement in the biomass supply chain - choosing lower-emissions fuels for drying biomass (to improve its overall carbon footprint) and reducing transportation distances, either by increasing biomass-fuel production in Europe (where it is mostly consumed), or increasing consumption in North America (where it is primarily produced). Importantly, the report also finds that the use of biomass to reduce CO2 emissions is generally comparable in cost terms to renewables, although it does not have the lower ranges of cost that some renewables do. With costs of renewables falling quickly, it seems likely that biomass will be less cost-competitive as a means of reducing CO2 emissions in the future, though biomass has the advantage of not being an intermittent power generation technology.
A short article on the World Coal website has looked at how the Conemaugh Generating Station in New Florence, Pennsylvania, USA is using mobile demineralising plant to improve plant performance and reduce operating costs. Operated by a subsidiary of GenOn, the station has employed the use of Suez’s demineralising plant (carried on a semi-trailer) since June 2017, and produces boiler feedwater using it. By using the solution together with Suez’s InSight asset performance management solution (which makes use of advanced data and predictive analytics), Conemaugh reduces chemicals and raw water use, and consequently discharges less wastewater to the Conemaugh River. GenOn estimates it is saving US$220,000 (€189,000) per year by using it – a small portion of the 1700 MW station’s total operating budget, but nevertheless a useful saving, especially in a competitive market.
A strike by workers seeking greater pay has led to power shortages in South Africa, with an escalation in the situation possible. The National Union of Mineworkers and the National Union of Metalworkers of South Africa, who together represent 20,000 of the 47,000 workers of the state-owned power utility Eskom, want a 15% pay rise, which is 15% above what Eskom is offering, having narrowly avoided a “liquidity crunch” earlier this year. With no compromise in the offing, the unions have threatened a total shutdown of power plant operations if their demands are not met, a huge step up from the partial power outages that have been effected so far. With the last major blackouts in 2015, South African economic output dropped, meaning there will be political pressure from the highest levels of government for there to be a resolution and an avoidance of outages, especially during the colder winter months. However, the fact that former president Jacob Zuma was implicated in a corruption scandal involving Eskom may curb the extent of political pressure. As one employee told Reuters, however, “It’s not the workers’ fault that the company is suffering because of corruption,” and it is difficult not to feel pity for the workers on that basis.
European Commission competition regulators have said they would allow Fortnum ‘s proposal to buy a 46.65% stake in Uniper, the thermal power generation company that was spun off E.ON at the start of 2016. After the Russian Federal Antimonopoly Service also recently cleared the proposal, there are now no remaining hurdles preventing the €3.8 billion (US$4.4 billion) move, which Fortnum wants to close by Wednesday 27 June. Uniper is opposed to the sale, with chief executive Klaus Schaefer saying that the two companies’ strategies are not in alignment.
Other articles from week 26:
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