German nuclear closures could embed gas competition
The impending closure of Germany's remaining nuclear plants this weekend might raise the call on gas-fired generation to fill the gap as falling gas prices have pushed gas ahead of coal in the merit order, although a rise in renewable generation may counter the upside.
The three remaining nuclear power stations which were meant to go off line by the end of 2022 are on track to close on 15 April, while output from the plants has already been reduced gradually since the beginning of this year. Nuclear power generation made up roughly 4.5pc of the German generation mix so far this year at 2.68GW, down from 6.5pc at 3.74GW in 2022.
Day-ahead spark spreads for gas-fired units with 55pc efficiency have hovered just inside positive territory so far this month, having averaged minus €10.50/MWh in March, while they have remained well ahead of 38pc-efficient coal-fired units in the merit order (see graph). And forward prices suggest that gas will remain more profitable than coal to burn for power generation over the rest of the summer. This suggests that gas-fired stations could take a larger share of the power mix once the nuclear stations are shut down — although the extent of this depends on output from renewable energies.
The last nuclear stations that were closed, according to schedule at the end of 2021 — the Grohnde, Gundremmingen and Brokdorf units — left roughly 4GW of baseload capacity to be replaced. Fuel-switching levels were largely in favour of coal ahead of gas in January 2022, but most of the lost capacity was at the time replaced by a surge in wind generation.
Fuel-switching levels now paint a markedly different picture, as high gas stocks across Europe as well as brisk European LNG sendout may free up ample spare gas supply for the power sector. And a ramp-up in Germany's LNG sendout may further bolster supply — the country's regasification reached fresh highs in recent days.
In addition, forecasts point to slightly lower wind power generation on 16-17 April, which could add support to gas burn, while potentially prolonged curtailments to French nuclear generation as a result of strike action could also add upside.
German energy and water association BDEW managing director Kerstin Andreae this week highlighted that flexible gas-fired power plants were needed to "provide guaranteed output as a partner of the renewables" as nuclear energy has constituted a significant share of the mix so far this year.
"The strategy of the federal government to rely on hydrogen-capable gas-fired power plants and to increase gas imports to Germany" is the right one, according to Andreae.
The country's energy supply security will "remain guaranteed" despite the closure of the nuclear fleet, German economy and climate protection minister Robert Habeck said today.
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Osaka, 17 May (Argus) — Japan's largest LNG importer Jera plans to maintain its LNG handling volumes at no less than 35mn t/yr until the April 2035-March 2036 fiscal year. Rising renewable power supplies and the possible return of more nuclear reactors are likely to pressure LNG demand from Japan's power sector. Jera consumed 23mn t of LNG in 2023-24, down by 3pc on the year, although it handled 35mn t through its global operations during the same year. But Jera needs to secure sufficient LNG supplies to adjust for imbalances in electricity supplies and ensure power security, through more flexible operations. It is also looking to further promote LNG along with renewable electricity in Asian countries, while helping to reduce their dependence on coal- and oil-fired power generators. The 2035 target for LNG is part of Jera's three pillars of strategic focus, along with renewables as well as hydrogen and ammonia , which was announced on 16 May to spur decarbonisation towards its 2050 net zero emissions goal. The company plans to invest ¥5 trillion ($32bn) for these three areas over 2024-36. Jera also aims to retire all supercritical or less efficient coal-fired units by 2030-31 . This would help achieve the company's target of cutting CO2 emissions from its domestic business by at least 60pc against 2013-14 levels by 2035-36. By Motoko Hasegawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Biomass start-ups lift Japan's Renova April power sales
Biomass start-ups lift Japan's Renova April power sales
Tokyo, 17 May (Argus) — Japanese renewable power developer Renova's electricity sales doubled on the year in April, following the start-up of three biomass power plants in the past six months. Renova sold 199,601MWh of electricity — including solar, biomass and geothermal — in April, double the 99,857MWh a year earlier, the company announced on 13 May. The 75MW Sendai Gamo plant in northeastern Miyagi prefecture started operations in November 2023 and produced 40,753MWh in April. The 74.8MW Tokushima Tsuda plant in western Tokushima prefecture, which was commissioned in December 2023, generated 10,870MWh in April. The 75MW Ishinomaki Hibarino plant in Miyagi began normal runs in March and supplied 49,495MWh in April. Renova plans to add 124.9MW biomass-fired capacity in the April 2024-March 2025 fiscal year, with the 75MW Omaezaki plant in central Shizuoka city scheduled to begin commercial operations in July, followed by the 49.9MW Karatsu plant in southern Saga city in December. Omaezaki is currently conducting trial runs and Karatsu is under construction. The additions will increase Renova's biomass-fired capacity to 445MW. By Takeshi Maeda Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Chinese importers seek five LNG cargoes for Jun-Sep
Chinese importers seek five LNG cargoes for Jun-Sep
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Q&A: Brazil adds Asian indexation for flexible gas
Q&A: Brazil adds Asian indexation for flexible gas
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