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EU green hydrogen uncompetitive into 2030s: Aurora

  • Market: Biofuels, Electricity
  • 26/01/21

Consultancy Aurora Energy Research expects blue hydrogen and imported green hydrogen to be cheaper than domestically produced green hydrogen in Europe in the medium term, according to a report released today.

European hydrogen demand could increase eight-fold by 2050, as countries work toward net zero, Aurora said. Hydrogen consumption rises to 2,500TWh by 2050 in a high-use scenario, where heating switches to hydrogen. By comparison, the European power system is currently around 3,000-3,3200TWh, Aurora said.

The cheapest source of low-carbon hydrogen by 2030 would be blue hydrogen produced in the Netherlands or Norway, followed by imported green hydrogen from Morocco. Aurora defines blue hydrogen as made from natural gas but combined with carbon capture and storage, and green hydrogen as made from water and electricity using electrolysis.

Green hydrogen from Morocco will be cheaper because power prices are much lower. A large rollout of solar is depressing power prices in Morocco, although it is still building coal-fired capacity. As a result, such green hydrogen may be more carbon intensive than blue hydrogen. This problem will also exist in European countries slow to decarbonise, for example in Germany, which still has a high share of coal and lignite in its power generation mix, Aurora said.

Aurora sees levelised costs of green hydrogen at €91-121/MWh for electrolyser plants built in 2025.

The lower end comes from flexible projects that can optimise production according to power prices. The optimal load factor for such projects would be around 50pc. If the load factor gets too high, it would be running during times of higher power prices, while if it falls too low, the capex costs per MWh produced would rise, Aurora said.

In Britain and Spain, hydrogen from flexible electrolysers will be cheaper than blue hydrogen by the late 2030s. It becomes cheaper in France by the early 2040s, and in Germany by the mid 2040s, Aurora's modelling shows.

Electrolysers co-located with renewable capacity will have higher costs than flexible or inflexible assets using power from the grid. This is primarily because low load factors increase capex — an electrolyser co-located with solar in Spain would have a load factor of just 22pc. Such a plant would still be cheaper than an inflexible asset using grid power in Spain in the 2030s, but will always remain more expensive than a flexible asset, the report said.


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19/09/24

LNG-burning vessels well positioned ahead of 2025

LNG-burning vessels well positioned ahead of 2025

New York, 19 September (Argus) — Vessels outfitted with dual-fuel LNG-burning engines are poised to have the lowest marine fuel expense heading into 2025 when the EU will tighten its marine EU emissions trading system (ETS) regulations and add a new regulation, " FuelEU", from 1 January 2025. Considering both regulations, at current price levels, fossil LNG (also known as grey LNG) will be priced the cheapest compared with conventional marine fuels and other commonly considered alternative fuels such as biodiesel and methanol. The EU's FuelEU maritime regulation will require ship operators traveling in, out and within EU territorial waters to gradually reduce their greenhouse gas (GHG) intensity on a lifecycle basis, starting with a 2pc reduction in 2025, 6pc in 2030 and so on until getting to an 80pc drop, compared with 2020 base year levels. The FuelEU GHG intensity maximum is set at 85.69 grams of CO2-equivalent per MJ (gCO2e/MJ) from 2030 to 2034, dropping to 77.94 gCO2e/MJ in 2035. Vessel pools exceeding the FuelEU's limits will be fined €2,400/t ($2,675/t) of very low-sulphur fuel oil (VLFSO) energy equivalent. GHG emissions from grey LNG vary depending on the type of marine engine used to burn the LNG, but ranges from about 76.3-92.3 gCO2e/MJ, according to non-governmental environmental lobby group Transport & Environment. This makes a number of LNG-burning, ocean-going vessels compliant with FuelEU regulation through 2034. The EU's ETS for marine shipping commenced this year and requires that ship operators pay for 40pc of their GHG generated on voyages within, in and out of the EU. Next year, the EU ETS emissions limit will increase to 70pc. Even with the added 70pc CO2 emissions cost, US Gulf coast grey LNG was assessed at $639/t VLSFOe, compared with the second cheapest VLSFO at $689/t, B30 biodiesel at $922/t and grey methanol at $931/t VLSFOe average from 1-18 September (see chart). "In 2025, we expect [US natural gas] prices to rise as [US] LNG exports increase while domestic consumption and production remain relatively flat for much of the year," says the US Energy Information Administration. "We forecast the Henry Hub price to average around $2.20/million British thermal units (mmBtu) in 2024 and $3.10/mmBtu in 2025." Provided that prices of biodiesel and methanol remain relatively flat, the projected EIA US 2025 LNG price gains would not affect LNG's price ranking, keeping it the cheapest alternative marine fuel option for ship owners traveling between the US Gulf coast and Europe. LNG for bunkering global consumption from vessels 5,000 gross tonnes and over reached 12.9mn t in 2023, according to the International Maritime Organization (IMO), up from 11mn t in 2022 and 12.6mn t in 2021. The maritime port authority of Singapore reported 111,000t of LNG bunker sales and the port authorities of Rotterdam and Antwerp reported 319,000t in 2023 from all size vessels. Among vessels 5,000 gross tonnes and over, LNG carriers accounted for 89pc of LNG bunker demand globally, followed by container ships at 3.6pc, according to the IMO. The large gap between LNG global and LNG Singapore, Rotterdam, and Antwerp bunker demand, is likely the result of most of the demand taking place at the biggest LNG export locations where LNG carriers call, such as the US Gulf coast, Qatar, Australia, Russia and Malaysia. By Stefka Wechsler USGC bunkers and bunker alternatives $/t VLSFOe Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Kosovo confident in winter 24-25 supply: TSO


19/09/24
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19/09/24

Kosovo confident in winter 24-25 supply: TSO

London, 19 September (Argus) — Kosovar transmission system operator (TSO) Kostt is confident it can meet demand over the winter season through domestic generation and imports, Kostt told Argus in an interview ahead of the Energy Week Western Balkans conference. Domestic generation capacity is not enough to meet demand during periods of high consumption, such as during the winter season, and imports will be necessary during peak tariff periods to meet demand, the TSO said. Maximum demand over the upcoming winter season is expected to reach 1.45GW, and transmission capacity can reach 1.85GW under normal operating conditions, Kostt said. Kosovar distribution company Keds and energy supplier Kesko had to import up to 35pc of power during peak periods in December last year, when peak demand reached 1.1GW. Annual maintenance at the 680MW Kosova B lignite-fired plant was completed on 18 August, and the plant is scheduled to be fully available over the winter season. Constraints on the electric system should be reduced in the upcoming winter season, as Keds has started metering the four Serbian-majority municipalities located in the country's north in January . Kostt was responsible for supply in the region last year, but received payment through subsidies from the Kosovar government, rather than tariffs. But subsidies were sometimes delayed, which created challenges in balancing real-time deviations within Kostt's control area, the TSO said. An agreement was reached last year with Serbian state-owned utility EPS subsidiary Elektrosever to normalise power supply for the Serbian majority municipalities, which were not paying for the unauthorised withdrawal of electricity. Elektrosever is now responsible for supply in the region and submits daily nominations and adheres to balancing requirements, although Kostt still meets its financial requirement to cover losses in the transmission system. There have been no violations of the operational terms since the agreement went into effect on 1 January, Kostt said. "System operations have become more stable, and deviations are now within the Entso-e acceptable limits," Kostt said. And Elektrosever has agreed to Kostt's request to submit an electricity supply plan for the region for 2025. By Annemarie Pettinato Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Pertamina supplies first SAF to Virgin Australia


19/09/24
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19/09/24

Pertamina supplies first SAF to Virgin Australia

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Western Australia to allow some onshore gas exports


19/09/24
News
19/09/24

Western Australia to allow some onshore gas exports

Darwin, 19 September (Argus) — Western Australia's (WA) state government will allow onshore developers of gas fields to export about 20pc of their output as LNG during a five-year window, in response to a growing failure to bring on new supplies for the domestic market. WA previously banned onshore gas exports, except in the case of Australian independent Beach Energy's 250 TJ/d (6.7mn m³/d) Waitsia stage 2 project . Beach may be required to share its infrastructure with fellow Perth basin firms, the WA government said, to expedite market access for new projects. Australian mining firm Mineral Resources, which has argued for permission to export 85pc of the gas from its Lockyer project as LNG and fellow WA-based firm Strike Energy may benefit from the changes, as both hold significant reserves in the Perth basin. The changes apply to new onshore developments or existing projects seeking to expand production. Developers are required to reserve 80pc of gas produced for WA, with this rising to 100pc from 2031 onwards. The policy shift follows dire outlooks for WA's gas supplies as the state attempts to wean itself off coal-fired power generation. It currently contributes about a third of the electricity into the state's largest power grid. A parliamentary report last month warned WA cannot rely on sporadic appeals for more gas to meet demand. "These policy changes are sensible responses that balance the need for Western Australia to secure its energy future while encouraging onshore producers to bring on more gas supply as and when it is needed," mines and petroleum Minister David Michael said on 19 September. The 15pc reservation for offshore LNG projects will continue, while WA has promised more transparency on the policy with the publication of a yearly WA Domestic Gas Statement to reveal how producers are meeting obligations, with a review to take place after two years. An interim parliamentary report tabled earlier this year showed about 8pc of the state's offshore gas output has reached WA consumers since 2006, representing just over half the required volumes. Following public criticism of LNG producers' contributions, Australian independent Woodside Energy has since pledged an extra 32PJ (854mn m³) of domestic supplies by the end of 2025 . WA will also seek to strengthen laws designed to prevent companies banking prospective onshore oil and gas tenements, with a review into the "use it or lose it" policy to be led by the state's energy department. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Advanced Fame marine biodiesel blends hit 9-month low


18/09/24
News
18/09/24

Advanced Fame marine biodiesel blends hit 9-month low

London, 18 September (Argus) — Some marine biodiesel blend prices in northwest Europe hit a year-to-date low on 17 September, owing to soft fundamentals and easing values in underlying markets. Argus assessed the prices of B30 and B100 Advanced fatty acid methyl ester (Fame) 0 dob ARA — which include a deduction of the value of Dutch renewable fuel tickets (HBE-G) — at $674.01/t and $993.87/t, respectively. At these levels, the two blends were at their lowest outright price since 29 December last year — right before values rose sharply following the halving of the Dutch HBE-G multiplier for maritime blending at the start of the year. Prices have slipped on the back lacklustre demand for marine biodiesel blends in recent months. The price of EU Emissions Trading System (ETS) allowances, for which Advanced Fame marine biodiesel blends receive a zero emission factor, have averaged $70.56/t so far this year, compared with $93.43/t in the same period last year. Consequently, the expansion of EU ETS into the shipping sector has done little to financially incentivise the uptake of marine biodiesel blends this year. On the other hand, voluntary demand for marine biodiesel blends has been steady from shipowners seeking to deliver proof of sustainability (PoS) documentation to their customers to offset the latter's scope 3 emissions. But this may have shifted geographically in recent months in favour of Singapore over ARA. Soft fundamentals in the marine biodiesel blend market has been compounded by pressure on prices in underlying crude and biodiesel markets. The front-month Ice Brent crude futures and gasoil futures contracts hit a near three-year low at 16:30 BST on 10 September. This in turn weighed on values of very-low sulphur fuel oil (VLSFO) and marine gasoil (MGO), and the former makes up 70pc of the B30 Advanced Fame dob ARA blend. VLSFO dob ARA prices have averaged $505.58/t so far in September, compared with $533.38/t on 1-18 August, having hit $483/t on 10 September, the lowest level since August 2021. Meanwhile, in the underlying biodiesel market, Advanced Fame 0 fob ARA prices were at the second-lowest level on record on 17 September, with the price marked at parity to used cooking oil methyl ester (Ucome) for the first time. Several market participants have said that low prices for German greenhouse gas (GHG) quota tickets, which can be traded on the market to meet the country's emissions reduction mandate, have discouraged buyers from physically blending advanced biodiesel, as tickets are a cheaper option. The current year GHG other ticket price hit a new historic low of $85/t CO2 equivalent (CO2e) on 13 September, down by $115/t compared with the same time last year and by $378/t compared with two years ago. Provisional EU anti-dumping duties on Chinese-origin biodiesel that came into force on 16 August have also turned European buyers away from advanced product made in China, which used to be one of the main sources of advanced biodiesel in Europe. By Hussein Al-Khalisy and Simone Burgin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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