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UK balancing power prices close to zero on weak demand

  • Spanish Market: Electricity
  • 24/03/20

System prices in the UK's power balancing mechanism hovered near zero throughout the middle of the day as weak demand again left the system oversupplied.

The average system price for the first 24 half-hour settlement periods of the day was just £10.29/MWh, and fell to zero in three of these periods (see chart). The price was well below the day-ahead exchange hourly price for the same period, which delivered at an average of £25.69/MWh for these hours.

Demand has trailed forecasts, leaving the system oversupplied (see chart). System demand was just 28.7GW by period 18 (08:30 local time), compared with forecasts of 30.3GW.

System demand was lower than forecasts by an average of 0.65GW yesterday, and was almost 3GW below forecast at 20:30 local time.

System demand excludes embedded generation. Total demand including embedded wind and solar was 34.38GW by midday, down by 3.6GW from the same period yesterday and 4.2GW lower than at the same time last week, data from UK generator Drax and Imperial College London show. Demand for all of yesterday averaged 33GW, down by 1.75GW from a week earlier.

Demand patterns had already begun to shift last week after prime minister Boris Johnson advised people to work from home where possible to counter the spread of the coronavirus pandemic. Supplier Octopus Energy said that 30pc of households changed consumption patterns markedly last week, likely as people worked from home.

Subsequent measures have added pressure on demand. On 20 March Johnson asked all pubs and restaurants to close. Yesterday he ordered all non-essential businesses to close, and said people should only leave their homes for food, health reasons or essential work. Police will have the authority to disperse any public gatherings of more than two people.

Similar measures taken in other European countries had a significant impact on demand last week, and led to widening discrepancies between actual and forecast demand.

The UK forward curve has been pricing in reduced power demand over the coming months, causing forward margins for gas plants to slide.

The summer 2020 and winter 2020-21 outright power contracts have recorded heavy losses in recent sessions, with both falling to contract lows yesterday. And the summer 2020 clean spark spread for 49.13pc efficiency fell to an five-month low of £2.29/MWh.

UK system demand v forecast GW

UK system and day-ahead price £/MWh

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04/10/24

Sheinbaum targets $40bn energy transition plan

Sheinbaum targets $40bn energy transition plan

New York, 4 October (Argus) — The ambition of Mexico's new President Claudia Sheunbaum to reach 45pc of renewable generation in the electricity mix by 2030 will include an investment plan of $35bn-40bn, sources familiar with the matter said. Sheinbaum announced a more ambitious goal for renewables and promised to launch an energy transition plan in coming days during her inaugural address on 1 October. The awaited document will include specific strategies and projects to be developed in the first days of her term, Alonso Romero, deputy director of commercial strategy at state utility CFE and one of Sheinbaum's energy advisors during her campaign, told Argus . There will be around $6bn/yr in new investments under Sheinbaum's six-year term to develop a pipeline of 60GW in new capacity, mostly renewable, he added. The new administration will propose several types of contracts to developers that guarantee CFE holds the largest participation in the sector, said Romero. There have been meetings between Sheinbaum's representatives and banks to show the plan's potential, said a source familiar with the topic. But potential investors are still waiting to see if congress passes the bill to reform the energy sector sent by former president Andres Manuel Lopez Obrador. That energy bill is crucial in Sheinbaum's plan, as it will lay the groundwork for further legal modifications, said Romero. It will be easier to attract the private sector into investing in projects if a long-term contract with CFE provides support as the final source of payment in case of a default, said Romero. Under current law, CFE cannot directly buy electricity from a new power plant unless it comes from a long-term auction. Congress would need to approve the bill and then modify the electricity law to lift that prohibition, so lenders would have certainty that CFE can sign long-term contracts with new renewable or thermal power plants without holding a tender, said Romero. The Sheinbaum administration is considering signing Build, Lease and Transfer (BLT) contracts for some projects, said Romero. This way, CFE will have the opportunity to acquire the asset after 10-15 years of being operated by another company. Hopes and fears Sheinbaum's bet on the energy transition could be seen as a hopeful message for the renewables sector, but investors still need clarity on the rules in the electricity market. Market players have been worried that Sheinbaum will continue her predecessor's energy policy that for years openly attacked private-sector renewable companies. "It is clear that Sheinbaum is trying to make the energy transition her own mark," said Jesus Carrillo, energy expert at Mexican think tank Instituto Mexicano para la Competitividad. "However, it is risking her credibility by setting such ambitious goals." In 2023, Mexico generated just 24.3pc of its electricity from clean sources, despite that category holding 32pc of installed capacity, according to energy ministry (Sener) data. Reaching the new target could be possible if Sheinbaum's administration pulled off a clear path to speed up investments in renewable generation, the sector said. "The energy transition path goes much faster when the government leads it," said Romero. Private-sector renewable companies are willing to finally put an end to the impasse during Lopez Obrador's term. But the legislative electricity proposal along with modifications that will overhaul the judicial power in upcoming months create a worrisome business environment in Mexico, sources said. The Sheinbaum administration needs to provide not only a clear but also attractive legal framework so the private sector can provide the funds and capabilities to aid in this energy transition plan, sources said. Mexico's electricity system requires around $130bn in new investments to meet the country's growing demand from 2024-2030, according to a recent analysis from business trade group Coparmex. By Edgar Sigler Mexico’s share of clean electricity % Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

France's wind sector weighs impact of new government


04/10/24
04/10/24

France's wind sector weighs impact of new government

London, 4 October (Argus) — Doubts over government policy on onshore wind competed with optimism over offshore wind at the French wind sector's annual conference in Paris on Wednesday. The event took place a day after the first policy announcements of prime minister Michel Barnier , in which he said his government would "better handle the impacts" of wind energy. No more detail is available on what this will mean exactly, although far-right party Rassemblement National (RN), which props up Barnier's minority government, is strongly opposed to wind energy. And of two of the parties in his coalition, president Emmanuel Macron's EPR and Barnier's own Les Republicans (LR), the former is supportive of wind, while the latter is more sceptical without being downright opposed, one developer told Argus . While junior energy minister Olga Givernet told the conference of her intention to reduce the delays developers face, participants Argus spoke to feared Barnier's evocation of "impacts" could mean an expansion of barriers to building new capacity. "We already take the impacts into account," one developer said, noting that firms perform extensive studies and undertake environmental impact assessments (EIAs). And legal challenges are one of the main obstacles slowing down capacity increases, with one developer calling for better-trained judges to reduce the number of "arbitrary" decisions made in these cases. Delays in receiving grid connection and EIAs were other factors developers cited. But the conference was more upbeat on offshore wind. The government will in the coming weeks announce priority zones for offshore wind, which will allow it to launch tenders for 8-10GW of capacity by the end of the year. These will contribute to the country's goal of reaching 18GW of installed capacity by 2035. At the same time, the increasing occurrence of negative price hours threatens the sector, according to industry body France Renouvelables. Negative prices can pose a threat to grid stability, according to grid operator RTE. Large quantities of renewables can be shut down suddenly at the beginning of negative price hours, leading to a sharp output slope, which the grid operator has little visibility of, RTE said. Negative prices are a problem for operators too, even those under contracts for difference (CfDs) which are not directly exposed, according to Jean-Francois Petit of renewables operator Boralex. Operators typically shut down during negative pricing hours, but receive only partial compensation for lost output, he said, while the requirement that production be completely halted can be difficult operationally. And slow progress on repowering could represent another brake to capacity increases. Repowering is not underpinned by primary legislation, but only by ministerial circulars, one developer said, which offers little certainty to firms that want to undertake it. Meanwhile, height limits imposed for aviation constraints and landscape protection reduce the potential to add taller, more powerful turbines. French turbines are typically much smaller than those in neighbouring countries because of these height limits, which reduces access to higher-quality wind resource. And an open question remains over potential local content requirements in future tenders for CfDs. These requirements, enabled by the European Net Zero industry Act (NZIA) and supported by energy regulator the CRE, could prove a fillip for manufacturers of energy-transition materiel such as wind turbines, hobbled by competition from Chinese manufacturers. But incorporation of these requirements would push up costs, requiring higher strike prices at CfDs and more public subsidy. Energy minister Givernet did not appear to give the conference any hints on which way the government would lean, saying that control over both energy prices and security of supply were absolute priorities. Reaching France's goals by 2028 of 33.2-34.7GW of onshore capacity would require an installation rate of 2.3-2.7 GW/yr, roughly twice rates reached in recent years ( see graph ). By Rhys Talbot France onshore capacity and 2028 goals Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Japan to phase out inefficient coal plants by 2030


03/10/24
03/10/24

Japan to phase out inefficient coal plants by 2030

London, 3 October (Argus) — Japan will target a phase-out of inefficient coal plants by 2030, as it continues its energy transition push, although the country is still yet to provide further details on any broader movement away from coal. "By 2030, the inefficient use of coal-fired power will be phased out," Japan's newly appointed environment minister Keiichiro Asao said at a press conference on Wednesday. Asao was appointed after Japan's new prime minister Shigeru Ishiba took office this week. Japan had earlier pledged to phase out "unabated" coal-fired plants by 2035 , or "in a timeline consistent with keeping a limit of a 1.5°C temperature rise within reach, in line with countries' net zero pathways". But inefficient, sub-critical coal plants — with below 40pc efficiency — make up only 22pc of Japan's total fleet, while 25pc is supercritical and 53pc is ultra-supercritical. The sub-critical plants probably produce less of Japan's coal-fired electricity, given the generation margins for them will fall below the majority of gas-fired generation in the merit order. This means Japan's overall coal-fired power generation is likely to be less impacted than the overall change to its coal fleet capacity. Japan has been considered a laggard in green energy transition among its G7 counterparts, but the country's coal demand could decline to some extent as a result of global divestment pressure. But coal is still key to the resource-poor country, as the government sees renewables and nuclear as insufficient to meet rising power demand driven by the growth of data centres needed to enable artificial intelligence. Japan's new government has recently announced that it will be restarting more of its nuclear reactors to help meet its power demand. Utility Shikoku Electric Power reactivated its sole nuclear reactor at Ikata on 29 September, after closing the unit for turnaround since 19 July. But the utility pushed back the restart of the 890MW Ikata No.3 nuclear reactor on Wednesday because of a technical issue during the process of resuming power generation. Japanese thermal coal imports rose by 10pc to 9.25mn t on the year in August, owing to increased deliveries from Australia. But this was 4pc lower than the past five-year August average of 9.6mn t. By Shreyashi Sanyal Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Mexico aims for 45pc renewable power by 2030


02/10/24
02/10/24

Mexico aims for 45pc renewable power by 2030

Mexico City, 2 October (Argus) — Mexico will generate 45pc of its electricity from renewable sources by 2030, new President Claudia Sheinbaum has pledged upon taking office in an immediate step-up in energy transition efforts. The government had previously committed to a 43pc share of clean energy, including nuclear and efficient natural gas-fired cogeneration. But Sheinbaum stated during her inauguration on Tuesday that the new goal will be achieved solely through renewable sources, such as solar, wind and hydropower, which will also meet growing electricity demand. In 2023, Mexico generated just 24.3pc of its electricity from clean sources, despite these holding 32pc of installed capacity, according to energy ministry (Sener) data. Low output from hydropower plans contributed to this shortfall. Wind and solar accounted for only 5.9pc and 5.1pc, respectively. Last year, the energy regulator (CRE) approved regulatory changes allowing the government to classify energy produced by natural gas-fired combined-cycle plants as clean. But international standards do not consider gas-fired generation as clean unless the plants use CO2 capture systems. Sheinbaum also pledged to introduce a new energy transition plan soon, to detail investment opportunities and projects in the electricity sector. She confirmed that state power utility CFE will maintain its prominent role, holding at least 54pc of electricity generation capacity. The president announced plans for large-scale rooftop solar panel installations for households with high electricity demand in the summer. She also committed to continuing the Sonora Plan, aimed at boosting solar generation, lithium production and electric vehicle part manufacturing in Sonora. Additionally, Sheinbaum promised to promote domestic lithium extraction technology, build 10 new recycling plants and implement air quality programs in cities like Mexico City, Guadalajara and Monterrey. She reiterated that CFE and state-owned Pemex will remain central to her administration and vowed not to sell their assets, as occurred under previous governments. By Édgar Sígler Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Mexico's Sheinbaum to present energy transition plan


01/10/24
01/10/24

Mexico's Sheinbaum to present energy transition plan

New York, 1 October (Argus) — Mexico's new president, Claudia Sheinbaum, will present a plan to attract new investments in the electricity sector and an "ambitious" energy transition strategy. Sheinbaum, Mexico's first female president, ratified the commitment made by former-president Andres Manuel Lopez Obrador of maintaining 54pc of the electricity generation in the hands of state-owned utility CFE and providing "clear rules" for private-sector companies to invest in the remaining 46pc. In her inauguration speech to congress, Sheinbaum said it was in the best interest of all Mexicans to have a strong public company in the electricity sector to provide cheap power to households. She promised that prices for electricity, gasoline and LPG will not rise faster than general inflation. The Mexican congress approved the process to change the constitution to give more power to CFE in prioritizing electricity dispatch over private-sector companies. Sheinbaum also said crude production will not go above 1.8mn b/d during her term, as it is "impossible" to reach the 3mn b/d promised under the 2014 energy reform without harming the environment. The increase in energy demand in Mexico will be met by renewable sources, she said. Among her economic priorities is attracting more international manufacturers to bring their plants to Mexico to take advantage of nearshoring — moving production closer to main markets. Her administration will also continue to implement the controversial bill to overhaul the judicial system passed in the last month . By Edgar Sigler Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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