Quantcast
Channel: Natural Gas Power Generation, Combined Cycle Gas Turbine Generation | Gas to Power Journal UK - Gas To Power Journal - Gas To Power Journal
Viewing all articles
Browse latest Browse all 1190

Europe’s electricity demand falls 8% in 2020, may take years to recover

$
0
0
Electricity demand across major European markets will fall nearly 8.1% this year as lockdown easing have no great impact yet,…

Low demand, combined with abundant supply from wind and solar power sources, has pushed most thermal coal power plants out of the merit order, as they have become unprofitable to operate. Gas generators bear the brunt of pressure from lower demand and upswings in renewable production - although this pressure has been somewhat mitigated by reduced output from nuclear in France and Great Britain.

Relatively high-cost thermal generation continues to run in periods of high renewable supply, suggesting the thermal fleet lacks the necessary flexibility or sees insufficient commercial incentive to respond. Other must-run restrictions may also have a bearing, analysts noted, stressing hydro and cross-border flows are a key provider of flexibility.

Negative power prices

On May 1, a public holiday in Europe except for the UK, strong renewable supply coincided with low demand which led to <1 EUR/MWh power prices across major markets. Germany, in particular, continues to see negative day-ahead prices with 179 such hours in the year-to-date. By comparison, the whole of 2019 saw 212 negative hours, according to WoodMac figures.

Risks monitored by Wood Mackenzie are the impact of low demand and ocassionally negative prices on commercial frameworks, notable for renewable support mechanism. This trend will impact UK’s Renewables Obligation markets, resulting in lower ROC prices. At the same time, it will raise levy rates faced by German consumers under EEG arrangements as renewables power is now sold under lower Feed-in Tariffs which get balance by higher levy charges.

Economics favour gas

The relative economics of gas and coal generators continue to hold firm in favour of gas. Clean sparks spreads, the profit margin for burning gas to generate electricity, remain some 11 to 14 EUR/MWh more attractive than low efficiency dark spreads (in markets paying ETS prices alone) and around 5 to 9 EUR/MWh ahead of even the most efficient hard coal burners in the fleet.

Great Britain has recorded 31 days of coal-free generation – a new record. It is questionable, however, if support for an accelerated Green Deal be fiscally feasible given tightened government budgets following lost tax revenues and bailouts of sectors deeply impacted by the recent lockdowns.


Viewing all articles
Browse latest Browse all 1190

Trending Articles