UK Lasts Without Coal Power for Three Days During Warm Spell

Thanks to a recent bout of warm weather that lowered the demand for coal power, the UK was able to go for three entire days completely free from coal. Gas, renewables and nuclear were all there to pick up the slack and cover the country’s energy needs during this time.

This hat-trick of coal-free days represents a new record for the country and shows that coal power, known as one of the most polluting fuels, is on a rapid decline.

Over the course of history, coal has played a vital role in the UK’s electricity mix. In fact, it wasn’t until 2017 that the UK managed to go an entire 24 hours without using it. This was the first time the UK had gone such an extended period coal-free since the 19^th century.

Now, in 2018, the UK has smashed that record with a 55 hour period of zero coal usage, which was subsequently broken again last Monday when the UK passed the 72-hour mark. The country’s coal-free record now stands at 76 hours, which might not seem like a lot but it indicates that a greener future is more attainable than ever.

Once coal had been eliminated from the mix, electricity around Britain was supplied by gas, representing about a third, and windfarms and nuclear, providing about a quarter each.

The remaining amount of electricity came from a mixture of biomass, burned in North Yorkshire at the Drax power station, solar power, and some imports from France and Holland.

This reduction in coal usage came as a welcome relief after the highs that came as a result of the exceptionally cold winter the UK just experienced. In February and March, the unusually cold weather drove up the price of gas and brought coal power stations online.

Fortunately, the cold weather seems to have subsided and the warm weather coming in is bringing with it the opportunity for gas, renewables and nuclear to take the helm and cover the UK’s power needs.

Indeed, forecasts from the National Grid show that demand for electricity this summer will be lower than in 2017. Minimum demand will go as low as 17GV while average peak will be around 33.7GW.

But, that’s not the only good news – experts predict even more milestones to be reached this year. Analyst Jonathan Marshall from the Energy and Climate Intelligence Unit praises the ever-growing renewable capacity in the UK. He expects to see more records set as progress made over the past decade comes to fruition.

One observer did comment that while a shift from coal would be positive, if it were to be replaced by gas, this could be a ‘false dawn’. He commented “Shifting to gas is likely to make our electricity market more volatile as our energy price becomes increasingly locked to international gas markets. That will only hurt consumers.”

Nevertheless, two coal plant owners have announced they will be closing up shop this year. This will leave the total of coal power stations in the UK at just six, meaning the country could well cease burning coal before its target of 2025.

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UK Cold Snap Reveals Country’s Dependency on Gas

The beginning of March saw temperatures in the UK plummet, with snow falling heavily across much of the country, As a result, homes and businesses cranked up the heating and the demand for gas went through the roof. One North London gas supplier, Cadent, reported that on March 1^st, hourly demand peaked at 20GW, which is around one and a half times more than the average for that time of the year.

 

This cold period saw gas demand reach its highest in eight years, which alerted the powers that be to the fact that we do not have the supplies necessary to meet this need.

 

We have now come out of the other side of that cold snap but the problem is not over. Britain must still face up to the fact that it is far too dependent on fossil fuels as a source of heat.

 

Approximately 85% of heating in the UK comes from natural gas. This can be compared to electricity generation, which comes from a mix of gas, coal and renewables. Recently, during the cold snap, wind was responsible for 30% of this power generation.

 

This comparison shows that the UK has taken great strides towards decarbonising electricity but still has a long way to go with regards to the heating sector. In 2015, domestic and industrial heating accounted for 32% of Britain’s emissions. But, Britain is going to need to find a way to curb these carbon levels if it wants to meet its emission targets.

 

Experts are in concurrence with the notion that decarbonising heat should be Britain’s top priority for its future energy policy. In 2008, the Climate Change Act came on the scene and demanded that the country cut greenhouse gases by 80% from 1990 to 2050. The UK is on track to meet some of its short-term emissions targets but looks unlikely to meet them in the long run.

 

To meet these targets climate change executives have stressed the importance of decarbonising heat from our buildings. The problem is that we are used to natural gas. It is what we all have installed in our homes already. Alternatives to natural gas are not very well known and could well cost more.

 

Experts have also criticised the government’s Clean Growth Strategy saying that while the targets laid out are promising, many of them lack detail. However, one government representative said that the government is exploring “low carbon heating technologies with the potential to support the scale of change needed to meet our 2050 targets”.

 

Another issue that is posing an obstacle to shifting away from gas is the fact there is no blanket solution to decarbonising heating. A range of options is currently on the table, including district heating systems. These heat networks comprise a network of hot water pipes that could supply a number of buildings from a central, low-carbon source.

 

In 2016, the government poured £320m into an investment programme, which could support up to 200 projects to renovate heating in towns and cities. However, the total cost of decarbonisation is going to be high and the government needs to be prepared for the necessity of pumping more money in to achieve this goal.

 

 

A Break Down of Trump’s Twitter Attack on Opec

President Trump’s recent attack on OPEC has left a number of investors in a state of shock and revealed a worrying deficit in the President’s knowledge of the state of the oil market.

The attack began when Trump tweeted that OPEC is keeping crude prices “artificially high.

To break down his comment we will begin by looking at what exactly OPEC is doing and what Trump meant by “looks like OPEC is at it again”. At the end of 2016, OPEC and Russia formed an agreement that would limit oil production. This was intended to stabilise the price of oil per barrel. This deal removed 1.8 million barrels per day from the market and compensated for the previous overproduction that flooded the market with cheap oil.

Originally, Saudi Arabia refused to take part in the initiative, blaming the glut of crude oil on U.S. oil production. The Saudis thought that the high production cost of this U.S. drilling would eventually force drillers to stop. Unfortunately, the opposite happened. American drillers found ways to cut costs and the price of oil continued to fall. Thus, Saudi Arabia agreed to limit production and in January 2017, the limitations were implemented.

The next thing Trump claimed was that there are “record amounts of oil all over the place”. Is this true? Not really is the answer. U.S output is at an all time high of around 10 million barrels a day but many oil producing nations are still limiting production and pumping out low numbers. The amount held in stockpiles has also been limited and is continuing to be whittled down.

Moving on we have the part of Trump’s tweet that says “the fully loaded ships at sea”. It is unclear what he meant by this but taking it in the most literal sense, he is wrong. Oil shipped by sea is down 48 million barrels from the start of the year. Storage at sea has also dropped due to the market being in a state of backwardation.

So, is Trump’s claim that oil prices are “artificially very high” correct or not? It is likely that Trump’s tweet is the result of him hearing the news that Saudi Arabia would like to push up the price of oil from $80 a barrel to $100. The increased price would help the planned IPO of Saudi Aramco.

This being the case, some analysts believe that the Saudis may lobby against ending the production agreement even if it is no longer necessary. This could lead to demand outstripping supply. However, if Trump is commenting on the production deal itself, he is alone in his criticism. The world generally concurs with OPEC’s decision and sees it as a sensible way to manage, but not manipulate, the market.

Is there anything Trump can do about all of this? Well, Trump does not have the power to tell American drillers how much to produce, whereas many OPEC country leaders do. Even if he could do this, they are already pumping at an all time high.

Trump has two potential options. He can appeal directly to Saudi Arabia to amend its policy, taking advantage of the close bond he has with the Saudi Crown Prince. Alternatively, he controls the Strategic Petroleum Reserve – a stockpile of emergency crude, and could use this as a weapon. However, this would be an unprecedented and controversial move.

 

$150 Million Investment by Clean Energy Financier to Reduce Emissions

Australia is about to see a huge amount of money flow into its largest infrastructure fund thanks to the Clean Energy Finance Corporation (CEFC). The corporation is investing $150 million into the fund in a bid to reduce emissions from a number of Australia’s airports, ports and electricity infrastructure assets.

This marks the first time that the CEFC has invested in an infrastructure fund. The money will go towards the reduction of emissions in the airports of Melbourne and Brisbane as well as Port Botany in Sydney and the Port and Brisbane and Ausgrid.

According to the CEFC, reducing the emissions coming from those places would prevent around 69,000 tonnes of CO2 equivalent from entering the atmosphere every year. This is the same as taking 14,775 cars off the roads each year or roughly how much electricity 7,450 homes use in a year. It is clear that this reduction would make quite a difference.

The National Greenhouse Gas Inventory has stated that in Australia over half of the country’s total greenhouse gas emissions are infrastructure related. The Inventory estimates that around 35% of the emissions come from the electricity sector and 17% come from the transport sector.

The mission of the CEFC is to decrease these emission levels. The corporation is a financier that specialises in clean energy and aims to increase the flow of money into renewable energy. It also wants to drive energy efficiency and fund the development of low emissions technologies.

The CEFC chief executive, Ian Learmouth, said that: “infrastructure assets are central to our economic and social wellbeing.” He went on to explain that the $150 million investment into the Australian Infrastructure Fund would lead to emission reductions. These reductions, enabled by the fund, which already holds $12 billion, would benefit the communities in which these infrastructure assets are based.

He went on to say: “With this investment the CEFC will work with IFM Investors in targeting comprehensive and sustained improvements to the carbon footprint of some of our most important infrastructure assets.”

IFM Investors is owned by 27 industry super funds in Australia and has to date invested on behalf of around 6 million Australians. In addition to this, it has invested for 15 million pension fund members from around the world. After starting up just 20 years ago, it now has a total of $100 billion under management.

The global head of infrastructure at IFM Investors, Kyle Mangini, believes that the boardrooms of the companies involved will be the hubs of.

“We’re represented on the boards, so we’ll propose to the board and the other investors the various programs that might be implemented across each one of the assets,” he said.

He carried on by explaining that the board will need to work on a cost and return basis but noted that this could be done through the regular governance process. Meanwhile, IFM Investors is going to be right there making sure there is an appropriate and consistent level of focus on reducing emissions.

Julia Hinwood, the infrastructure lead at CEFC, said that they are looking at pursuing a number of various initiatives design to reduce emissions. These include on-site solar panels and batter storage solutions as well as a drive to use more electric vehicles.

“They are also likely to involve using smart management systems, which monitor asset performance and assist with reducing energy consumption and optimising logistics and supply chains,” she said.

Finally, Mangini has explained how he plans on keeping IFM Investors accountable. There are plans to report emissions levels from each of the assets on a new website, along with targets and progress made towards those targets.

 

Ten Headlines that Summarise Energy in 2017

2017 was an interesting year for the energy world – and one that will be looked back on as we move ever closer towards a sustainable future. Here is a round up of the most important energy stories that happened in 2017 and how they shaped the energy landscape.

1. Pipelines Put in Motion

Not long after Trump became president, he signed executive orders on two pipelines whose construction had been stalled. Trump told the Keystone XL Pipeline’s backer to reapply for a permit, which the company successfully did. The other pipeline in question is the Dakota Access Pipeline, which was stalled by Barack Obama after protestors expressed their aversion. Trump gave orders to cut through the red tape and restart the project, which was inaugurated in May.

2. No More Clean Power Plan

No-one in the world would think it is a good idea to scrap the Clean Power Plan. No-one except President Donald Trump. In March, Trump signed an executive order that would start dismantling the Clean Power Plan, which was put in place by the Obama administration and required carbon emissions to be reduced by 30% from 2005 levels by 2030.

3. A Move Away From Canada’s Oil Sands

Big players in the oil world such as Statoil, Shell and Conoco Phillips have sold off around $24 billion worth of assets in Canada’s oil sands sector. The reason they gave for this was that there were better, cheaper opportunities in the USA with shale oil. It looks likely that other major oil companies will do the same in the near future.

4. USA Quits Paris Climate Agreement

Just when you thought it couldn’t get worse, it does. Trump continues along his path of destruction and undoes yet another of Obama’s environmental achievements by pulling out of the Paris Accord. The agreement was designed to lower global carbon emissions. Trump said that the agreement was unfair to the U.S. and would harm the coal industry he was trying to revive.

5. Records for Renewables

The 2017 Global Status Report and BP statistical Review of World Energy both showed that record levels of renewable energy are being consumed – particularly wind and solar. But, it also showed new records for oil and natural gas production and for carbon emissions. Furthermore, despite record sales of electric vehicles, gasoline consumption in the U.S. is at an all-time high.

Hurricane Harvey Wreaks Havoc

This wild storm closed down oil production in various locations and idled around 30% of the country’s refining capacity. As a result, gasoline prices soared and shortages were widespread.

U.S Shale Production Bounces Back

Oil production struggled through 2015 and 2016, dropping by about one million barrels per day (bpd). In 2017, however, we saw it surge again to produce record-breaking numbers. December of 2017 saw the highest monthly production of oil since 1971 at around 9.8 million bpd.

Oil Prices Rebound

As oil production boomed so it seems did the price of oil. After resting below $50/bbl for West Texas Intermediate, the price finally moved towards the $60 mark and rested there comfortably. Highs were reached in December.

Future Oil Supplies Uncertain

There have been warnings from the International Energy Agency (IEA) about the low number of new drilling projects that are being approved. This number is the lowest it has been in 70 years and this leads to fears that oil shortages may occur and prices may soar.

Energy Sector Boosted by Tax Reform

The latest tax reform will reduce corporate tax from 35% to 21% and will allow deduction of capital expenditure in the year they are incurred. Indeed, it is the energy companies that stand to gain a lot from this.

 

US solar power likely to suffer at hands of tariffs imposed by Trump

The United States is likely to install far less solar power than was anticipated in the coming years. This forecast comes as a result of President Donald Trump’s decision to impose tariffs on basic solar equipment, which will inevitably pose challenges to big solar projects.

This tax on solar cell and panel imports was announced earlier this year and is already reducing demand alongside other obstacles the industry faces. These include slow expansion in pivotal state markets and an emphasis on growth over balance sheet discipline.

However, not all is doom and gloom for the solar industry. 2017 was a good year for solar with it being the second year in a row of double-digit gigawatt growth. The sector added 10.6 gigawatts of solar capacity in the form of photovoltaic technology.

Abigail Ross Hopper, SEIA President and CEO, was encouraged to see the growth in solar across the country. In a press release she said “the solar industry delivered impressively last year despite a trade case and market adjustments. Especially encouraging is the increasing geographic diversity in states deploying solar, from the Southeast to the Midwest, that led to a double digit increase in total capacity.”

Despite being double-digits, the increase in 2017 was still 30% less than the astonishing addition of 15 gigawatts in 2016. This record-setting figure came as a result of buyers frantically purchasing equipment before tax credits expired. However, the tax credits were extended in the end.

Over the next five years we can expect to see solar develop in a far less exciting manner.

GTM Research, a clean tech analysis firm, altered its forecast by 13% with regards to solar installation that will take place between 2018-2022. The revision has been put down to various factors, such as changes in federal and state policies, corporate tax reform impacts, and, of course, the consequences of Trump’s solar panel tariffs.

In 2018, GTM expects growth in the United States to stay flat at 10.6 gigawatts. Fortunately, many solar projects already bought their equipment before the tariffs were put in place. This means that the effects won’t be felt too much in 2018.

This is particularly true in the utility-scale segment, which constructs large solar facilities that work like power plants and feed into electric power markets. In fact, GTM predicts that this section of the market will actually expand more this year than it did last year.

However, growth in this segment is not going to last for long as stagnation looks likely between 2020 and 2022 as a result of the tariffs, which will undoubtedly delay or even kill off some projects.

The tariffs could also cap gains in installations for residential homes, despite the surge that has been seen so far in 2018. It is hoped, however, that solar for residential homes could bounce back by the 2020s if companies can sort out their finances and push into new markets.

Similarly, solar for businesses could shrink over the coming years before surging again.

To end on some good news, solar has seen notable growth of installations in the Southeast and Midwest parts of the country where renewables are yet to make much of a footprint. We also saw, in 2017, a rise in community solar. This allows neighbourhoods to benefit from community projects rather than having their own rooftop panels installed.

Surprise Oil and Gas Stocks Cause Ripples in the Market

Last week, oil prices dropped in the wake of official data showing that U.S crude inventories have increased beyond what was expected. The same went for the nation’s gasoline stocks.

The week ending on February 23^rd saw crude inventories in the United States increase by 3 million barrels. This can be compared with predictions by analysts that believed the rise would sit around the 2.1 million barrels mark. Again, the rise in gasoline stocks was also a surprise to analysts.

“We had another pretty sizable build, and with that it kind of seemed like this recent bull market had the carpet pulled out from underneath it,” commented a senior market strategist, Phillip Streible, from RJO Futures, based in Chicago.

Furthermore brent crude futures continued to tumble for a second day after a steady increase over the last 6 sessions straight. Indeed, West Texas Intermediate also fell, dropping $1.37 to sit at $61.64 a barrel. The most active Brent crude futures sent out for delivery in May had fallen $1.79 and were resting at $64.73 a barrel.

The April contract settled down 85 cents, or 1.28 per cent, at $65.78 a barrel ahead of expiration.

Fortunately, prices reduced losses after the Energy Information Administration of the United States provided data that indicated the production of crude in December dropped down to 9.95 million barrel, a decrease of 108,000 barrels per day compared with November.

Prices continued to dip following the release of this data, in which the EIA took another look at the crude production numbers for November and altered it to a record 10.057 million barrels per day.

An analyst at Price Futures Group, Phil Flynn, commented on the situation, “The market did attempt a late day rally but because it’s the end of the month, a lot of hedge funds decided to try and take some profits.”

Despite OPEC’s production cuts, the huge increase in U.S. production, which has gone up by a fifth since the middle of 2016, have kept oil prices low this year.

Streible explained that the U.S. has no intention of slowing down its production and is likely to hit 11 million barrels per day far sooner than anyone expected.

Lower gas futures led the entire energy complex following a surprise increase in gas stocks in the United States. These stocks were expected to suffer a 190,000 barrel drawdown but instead got a boost of 2.5 million barrels. The most active gas futures fell in price to just over $1.9 a gallon.

The rise in inventories came even as refineries boosted activity in the most recent week.

Although refiners were undergoing maintenance, they were still able to produce more crude than had been in former years, which adds to supply of gas and diesel. This was commented on by Andrew Lipow, who is the president at Lipow Oil Associates based in Houston, Texas.

Finally, the market was under pressure by the rising dollar and stock markets. On Wednesday, equities markets weakened but the United States dollar shot up to the highest it has been in a month. The consequence of this is that oil becomes more expensive for holders of currencies that are not the dollar. This price pressure came from a slow down in monthly factory activity by three of the biggest crude consumers in the world: China, Japan and India.