DID YOU SAY ENERGY PRICES?
Surging gas and electricity costs are forcing European governments to discuss billions of euros in aid for households and stricken suppliers, as concern mounts over a deepening winter energy crisis, wrote the FT.
Britain's energy industry could be headed for a significant shakeup, industry insiders have warned, as countries all over Europe grapple with an unprecedented crisis in the power sector, wrote CNBC.
The energy price story is global for two reasons: prices are growing worldwide (pushing energy companies to increase coal use), and the rally in European gas prices are attracting geopolitical interests from other countries, including the US and Russia.
This does not mean that the internal ramifications are for now the most important dimension for the stability of EU countries, and for the future of the EU's development plan (the Green Deal).
“The one thing we cannot afford is for the social side to be opposed to the climate side. I see this threat very clearly now that we have a discussion about the price hike in the energy sector," said Frans Timmermans, the European Commission vice president, adding that the rise in energy should boost transition, rather than hindering it.
FIRST LOSERS OF THE RALLY
The medium-term consequences of the surge will be anyhow felt by end consumers and even more quickly by energy-intensive companies (logically).
Norwegian fertilizer manufacturer Yara on Friday said it was curtailing European ammonia production due to the record rise in natural gas prices, ICIS reported.
Also energy companies in countries where governments will pass emergency measures to rein in energy prices will likely pay the consequences, at least in the short term.
Iberdrola and Endesa lose 4.9 billion euros of market capitalization in the space of two days after the Spanish government announces measures to control electricity prices in Spain, EuroWeekly reported.
Meanwhile, some trading companies are filing for bankruptcy in several countries in Europe, including Denmark and the UK.
THE ROLE OF GAS AND OIL&GAS COMPANIES
Another lesson. The role of gas will be increasingly under the spotlight in the coming months.
Germany needs natural gas in its energy mix while it develops a market for so-called "green" hydrogen based on renewable power, the boss of Wintershall said on Wednesday, wrote Reuters.
Public funding and collaborations will be key for companies to take new risks.
German energy firm Uniper and consortium partners have secured funding from the UK government to produce hydrogen at the port of Immingham by 2025, Argus Media reported. Uniper won the funding from the Clean Maritime Demonstration Competition (CMDC) along with Associated British Ports, energy technology company Siemens Energy, and the trading arm of Toyota Group, Toyota Tsusho.
Traditional oil companies are likely to be more and more under the spotlight. On Twitter, many commentators pointed their finger at Chevron.
CEO Mike Wirth told CNBC's Jim Cramer on Wednesday the oil giant's lower-carbon investments look past solar and wind energy because the company did not believe it could create enough value in those industries.
The comments did not go down well. But the company then announced plans to invest more to grow lower carbon energy businesses. “Renewable fuels, hydrogen and carbon capture target customers such as airlines, transport companies, and industrial producers. These sectors of the economy are not easily electrified, and customers are seeking lower carbon fuels and other solutions to reduce carbon emissions,” said on Tuesday Jeff Gustavson, president of Chevron New Energies.
This does not mean that some energy companies and energy exporters will not maintain, or even improve their image.
Norway agreed on Monday to increase natural gas exports to the rest of Europe as record high wholesale natural gas prices prompted suppliers in Britain to seek state support and raised fears of a food supply crunch, wrote Reuters.
Equinor is Europe's second-largest gas supplier after Russia's Gazprom.
US - EU COLLABORATION?
Also last week, the EU and the US announced the Global Methane Pledge, an initiative to reduce global methane emissions to be launched at the UN Climate Change Conference (COP 26) in November in Glasgow.
As the Uniper “success story” shows, the focus on hydrogen has not vanished. But, as gas prices keep their rally, blue hydrogen increasingly raises eyebrows. Green hydrogen seems to be an early winner of this prices trend.
This does not mean that some companies are not looking into CCUS and blue hydrogen. France’s Air Liquide and TotalEnergies are working to decarbonize hydrogen production at TotalEnergies’ Normandy platform in France. “This project will enable in time the supply to TotalEnergies by Air Liquide of low-carbon hydrogen by relying on Air Liquide's hydrogen network in Normandy and the implementation of a large-scale CO2 capture and storage solution (CCS),” reads the note released on Tuesday.
On the other hand, Australia seems to grow more enthusiastic about green hydrogen.
Japanese refiner Eneos Holdings and a unit of Australia's Fortescue Metals Group will examine collaborating on the development of a green hydrogen supply chain between the two countries, it said on Thursday, Reuters reported.
Australian opposition hits out at the government's 'lack of ambition' on hydrogen (wrote Upstream), while Australian Renewable Energy Agency (ARENA) is investing AUS $2.17 million (€1.35 million) to complete a feasibility study for a proposed hydrogen export project located in Gladstone, Queensland.
OTHER HYDROGEN NEWS: INDIA, ITALIAN COMPANIES, NORTH RHINE-WESTPHALIA AND UK
Enel Green Power Chile, AME, Siemens Energy, Porsche, Enap, and Exxon Mobile started construction works for the “first green hydrogen pilot plant in Magallenes.” The green hydrogen production will take place in Cabo Negro, north of Punta Arenas (Chile).https://www.pv-magazine.com/2021/09/14/the-hydrogen-stream-work-begins-on-chiles-first-green-hydrogen-project-and-french-energy-giants-target-decarbonized-hydrogen/
Milan-based electric utility company Edison, Italy’s gas TSO Snam, developer Alboran Hydrogen, and Italy’s technology provider Saipem signed a Memorandum of Understanding (MoU) for the Puglia Green Hydrogen Valley project. “The Puglia Green Hydrogen Valley project plans to build three green hydrogen production plants in Brindisi, Taranto and Cerignola (Foggia) for a combined capacity of 220 MW and powered by a photovoltaic production of 380 MW in total.”https://www.pv-magazine.com/2021/09/17/the-hydrogen-stream-new-fuel-cell-tech-for-uncrewed-ships-and-a-solar-powered-hydrogen-valley-in-southern-italy/
India is progressively unveiling its hydrogen strategy. The country invited US companies to participate in upcoming bids for green hydrogen and electrolyzers. “ Singh requested the US side to send their companies to participate in the bids. He also highlighted India’s upcoming projects in Ladakh on Green Hydrogen and Green Energy Corridors,” reads the official note.
Indian steel-making company Tata Steel announced it wants to adopt hydrogen for its steelworks in IJmuiden, the Netherlands.
American companies are also looking into hydrogen opportunities in northwest Europe. US-based turnkey hydrogen solutions company Plug Power is opening its European headquarters in North Rhine-Westphalia in Germany. “The initial 70,000-square foot facility will house an innovation center with engineering labs and technical support, a monitoring, diagnostics and technical support center, a green hydrogen generator with an electrolyzer infrastructure on site, a shipping, inventor and logistics center, and a training space. The expansion to Europe will allow Plug to serve new and existing customers, while building relevant partnerships with leaders in hydrogen application,” reads a note.
Also in North Rhine-Westphalia, German-based Enapter started works for its €105 million mass-production facilities. “From 2022, Enapter will offer the first megawatt-scale AEM Electrolyser – the containerised AEM Multicore – featuring 420 of its AEM electrolysis stacks,” reads a note released by Enaper. The company has offices in Germany, Italy, Russia, and Thailand.
Meanwhile, some developments in the UK too.
HyDeploy, the first project in the UK to blend hydrogen into a natural gas network, has demonstrated that “consumers can safely receive up to 20% hydrogen blended with natural gas, without the need to make any changes to their existing appliances,” commented Steve Fraser, Chief Executive of Cadent.
Abu Dhabi National Oil Company, British oil giant bp, and Abu Dhabi-based renewable energy company Masdar signed a strategic framework agreement. “Under the terms of the agreements, ADNOC, bp, and Masdar will seek to collaborate on UK and UAE clean hydrogen hub development at an initial scale of 1GW in the UAE and 1GW in the UK, building on the UAE’s position as an anchor investor in some of the UK’s largest offshore wind projects,” the companies said in a note.