Algorithmic trading is increasingly a mainstay of European electricity and natural gas trade as major players seek to stay on top of fast-moving, volatile markets.So-called algos, which make hundreds if not thousands of trades a day, are widely used to balance renewable energy portfolios and bring more liquidity to the market.But traders have blamed the automated process for exacerbating volatility during last year's energy crisis, when electricity and gas prices exploded due to tight supplies and regulatory uncertainty. In this episode S&P Global Commodity Insights' Kira Savcenko shares fragments of her conversation about this phenomenon with Jürgen Mayerhofer, CEO of algorithmic trader Enspired, and discusses further with Henry Edwardes-Evans, managing editor of S&P Global Commodity Insights' Power in Europe newsletter.Related price assessments: UK Day-ahead Baseload Power price: AADET00 UK Day-ahead Peakload Power price: AADFC00 UK Block 5 Power price: GTB5G00More listening options:
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Prices are closer to lower, volatility has reduced and inter-product price spreads have come in, so are we seeing gas and LNG markets revert to normality? What are the factors that have calmed markets, and is this new-found tranquillity likely to be sustained?In this Commodities Focus podcast episode, S&P Global Commodity Insights experts Kenneth Foo, Allen Reed and Stuart Elliott discuss these topics with global director for LNG Ciaran Roe.Related price assessments: AAOVQ00 - LNG Japan/Korea DES Spot Crg AASXU00 - LNG NWE DES $/MMBtu GTFWM10 - Dutch TTF 1-Mo $/MMBtuMore listening options:
Russia's invasion of Ukraine triggered major supply risks and wide-ranging sanctions that have dramatically changed global oil and gas markets. In a year of price volatility, supply concerns and increasingly harsh sanctions, Russia has accelerated its pivot to Asian markets. As we enter a second year of the conflict, the risk of major security incidents, a decline in Russian production, and even tougher sanctions hangs over global markets. In this episode of the Commodities Focus podcast S&P Global Commodity Insights experts Paul Sheldon, Stuart Elliott and Sambit Mohanty discuss the impact of the war with managing editor for Russia commodities and energy news Rosemary Griffin.Related price assessments: GTFWM10 - Dutch TTF 1-Mo PCAAS00 – Dated Brent AAWVH00 – Urals FOB Primorsk AAWVI00 – Urals Primorsk v Med Dtd StripMore listening options:All our infographics on the topic: Sanctions on Russian commodities tracker Russian invasion of Ukraine impact on OPEC+ economics Is Russia's weaponization of energy failing? G7 price cap hangs over Russian oil flows
The Federal Energy Regulatory Commission is starting the new year with a 2-2 partisan split after former Chairman Richard Glick was forced to bid adieu to the agency after his renomination stalled out. The divide could complicate action on some of the thornier issues before the agency, and there is a risk of 2-2 deadlocked votes that could stall project authorizations.S&P Global senior editor Maya Weber joined the podcast to break down what's happening at FERC and what its agenda could mean for natural gas producers and other stakeholders. She also shed light on climate actions being pursued by the Biden administration that could impact the gas sector and provided some clarity on whether President Joe Biden is really trying to ban gas stoves.Stick around after the interview for Chris van Moessner with the Market Minute, a look at near-term oil market drivers.Related content: New FERC chair sets sights on reliability, transmission, environmental justice (premium content)White House guidance on GHGs could add to friction for natural gas projects (premium content)Biden to tap Phillips to head US FERC until permanent chair is confirmed: WH officialMore listening options:
Infographic: Developing economies hit hardest by EU’s carbon border tax
Feb 24 2023
The EU’s Carbon Border Adjustment Mechanism is set to have far-reaching impacts on world trade and the wider energy transition. Phasing in from 2026, CBAM will levy a carbon tax on imports of selected energy intensive materials and products into the EU, removing the gap between the EU’s ETS carbon price and the export country of origin’s carbon price. Analysis by S&P Global Commodity Insights shows Canada, Brazil, South Africa and Turkey will be most exposed to the mechanism, with iron and steel by far the biggest sector targeted. Click to see the full-size infographic Related Insight Blog entry: CBAM, ETS reform to impact fertilizer trade Related podcast: How will the EU's Carbon Border Adjustment Mechanism affect global trade and carbon pricing? More listening options:
How will the EU's Carbon Border Adjustment Mechanism affect global trade and carbon pricing?
Feb 21 2023
The European Union’s implementation of a Carbon Border Adjustment Mechanism (CBAM) to support its industry’s efforts to decarbonize and prevent carbon leakage is likely to have far-reaching effects on global trade and the wider energy transition. S&P Global Commodity Insights' experts Eklavya Gupte, Coralie Laurencin, Michael Evans and Paula VanLaningham take a deep dive on CBAM, examining its potential impact on a range of industries, political alliances and its influence on carbon pricing and regulation. NOTE: CBAM CO2 emissions data referenced in this podcast relate to emissions modelling totals between 2026-2040. Click here to access prices, news and analytics relating to carbon markets on Platts Dimensions Pro More listening options: No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P).
Feb 17 2023
The Freeport LNG terminal in Texas started exporting LNG cargoes in mid-February for the first time since a fire and explosion in June 2022 forced a shutdown of the facility, marking a milestone in the history of US LNG. In the global LNG market, the Freeport outage initially exacerbated supply shortages that sent sky-high spot prices even higher. In the US, the shutdown took the lid off a really hot domestic gas market, as a key source of domestic demand went offline. But global LNG and US gas market dynamics have changed dramatically in the eight months since Freeport went offline. In this episode, S&P Global Commodity Insights LNG experts Harry Weber and Corey Paul discuss these issues as Freeport returns, as well as LNG market fundamentals more broadly in the Atlantic. Also listen: Have LNG and gas markets returned to normality in 2023? Register for CERAWeek by S&P Global here More listening options: No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P).
Platts launches European LNG, Natural Gas differential assessments
Feb 15 2023
Platts, part of S&P Global Commodity Insights, has launched new LNG assessments, including one for the spread between European TTF and LNG prices, effective Feb. 15, 2023. This follows the increased market interest to understand the prevailing price difference between LNG and European gas prices in Eur/MWh recent legislative announcements in the European Union. The new assessments include: The price of front-month JKM (AAOVQ00) in Eur/MWh. The price difference between month-ahead Dutch TTF (GTFTM01) and the average of Platts DES NWE (LNNTA00), Platts DES MED (LNMTA00) and Platts JKM in Eur/MWh. A rolling three-day average of the aforementioned spread between Dutch TTF and global LNG. The price difference between the front-month Dutch TTF in $/MMBtu (GTFWM10) and the equivalent month of NWE assessments. For example, from the 1st to the 15th of the calendar month, this would consider Platts NWE (AASXU00) minus Platts Dutch TTF M1 (GTFWM10); for the 16th to the end of the month this would look at Platts NWE (H2 [LNNDA00] + H3 [AASXV00] / 2) minus Platts Dutch TTF M1 (GTFWM10). The price difference between the front-month Dutch TTF in $/MMBtu (GTFWM10) and the equivalent time month of Platts MED LNG assessments. For example, from the 1st to the 15th of the calendar month, this would look at Platts MED (AASXY00) minus Platts Dutch TTF M1 (GTFWM10); for the 16th to the end of the month this would look at Platts MED (H2 [LNMDA00] + H3 [AASXZ00] / 2) minus Platts Dutch TTF M1 (GTFWM10). Platts decided to launch the assessments on Jan. 17 in a subscriber note available here: https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/011723-platts-to-launch-european-lng-natural-gas-differential-assessments , following a proposal on Dec. 20, in a subscriber note available here: https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/122022-platts-proposes-european-lng-natural-gas-differential-assessments . Full details of the existing Platts DES NWE LNG assessments can be found in the Global LNG Specifications Guide: https://www.spglobal.com/commodityinsights/PlattsContent/_assets/_files/en/our-methodology/methodology-specifications/global_lng.pdf . Please send all feedback, comments and questions to email@example.com and firstname.lastname@example.org. For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing. Platts will consider all comments received and will make comments not marked as confidential available upon request.
What’s transmission without a little competition? A drain on your wallet, coalition says
Feb 13 2023
Accommodating the growth of renewable energy needed to meet ambitious climate goals will require the US to expand the power grid. And according to Princeton researchers, those grid investments could cost upwards of $2 trillion if the US is to achieve net-zero emissions by 2050. So who’s going to foot that bill? Well, ultimately, it’s electricity consumers that pay for new transmission, and federal policies in play right now could have a big impact on the final price tag of grid expansion. The Electricity Transmission Competition Coalition has argued that if the US wants to meet its climate goals and lower the price of energy, the Federal Energy Regulatory Commission cannot abandon transmission competition, which the group contends can reduce the cost of grid projects by as much as 40%. The coalition’s chairman, Paul Cicio , joined S&P Global Commodity Insights senior editor Kate Winston on the podcast to discuss why competition matters and what changes the group is seeking to a FERC proposal on the topic. Stick around after the interview for Jeff Mower with the Market Minute, a look at near-term oil market drivers. Related content: Bill to bar power transmission competition in Mississippi draws criticism (premium content) Transmission owners, consumers spar over changes to FERC's competition rules (premium content) FERC's transmission planning, cost allocation proposal elevates state regulators (premium content) More listening options: No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P).
Infographic: European governments look to end EV subsidy programs after strong 2022
Jan 31 2023
Electric vehicle sales in Europe's largest passenger car markets increased to record highs in 2022, boosted by government incentives, although a number of countries will likely see subsidies for EVs being reduced or eliminated in 2023, which could have some downside risk. The reduction in subsidies comes at a time when battery metal prices are strong, with lithium prices ending 2022 more than double where they were at the start of the year, boosted in part by the increased global EV demand. Click here to see the full-size infographic Learn more: Latest Insight Blog entry: EV sales momentum to face challenges in 2023, but long-term expectations unaffected . And in the latest Platts Future Energy podcast , we uncovered the potential roadblocks facing the EV market in 2023. From lithium prices to government subsidies, learn how these factors may impact EV sales and the battery metals market:
Does offshore wind have the right stuff to make it as the new kid on the block?
Jan 30 2023
The US has dozens of offshore wind projects in the pipeline as the Biden administration has set its sights on deploying 30 GW of offshore wind by 2030 and 110 GW by 2050. And 11 coastal states have already set procurement targets that exceed 50 GW through 2035 and surpass 75 GW by 2045. But if the industry wants to build the up to 200 GW of capacity necessary to decarbonize power grids and become a staple in federal waters like the oil and gas sector, early and frequent planning must be a priority. What’s more, a new report from The Brattle Group -- commissioned by the American Council on Renewable Energy, known as ACORE, and other clean energy advocacy groups – found that proactive transmission planning over the next several decades could save at least $20 billion in transmission costs associated with reaching the country’s offshore wind goals. S&P Global Commodity Insights power news editor Kassia Micek spoke with José Zayas , ACORE’s executive vice president of policy and programs, about the state of the US offshore wind market, steps needed to achieve development goals, and where the wind, oil and shipping industries link up. Stick around after the interview for Starr Spencer with the Market Minute, a look at near-term oil market drivers. Related content: Offshore wind report urges immediate action to reduce costs, barriers to achieve clean energy goals (premium content) First West Coast offshore wind power lease auction earns $757.1 million in high bids DOE lab outlines path to triple Biden's offshore wind goal by 2050 More listening options: No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P).
Infographic: European energy crisis intervention tracker
Jan 23 2023
The EU's new gas market correction mechanism could impact financial and energy markets in future, European regulators said Jan. 23. Energy ministers agreed the mechanism in December – the latest in a string of market interventions aimed at limiting the damage of unsustainable wholesale energy costs. This infographic captures the major decisions taken so far. Click to see the full size (latest update January 2023)
LNG seeing boost as competitive US bunker fuel as Atlantic cargo prices fall
Jan 18 2023
LNG is seeing a competitive boost as a US bunker fuel, as FOB prices have dropped sharply from record highs and spot marine fuel has trended higher. Shipowners are increasingly evaluating shifting economics and environmental considerations. Some market participants see the ability to offer a Henry Hub-linked price as a unique advantage for LNG producers in the US, whether for small-scale or large-scale exports or for use as a bunker fuel. LNG bunker prices in Europe also are seeing additional attention. In recent months, an Italian strategy group was heard to have met with market participants trying to get intelligence about LNG bunkering opportunities in the Mediterranean; they were said to be scouting locations around Poland and Turkey. "The world has been shifting to alternative fuels," said an Atlantic-based LNG trader. "We may see a switch to gas if it keeps coming down." US SE Coast LNG bunkers were assessed at $15.174/MMBtu Jan. 18, or 115% Henry Hub plus $11.25/MMBtu for volumes of 3,000-5,000 cu m. That was slightly cheaper than the latest bulk 0.5%S marine fuel barge value at 1630 London time, which was $15.249/MMBtu, or $589.25/mt. On an equivalent basis, at the same time, USGC HSFO, with the highest sulfur content of the three fuels, was the least expensive, at $9.616/MMBtu. The Platts Gulf Coast Marker for US FOB cargoes loading 30-60 days forward was assessed at $15.35/MMBtu Jan. 18, down nearly 80% from the record-high $73.35/MMBtu Aug. 26, 2022. LNG supplies have flooded the Atlantic in recent months, amid Europe's efforts to build gas inventories while at the same time reducing its reliance on Russian supplies. Europe entered the winter with gas storage more than 90% full. Relatively mild weather since then has kept gas stocks high. Meanwhile, spot marine fuel bunkers pricing has generally trended higher for US Gulf Coast ports in 2023, with assessments tracking recent rebounds for crude futures. Additionally, markets are seeing tight supply and logistical challenges related to fog, further propping up values in recent days. Bulk 0.5%S marine fuel barge value has risen from a Dec. 30 assessment of $567.25/mt, with some sentiment pointing to strong demand from the retail bunkers segment in the US Gulf Coast. On that front, Houston spot 0.5%S bunkers pricing has risen from $580/mt ex-wharf Dec. 30 to its most recent assessment of $618/mt ex-wharf Jan. 17. The New Orleans market, which competes with Houston for retail bunker stems, has seen retail 0.5%S bunkers value jump from $570/mt to end 2022 to its most recent close at $690/mt ex-wharf—a three-month high. "No barrels, resupply uncertain," a source said recently of New Orleans' rising prices. "Suppliers are struggling to find resupply barrels." The situation has seen each of the key USGC ports prop up the other at times on retail values, as ships will generally consider both for refueling operations despite Houston typically carrying a discount to New Orleans. "There are no avails, or won't be soon," a second source said of Houston. "Product is tight, and resupply has gone up in price considerably." That retail spread has been inverted at times in January, but more recently tight supply had led to New Orleans seeing its premium widen over Houston.
Platts to launch European LNG, Natural Gas differential assessments
Jan 17 2023
Platts, part of S&P Global Commodity Insights, will launch new LNG assessments, including one for the spread between European TTF and LNG prices, with effect from Feb. 15, 2023. This follows the increased market interest in understanding the prevailing price difference between LNG and European gas prices in Eur/MWh after recent legislative announcements in the European Union. The new assessments will include: The price of front-month Platts JKM (AAOVQ00) in Eur/MWh. The price difference between month-ahead Dutch TTF (GTFTM01) and the average of Platts DES NWE (LNNTA00), Platts DES MED (LNMTA00) and Platts JKM in Eur/MWh. A rolling three-day average of the aforementioned spread between Dutch TTF and global LNG. The price difference between the front-month Dutch TTF in $/MMBtu (GTFWM10) and the equivalent month of NWE assessments. For example, from the 1st to the 15th of the calendar month, this would consider Platts NWE (AASXU00) minus Platts Dutch TTF M1 (GTFWM10); for the 16th to the end of the month this would look at Platts NWE (H2 [LNNDA00] + H3 [AASXV00] / 2) minus Platts Dutch TTF M1 (GTFWM10). The price difference between the front-month Dutch TTF in $/MMBtu (GTFWM10) and the equivalent time month of Platts MED LNG assessments. For example, from the 1st to the 15th of the calendar month, this would look at Platts MED (AASXY00) minus Platts Dutch TTF M1 (GTFWM10); for the 16th to the end of the month this would look at Platts MED (H2 [LNMDA00] + H3 [AASXZ00] / 2) minus Platts Dutch TTF M1 (GTFWM10). This decision follows a proposal note published Dec. 20, 2022, available here: https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/122022-platts-proposes-european-lng-natural-gas-differential-assessments Full details of the existing Platts DES NWE LNG assessments can be found in the Global LNG Specifications Guide: https://www.spglobal.com/commodityinsights/PlattsContent/_assets/_files/en/our-methodology/methodology-specifications/global_lng.pdf. Please send all feedback, comments and questions to email@example.com and firstname.lastname@example.org by February 15, 2023. For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing. Platts will consider all comments received and will make comments not marked as confidential available upon request.
Market Movers Europe, Jan. 16-20: Rising oil prices and overflowing gas storage point to major energy shift
Jan 16 2023
In this week's Market Movers Europe with Charlie Wright: Global recovery hopes, Europe still subdued High storage relief for European gas market EC’s market design proposals imminent View Full Transcript Video Transcript The
Norwegian gas supplies to Europe, UK hit 11-month high in December
Jan 10 2023
Norwegian pipeline gas exports to continental Europe and the UK rose to an 11-month high in December, with flows second only to deliveries in January in 2022, an analysis of data from S&P Global Commodity Insights showed Jan. 10. Norwegian gas deliveries totaled 9.99 Bcm in December, up by 8% on the month, although supplies were 4% lower than in December 2021 when exports hit a multi-year high at 10.35 Bcm as European gas prices surged. Norway has pledged to do as much as it can to boost gas deliveries to Europe to help counter record high gas prices triggered by the war in Ukraine and much lower Russian supplies. For 2022 as a whole, Norwegian pipeline exports totaled 113 Bcm, up by almost 4.5 Bcm year on year, the data showed, with Norway now Europe's biggest single gas supply source. On Jan. 9, the Norwegian Petroleum Directorate said gas production last year -- which also includes gas from the Snohvit field that is fed into the Hammerfest LNG plant and gas used domestically -- totaled 122 Bcm. The NPD said production was set to remain flat in 2023 and hit a new peak of 122.5 Bcm in 2025. Norwegian gas producers were incentivized to maximize exports through 2022 on the back of record European gas prices. Platts, part of S&P Global Commodity Insights, assessed the benchmark Dutch TTF month-ahead price at an all-time high of Eur319.98/MWh on Aug. 26. Prices have weakened since amid healthy storage levels and demand curtailments but remain relatively high with Platts assessing the TTF month-ahead price on Jan. 9 at Eur74.75/MWh. The NPD said Norway continued to enjoy a "high degree" of operational stability, and there was limited unplanned maintenance on Norwegian gas assets in December other than short-lived outages at the Aasta Hansteen and Oseberg fields. Baltic Pipe flows Norwegian piped gas flows have traditionally landed at terminals in the UK, Belgium, France, the Netherlands and Germany. However, since the start of November gas has also been entering the Danish grid at Nybro as part of the 10 Bcm/year Baltic Pipe project to Poland, which reached its full design capacity on Nov. 30. According to S&P Global data, a total of 0.46 Bcm flowed into Nybro in December, or an average of 15 million cu m/d. Baltic Pipe began commercial operations on Oct. 1, but gas initially flowed to Poland only from Europe via Denmark, while commissioning work at Nybro continued. Poland's PGNiG has reserved more than 80% of Baltic Pipe's capacity and has contracted imports of up to 6.5 Bcm in 2023 and up to 7.7 Bcm in 2024. Flows in Baltic Pipe take from Norwegian gas exports to the other landed terminals, with diversions away from France especially notable in December. The French energy regulator on Dec. 14 called for changes to the country's gas congestion management mechanisms after lower imports from Norway led to gas deficits in northern France. The CRE said it was necessary to modify the congestion management mechanisms in two stages -- one for immediate implementation and a second for the longer term. Gas flows from Norway to France via the Franpipe to Dunkirk fell sharply in early December, likely as a result of Norwegian operators diverting gas to other higher-priced European markets. "This situation has triggered a gas deficit in northern France and a surplus in the south, which is well supplied with LNG and pipeline gas from Spain," the CRE said. For most of November, Norwegian gas exports to France via Franpipe averaged close to 50 million cu m/d, according to data from S&P Global. However, flows fell sharply last month to as low as 14 million cu m/d, averaging just 24 million cu m/d over Nov. 29-Dec. 13, the data showed. The regulator said the sudden decrease in flows to France was "probably explained" by an increase in Norwegian gas exports to the UK and Denmark. The situation appeared to have largely resolved itself later in December, however, with imports from Norway back up to an average of 42 million cu m/d from Dec. 18 until Jan. 8, 2023. German, UK highs Meanwhile, Norwegian deliveries to Germany remain at historic highs as it looks to replace lost Russian gas. In December supply to Germany totaled 3.83 Bcm, the third highest volume in 2022 after deliveries in October and November. Gas from Norway helped Germany -- which has the biggest gas storage capacity in the EU -- to fill its gas storage sites to 100% of capacity in November. Supplies to the UK also remained robust in December at 2.73 Bcm, but the Netherlands saw its Norwegian imports stay low at just 0.64 Bcm after it began importing more LNG into a new terminal at Eemshaven in September.
Platts launches LNG-based Brazil inland natural gas assessments
Jan 09 2023
Platts, part of S&P Global Commodity Insights, is now publishing daily LNG-based natural gas assessments reflecting the value of natural gas delivered inland to end-users in the northeast and southeast of Brazil, effective Jan. 9. This follows market feedback on a need for additional transparency around Brazil delivered natural gas prices as the market continues to liberalize, especially considering new infrastructure that is being built in Brazil and to service gas shipments to the country. Platts first proposed these new assessments in a subscriber note published Sept. 20: https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/092022-platts-proposes-to-launch-lng-based-brazil-inland-natural-gas-assessments-jan-9-2023. Platts has launched three assessments: one for gas delivered to end-users in the northeast, one in the southeast and one that is the average of both regions. For the northeast netforward assessment, Platts is using the daily Platts DES Brazil LNG assessment (LEBMH01) as the basis for LNG delivered to Salvador, Bahia. For the southeast netforward assessment, Platts is using the daily Platts DES Brazil LNG assessment, but accounting for the additional shipping days needed for arrival to Rio de Janeiro from common LNG supply ports. Inputs once onshore include regasification, port fees, storage, pipeline transportation and average estimated distribution costs based on market intelligence. Inland shipping-related costs are included, while non-shipping related taxes are excluded. The assessments are being published on a fixed price basis in $/MMBtu and reflect market value at 4:30 pm London time. Platts is also publishing these assessments as a differential to Platts JKM. These assessments follow the UK publishing schedule. The calculations will be reviewed periodically to ensure the inputs reflect prevailing market dynamics. The calculations will be reviewed at least once annually, and more frequently based on market intelligence. The assessments will appear in Platts LNG Alert page 1100, Platts Natural Gas Alert page 1100, and Platts LNG Daily under the following price database codes: Assessment Codes Brazil Inland Gas Derived from LNG Cost Northeast $/MMBtu ABINA00 Brazil Inland Gas Derived from LNG Cost Southeast $/MMBtu ABINB00 Brazil Inland Gas Derived from LNG Cost Average $/MMBtu ABINC00 Brazil Inland Gas Derived from LNG Cost Northeast vs JKM $/MMBtu ABIND00 Brazil Inland Gas Derived from LNG Cost Southeast vs JKM $/MMBtu ABINE00 Brazil Inland Gas Derived from LNG Cost Average vs JKM $/MMBtu ABINF00 Please send all feedback, comments and questions to email@example.com and firstname.lastname@example.org. For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing. Platts will consider all comments received and will make comments not marked as confidential available upon request.
Market Movers Europe, Jan. 9-13: Germany's floating LNG terminals begin commissioning; oil demand concerns linger
Jan 09 2023
In this week's Market Movers Europe with Nikolaos Aidinis – Antonopoulos: Demand worries dominate in oil Germany begins commissioning tests at LNG terminals Mild, windy weather subdues energy prices Carbon auctions set to resume
Opportunity for battery storage 'as big as it has ever been' in Europe
Dec 30 2022
Battery storage players in Europe are experiencing both the best of times and the worst of times. The ongoing volatility in the European power market makes the case for grid-scale batteries like never before, but persistent supply constraints and the sky-high cost of key materials — including lithium — continue to paint a challenging picture for project development. Batteries have become "incredibly profitable" in the volatile power price environment, according to Sam Wilkinson, director of clean technology and renewables at S&P Global Commodity Insights. In particular, operators involved in wholesale arbitrage, charging up when prices are low and dispatching when prices are high, have likely enjoyed a bumper year as market prices soared to record highs. These catalysts for batteries look set to continue thanks to long-term policy signals such as the European Union's REPowerEU strategy, which plans to end Russian gas imports and accelerate the bloc's energy transition. The strategy sets higher capacity ambitions for wind and solar projects of 510 GW and 600 GW, respectively. "The levels of renewables they're talking about requires an amount of storage way beyond what we've currently got," Wilkinson said in an interview. Commodity Insights' latest forecast for 2030 energy storage installations in Europe, encompassing both EU nations and non-EU members, stands at 44.6 GW, nearly double its previous estimate of 23.7 GW that it made in February. While this cannot be directly attributed to REPowerEU, it is still the largest single forecast increase the group has ever made. "Really we see exponential growth over the next 10 to 15 years in energy storage," said Peter Kavanagh, CEO of UK-based Harmony Energy Ltd, which brought online Europe's largest battery storage project in November – the 98 MW/196 MWh Pillswood project near Hull, Yorkshire. "The more onshore wind, offshore wind and solar you have on the system, the more intermittency," Kavanagh said in an interview, adding that batteries are needed to "really make the network efficient." Competing with EVs Yet while the battery storage opportunity in Europe might be greater than ever, there has arguably also never been a more challenging environment for developers. Heightened need for lithium-ion batteries by electric vehicle manufacturers is causing supply shortages in the storage market, which compared with EVs accounts for only a fraction of the overall demand for batteries. The project pipelines of the 10 largest energy storage providers equate in total to about 10% of automaker Volkswagen AG's battery procurement plans in the next three years, according to Wilkinson. "Their purchasing power is almost zero in comparison with the automotive companies," Wilkinson said. "It makes it very difficult for them to procure batteries." These supply constraints, combined with the rising cost of raw materials such as lithium, are putting huge pressure on the price of batteries. Platts assessed the price of lithium carbonate (CIF North Asia) at $75,000/mt Dec. 30, up 122% year on year, S&P Global data showed. "The big challenge is . . . the car industry doesn't really care too much about being exposed to lithium prices," Wilkinson said. Consumers buy cars at a given point in time, whereas energy storage projects have longer development time frames, which mean dramatic changes in cost can be a "huge problem" in raising financing. UK growing fast Commodity Insights' latest forecast puts the UK as Europe's largest market for grid-scale energy storage by 2030, with 12.5 GW of capacity, followed by Germany with 8.1 GW and Spain with 5.1 GW. The group's February outlook for the UK was 6.5 GW. Part of the UK's leadership on battery storage is down to it being an early mover. In 2016, National Grid PLC provided four-year, enhanced frequency response contracts to eight projects totaling 201 MW — more than double what was installed in the whole of Europe at that point. "The market's evolved quite a lot since then," Kavanagh said. In particular, the narrative that batteries need long-term contracted revenues has almost entirely disappeared. Harmony Energy's battery portfolio provides eight different services to the system, from arbitrage to frequency response and ancillary services. More fundamentally, operators also see an opportunity for batteries to complement the UK's push for offshore wind, which is targeted to grow to 50 GW by 2030. Batteries are "like an insurance policy or a shock absorber," according to James Basden, founder director of developer Zenobe Energy Ltd. When there's a sudden surge of offshore wind, instead of grid companies having to pay to curtail wind farms, excess electricity is stored by batteries then discharged when demand picks up. "That has a big benefit in terms of savings to the consumer," Basden said in an interview. Zenobe recently began the construction of three batteries in Scotland, totaling 1 GW/2 GWh, which the company said will lower consumer bills by more than £1 billion over 15 years by reducing the curtailment of wind farms. Meanwhile proponents say batteries should also come into their own on cold days when the wind does not blow and could get compensated handsomely. On Dec. 12, as temperatures in the UK plummeted, two coal-fired power plants nearly returned to operation while a gas plant briefly earned a record GBP6,000/MWh in the balancing mechanism, the market used by National Grid Electricity System Operator Ltd. to balance supply and demand in Britain. "It really is a super challenging time for [battery storage]," Wilkinson said, "but the overall opportunity is as big as it has ever been."