EU gas power sector look to summit for change of fortune

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The beleaguered European gas-fired power sector is hoping legislation to be announced later this month and beyond will help arrest a serious decline in fortunes that has threatened the very survival of the industry.

Delegates and speakers at the International Gas Turbine Conference in Brussels on Tuesday spoke of how inaction at European level would see the industry’s decline continue unabated.
International Gas Turbine Conference
There were also concerns about potential future blackouts for the bloc unless legislation was provided for appropriate remuneration for plant owners who themselves expressed dismay at the ongoing challenge of motivating workforces in under-utilised plants.

Rodrigo Pinto Scholtback, Senior Gas Market Analyst with the International Energy Agency told the gathering that the 23rd and 24th October EU summit in Brussels will be critical for the gas industry’s future.

“At the end of 2014 it’s estimated that 30 GW of gas-fired plant will have closed with that rising to 40 GW being mothballed by the end of 2015. The decline in production is also a big issue, the change in the Netherlands policy due to recent earthquakes also a factor."

Scholtback said the substitution of coal by gas due to cheap shale gas and the new Clean Power Act in the US means the deterioration of the EU power market looks set to continue until 2020.

Mechtild Worsdorfer –Director for Energy Policy at the European Commission played down Europe’s continued dependency on energy imports saying that what made it a current concern is the instability of one supplier.

She told the audience attending the International Energy Policy and Market Outlook towards 2030 session outgoing EU Energy Commissioner Gunther Oettinger had been asked by EU President Jose Manuel Barroso to come up with a winter package deal before the 23rd of October EU summit.

“There is anticipation that whatever happens the Commission will come out with preparations for stress tests to prepare for worst case scenarios. One scenario is no gas from Russia to Ukraine and a 2nd case is no gas from Russia to the EU. A report is being prepared on the potential outcomes of these scenarios and those results are to be presented with policy recommendations by Mr Oettinger.”

Worsdorfer also questioned the idea that the self-sufficiency of the bloc would be a panacea for all its energy ills and its ailing gas sector.

“Some say self-sufficiency is the answer? Is it really so attractive to be self-sufficient? Why have all those trade agreements in that case – why is the EU negotiating free trade agreement with the US, Canada, why have the WTO? Can you always trust your own resources?"

In her presentation, Building a sustainable energy systemhow to keep it simple and flexible
Beate Raabe, Secretary General Eurogas, told her audience that without clarity on the policy front, the fortunes of the gas power industry would continue to ebb away.

“If council doesn’t come to agreement the renewables and coal-dominant trend will continue – if nothing changes the lack of physical interconnection will also continue to hinder the electricity market – without clear policy the energy system will decline further."

With an eye on the summit taking place next week, Raabe urged Europe to see the value of gas-fired power.

“A word of caution. Don’t declare war on fossil fuels and reduce consumer choices and avenues for development – if clear rules are set in place for fossil fuels they can bring a significant contribution."

"If you drive out gas you will limit resources, there will be less resilience, less flexibility, higher prices and lower competitiveness. Set the rules and environmental rules right and let the market decide.”

 



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