Coronavirus’ effect on the energy sector
As offices, schools and other establishments close in an effort to contain the virus, some people are concerned about the stability of the grid.
Yet, aside from adjusting to the new conditions of working from home, Professor Phil Hart, Director of Energy and Power at Cranfield University, wants to assure the public that our present energy system shouldn’t meet any additional challenges.
“Our power transmission and distribution systems are extremely robust and over recent years energy efficiency measures means our overall power consumption as a country has reduced,” he said.
In fact, he claims, the disruption, far from straining the availability of energy, may actually free it up. Mitsubishi Electric estimates that as much as 20TWh of the UK’s electricity consumption is spent on air conditioning (10% of the total), including in offices.
Additionally, because fewer people are commuting using petrol/diesel vehicles and industry has slowed down, the virus’ effect has actually reduced CO2 levels worldwide - China alone has reportedly reduced emissions by 25%.
Meeting the demand for energy
Professor Hart believes that meeting the consumer demand for energy should be able to continue unabated - only an unlikely scenario, such as all energy workers being incapacitated simultaneously, could disrupt power stations.
“The advent and scale of renewables in our supply system is helpful here as the size of renewable plants is generally much smaller, and the national power system will be better able to handle withdrawal of multiple smaller sites,” he explained.
With regard to oil and gas supplies, Hart considers the recent pricing war, which has seen prices drop by 26%, to be indicative of an abundance of supply rather than a shortage.
This opinion is verified by a recent article by National Geographic, which contends that supply is so profuse that production has to be restricted in order to avoid the current US$30 for a 42-gallon (159-litre) barrel price from plummeting.
In any case, biomass and coal-fired power stations should be able to continue without foreseeable restrictions.
“I feel sure that major producers such as DRAX have contingency plans in place to ensure maintenance of their base load plant is kept up to date, so the overall risk of any issues with power supply is really quite small currently,” said Hart.
The effect on smaller companies
Whilst larger companies might have the resources to weather the financial storm, smaller energy providers may become concerned about their prospects. However, Hart is again sceptical that current levels of disruption would have a significant impact.
“Whilst there may be variations in daily use profile, changes in power flows through the grid, or modest reductions in power use potentially, none of these should be meaningful to the overall commercial supply and demand outcome.
“The only exception to this is if we see major users like industrial, manufacturing or chemical works shutting down, reducing the demand significantly,” he clarifies.
So far, there have been closures of car manufacturing plants in the US and UK, but no significant slow down for other crucial industrial and manufacturing sectors (chemicals, food processing, etc). Although this situation could change, so far, there is no cause for alarm.
Trafigura and Yara International explore clean ammonia usage
Reducing shipping emissions is a vital component of the fight against global climate change, yet Greenhouse Gas emissions from the global maritime sector are increasing - and at odds with the IMO's strategy to cut absolute emissions by at least 50% by 2050.
How more than 70,000 ships can decrease their reliance on carbon-based sources is one of transport's most pressing decarbonisation challenges.
Yara and Trafigura intend to collaborate on initiatives that will establish themselves in the clean ammonia value chain. Under the MoU announced today, Trafigura and Yara intend to work together in the following areas:
- The supply of clean ammonia by Yara to Trafigura Group companies
- Exploration of joint R&D initiatives for clean ammonia application as a marine fuel
- Development of new clean ammonia assets including marine fuel infrastructure and market opportunities
Magnus Krogh Ankarstrand, President of Yara Clean Ammonia, said the agreement is a good example of cross-industry collaboration to develop and promote zero-emission fuel in the form of clean ammonia for the shipping industry. "Building clean ammonia value chains is critical to facilitate the transition to zero emission fuels by enabling the hydrogen economy – not least within trade and distribution where both Yara and Trafigura have leading capabilities. Demand and supply of clean ammonia need to be developed in tandem," he said.
There is a growing consensus that hydrogen-based fuels will ultimately be the shipping fuels of the future, but clear and comprehensive regulation is essential, according to Jose Maria Larocca, Executive Director and Co-Head of Oil Trading for Trafigura.
Ammonia has a number of properties that require "further investigation," according to Wartsila. "It ignites and burns poorly compared to other fuels and is toxic and corrosive, making safe handling and storage important. Burning ammonia could also lead to higher NOx emissions unless controlled either by aftertreatment or by optimising the combustion process," it notes.
Trafigura has co-sponsored the R&D of MAN Energy Solutions’ ammonia-fuelled engine for maritime vessels, has performed in-depth studies of transport fuels with reduced greenhouse gas emissions, and has published a white paper on the need for a global carbon levy for shipping fuels to be introduced by International Maritime Organization.
Oslo-based Yara produces roughly 8.5 million tonnes of ammonia annually and employs a fleet of 11 ammonia carriers, including 5 fully owned ships, and owns 18 marine ammonia terminals with 580 kt of storage capacity – enabling it to produce and deliver ammonia across the globe.
It recently established a new clean ammonia unit to capture growth opportunities in emission-free fuel for shipping and power, carbon-free fertilizer and ammonia for industrial applications.