Gas-to-power demand volatility is climbing to new highs in northwest Europe amidst the rapid expansion of variable renewables and the continued phase-out of coal-fired power plants. this highlights the growing role of gas-fired power plants in ensuring electricity supply security.
The northwest European power system is undergoing a profound transformation: wind power output more than doubled since 2016, while coal-based generation declined by two-thirds amidst the gradual closure of coal-fired power plants in the region.
In this context, gas-fired power plants play an increasingly important role in complementing variable renewables and ensuring electricity supply security during peak demand and/or low renewable power supply.
The flexibility services provided by gas-fired power plants is naturally increasing the volatility of gas-to-power demand and consequently the short-term variability of gas prices.
While gas-fired power generation dropped by almost 30% since 2017, the volatility of gas-to-power demand increased by almost 60% during the same period. this trend is set to continue over the medium-term amidst the rapid expansion of renewables and the coal phase-out by 2030 is most northwest European markets.
This raises a number of questions on the investments required across the gas value chain: while gas demand expected to decline in northwest Europe, the range of its short-term variability is set to increase. this is set to drive the value proposition of gas flex providers, such as salt caverns, LNG peak-shavers and linepack management. there is also a question whether only flex services should be remunerated or there is a case to remunerate also the capacity…
Source: Greg Molnar (LinkedIn)
Online platform for sharing analysis and information on Global and regional LNG markets. Weekly newsletter each Wednesday more info
Sign up to receive our weekly newsletter with new LNG market reports, presentations & analysis. Every Wednesday!
By signing up, I agree to our TOS and Privacy Policy.
© 2020 GlobalLngHub | All Rights Reserved
