The 21 st Century s Triad

Transcription

1 Comments on The Changing Fundamentas of Goba Gas Markets Europe as the Batteground Branko Terzic, P.E., Sc. D (h.c.) Executive Director, Deoitte Center for Energy Soutions for the Carnegie Endowment for Internationa Peace October 12, 2010 The 21 st Century s Triad Securing an adequate energy suppy at reasonabe cost (not new) Inteigenty managing energy demand to ower consumer bis (not new) Managing the greenhouse gas ( cimate change ) issue (new) 1

2 Power system overview 2 3

3 Coa, Oi, and Natura Gas Wi Remain Indispensabe ,755 Miion tons of Oi Equivaent 11,429 Miion tons of Oi Equivaent 17,721 Miion tons of Oi Equivaent 1% Oi 37% Coa 25% Gas 19% 10% 2% 6% 1% Source: IEA 2007 Word Energy Outook Coa 25% 10 % 2% 6% Oi 35% Gas 21% Renewabes 2% Biomass 10% Hydro 2% Coa 28% Nucear 5% Oi 32% Gas 22% 4 4 Range of Goba Suppy Projections Gas Biion Cubic Feet Per Day EIA Reference 452 IEA Reference 380 Historica Trend Source: NPC Survey for the Oi & Gas Study 5 5

4 Regiona Gas Suppy Outooks BASELINE Incrementa projected natura gas suppies by 2030 wi come from non-oecd Europe & Eurasia, Asia & Oceania, and the Midde East. 6 6 Comments on A. J. Meing Paper European Gas Prices/Contracting Structures for Power Generators: Long-Term Oi-Indexed Contracts v. Spot-Price Contracts Long-term, oi-indexed GSAs are suboptima for power generators In particuar for independent/competitive generators running CCGTs. Generators under LT contracts may at times be forced to purchase arge voumes of gas whie seing their power at prices that do not cover the cost of the gas (or face arge ToP penaties). 7

5 Comments cont d Long-term oi-indexed GSAs more feasibe for gas-fired generation capacity that is used to meet base-oad power demand. Liquid spot gas markets in northwestern Europe (as opposed to much of Centra and Eastern Europe) supports CCGT deveopment there. Superior characteristics of spot GSAs for power generators wi hep spot gas contracting (and thus spot gas markets) to continue to gain ground in Europe Long-term, oi-indexed GSAs wi not competey disappear from European gas markets (at east not in the foreseeabe future). 8 Comments cont d the Statoi-Poweo GSA of June 2010 may represent the way forward for CCGT deveopers in Europe Major gas producers are more ikey to remain open to increased/nove market-based GSAs with CCGT deveopers, if the producers continue to face widespread competition from secondary gas suppiers (who source and rese spot gas) in the broader European marketpace. future EU renewabe energy/carbon poicy represents a widcard with respect to future CCGT deveopment 9

6 Summary There wi be need for new firm eectricity capacity. New firm eectricity capacity must come from generation which can be dispatched i.e. traditiona fue sources: Coa. Natura gas, oi, hydro-eectric. Natura gas has advantages for eectricity production in Europe: avaiabe, deiverabe, reative ower CO2 emissions and can be priced competitivey Natura gas contract forms need to meet the dynamic demands of competitive generation. 10 Branko Terzic Office

7 About Deoitte Deoitte refers to one or more of Deoitte Touche Tohmatsu, a Swiss Verein, its member firms, and their respective subsidiaries and affiiates. As a Swiss Verein (association), neither Deoitte Touche Tohmatsu nor any of its member firms have any iabiity for each other's acts or omissions. Each of the member firms is a separate and independent ega entity operating under the names Deoitte, Deoitte & Touche, Deoitte Touche Tohmatsu, or other reated names. Services are provided by the member firms or their subsidiaries or affiiates and not by the Deoitte Touche Tohmatsu Verein. Deoitte LLP is the U.S. member firm of Deoitte Touche Tohmatsu. In the United States, services are provided by the subsidiaries of Deoitte LLP (Deoitte & Touche LLP, Deoitte Consuting LLP, Deoitte Financia Advisory Services LLP, Deoitte Tax LLP, and their subsidiaries), and not by Deoitte LLP.