Europe Energy Review November 2022

By Tsvetana Paraskova

Europe’s energy and gas supply ahead of the winter, concerns about the security of energy infrastructure in Western Europe’s biggest oil and gas producer, Norway, and renewable energy developments featured in the European energy news flow this past month.

Oil & Gas

At the beginning of October, Norway posted soldiers from its Home Guard to protect energy infrastructure as it increased security following the suspected sabotage of the Nord Stream pipelines in the Baltic Sea at the end of September. Norway has also been investigating flyover of drones close to oil and gas assets in the Norwegian Continental Shelf.

Europe and the UK continue to warn of a difficult winter ahead, which could result in rolling blackouts and gas rationing in case of a colder than usual winter and shortages of natural gas. Europe’s gas storage sites were more than 93% full as of late October, giving the market and governments some comfort about the early months of the coming winter. Another comforting sign is the influx of LNG cargoes to Europe with tankers waiting to unload at ports.

In company news

Equinor awarded contracts for six platform supply vessels to Simon Møkster Shipping AS, Island Offshore Management AS, Eidesvik AS, Remøy Shipping AS, and P/F Skansi Offshore. The contracts will take effect before the end of 2022, and have a three-year firm period and three one-year options. The vessels will support Equinor’s activities on the Norwegian Continental Shelf.

Equinor also issued a complementary assessment for the Wisting development in the Barents Sea for public consultation. The field is proposed to be powered from shore.

“The work on technical studies and detailing of plans for the development of the project will continue towards the planned investment decision at the end of 2022,” said Trond Bokn, Equinor’s senior vice president for project management control.

In Italy, authorities in the Tuscany region gave the go-ahead to the regasification site at Piombino, with works expected to begin shortly so that LNG could be used in the national gas network as soon as next April. The plan for the LNG regasification terminal has sparked controversy among local communities and the mayor of Piombino, Francesco Ferrari, said the town would appeal the decision in court.

Low Carbon Energy

The UK’s renewable industry urged the UK’s new Prime Minister Rishi Sunak to scale up on clean power.

“We need a wide range of power sources to get us to net zero as fast as possible, including floating wind, tidal energy and green hydrogen – and the UK is a world leader in all of these technologies,” RenewableUK’s Chief Executive Dan McGrail said in a statement on 24 October.

“But to seize these opportunities we’re urging Mr Sunak to reassess some of the Conservatives’ recent measures which risk undermining confidence among investors, such as the energy price cap which could skew investment towards fossil fuels. We also need to see a reform of our system of clean power auctions to increase the volume of new capacity we secure each year,” McGrail added.

“And we need a new remit for Ofgem so that it can start investing in vital new grid infrastructure ahead of time so that we can reach net zero as fast as possible”.

The Crown Estate has updated developers on the design of the tender process for seabed leasing for floating wind energy in the Celtic Sea. The Celtic Sea programme is intended to provide 4 gigawatts (GW) of renewable energy capacity by 2035. The region is assessed to have the economic potential to accommodate up to an additional 20 GW by 2045.

“The programme will not only boost the UK’s net zero ambitions and deliver enhanced energy security, but will also create new jobs, skills and investment, including in Wales and the South West of England,” The Crown Estate said on 10 October.

Scotland’s renewable energy industry and its supply chain supported more than 27,000 full time equivalent jobs and generated £5.6 billion of output in 2020, according to new figures released on 4 October.

Reporting on the latest available figures, Strathclyde University’s Fraser of Allander Institute finds that onshore wind supported the most employment across the economy, with 10,120 full time equivalent roles, followed by offshore wind with 6,735 roles and hydropower with 4,395.

Including spill-over impacts, economic activity stimulated across the wider Scottish economy, onshore wind had the largest output, generating nearly £2.5 billion, with offshore wind and hydropower both supporting more than £1.1 billion output.

“While the industry clearly plays a critical role in progress towards net-zero targets, it also provides many economic opportunities for Scotland. These opportunities include the potential for technological development, new export markets, and prosperity for rural parts of Scotland that may otherwise be economically left behind,” James Black, Fellow at the Fraser of Allander Institute at the University of Strathclyde, said.

Scotland generated 18,568 GWh of renewable electricity in the first half of 2022, up by 29% compared to the same period in 2021, government data showed. Renewable electricity capacity increased by 10.5% from June 2021 to 13.3 GW in June 2022, driven largely by new wind farms becoming operational.

The figures show that “Scotland as a renewable energy powerhouse, producing more clean, green electricity than ever before,” Nick Sharpe, Director of Communications and Strategy at Scottish Renewables, said, commenting on the government’s data.

RenewableUK published a new analysis on 25 October, which found that wind farms awarded contracts over the last 7 years by the Government would save each household nearly £250 per year, compared to the cost of generating electricity from gas at this winter’s prices.

“Our analysis shows that the faster we can grow wind energy in the UK, the more consumers will save. To do that, we need a stable framework for investment so that companies are confident they will make a return. There is a global race for renewable investment and I want the UK to be the most attractive place in the world to invest in wind so that billpayers and the wider economy benefit fully from cheap, renewable power,” RenewableUK CEO Dan McGrail said.

Solar power is the fastest way to reduce Europe's dependency on Russian gas, Europe’s largest generator of renewable energy, Statkraft, said in a report on 25 October.

Statkraft’s Low Emissions Scenario now shows that Europe will have significantly more solar power by 2030 than expected before the war in Ukraine.

The new analysis estimates an average yearly increase of solar capacity in the EU of between 45 GW and 52 GW towards 2030. This is significantly higher than the 33 GW per year analysts expected before the Russian invasion of Ukraine, and compares to a record 26 GW in 2021.

Statkraft’s analysts expect solar power to become the world's largest source of power generation around 2035.

The Danish Energy Agency said it would launch the tender for the North Sea Energy Island in the spring of 2023. North Sea Energy Island, one of the largest projects in Danish history approximately 100 km off the coast of Jutland, is planned to be an artificial island in the North Sea that will serve as a hub for offshore wind farms of initially 3 GW by 2033, aiming at 10 GW by 2040.

Equinor took in early October the final investment decision on the Blandford Road battery storage project in the south of the UK. This will be the first commercial battery storage asset for Equinor, and the first project realized from the strategic partnership between Equinor and Noriker Power.

“Our ownership position in Noriker gives us a platform to build an energy storage portfolio in the UK. We expect to sanction up to three battery storage projects in the country during the next 6-9 months. A portfolio of flexible storage assets will broaden and diversify Equinor’s energy offerings in the UK and strengthen our role as a reliable supplier of energy”, said Ingrid Fossgard-Moser, vice president for energy storage development within Renewables at Equinor.

The European Marine Energy Centre (EMEC), based in Orkney, Scotland, has concluded the concept design for a new 100 MW floating offshore wind test and demonstration site. The site will offer floating wind developers representative metocean conditions to those in ScotWind, Celtic Seas and future leasing rounds.

Wintershall Dea and its partner CapeOmega were awarded in early October a CO2 storage licence in the Norwegian North Sea by the Ministry of Petroleum and Energy. Wintershall Dea will be operator of the Luna licence 120 km west of Bergen, which is estimated to hold a CO2 storage injection capacity of up to 5 million tonnes per year.

Wintershall Dea also signed a memorandum of understanding with HES Wilhelmshaven Tank Terminal to jointly develop CO2nnectNow, a CO2 hub at HES Wilhelmshaven Tank Terminal in Germany. CO2nnectNow is expected to act as a hub for CO2 that cannot be avoided in industrial processes at German sites. From the hub, the CO2 will first be shipped, later transported via pipeline, from Germany’s only deep-water port to geological formations in the Norwegian and Danish North Sea to be permanently and safely stored.

Italian energy group Eni met in mid-October the top officials of the local authorities in Tuscany to confirm that the company is considering the opportunity to build a new bio-refinery at its industrial site in Livorno.

The president of Tuscany, Eugenio Giani, said: “I wish to express my deep appreciation for Eni’s decision to investigate the conversion of the Livorno refinery into a bio-refinery, focusing on a sustainable energy transition both in terms of the environment and the outlet market.”