New York, NY (PRWEB) January 09, 2013
NYC-based PIRA Energy Group reports that research suggests that European wind turbines may have a shorter economic life than expected. In the U.S., coal prices were mixed month-on-month, while international coal prices fell week-on-week. Specifically, PIRA’s analysis of electricity and coal market fundamentals has revealed the following:
European Electricity Markets
*Onshore Wind Turbines May Have Shorter Economic Life than Expected
A recent study by the University of Edinburgh shows that the economic life of onshore wind turbines may be between 10 and 15 years, or much shorter than the 20-25 years expected in the wind industry. After normalizing for weather conditions, the study shows that the average load factor of wind farms declines substantially with age.
*Russian Electricity Market Outlook
Given the highly inefficient and ageing nature of the existing power generation fleet in Russia, significantly higher power prices and more investment will be needed, particularly in fossil fuel capacity. PIRA believes that new fossil fuel capacity requirements through 2020 will be significant, far outpacing the amount installed over the past five years. While the government is driving investments in new capacity through long-term supply contracts, the expected steady growth in fossil fuel requirements will keep inefficient gas as the marginal unit.
U.S. & International Coal Markets
*U.S. Coal Prices Mixed Month-on-Month
Amid weaker fundamentals and slack transport loadings, CAPP (Central Appalachian) coal pricing resumed its slide in December. ILB (Illinois Basin) and Pitt 8 coal forwards have seen little action again this past month again. Meanwhile, SPRB (Southern Powder River Basin) prices have firmed in recent weeks as power generators true up winter inventory coverage.
*International Coal Prices Fall Week-on-Week
Coal prices faded last week amid quiet market activity post-holiday. The weakness was most apparent for 1Q13 API#2 (Northwest Europe) prices. API#4 (South Africa) and FOB Newcastle (Australia) prices fared these rebalancing periods have historically been pretty mundane affairs as the big banks typically pre-position to negate any dramatic closing moves.
The information above is part of PIRA Energy Group's weekly Energy Market Recap, which alerts readers to PIRA’s current analysis of energy markets around the world as well as the key economic and political factors driving those markets.
Click here for additional information on PIRA’s global energy commodity market research services.
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