LNG is gas cooled to minus 161 degrees Celsius to liquid form, reducing it to 1/600 of its original volume – similar to reducing the volume of a beach ball to the volume of a ping-pong ball - allowing the gas to be transported internationally.
A Smarter Energy Future
New Sources of Energy
The energy industry is finding new ways to meet global needs.
Liquefied Natural Gas (LNG)
LNG represents a major source of supply for the UK, growing from almost nothing 10 years ago to a point where imports are capable of meeting nearly a third of total gas demand.
US LNG (Shale) exports
The growth in production of oil and natural gas from shale in the US has had a significant impact on the global energy market.
The US Energy Information Administration (EIA) estimates that the commercial exploitation of shale gas now adds 40% to the world’s technically recoverable natural gas resources. The largest sources of commercial extraction are China and the US.
Centrica’s £10bn deal with Cheniere will see exports from the Sabine Pass liquefaction plant in Louisiana begin by the end of 2018, with supplies indexed to the lower US Henry Hub price.
Construction of the facilities and terminals required to export is underway, with six liquefaction plants (‘trains’) adjacent to the Sabine Pass LNG terminal to be built in total.
In July 2015, Cheniere received the necessary regulatory approvals, and Centrica took the Final Investment Decision to proceed with the construction of the fifth LNG train.
While these preparations are being made, long-term LNG supply deals such as Centrica’s contract with Qatargas to purchase up to 3 million tonnes per year to December 2018 are essential.
More information on US LNG facilities can be found on the Federal Energy Regulatory Commission (FERC) website.
Exploring the potential of natural gas from shale in the UK
With 8 in 10 UK homes still reliant upon gas for heating, the development of natural gas from shale could have an important role to play in terms of helping to secure future gas supplies.
Experts at Pöyry have estimated that the production of natural gas from shale in the Bowland licence alone could reduce the amount of gas the UK has to import from 89% to 78% in 2035. This could reduce the nation's exposure to the volatile wholesale market, helping us to mitigate against rising energy prices and keep the UK economy as competitive as possible.
In 2013, Centrica acquired a 25% stake in the Bowland shale exploration licence, and has been working with Cuadrilla to understand the potential of natural gas from shale in the UK, using its expertise as a responsible operator and developer of gas resources.
Bioenergy is the single largest renewable energy source today, providing 10% of world primary energy supply (IEA).
Bioenergy is produced using organic material derived from various forms of biomass including plant-based raw materials, by-products (e.g. agricultural residues) and wastes. At Centrica, bioenergy encompasses the generation of heat and electricity through direct combustion of biomass, as well as the production of biomethane.
Whilst there are opportunities to generate bioenergy that would generate significantly lower carbon emissions than fossil fuels, there are concerns about the sustainability of the process, particularly in the supply chain.
Centrica is committed to undertaking bioenergy projects only where it can do so in a sustainable manner.
Over the last decade Centrica has put both human and financial resources into bioenergy projects looking at several different technologies, including biomethane and dedicated biomass, which produced useful learning outcomes:
Centrica’s involvement in a flagship project to generate energy from sewage resulted in the first ever renewable gas being sent to the national gas grid.
Further ground-breaking projects delivered the first renewable gas made from brewery and local food waste to the grid using an anaerobic digestion plant.
However, as with many fledgling technologies there are challenges to overcome, and progress has been slow. Partly for these reasons, and facing other pressures in the external energy production and supply environment, Centrica made the decision to suspend involvement in the sector, which remains potentially exciting yet is still in early stages.
Centrica had looked to convert two ageing gas fired assets to dedicated biomass powered generation, primarily for life extension purposes, but also to explore options for a potentially larger portfolio of biomass plant.
However, in 2012 Centrica announced that it would not be progressing with these plans following indications that Government support would not favour dedicated biomass plants. Therefore the long term economics of dedicated biomass became increasingly challenging leading to Centrica pulling out of the sector.
RENEWABLE AND DISTRICT HEATING
Renewable heating covers a range of technologies that are capable of generating energy from renewable sources for space heating, hot water or industrial processes.
This includes biomass boilers, heat pumps and solar thermal technologies, which can be deployed either at an individual building level or across multiple buildings through the use of district heating pipe networks.
Renewable heating, in particular larger non-domestic biomass and air source heat pumps consistently appear to be a cost-effective source of renewable energy.
In addition to renewable heat sources, district heating can also make use of waste heat captured from power stations and industry.
District heating is where multiple buildings such as domestic tower blocks or commercial buildings like hospitals are heated from a single source, which could include biomass, gas or heat pumps.
In 2013, Centrica signed contracts for 4,200 connections across the UK - most of these were biomass fuelled social housing properties that contribute to our commitment to the Energy Company Obligation. For example, British Gas is working closely with Solihull Community Housing to install insulation and biomass district heating that will enable high-rise homes to stay warmer through greater efficiency, reduced maintenance and heating costs as well as achieve lifetime carbon savings of over 130,000 tonnes of CO2 emissions by 2015.
Carbon Capture and Storage (CCS)
CCS technology has potential “game-changing” importance for cost-effective decarbonisation in the UK. However, its development is in early stages and there is considerable uncertainty about its potential and its costs.
This technology works to limit emissions by capturing carbon dioxide from fossil fuel power stations (or large industrial sources), transporting it via pipelines and then storing it safely offshore in deep underground structures such as depleted oil and gas reservoirs.
The viability and scalability of CCS needs to be established as a priority, and the UK is potentially well placed to become a world leader in CCS deployment, which would bring significant benefits to the wider economy.
Developments in power generation
New technology breakthroughs, or innovation to drive down the costs of existing technology, have an important role to play in affordable decarbonisation of the power sector. Technology development is unpredictable by its nature, and we believe in focusing on those solutions that represent a cost-effective option for consumers and the tax-payer.
National Grid forecast that the UK will have 5.5 GW of embedded solar photovoltaic (PV) capacity by Feb 2016.
Embedded solar PV are small generation units connected to the electricity distribution network and it is the growth of these installations that has led to expectations that electricity demand this summer will be the lowest ever forecast.
In fact, it is likely that embedded solar generation will lead to a permanent reduction in summer peak demand as the peaks in generation capacity from these installations tend to coincide with peak energy demands.
In the UK demand for power is at its highest during dark winter evenings when solar PV generates no output and therefore needs investment in back-up to support security of supply.
However, as technology advances, systems designed to efficiently store solar energy in-home could revolutionise the domestic energy market in the coming years.
In North America, Direct Energy have partnered with SolarCity, the leading U.S. solar power provider to create a dedicated investment fund capable of financing up to $124 million in solar projects for Direct Energy's commercial and industrial partners.
In 2014, Direct Energy and SolarCity partnered with a leading US retailer to install a first-of-its-kind smart energy battery storage system. Businesses in North America can incur extra charges for using power during times of peak demand - this pioneering technology helps businesses cut those costs by using stored electricity generated from solar during peak times.
‘Distributed Energy’ could open the door to growth for small-scale renewable generation
Distributed Energy is a kind of virtual power plant connecting on-site generation installed by individuals, at business and industrial sites, in communities or schools to the local distribution network rather than the national transmission network.
This includes Combined Heat and Power (CHP) plants that capture and make use of the heat usually lost through generation, to use in industrial processes or to heat and cool buildings; wind farms, hydroelectric power, and micro-generation technologies such as solar panels.
Distributed energy reduces electricity losses by bringing generation closer to where it is used and, because this system allows output to be varied, provides flexibility in responding to demand strengthening local security of supply.
In the UK, there has been a dramatic growth in the number of distributed generators in recent years, and recognising the benefits this flexible, localised generation could provide, the regulator is working with industry to facilitate its development.
Wave and Tidal
Wave and tidal stream energy is electricity generated from the movement of wave and tidal flows.
Wave and tidal power is much more predictable and constant than wind power – and it increases during the winter, when electricity demand is at its highest. It is estimated the UK has around 50% of Europe’s tidal energy resource, and has the potential to meet up to 20% of the UK’s current electricity demand, representing 30-50GW of installed capacity, with 27GW of this potentially deployed by 2050.