Timera Angle

Timera is recruiting analysts

As we continue to expand our team, we have several Analyst positions open.  Why join Timera as an Analyst?

  1. The Challenge: Your focus will be on understanding & analysing the flexibility that lies at the core of the energy transition.
  2. Development: We have a flat hierarchy where analysts interact dynamically with senior team members and clients and have the space to apply initiative and take on responsibility.
  3. Remuneration: Our packages are very competitive and include participation in company growth.
  4. Flexibility: We offer significantly more flexibility and autonomy than other companies, covering e.g. location, work hours & remuneration structure.
  5. Team culture: We have an open, innovative & entrepreneurial environment, working together on a variety of stimulating analytical challenges across the rapidly evolving energy industry.

See Analyst Job Spec and more details on Working with Timera.

New Managing Director joins Timera

We continue to expand our team with May Mannes joining as a new Managing Director.  5 things May has done prior to joining our team:

S&P Global Platts: Director of Content focused on gas & LNG market analysis post acquisition of Eclipse Energy.

Eclipse Energy: Director of Gas & LNG Analysis and of Advisory Services, developing Eclipse before sale to S&P Global.

Statoil: Senior commercial roles across gas & LNG, including managing parts of Statoil’s existing gas contract portfolio & responsibility for long term sales.

Alliance Gas: Head of Business Operations responsible for balancing the trading, end users and wholesale portfolio.

Athletics: British Universities Champion 200m sprint… so she’s pretty quick!

May will focus on developing Timera’s gas & LNG business across asset investment, value management and market analysis.

Our Team: May Mannes

Timera presenting at Flame 2019 on May 14th

Timera will be doing a presentation on Day 1 of the main conference at Flame (14:10) on new sources of gas supply into Europe.  Topics covered to include:

  • Supply: Interaction between Russian imports, LNG imports and North Sea production
  • Pricing: Evolution of European hub pricing dynamics into 2020s
  • Portfolios: How the role of gas is changing within energy company portfolios in response to market evolution & decarbonisation
  • Investment: How market transition is causing a structural shift in gas asset risk/return profiles

Feel free to contact us if you would like to meet at Flame (olly.spinks@timera-energy.com).

UK power demand

UK annual electricity demand has fallen by around 7% over the last 5 years. Will this be an ongoing trend or is demand set to stabilise? Key drivers:

  1. Economic transition: Shift from industry to less power intensive services has pulled down demand over recent years (e.g. decline in steel & automotive industries).
  2. Weather: Last 3 winters have been mild compared to history. Outliers or new normal?
  3. Efficiency: Despite government ambitions, not much evidence of structural efficiency gains to date – and a lack of clear policy incentivisation going forward.
  4. EVs: Electric vehicles likely to materially increase demand from mid next decade.
  5. Next 5 years: Limited industry left to transition, lack of efficiency traction & EV impact support demand stabilisation… caveat economic risks e.g. Brexit/recession.

Another large gas storage closure

Dutch gas co. NAM has notified via Remit its intention to close its large Grijpskerk storage facility (2.8 bcm) by 2021:

  • Next big NW European storage asset closure after Rough (3.4 bcm in 2016)
  • Plays key role in managing Groningen production & providing flex at TTF
  • Puts future of Gasterra virtual storage auctions in doubt (given flex underpinned by Grijpskerk)
  • Evidence of ongoing tightening of gas flex market due to ageing infrastructure & low investment

Changing role of gas in energy portfolios

5 factors currently impacting energy company gas portfolio construction:

  1. De-carbonisation: The focus/value of gas portfolios is evolving with the energy transition. Big gas players looking to diversify e.g. into power / CCS / alternative fuels.
  2. Power sector linkage: Growing gas & power market dependency driving gas portfolio diversification options e.g. Shell buying First Utility, Equinor expanding offshore wind.
  3. LNG market growth: Rapidly expanding LNG supply & liquidity = key source of new growth e.g. utilities (Uniper) and traders (Vitol, Trafigura) growing portfolios.
  4. Trading: Companies targeting growth in trading to increase returns & manage risks. E.g. Equinor buying Danske Commodities; Uniper global trading expansion.
  5. Refocusing: Companies are also shifting focus within the gas supply chain e.g. Engie & Centrica pivot towards energy services.

Timera Snapshot

European LNG imports fall, TTF rises

LNG import flows have been a key factor driving European hub prices dynamics over the last year. Apr-19 saw Europe’s highest LNG send out in history as shown in the chart. Volumes were triple the levels seen last summer. But since April, LNG import flows into Europe have started to decline. This has coincided with some recovery in the JKM/TTF price spread in Q2-19.  TTF front month prices are also responding, with Aug-19 up more than 25% since the start of July.

Coal & carbon prices and switching levels

Coal & carbon prices have been trending in opposite directions over the last 12 months. EUA prices have recently moved above 25 €/t. Prices have remained strong in 2019, despite weakening economic conditions and significant switching from coal to gas plant. Coal prices on the other hand have fallen by around 50% since the beginning of Q4-18. Falling coal prices across the last two months have pulled down switching levels, putting further pressure on TTF/NBP.

Will gas & power demand take a hit in 2019-20?

In Jan-19 we flagged the risk of an economic driven demand shock.  Evidence of this is gathering quickly as shown in the charts.  The top chart shows a rapid decline in new export orders in the Eurozone’s biggest economies since last summer (Germany particularly sharp). Consistent with this, the bottom chart shows declining manufacturing data, with a shift from strong expansion in mid 2018 to sharp contraction in 2019. Global central banks are now responding with (yet more) stimulus.  But as things stand, demand may take a hit in 2019. However this is likely to be balanced in the gas market by power sector switching demand given low hub prices.

Power sector gas demand falling

European hub prices continue their 2019 decline as LNG & Russian import volumes remain near record levels. This has pushed gas prices well below switching levels. But despite ongoing gas price declines, European power sector gas demand has fallen since Jan-19, as shown across key European power markets in Chart 1. Switching volumes and gas demand do not just depend on relative gas vs coal price levels. They are also subject to declining power demand (falling into summer) and prevailing levels of wind & solar output.

German closures redefine NWE balance

The German power market is facing almost 25GW of regulatory driven power plant closures over the next 3 years. 9.5 GW of this is nuclear (exacerbating carbon emissions problems). The remainder is a combination of hard coal & lignite to meet Coal Commission targets (+ an additional 13GW by 2030).  Closures are set to significantly tighten the German and NW European power market balance, with gas-fired plants transitioning to dominate the setting of marginal power prices.

 

Timera’s Flame presentation slides

The slides from Olly Spinks’ presentation at Flame this week can be downloaded here. Key themes include:

  1. 3 key drivers of European hub prices
  2. Evolution of supply mix & prices across 2020s
  3. Changing gas asset value capture dynamics
  4. Decarbonisation & portfolio construction
  5. Value and risk considerations for asset investment