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Analysis Energy

Solar panels as a supplement to wheat balance

3 September 2024 - Jurphaas Lugtenburg

Energy and politics go hand in hand. Turkey secured a gas deal with Shell and is thus trying to strengthen its position as a gas intermediary between Europe and Asia. Russia, meanwhile, is ignoring the American sanctions and is happily investing in LNG. There are opportunities for farmers in the area of ​​sustainable electricity. Agriculture can play an important role in both food and energy security. One certainly does not exclude the other.

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The provisional ceiling in the gas market seems to be around €40 per MWh. In early August there were only two days when the TTF was just above that. For a while it seemed as if a new rally was coming on the gas market, but on the first trading day of the new month the market calmed down again.

Turkey signed a deal with Shell on Monday for the supply of LNG. The originally British-Dutch oil and gas company will supply gas to Turkey for ten years. "A total of forty shipments, or approximately 4 billion cubic meters, will be delivered annually for a period of ten years starting in 2027," said Turkish Energy Minister Alparsan Bayraktar during the ceremonial signing of the contract. In May of this year, Turkey also signed a ten-year agreement with ExxonMobil for the supply of LNG. ExxonMobil supplies up to 2,5 million tons (approximately 3,7 billion cubic meters) of LNG per year to Turkey. The LNG agreements are not only intended to meet Turkey's own gas demand. The country on the Bosphorus has the ambition to become a major player in the field of storage and transhipment for the gas trade between both Europe and Asia.

Aphrodite
A little further south in the Mediterranean Sea, beneath Cyprus, a consortium of companies has presented plans to develop the Aphrodite gas field. The consortium has submitted the plans, which are worth around $4 billion, to the Cypriot government, the Israeli company NewMed Energy announced on its website on Sunday evening. In addition to NewMed, Chevron and Shell are participating in the project. The gas field contains at least 98 billion cubic meters. The gas that is extracted will largely be transported via a pipeline to Egypt, from where it will be further distributed.

Russia exported 2% less gas to Europe in August compared to July. Compared to August last year, exports fell by 2,3%. This is according to calculations by Reuters based on data from Entsog (the European association of gas network operators) and Gazprom. The fighting in the Russian region of Kursk could be a reason for the reduced exports, according to Reuters. This province is home to the last hubs from which gas is distributed to Western and Central Europe. Gazprom, which has not published monthly export figures since the beginning of 2023, did not respond to questions from Reuters.

Investing in LNG
With LNG exports, the Kremlin is sailing close to the wind. Novatek, Russia’s largest LNG producer, is reportedly preparing a floating gas storage facility for use as part of the Arctic 2 project. The floating storage facility Saam (which is on the US sanctions list) is being prepared to receive a cargo of gas from the Everest Energy LNG tanker, which is also on the sanctions list, according to vessel tracking data from LSEG. Asya Energy, another blacklisted tanker, has also been spotted in the region. The tracking data does not record whether loading or unloading is actually taking place, but the ship movements do indicate that Novatek and the Kremlin are pushing ahead with their own plans and are paying little attention to Western sanctions.

Volatile electricity market
The electricity listing on the Epex Spot showed considerable fluctuations. Sufficient sun or wind makes a world of difference in the daily prices. A halving or doubling of the price is not unusual.

Worldwide, for the first time in May and June, more sustainable electricity was generated by the sun than by wind. The data for July and August have not yet been fully published, but because it is summer in the northern hemisphere, energy think tank Ember expects that those months will also be sunny. Over the entire year, Ember expects that approximately 30% more electricity will be produced from wind.

Dual purpose
It is clear that more is invested in solar panels than wind turbines. The construction of solar parks is not entirely without controversy. In some places, solar panels compete with food production. "As Europe increasingly finds itself in uncertain times, food security and energy security are absolutely vital. Combining solar panels with agriculture can help farmers contribute to both, while keeping their businesses stable and profitable," writes Ember's Paweł Czyżak.

In the Czech Republic, Hungary, Poland and Slovakia, where almost a fifth of the EU's agricultural area is located, there are opportunities for the combination of solar energy and agriculture. In shade-loving berries and fruits, the fruit yield decreases by 16% after placing 'solar roofs' above the crop, while the solar panels supply 63% of the power compared to a conventional setup. In wheat, the crop yield is 20% lower with rows of vertically placed solar panels. According to Ember, the combination of solar panels and wheat can yield an annual profit of €1.268 per hectare compared to wheat alone, which is a loss-making crop in 2024.

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