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23 June 2022

The world of renewables this week

Oil prices fell by 4.5% on Wednesday as US President Joe Biden made move to cut fuel costs for drivers, with Brent crude hitting $109 per barrel – it’s lowest levels in over a month. Biden announced that he hopes to temporarily suspend the federal tax of 18.4 cents per gallon on gasoline as the country, which is the world’s largest oil consumer, struggles to tackle soaring gasoline prices and inflation.

The record forecast spending of $2.4 trillion on renewable energy this year will still fall short of the levels needed to sufficiently tackle climate change, according to the IEA.

 

US firm C-Zero says it has developed a technology for natural gas to hydrogen manufacture and it has closed a $34 million financing round led by SK Gas, of Korea’s and two new investors, Engie New Ventures and Trafigura, one of the world’s largest physical commodities trading companies plus existing investors Breakthrough Energy Ventures, Eni Next, Mitsubishi Heavy Industries and AP Ventures. The money will build C-Zero’s first pilot plant, expected online by Q1 2023 to make 400kg of hydrogen per day from natural gas with the CO2 emissions captured. This is a business that has missed its mark, with the current prices of natural gas, Blue Hydrogen of this type will never make it economically.

The US Federal Energy Regulatory Commission (FERC) has issued a proposed new rule which will schedule work on US ISO grids on a first ready, rather than first come first served basis. The hope is that this will help deal with a massive backlog in connection queues and more importantly it should end discrimination against solar and wind. At the end of 2021 the queues stood at 1,400 gigawatts of generation and storage throughout the country and projects face an average of three years before they get to the head of the queue. Comments are due in 100 days – expect outrage.

UK newspapers this week are saying that UK Chancellor Rishi Sunak is turning away from a windfall tax on Britain’s electricity generators and instead will go with something the French market plans to use – described as a consumer price mechanism. That idea is about decoupling the price of gas from the price of electricity by having flat energy supplies like coal, nuclear and hydro benefit from once price, and well-shaped curves of supply like solar and wind, at another and natural gas when it is needed at a third. This idea was first put to the UK by Professor Dieter Helm in his 2017 appraisal of the UK energy market, which was totally ignored by the government of the day. There are implications for solar investment which has made huge profits recently because it currently receives as much per MWh as gas does.

ExxonMobil this week has announced a process technology to enable the manufacture of sustainable aviation fuel (SAF) from renewable methanol using Carbon Capture & Storage (CCS) and Hydrogen. This is a proprietary

engineering process for methanol into SAF with renewable methanol as a feedstock. Rethink Energy thinks that the world is tuck with SAF until about 2035, when it should be ready to be replaced with Green hydrogen.

BlackRock this week said it will establish an infrastructure strategy to partner with leading infrastructure businesses over the long term to help drive the global energy transition as part of its $75 billion Real Assets business. It will apply the funds first in Europe and then on a wider global basis. Blackrock says it wants to make lasting investments in core assets and aim to create resilient, inflation-linked returns for investors. This means it will invest in utilities and renewable energy infrastructure players, as well as assets such as data centers, grid digitization technologies, battery storage systems, and natural gas storage and transport facilities. Shame about investments in gas, but we can’t have everything.

 

The world’s pipeline for offshore wind projects has doubled over the past 12 months, according to RenewableUK. In total, the capacity of projects at various stages of development has grown from 429 GW to 846 GW, with a leading 98 GW of this held in China. This is followed by the UK (91 GW), the USA (80 GW), and Germany (57 GW).

US oil major Chevron has continued to make half-baked pledges about its transition away from oil and gas. At a conference in London this week, it unveiled plans to invest $2.5 billion into green and blue hydrogen by 2028 – likely representing less than 10% of its spending over the period. It has been vague on how much it will rely on blue hydrogen here – a technology which will do little do decarbonize hydrogen supply and will be used as a way for Chevron, and other oil majors, to continue with natural gas operations under a ‘green’ umbrella.

RWE has put plans on ice to retire coal plants early in Germany. The move follows similar plans from the UK to temporarily increase the use of coal-fired power while gas supplies from Russia are low. The company has three 300 MW power plants that are currently on security standby and can be restarted at the request of the federal government.

Siemens Gamesa has secured a victory – at least in part – in a US patent infringement case against General Electric regarding offshore wind turbines. While not all claims were upheld, a jury in Boston found that GE infringed on one of Siemens Gamesa’s patents related to the structural support of large turbines, which GE then used to win rights to develop projects such as Vineyard Wind in the USA, with its Haliade-X turbine. GE now face an additional $24 million fee to develop the project, with the court ruling that it must pay $30,000 per MW in royalties to Siemens Gamesa. On a 13 MW turbine, which typically costs around $20 million, the royalty will add an additional 2% in costs, which will come out of GE’s margin on projects where it has already agreed a price.

China’s overall polysilicon supply in 2022 will consist of 715,000 tons produced domestically plus 100,000 tons imported. The country’s solar glass industry produced 1.372 million tons in the month of May, up 52.8% year-on-year, with inventories high and prices down by one-quarter from last year.

The Federal Energy Regulatory Commission (FERC) has proposed requiring “first ready first served” interconnection standards from transmission providers across the US. According to FERC Chairman Richard Glick interconnection queues are clogged with 1,000 GW of generation and 400 GW of energy storage across the country – the process takes on average 3.7 years with a 75% dropout rate.

The West Virginia State Treasury is to blacklist six of the largest financial firms in the US – BlackRock, Wells Fargo, JPMorgan Chase, Morgan Stanley, Goldman Sachs, and U.S. Bank – for discriminating against the coal, oil, and natural gas industries. Senator Manchin, the Democrat holdout on Biden’s energy transition and other spending plans, is one of the two Senators from West Virginia state.

Democrat Congressman Tim Ryan has proposed the EAGLE SOLAR act to require American-made modules to be used in federal solar PPAs, closing a loophole in the Buy American Act. Meanwhile the Uyghur Forced Labor Prevention Act, signed into law in December, took force yesterday, banning goods imported from Xinjiang unless they are positively proven to involve no forced labor. Some solar imports into the US have already been blocked at port by the Withhold Release Order (WRO), on the grounds they may use polysilicon from Hoshine Solar. The WRO is now superseded. And lastly AES, Clearway Energy Group, Cypress Creek Renewables and D.E. Shaw Renewable Investments have jointly declared their intention to purchase 6 GW to 7 GW of American-made Si solar modules per year starting from 2024.

Fujian District in China’s Guangdong Province has instituted a $45 per MWh subsidy for BIPV solar and $30 for other solar projects.