AES Indiana: Gas Cheaper Than Renewables + Storage // Eversource CEO: "Deeply Concerned" About New England // European Manufacturing Slides Into Recession

AES Indiana: Gas Cheaper Than Renewables + Storage

Despite all the incentives for wind and solar in the Inflation Reduction Act, the utility AES Indiana plans to replace two of its coal plants (a total of 1052 MW) with natural gas. The utility expects it will save them $381 million over twenty years compared to replacing the coal with renewables.

That doesn't mean AES is forsaking renewables entirely. "In the near term, The AES Corp. subsidiary’s integrated resource plan also calls for adding 240 MW of storage, up to 900 MW of wind, 90 MW of solar combined with storage and 75 MW of stand-alone solar by 2027, depending on the cost," reports Utility Dive.

Still, the Sierra Club is upset by the lack of solar AES plans to build in the American Midwest, where winter lasts almost half of the year. "For years, Sierra Club and its community supporters and volunteers have urged AES Indiana to implement a plan to retire their Super Polluter coal plant and replace it with clean renewable energy, not more fossil fuels, a call joined by the City-County Council of Indianapolis and the City of Beech Grove, which each passed resolutions calling on AES to retire Petersburg by 2028 and replace it with renewable energy," the organization said in a statement.

In 2012, it came out that the Sierra Club had taken $26 million from the natural gas industry to fight coal plants.

Eversource CEO: "Deeply Concerned" About New England

The CEO of Eversource, a residential energy company with 4 million customers in New Hampshire, Massachusetts, and Connecticut, has just written President Biden a letter in which he expresses that the state of the New England grid going into winter "deeply concerns" him.

"[T]he New England region remains dependent on natural gas to meet our power needs this winter and for the foreseeable future as we work expeditiously to bring additional renewables online," Joseph Nolan writes, "As both an energy company CEO and a lifelong New Englander, I am deeply concerned about the potentially severe impact a winter energy shortfall would have on the people and businesses of this region."

Nolan warns the president that the New England grid operator has been sounding the alarm for months, warning they may have natural gas supply shortfalls this winter. Nolan recommends four courses of action.

• Invoking an emergency order under Section 202c of the Federal Power Act. "This authority permits the Secretary of Energy to order 'temporary connections of facilities and such generation, delivery, interchange, or transmission of electric energy' as in the Secretary’s judgment 'will best meet the emergency and serve the public interest.'"

• Waiving the Jones Act which allows for LNG shipments between US ports.

• "An emergency order under the Natural Gas Policy Act, 15 U.S.C. §§ 3361-3364, if the President determines that there is a severe natural gas shortage (or an imminent such shortage) in the U.S. that endangers the supply of natural gas for high priority uses, and finds the exercise of such authority reasonably necessary to meet these uses."

• Invoking the Defense Production Act to authorize an emergency dispatch of materials and supplies.

Nolan concludes by telling President Biden that in order for any of these to work, Energy Secretary Granholm will have to convene all relevant parties in order to collaborate on guaranteeing New England's grid stability. At the very least, everyone will need to be brought to the table to strategize whether or not any of the emergency orders are invoked.

This letter indicates that even those within the utility industry are now starting to worry about New England's ability to make it through the winter.

European Manufacturing Slides Into Recession

Last quarter, demand for electricity and natural gas in Europe plummeted. But that's not just because industrial energy consumers are making a greater effort to conserve--it's also that they're shutting down plants, some of which may never re-open.

Manufacturers reliant on cheap energy are quitting the Continent. "Energy-intensive industries, such as aluminium, fertilisers, and chemicals are at risk of companies permanently shifting production to locations where cheap energy abounds, such as the United States," reports Reuters. "Even as an unusually warm October and projections of a mild winter helped drive prices lower, natural gas in the United States still costs about a fifth what companies pay in Europe."

But high energy prices aren't the only element at play. Consumers have also cut spending due to skyrocketing prices and higher interest rates, thus flattening demand.

"S&P Global’s final manufacturing purchasing managers’ index (PMI) for the 19 countries using the euro fell to 46.4 last month, down from 48.4 in September," reports Oilprice.com. "The reading was revised down from an earlier estimate and came in below analysts’ expectations. It also signalled eurozone factory output is shrinking quickly. The PMI has a threshold of 50 that separates growth and contraction."

“The eurozone goods-producing sector moved into a deeper decline at the start of the fourth quarter. The PMI surveys are now clearly signaling that the manufacturing economy is in a recession,” Joe Hayes, senior economist at S&P Global Market Intelligence, said.

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Conversation Starters

1. Russian LNG exports to Europe almost broke a record last month. "LNG exports from Russia rose 1.1% year on year in October to the highest level since March, according to ship-tracking data compiled by Bloomberg since 2016. That is in stark contrast to plummeting pipeline flows to Europe following the deterioration of relations between the West and the Kremlin over its invasion of Ukraine in February," reports Bloomberg.

2. PG&E has filed for life extensions for the two nuclear reactors at Diablo Canyon in California. "The application had been originally submitted in 2009, but in March 2018, after assenting to an early, 2025 shuttering of the nuclear facility in Avila Beach, Calif., PG&E asked to withdraw the application," reports Nuclear Newswire. "The [Nuclear Regulatory Commission] granted the utility’s request the following month. This September, however, Gov. Gavin Newsom, California’s highest-profile sudden Diablo Canyon convert, signed S.B. 846, providing an option for extending operations at the 2,289-MWe plant to 2030."

3. Premature nuclear closures have already wounded climate goals. "Premature shutdowns of nuclear power plants in developed countries, for instance, have caused additional annual carbon emissions that now total 138.1 million metric tons (Mt) of CO2 equivalents a year," reports The Breakthrough Institute. "This yearly carbon footprint is nearly equal to the combined annual emissions from 37 African countries, with a total population of 455 million people."

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