Brussels Bickers Over Nuclear Hydrogen

The European Union is in final negotiations over whether to count hydrogen produced from nuclear power as renewable.

“One of the key goals in the renewable energy policy is for every EU country to use a certain amount of renewable fuels, such as hydrogen, as a energy source in industry by 2030,” reports Reuters. “Because low-carbon hydrogen requires electricity to be made in the first place, the EU battle now is over what energy sources should be allowed for its production, if it is to be counted towards the renewable energy targets.”

France and at least eight other EU countries are pushing for "low-carbon hydrogen" made using nuclear power to count towards the renewable goals. However, at least nine other countries, including Germany, Spain, and Austria, disagree, saying the EU targets should solely focus on renewable sources like wind and solar.

Canada’s Big Green Budget

Canada has announced almost C$83 billion ($61 billion) in investment tax credits over the next decade to become a leader in the energy transition.

“The measures, along with increased health spending, will swell the country’s deficit at a time of heightened economic risks,” reports Bloomberg. “Prime Minister Justin Trudeau’s government is making the case that the cost is unavoidable if Canada hopes not only to live up to its climate promises, but to profit from the world’s transition away from fossil fuels to cleaner power.”

The scale of investment required for Canada to meet its net-zero emissions commitment by 2050 is estimated to be between C$60 billion and C$140 billion per year, with most of the funding expected to come from the private sector.

The budget is a boon for Canada’s nuclear sector. “A new 15% refundable Investment Tax Credit (ITC) for Clean Electricity was introduced that can be applied to all sizes of nuclear power, including small modular reactors (SMRs), large builds, and new refurbishment projects,” reports the Canadian Nuclear Association. The Pickering plant, which has needed refurbishment, will qualify for the ITC, saving it from premature retirement.

Nuclear and hydro already supply Canada with much of its electricity, 83% of which comes from low carbon sources.

PJM Delays Capacity Auction

The PJM Interconnection, the grid operator serving parts of thirteen Mid-Atlantic and Midwest US states, plans to delay its upcoming capacity auctions to allow time for market reforms.

“Despite the implications of auction delay, reforms are necessary to the capacity market design in order to conduct an effective Base Residual Auction,” PJM said in an email to stakeholders, reported by Utility Dive. The grid operator wants to ensure power supplies are available when needed.

The delay follows outages during Winter Storm Elliott in December and a recent report that forecasts the grid operator could face narrow reserve margins in 2028. The energy transition, i.e. the rapid buildout of wind and solar and the retirement of reliable thermal generators, has left PJM worried it won’t have the margins it needs to guarantee reliability. PJM’s problems will become MISO’s problems, as PJM’s midwestern neighbor relies on PJM for imports when the going gets tough.

The PJM board has begun a fast-track stakeholder process to bolster its capacity market and is expected to file proposed market reforms for approval by the Federal Energy Regulatory Commission by 1 October.

The grid operator has published a market reform proposal. “The proposal includes a marginal accreditation framework that aims to account for supply-side availability risks for all resource types. It would reflect each resource’s expected incremental contribution to system reliability during periods of risk. For thermal power plants, it would adjust for temperature-dependent forced outage rates and the effect of correlated plant outages,” reports Utility Dive. Additionally, the proposal suggest that plants that fail to winterize adequately would: a) get no winter capacity commitment and b) receive a zero for accredited value for winter performance.

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Conversation Starters

1. Chevron’s on the hunt for LNG infrastructure. “US energy major Chevron is making enquiries with shipbuilders for up to six LNG carrier newbuildings as it looks to provide tonnage to cover the new volumes it added to its portfolio in 2022,” reports TradeWinds. “Multiple sources have detailed to TradeWinds that Chevron has approached shipyards for four firm vessels with options on a further two. Few specifications have emerged and yards appear to be particularly tight-lipped on the business.”

2. Oil nationalization comes to Chad. “Chad's parliament on Wednesday approved a bill to nationalise oil assets and rights acquired last year by Savannah Energy from ExxonMobil's affiliate, Esso Exploration and Production Chad,” reports Reuters. “In December, ExxonMobil closed the sale of its operations in Chad and Cameroon to Africa-focussed oil and gas producer Savannah Energy in a $407 million deal, but the Chadian government challenged the agreement. Out of 175 lawmakers present, 172 backed the law to nationalise the assets - a move Savannah vowed last week to contest.”

3. Westinghouse snatched up a European nuclear fuel contract. “Westinghouse, a U.S.-based nuclear fuel supplier, will replace Russia's TVEL as the supplier for CEZ's Dukovany nuclear power plant in the Czech Republic beginning in 2024,” reports Oilprice.com.

   “This change comes as a result of CEZ seeking a new supplier after Russia invaded Ukraine. TVEL had been the only supplier of fuel for Dukovany's VVER reactors. The switch is a significant win for Westinghouse, solidifying its position as a major supplier of nuclear fuel in the Czech Republic. Westinghouse has already been the supplier of the Temelin power station since 2010.”

Crom’s Blessing