Welcome to Grid Brief! Here’s what we’re looking at today: California announces offshore wind ambitions, the US added a record amount of rooftop solar in 2022, Malaysia joins the rising tide of mineral nationalism, and more.

California’s Big Offshore Wind Deal

California is diving headlong into offshore wind.

“Heading into Labor Day Weekend, California Gov. Gavin Newsom announced a deal with legislative leaders that could prompt construction of California’s first offshore wind farms,” reports the Los Angeles Times.

But Newsom’s deal comes at a time when the offshore wind industry struggles mightily. Compounding inflationary pressures, cost overruns, and supply chain bottlenecks have begun to undermine the industry’s fundamentals.

Newsom’s plan may also include the development of geothermal plants in the Imperial Valley plus a pumped storage hydropower project in San Diego County.

Record Rooftop Solar Added to US in ‘22

The Energy Information Administration estimates that the US added 6.4 gigawatts (GW) of small-scale (or rooftop) solar capacity in 2022—the most ever in one year.

“U.S. small-scale solar capacity grew from 7.3 GW in 2014, when we started publishing these estimates, to 39.5 GW in 2022. Small-scale solar makes up about one-third of the total solar capacity in the United States,” reports the EIA. “Tax credits and incentives, public policy, and higher retail electricity prices have encouraged the growth of small-scale solar capacity over the past decade. Falling solar panel costs have also played a significant role.”

California has the largest share of rooftop solar in the country at 36%. New York and New Jersey are second and third, though Texas and Arizona are hot on their heels.

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Malaysia Plans to Ban Rare Mineral Exports

Malaysia, as per Prime Minister Anwar Ibrahim, intends to prohibit the export of raw rare earth materials.

“Anwar, speaking to parliament on Monday, said the government will develop an export ban policy ‘to prevent exploitation and loss of resources, thereby guaranteeing maximum returns for the country,’” reports Bloomberg. “He said the policy would help drive development of the mineral industry, but didn’t say when a ban would come into effect. Malaysia is the latest country seeking to restrict shipments of the key minerals used in everything from lithium-ion batteries to electric vehicles.”

A rising tide of mineral nationalism is sweeping the world. India, China, Ghana, Chile, and Mexico have all moved towards export bans and/or nationalization.

Conversation Starters

• Ukraine snatched Crimean oil and gas infrastructure from Russia. “Ukraine said on Monday its forces had retaken oil and gas platforms offshore Crimea which Russia had occupied in 2015. The so-called Boyka Towers are oil and gas drilling platforms off the coast of Crimea in the Black Sea, and Ukraine has regained control over them, the Defence Intelligence of Ukraine said in a post on social media accompanied by a YouTube video,” reports Oilprice.com. “The platforms for oil and gas drilling were occupied by Russia in 2015, after the Russian annexation of Crimea in 2014.”

• Moody’s raised its outlook for regulated utilities while Bank of America remains cautious. “Moody’s Investors Service on Thursday raised its outlook for the regulated utility sector to ‘stable,’ citing the firm’s expectations for lower natural gas prices, moderating inflation and regulatory support for the recovery of fuel and purchased power costs,” reports Utility Dive. “The credit ratings agency had lowered the sector’s outlook to ‘negative’ in November, but now believes utilities are better positioned to promptly recover their costs. ‘The outlook could change to positive if the regulatory and political environment turns even more credit supportive,’ Moody’s said. Analysts at Bank of America Global Research were less sanguine in a Wednesday report. The S&P utilities stock subsector is down about 13% this year, they said, but despite the decline, ‘we do not view the pullback as an overly attractive buying opportunity,’ though there is potential upside for specific companies.”

• American drillers are going deeper to increase efficiency. “The U.S. shale patch is looking to do more with less as it seeks capital and operational efficiency to prove to shareholders that it has turned the page from growth at all costs to measured growth accompanied by higher returns to investors. The oil and gas firms operating from the Permian to Marcellus shale plays are drilling increasingly deeper lateral wells as drilling rigs are fewer, but wells are longer,” reports Oilprice.com. “The total number of active drilling rigs in the United States rose by 1 last week, according to data from Baker Hughes published on Friday. The total rig count rebounded to 632. But so far this year, Baker Hughes has estimated a loss of 147 active drilling rigs. Last week's count was 443 fewer rigs than the rig count at the beginning of 2019 prior to the pandemic.”

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