Welcome to Grid Brief! Here’s what we’re looking at today: Centrica signs a multi-billion dollar LNG deal with the UK, US utilities are spending like crazy this year, and Toyota criticized the EPA over its new tailpipe emissions limits.

Centrica Inks $8b LNG Deal With UK

Centrica, which owns the first floating LNG export facility off the coast of Louisiana, just cut a major deal with the UK.

“The UK’s biggest energy supplier signed the contract for 1 million tons of LNG a year with Delfin Midstream Inc., following their heads of agreement last year. When the US project starts production, the deliveries will provide enough energy to heat 5% of UK homes for 15 years and ‘build further resilience’ to the country’s energy security,” reports Bloomberg. “Centrica has been expanding its LNG portfolio over the past few years, and intensified its efforts after Russia’s invasion of Ukraine upended the European gas market. Meanwhile, Delfin has been scouting for customers for production from its LNG project.”

America has become a vital LNG lifeline across the Atlantic since the start of the Ukraine war. Expect to see more deals like this as it continues.

“Seismic Shift” In US Utility Spending Underway

Kansas utility Evergy’s capital spending has swollen by 65% to $7.6 billion over the last four years.

What’s the utility spending it on?

“Evergy plans to add about 3,300 MW of renewable energy and about 1,300 MW of hydrogen-capable advanced combined cycle generation by 2035 while retiring about 1,900 MW of coal-fired capacity, the Kansas City, Missouri-based company said in a June 15 update to its integrated resource plan,” reports Utility Dive.

Evergy predicts that its spending will raise rates for its 1.7 million customers in Missouri and Kansas by 5%. But the utility isn’t spending as much as many other utilities, which are poised for a “seismic shift” in spending this year according to S&P Global.

The American utilities with the highest expected net plant growth are NextEra Energy at 98.3%, Eversource Energy at 48.3%, Idacorp at 35.6%, Allete at 32.9% and PNM Resources at 28.5%, while Evergy’s sits at 18%, according to a report from the Kansas Corporation Commission.

Here are the elements driving the splurge according to S&P: replacing aging infrastructure, complying with state renewable portfolio standards, taking advantage of federal infrastructure investment plans, and soaking up clean energy tax credits.

Some costs can’t be avoided, but here we see that the Inflation Reduction Act and state renewable energy goals are incentivizing expenditures on unreliable technology that will barely survive the next decade—spending that consumers will pay twice for; once in taxes, and again in power bills.

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Toyota Criticizes EPA

Toyota believes that the Environmental Protection Agency has “unrealistic” expectations about electric vehicles and cautioned against the EPA’s new tailpipe emissions rules.

“Toyota sent a letter to EPA administrator Michael Regan with comments on the agency's tailpipe emission limits for vehicles produced in 2027 and beyond. The proposed rule calls for more electric vehicles to be sold, accounting for 67% of new light-duty vehicle sales and 46% of new medium-duty vehicle sales in model year 2032,” reports Oilprice.com. “Currently, EVs and plug-in hybrids are approximately 10% of the market.”

Toyota said that the government’s attempt to fast track EV adoption faces "challenges, including the scarcity of minerals to make batteries, the fact that these minerals are not mined or refined in the US, the inadequate infrastructure and the high cost of battery-electric vehicles."

Toyota also stated that it shares the Biden administration’s commitment to decarbonization and automotive electrification—the company has put 20 million EVs on the road since 1997—but the company believes that these rules and policies are too hasty.

“The proposed standards are expected to result in a new vehicle sales mix of 67% BEV by 32MY. Achieving such a high penetration is almost entirely dependent on factors outside our control. As discussed in more detail in our attached comments, hundreds of new mines are needed globally to produce enough critical minerals to support so many BEVs,” reads the letter. “The sources for those minerals are almost exclusively outside the US, as is most of the mineral processing to turn the ore into usable battery-grade material. And the charging infrastructure (both in-home and public) needed to support that level of electrification is far from where it needs to be.'“

Conversation Starters

• Texas’s grid is being pushed to the limit. “Demand for power in Texas missed a forecast record on Tuesday, but the state's grid operator projected electric use would break records on Wednesday and Thursday as homes and business crank up their air conditioners during a lingering heatwave,” reports Reuters. “The Electric Reliability Council of Texas (ERCOT), which operates the grid for more than 26 million customers representing about 90% of the state's power load, has said it has enough resources available to meet soaring demand.”

• The Nordstream plot thickens. “Nord Stream investigators have uncovered traces of subsea explosives from a yacht, according to European diplomats who spoke to the United Nations Security Council. Sweden, Denmark, and Germany have been jointly investigating the Nord Stream incident,” reports Oilprice.com. “Just who is responsible for the explosives being there or for the Nord Stream sabotage is still unknown. The findings most closely back German media’s March reports that six individuals hired by a Ukrainian company in Poland were responsible for the attacks. Other theories of who was behind the pipeline explosion remain, including that the United States or Russia was behind the sabotage.”

• Correction: Yesterday, our segment on the Illinois nuclear moratorium incorrectly reported that the bill had yet to make it to the governor’s desk. It has made it to Governor Pritzker’s desk and he is sitting on it. If he takes no action, it passes in mid-August. You can view the correction at the end of the aforementioned segment on our website.

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