Welcome Grid Brief! Today we’re looking at ERCOT’s abandonment of a winter capacity procurement program, Asian LNG buyers have to pay a hefty premium to secure US supplies via Panama, and more.

ERCOT Drops 3 GW Capacity Procurement

The Electric Reliability Council of Texas has cancelled a 3 GW capacity procurement to guarantee reliability this winter after no power plants stepped up to provide additional operating reserves.

ERCOT remains unconcerned about the winter despite the failure of this program. “The request for additional capacity was an extra layer of precaution to mitigate higher risk during extreme weather this winter,” said ERCOT President and CEO Pablo Vegas. “ERCOT is not projecting emergency conditions this winter and expects to have adequate resources to meet demand.”

“ERCOT’s RFP was supposed to entice shuttered power plants to restart, but instead the grid operator received demand response offers for just 11 MW,” reports Utility Dive.

According to the North American Electric Reliability Corp., the “risk of a significant number of generator forced outages in extreme and prolonged cold temperatures continues to threaten reliability” in Texas “where generators and fuel supply infrastructure are not designed or retrofitted for such conditions.”

NERC believes the shortage in reserves in Texas is greater than last year “due primarily to robust load growth that is not being met by corresponding growth in dispatchable resources.”

Asian LNG Buyers Pay Panama Premium

The Panama Canal has become a chokepoint as a drought shallows its water. The resultant passage constraints are driving up costs from US LNG suppliers to Asia.

“The Asian gas price premium to Europe for summer 2024 has more than doubled since Oct. 30, when the Panama Canal announced that it would further restrict passage, while the winter 2024 spread has also widened,” reports Bloomberg. “The number of slots available for ships the size of LNG carriers will be reduced by half come January, according to BloombergNEF.”

Analysts believe that Asian buyers will have to shell out more to divert US LNG shipments from Europe as the margin for LNG shrinks.

Share Grid Brief

We rely on word of mouth to grow. If you're enjoying this, don't forget to forward Grid Brief to your friends and ask them to subscribe!

Conversation Starters

• The US Coast Guard is trying to discern the origin of an oil leak into the Gulf of Mexico. “The U.S. Coast Guard on Monday said it was still looking for the source of a leak from an underwater pipeline off the Louisiana coast in the Gulf of Mexico that it estimated had released more than a million gallons of crude oil,” reports Reuters. “The 67-mile long pipeline was closed by Main Pass Oil Gathering Co (MPOG) on Thursday morning, after crude oil was spotted around 19 miles offshore of the Mississippi River Delta, near Plaquemines Parish, southeast of New Orleans.”

• Shell pays net taxes for the first time in years in the UK. “Shell Plc paid net corporate taxes in the UK in 2022 for the first time in at least four years after the government introduced an oil and gas windfall levy,” reports Bloomberg. “Last year, the company paid $40.5 million in tax from a UK profit of $1.81 billion, according to its annual tax-contribution report. Without the government’s new Energy Profits Levy, Shell said it wouldn’t have had to pay corporate tax in the UK. The London-listed energy giant made a global profit of $64.8 billion in 2022 and paid out $13.1 billion in corporate income tax. That compares with $6 billion in corporate taxes in 2021 on a profit of $30 billion.”

• Germany pledges money for green power projects in Africa. “Germany will invest 4 billion euros in green energy projects in Africa until 2030, Chancellor Olaf Scholz said on Monday, noting these could in turn help Europe's largest economy achieve its own transition to carbon neutrality,” reports Reuters. “Germany will need to import large quantities of green hydrogen going forward, including from Africa, if it is to achieve its goal of net zero emissions by 2045, he said at a German-African business forum in Berlin. The forum preceded a summit of the ‘G20 Compact with Africa’ that aims to drum up investment in the world's poorest but fast-growing continent by coordinating the development agendas of reform-minded countries and identifying business opportunities.”

Crom’s Blessing

Interested in sponsoring Grid Brief?

Email [email protected] for our media kit to learn more about sponsorship opportunities.