Powered by

Welcome to Grid Brief! Here’s what we’re looking at today: FERC and NERC report back on what went wrong during Winter Storm Elliott, beef prices are rising, a push for coal subsidies frustrates the EU’s energy deal, and more.

FERC & NERC: Power Plants Still Vulnerable to Cold

The Federal Energy Regulatory Commission and the North American Electric Reliability Corp. warn that US power plants remain vulnerable to extreme cold weather. The two organizations emphasized their concerns in a joint presentation on Winter Storm Elliott.

“About 70,000 MW was unable to run in frigid weather in late December across the Midwest and Eastern United States, leading to rolling power outages of more than 5,000 MW in the Southeast, according to a presentation at FERC’s monthly meeting Thursday,” reports Utility Dive. “The majority of power plant outages during the cold snap were caused by problems with freezing, fuel supply, and mechanical and electrical issues, FERC staff said, noting those problems occurred in the last five major extreme cold spells that have happened in the U.S. since 2011.”

Elliott was no stand out: natural gas production dropped while electricity use rose more than forecasted. Both FERC and NERC called for weatherizing power plants and re-iterated that their previous suggestions need to be heeded (hardening gas pipelines, figuring out on-site storage, etc.).

But will the market allow for this or are other mechanisms needed? If power plants and pipelines can only lose money by winterizing and no one is directly responsible for grid reliability, then FERC and NERC’s urgings can only fall on deaf ears. Outside the deregulated areas, it may be a different story. Rolling blackouts hit Duke Energy and the Tennessee Valley Authority, both of which operate as traditional monopolies.

Unburgered: Beef Prices Rise

Bad news for Americans before the Fourth of July: your burgers are going to hurt your wallet.

Ground beef prices are ten cents shy from last year’s peak. Prices rose just over 2% in May to $5.35/lb.

“Meanwhile, cash cattle costs soared to a record earlier this month as ranchers reduced herds amid drought in the Plains and high feed costs,” reports Bloomberg. “American consumers are further squeezed by broader inflation pressures, with grocery prices edging up last month after falling for two straight periods.”

Will prices come back down? Eventually. But cattle take a year and a half to raise, while chickens take six weeks, and pigs six months. Next year, America is expected to see its cattle count fall to its lowest level since 1979.

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!

Coal Subsidies Upsets EU Energy Deal

Yesterday, a late push to get coal subsidies into Europe’s power market reforms has upset the deal.

“The proposed reform aims to make power prices more stable and predictable, by putting new state-backed renewables and low-carbon nuclear plants onto fixed-price ‘contracts for difference.’ Ministers need to iron out details like how to spend any revenues raised by these subsidy schemes,” reports Reuters. “But the talks have been complicated by a late proposal by Sweden, which holds the EU's rotating presidency, to allow countries to prolong capacity mechanism subsidies for coal power plants, under which they are paid to keep enough power generating capacity on standby to avoid blackouts.”

Poland, which heavily relies on coal for its energy needs, supported the proposal, emphasizing the importance of energy security. Other countries, including Germany, Belgium, and Luxembourg, opposed the proposal, citing climate concerns.

In addition to the coal subsidy proposal, ministers will also consider letting countries to recoup windfall revenues from power plants during price spikes, a suggestion supported by countries such as Spain and Greece but opposed by energy industry groups.

Once EU countries hash it out, they will need to negotiate the final power market reform with the EU Parliament with the aim of passing the law before the next EU parliamentary elections.

A message from Morning Brew

Get smarter in 5 minutes with Morning Brew (it's free)

There's a reason over 4 million people start their day with Morning Brew - the daily email that delivers the latest news from Wall Street to Silicon Valley. Business news doesn't have to be boring...make your mornings more enjoyable, for free.

Conversation Starters

• Corruption has been discovered at the US Environmental Protection Agency. “EPA’s internal watchdog has dug into contact between the agency’s top air official and Harvard University, his former employer. Staff for EPA’s Office of Inspector General have sought to speak with agency ethics officials and obtain records about Joseph Goffman, principal deputy assistant administrator in the Office of Air and Radiation, after he was the subject of a watchdog group’s complaint, records show,” reports E&E News. “At issue is Goffman’s having asked an EPA subordinate to set up a meeting with Harvard officials after one reached out to him, violating President Joe Biden’s ethics pledge. Goffman had signed the pledge that bars contact with former employers.”

• Germany readies for winter. “Germany’s energy regulator will practice a large-scale emergency exercise with companies this September, testing their preparedness should gas supplies decrease. While Europe’s largest economy staved off a gas crisis last winter, it hasn’t yet called off the emergency status triggered in June last year. Turbulent price swings this month have served as a reminder that supply risks remain,” reports Bloomberg. “The country’s Economy Minister warned last week that Germany may still be forced to wind down or even switch off some industrial use if Ukraine’s gas transit agreement with Russia isn’t extended after it expires at the end of next year. Germany’s gas storage operators have also cautioned that storage sites could be completely depleted by January 2024 — even if current low demand patterns persist.”

• Israel looks offshore. “Israel has decided that the Gaza Marine natural gas field offshore Gaza should be developed, subject to security coordination with the Palestinian Authority and Egypt, Israel’s government said on Sunday,” reports Oilprice.com. “In the framework of the existing efforts between the State of Israel, Egypt and the Palestinian Authority (PA), with emphasis on Palestinian economic development and maintaining security stability in the region, it has been decided to develop the Gaza Marine gas field off the coast of Gaza,” the Israeli Prime Minister's Office said in a statement.

Crom’s Blessing

Interested in sponsoring Grid Brief?

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