Welcome to Grid Brief! Here’s what we’re looking at today: the Florida Municipal Power Agency has commented on the EPA’s new power plant emissions rules, India ponders letting the private sector into nuclear, European LNG prices fall like a stone, and more.

Florida Agency Sounds Alarm on EPA Rules

The Florida Municipal Power Agency has released a comment on the Environmental Protection Agency’s new power plant emissions rules. The new rules also require large natural gas plants operating continuously to either capture 90 percent of their emissions by 2035 or primarily utilize low-carbon hydrogen by 2038, while setting onerous carbon capture requirements on coal plants.

The FMPA warns that the EPA’s new rules could be lethal Florida’s energy system.

“We believe the EPA proposal could dramatically raise the cost of power and put the reliability of Florida’s power supply at great risk,” FMPA’s CEO and Manager Jacob Williams writes in his cover letter to the comment. “For example, the proposal effectively retires all remaining coal generation in the U.S. and, more importantly to Florida, dramatically impacts natural gas generation, which provides 75% of our electricity. Florida is by far the most dependent state in the U.S. on natural gas generation.”

FMPA’s report honed in on the EPA’s assumptions about using green hydrogen to replace natural gas. The FMPA argues that the design, permitting, and construction of green hydrogen pipeline structure is not feasible by the EPA’s 2032 goal and most likely not even before 2040.

“It is unlikely Florida could meet the 2032 ‘green’ hydrogen requirement for the large natural gas power plants. As a result, Florida would have to reduce generation levels by 20–40% for the low-cost, low emitting natural gas units and the remaining higher cost plants could not make up the difference,” Williams writes. “This presents a serious challenge for Florida—FRCC estimates that in 2032 the EPA rule could require the replacement of 23 million MWh of power to serve load. But this causes a shortfall of about 8 percent of FRCC’s own projected needs, the equivalent to blacking out about 1.8 million residential customers for the entire year.”

FMPA’s report is yet another broadside against the EPA’s aggressive stance against fossil fuel generation. FMPA is owned by the 33 Florida municipal electric utilities, which serve over 4.2 million Floridians or nearly one fifth of the state.

India Considers Private Nuclear Power

India, which has a nationalized nuclear power industry, is consider whether or not private industry should enter the nuclear sector, specifically for small modular reactors.

“Discussion about modular reactors, or SMRs, has gained momentum in recent months, as the world’s third-biggest emitter of greenhouse gases seeks clean sources of power to reduce its dependence on coal, which currently produces about 70% of India’s electricity,” reports Bloomberg. “The nation has committed to have half its power generation capacity run on clean sources by the end of this decade, a key milestone in its goal to become net zero by 2070.”

But SMRs are still in their early stages of development. Whether or not they can succeed at scale has yet to be demonstrated. Though India is mulling private sector entry, it’s likely to limit private involvement to construction. The federal government would still handle operations and fuel management.

At present, India's nuclear power capacity stands at about 7.5 gigawatts, all of which sits under the aegis of the state-run Nuclear Power Corp. of India Ltd. The country has set an ambitious target to expand this capacity to nearly 22.5 gigawatts by 2031, and the expansion plan will mainly focus on large, traditional nuclear plants.

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European LNG Imports Plummet

LNG prices in Europe has dropped to their lowest level since before the outbreak of the Ukraine War.

“LNG deliveries fell 7% in July from a year earlier to 8.6 million tons, the least since November 2021,” reports Bloomberg. “The drop coincides with a slide in the region’s benchmark gas prices, which have slumped more than 80% in the period and left LNG traders opting to send deliveries to Asia or wait for rates to rise again.”

In 2022, Europe saw a 60% spike in its LNG imports, primarily driven by the need to offset the decline in Russian pipeline gas deliveries following the invasion of Ukraine. Currently, the continent has higher-than-average reserves of LNG amid low demand. But secure shipments for winter demand, Europe may need to raise prices to lure suppliers away from the competitive Asian market.

Conversation Starters

• Oil output is expected to rise. “U.S crude oil production this year will rise faster and demand increases will cool compared to prior expectations, the U.S. Energy Information Administration (EIA) said on Tuesday,” reports Reuters. “EIA issued the new outlook after the Organization of the Petroleum Exporting Countries (OPEC) and allies extended output cuts through 2024. Saudi Arabia will pare 1 million barrels per day (bpd) from its July output to stabilize oil markets, it said.”

• Mexico has inked a long-term LNG deal with Mexico. “ConocoPhillips has agreed to a long-term LNG deal from a $15 billion export terminal that is being built in Puerto Libertad, Sonora, Mexico,” reports Oilprice.com. “The free on-board basis deal with span 20 years, with Conoco committing to purchasing 2.2 million tons per year of LNG from Mexico Pacific Limited LLC. Mexico Pacific Limited LLC is building out the terminal and in Sonora, Mexico, which is expected to cost some $15 billion. It is also planning to build a 500-mile-long pipeline as part of the project. The annual capacity of the first three LNG trains part of the project is expected to be 15 MTPA. It is expected to open by 2027.”

• An American wind industry group isn’t happy with the government’s offered acreage. “The Bureau of Ocean Energy Management on Monday announced it has finalized three new offshore wind lease areas off the coasts of Virginia, Maryland and Delaware, after “extensive” engagement with stakeholders — which one climate group said resulted in the proposed areas being shrunk excessively,” reports Utility Dive. ‘79% of all the initially proposed offshore wind lease space in the central Atlantic was cut – that is far above what is usually cut in this kind of process,’ Jamie DeMarco, Maryland director of the Chesapeake Climate Action Network, or CCAN, said in an interview. BOEM said that the three areas, which total 356,550 acres, would support 4 GW to 8 GW of offshore wind energy capacity.”

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