Liz Truss Takes On UK Energy Crisis // Ghana Goes Nuclear // How Long Can CAISO Hold Out?

Liz Truss Takes On UK Energy Crisis

Incoming UK PM Liz Truss is inheriting quite the mess. Energy costs are hammering UK households and it's not yet winter. To solve the issue, Truss has worked up plans to fix the price of gas and electric bills at around $2300. 

"In discussions with her team and government officials in recent days, Truss has settled on a mechanism that will avert the massive increase in energy bills that is due to kick in at the start of next month under the existing pricing system, according to officials and advisers to Truss who were briefed on the plan," reports Bloomberg. Truss's policy may cost as much as £130 billion ($150 billion) over the next year and a half. 

The price of energy was expected to leap 80% for most households, putting terrible pressure on the poor and working class. Truss's plan disposes of that pricing and sidesteps Britain's energy regulator Ofgem. Instead, households will pay a price set by the government and reviewed every quarter by ministers. 

"Under Truss’s plan, energy suppliers will be obliged to charge households a reduced rate for their energy and the government will guarantee financing that will cover the difference with what they would have charged under the previous system," reports Bloomberg.

The exertion of government control over the market should signal to the rest of the West that the question is no longer whether or not the UK and Europe will enter a crisis this winter, but how bad it will be.

Ghana Goes Nuclear

President Akufo-Addo of Ghana has just officially adopted nuclear as part of his country's energy mix. 

"The move, according to him, is in consonance with the global collective commitment to the sustainable availability of power, and the peaceful exploitation of nuclear energy for the benefit of our citizens, to enhance rapid industrialization, and to propel economic growth," reports Starr FM. 

Akufo-Addo's move builds on a cabinet decision to adopt nuclear in 2008 as part of Ghana's National Energy Policy and Strategy. 

In a statement, the president pledged to develop nuclear for strictly peaceful means and described the country's participation in the International Atomic Energy Agency's Milestones Approach to creating a nuclear power industry. He also announced the institutional restructuring needed to fast-track the process. 

This development is part of America's FIRST program launched in the spring of last year. "The programme will support Ghana's adoption of SMR technology, including support for stakeholder engagement, advanced technical collaboration, and project evaluation and planning. Japan, which has partnered with the USA on the FIRST programme, will also build on its existing partnership with Ghana to advance Ghana's civil nuclear power aspirations," World Nuclear News reports. FIRST is meant to complement the IAEA's work with Ghana.

"Clean, reliable, and safe nuclear energy can provide significant benefits to Ghana and the Ghanaian people - including clean energy, agricultural improvements, clean water, advanced medical treatments, and more. The climate crisis is serious and urgent.  Next generation nuclear energy, like what we're working on today, must be part of the solution," said US Ambassador to Ghana Stephanie Sullivan at last February's launch event for FIRST.

How Long Can CAISO Hold Out?

California saw nearly 100,000 customers without power last night. A heatwave coupled with a lull in wind up and down the cost has forced demand up while throttling supply.

The Golden State's grid operator, CAISO, issued an EEA 3 alert at 5:17pm (PST). EEA3 alerts signal that supply can no longer serve demand. Rolling blackouts are often implemented after an EEA 3 to keep the grid from failure.  CAISO claims there was no load shedding, but Palo Alto Utilities, Healdsburg, and Alameda Municipal Power all announced load shedding in response to the EEA 3.

Earlier in the day, Governor Gavin Newsom pleaded with Californians to constrain their energy use after 4pm to spare the grid. 

California's aging transmission lines also played a role. They simply couldn't handle the heat. 

If you look at the supply chart below, you'll notice natural gas did most of the heavy lifting. Also notice that batteries discharged while solar was abundant. Why? Because the price was above cap. Greens sell customers on the line that when the grid is awash in cheap solar, batteries will store up power and save it for when solar falls off. 

This is inconsistent with EIA findings. "During 2021, 59% of the 4.6 GW of utility-scale U.S. battery capacity was used for price arbitrage," the administration reported earlier this year, "up from 17% in 2019. In certain markets, price arbitrage is more common than in others. For example, more than 80% of the battery capacity added in 2021 in the California Independent System Operator service territory was used for price arbitrage."

Battery owners want to make money, not bail out solar.

In short, the green vision born in the 1970s that focused on energy austerity, wind and solar, and the restructuring of the American electricity sector to accommodate its preferred tech is now falling apart before our very eyes.

The heatwave will persist until Friday.

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Conversation Starters

1. A fight over Texas transmission line construction could have huge implications for the power industry. "A Texas law giving incumbent utilities the sole right to build transmission lines connecting to their systems likely violates the U.S. Constitution’s dormant Commerce Clause, which bars states from restricting interstate commerce, the U.S. Court of Appeals for the Fifth Circuit said in an opinion Tuesday," reports Utility Dive. If the court's decision is upheld, then we could see the monopoly status of transmission, largely thought even by some anti-monopolists to be a "natural monopoly," put under serious strain. 

2. Russia has made bank since Europe imposed sanctions. "Of the 158 billion euros ($157.6 billion) in energy exports that Russia has earned in the past six months, over half of it has been funded by the European Union," reports Oilprice.com.

3. America's LNG export capacity is set to grow. With the addition of Plaquemines, Corpus Christi Stage III, and Golden Pass, American LNG exports will approach 20 billion cubic feet per day.

Crom's Blessing