Welcome to Grid Brief! Here’s what we’re looking at today: NERC identifies energy policy as a threat to grid reliability, China’s economic downturn threatens commodities markets, New York labor and power producers offer solutions to grid reliability issues, and more.

NERC’s New Reliability Threat: Policy

In a recent report, the North American Electric Reliability Corp. has identified a new top threat to grid reliability: energy policy.

Decarbonization with intermittent resources like wind and solar plus decentralization and greater electrification are rapidly changing the dynamics of the American electrical system.

NERC reports that the grid relies on “existing resource sufficiency requirements and underlying studies” premised on a world before decarbonization that assumed meeting peak capacity requirements meant achieving energy sufficiency. But because wind and solar rarely generated their nameplate capacity and because they cannot be made to dispatch power, the availably of capacity (the potential amount of power available) can’t be assumed.

To handle the changes and new stresses to the grid, NERC recommends that stakeholders reach out to policymakers and educate them on the potential consequences of their policy efforts.

“In addition, education for the industry, as the developers of reliability standards, is needed to better understand the processes and implications of policy decisions,” the report said.

As for the physical changes themselves, NERC advised operators to focus on sufficient, flexible operating capacity.

NERC’s full list of major threats to grid reliability are as follows: energy policy, grid transformation, extreme weather, security risks, and critical infrastructure interdependencies. To see the full report, click here.

Commodities Stumble With China

The global commodities market has become tethered to China’s growth—a worrisome spot to be in as the world’s top buyer hit economic turbulence.

“Traders are contending with a protracted crisis in the property market, deflation, weak exports and a falling yuan. Structural challenges include the government’s desire to pivot to an economy led by consumption instead of investment — helpful for fuel and food demand but not for old economy metals driven by construction,” reports Bloomberg. “China’s explosive spending on clean energy offers one salve, lifting consumption of materials linked to the green transition such as copper. But there are always trade-offs, in this case reduced demand for fossil fuels.”

Here’s what else is getting hit, according to Bloomberg:

• Base metals—their profitability saw its worst performance in over a decade in this year’s first half.

• Iron and steel—China’s construction-heavy growth made for 40% of the world’s iron and steel demand, but Beijing’s new reticence around piling debt upon local governments dowses hopes for another round of public works spending.

• Crude oil—The first half of this year saw solid demand growth in crude for China, but the recovery has begun to dissipate as refiners have switched to drawing down inventories and choking imports.

• Coal—Coal is the bedrock of China’s electricity system and thus Chinese growth. But Beijing’s push for more output and imports have tanked prices with a supply glut.

• Gas—The coal glut may also depress the country’s need for LNG.

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NY Labor and Power Producers Offer Grid Solutions

The Independent Power Producers of New York and several labor organizations published a petition to the Public Service Commission on avoiding blackouts and ensuring firm labor standards for the state’s energy transition.

Currently, the Empire State is moving towards the energy transition in aggressive fashion. But its grid operator worries that shortfalls loom on the horizon. To remedy this, the coalition is petitioning the PSC to establish a “Clean Energy Standard” to spur investment in clean technologies. It also calling upon the PSC to create “a competitive program to foster the development of, and investment in, a minimum of 1 GW of zero emissions energy systems.”

But the coalition believes nuclear energy must be in the mix; they do not advise a renewable-only approach.

IPPY is the largest fleet of clean energy producers in the state and the New York State Building and Construction Trades Council represents hundreds of skilled workers.

Conversation Starters

• South Africa and China ink energy deals at BRICS summit. “South Africa signed a raft of deals with China on Wednesday to help it overhaul its creaky energy sector including upgrading its nuclear power plant as the government seeks to ease a severe energy crisis hobbling the economy,” reports Reuters. “The agreements, signed with Chinese power companies on the sidelines of the BRICS summit in South Africa, includes upgrades to the southern African country's electricity transmission and distribution network.”

• Canada has approved federal funds for an SMR project. “The Canadian government has approved CAD74 million (USD55 million) of federal funding for small modular reactor (SMR) development in Saskatchewan. The funding - including over CAD24 million from the proceeds of Canada's pollution pricing system - will support work to advance the project led by utility SaskPower,” reports World Nuclear News. “In 2022, SaskPower selected GE-Hitachi's BWRX-300 SMR for potential deployment in Saskatchewan in the mid-2030s, subject to a decision to build that is expected in 2029.”

• The biggest offshore wind facility in the North Sea powers oil extraction. “The Hywind Tampen wind park, which officially opened Wednesday, is powering five oil and gas platforms operated by Equinor ASA as the Norwegian energy behemoth grapples with mounting pressure to slash emissions,” reports Bloomberg. “More such projects are likely to follow, with European peers Shell Plc and TotalEnergies SE also investing in floating wind. But it’s still a nascent — and expensive — technology, and capacity will continue to be dwarfed by fixed offshore turbines.”

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