UPDATE: Grid Brief will be taking next week off for the 4th of July holiday. 🇺🇸 

Welcome to Grid Brief! Here’s what we’re looking at today: offshore wind continues to suffer, South Africa’s coal bottlenecks worsen, 21% of American energy consumption in 2022 was non-fossil, and more.

Offshore Wind Sees More Trouble

Fortune has turned its face from the offshore wind industry this year.

In the headlines, Siemens Energy’s wind division has continued to founder. This year, the company discovered that the primary frame on its wind turbines tends to shake, damaging its vital components. The company says 15-30% of its turbines are impacted by this problem.

“Executives and board members are concerned that fixing the problem may far exceed the company’s estimate of more than €1 billion ($1.1 billion), said one of the people, who asked not to be named discussing non-public information,” reports Bloomberg. “The magnitude, which is still being assessed and may involve other issues as well, could determine the viability of a business at the center of Europe’s long-term climate goals and energy security.”

But the problems for European offshore wind don’t stop there. Denmark has postponed its offshore wind energy island in the North Sea due to rising costs. “The island, which will gather the power produced by nearby offshore wind farms and distribute it to Denmark and neighbouring countries, is estimated to cost the Danish state more than $7bn, something the country’s energy ministry said is ‘far from being profitable,’” reports Splash 247.

“At this point the costs and risks of the current project are too high,” the ministry said.

And then there’s the manufacturing capacity problem. According to Rystad Energy, demand for the technology may outpace Europe’s ability to crank out turbines.

“According to the company, the offshore wind capacity outlook shows that wind tower manufacturing capacity will keep pace and exceed demand before 2028. However, that year is seen as a turning point, and in 2029, demand will surpass manufacturing capacity by a significant margin,” reports Splash 247. “Steel demand for offshore wind towers will total more than 1.7m tonnes in 2029, but manufacturing capacity will be a maximum of around 1.3m tonnes, meaning supply can only meet about 70% of demand.”

South Africa’s Worsening Coal Bottlenecks

South African coal mining company Exxaro warns that the nation’s coal bottlenecks are getting worse.

“Coal shipments by state-owned port and rail company Transnet have dropped to an annualised rate of 46.5 million tons, Exxaro said on Tuesday. That’s down from the 50.4 million tons it carried from mines to the Richards Bay Coal Terminal for export in 2022 — already the lowest volume in three decades,” reports Moneyweb. Richards Bay is the largest coal export terminal in Africa.

“Various challenges, including poor locomotive availability, train derailments, and instances of cable theft and vandalism continue to impact negatively on export performance,” Exxaro said in an update.

The bitter irony is this: some Western countries are frustrated by South Africa’s coal bottlenecks because they need the fuel for their power systems. And yet Western NGOs have flooded African nations, including SA, demanding that they pivot to a renewables-only future, even as SA suffers blackouts for a want of power.

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One Fifth of ‘22 US Energy Consumption Was Non-Fossil

According to the Energy Information Administration, 21% of US energy consumption in 2022 was non-fossil. Put another way, America has a long way to go before it decarbonizes.

“Renewable energy consumption in the United States increased slightly from 12.1 quads in 2021 to a record-high 13.2 quads in 2022. Increased use of renewables for electricity generation, particularly wind and solar energy, largely drove the rise in renewable energy consumption. Wind remained the largest source of renewable energy in 2022; it first surpassed hydroelectricity, the second-largest renewable source, in 2019,” reports EIA. “Consumption of nuclear energy totaled 8.0 quads in the United States in 2022, down slightly from 8.1 quads in 2021. The small decrease was driven by the closure of the Palisades nuclear power plant in May 2022, nine years before its operating license would have expired.”

Since 1950, petroleum has been the primary energy source consumed in the America. Although petroleum consumption remains below its 2005 peak, it totaled 35.8 quadrillion British thermal units (quads) in 2022. The transportation sector accounts for the most petroleum energy consumption thanks to cars, trucks, and planes.

In 2022, the United States experienced a record-high natural gas consumption of 33.4 quads. The growth in natural gas consumption has primarily been driven by its increased use in the electric power sector which has, for the last five years, been the largest consumer of natural gas, notes the EIA.

On the other hand, coal consumption in the United States declined to 9.8 quads in 2022, marking the second-lowest level in 60 years. Coal consumption has significantly decreased by more than half since its peak in 2005. The reduction in coal use has been predominantly driven by the declining demand in the electric power sector.

Conversation Starters

• UK regulator wants to keep backup power from making too much money. “Britain's energy regulator Ofgem said on Thursday it had launched a consultation on a licensing condition that would prevent electricity generators from making excessive profits from a back-up a system to ensure power supply,” reports Reuters. “The announcement follows talks between Ofgem and other industry regulators with Jeremy Hunt, the finance minister, on Wednesday to try to protect customers facing a cost of living squeeze. A balancing mechanism allows the National Grid System Operator (ESO) to pay generators an inflated fee to produce electricity when it needs extra power to keep supplies to the grid stable.”

• More batteries are coming to California. “Greenbacker Capital Management is expanding its energy storage portfolio and on Wednesday announced the purchase of a 30-MW/120-MWh battery system in Imperial County, California. The Holtville battery energy storage system, or BESS, will be the largest standalone storage asset in GCM’s clean energy portfolio, the company said,” reports Bloomberg. “The project, expected to come online in the third quarter of this year, will help California meet its clean energy goals and storage targets, the company said.”

• Europe struggles with its dependence on Russian LNG. “The European Union may need to rely on sanctions to tackle rising imports of Russian liquefied natural gas in order to meet its ban on all fossil-fuel shipments from Moscow by 2027, according to a leading think tank,”

  reports Bloomberg. “An outright embargo on flows from Russia’s Yamal LNG plant has so far been politically unpalatable in Brussels, but the EU has several paths to curb imports including using its new mechanism for coordinating joint purchases of the fuel, analysts at Brussels-based Bruegel said in a report. Other options include soft sanctions that discourage new purchases but don’t break existing supply contracts, or even doing nothing.”

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