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Welcome to Grid Brief! Here’s what we’re looking at today: Norwegian natural gas outages tighten the EU’s gas market, coal saves the UK grid during a heatwave, an EV bug threatens the US grid, and more.

Outages Tighten EU Gas Market

Natural gas prices in Europe have continued to rally under pressure from sustained summer heat and Norwegian maintenance outages.

“Benchmark prices rebounded from an early slide and rose as much as 12% to the highest since late April. That followed a 16% jump in the previous session, prompted by Norwegian production facilities prolonging their maintenance works until mid-July,” reports Bloomberg. “Other short-term supply issues have brought back volatility, helping boost prices by about 50% this month. Such events, coupled with expectations of competition for fuel with Asia, are keeping the market on edge even as inventories remain far fuller than normal and industrial demand for gas remains muted.”

While prices have not rebounded to their 2022 heights, traders appear to be handling the ebb and flow of the market with great anxiety. Europe’s dependence on LNG has deepened since the outbreak of the Ukraine War, leaving the continent without flows from Russia. LNG import capacity has yet catch up to fully replace pipeline capacity. Right now, Europe’s storage is almost topped off and the market teeters on the brink of gas glut.

But is any of this enough to make it through a hard winter without Russian gas? No one knows for sure.

Coal Saves UK Grid

The United Kingdom’s National Grid ran 46 days in a row without coal until Monday. The demands of a recent heatwave required they switch on their coal plants. Many renewables advocates wondered why wind and solar weren’t used instead.

Here’s what strained the grid according to the Guardian: “the surge in demand for aircon; a fault on the 1,400-megawatt North Sea Link interconnector with Norway that meant the power the subsea cable was carrying to the UK was reduced by half; and planned maintenance at the Torness nuclear power station on the east coast of Scotland, which cut supplies.”

The UK’s flagship left publication then explained to its readers that wind power failed during the heatwave. And although solar made up for about 20% of the mix, it was only available during the day. The Guardian then gestures to batteries as a potential solution to this problem.

This coverage marks an improvement, but fails to educate readers about some power grid basics. Renewables are both intermittent and non-dispatchable. You can’t switch them on when you need them. And battery storage, while useful, is not synonymous with power generation in the way that canning corn isn’t the same as growing it.

A revealing fact for American readers emerges in the article: the UK, like the US, is struggling to site renewables projects and adequate transmission capacity to link them to the grid. European countries are running into similar problems. This should tell Americans that our struggles with interconnection queues isn’t necessarily due to kludgy bureaucracy or regulations alone. The demands of renewables are just that difficult.

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California Is In Trouble

California has ambitious climate goals. The Golden State wants run 100% on renewables by 2045 while decarbonizing its transportation and heating sectors.

The demand on the system will be extreme. Just to electrify transportation, the state will need to increase its electricity 21-fold (2,753 GWh in 2022 to 59,283 GWh in 2045).

Does the state have enough power to pull this off? Not according to a recent report from the Pacific Research Institute. "It is highly doubtful that California will be able to meet its government-imposed renewable energy transition deadlines unless, based on our calculations, the state expands its annual addition of alternative energy sources by 86 percent," reads the report.

Continuing to phase out fossil and nuclear assets will only worsen the problem. Replacing both with wind and solar “will cause total generation capacity to decline slightly, leading to a projected 21.1 percent generation deficit compared to demand by 2045.”

Already, California is running into trouble keeping the lights on. In fact, necessity and reliability have hampered the state’s green energy goals. In February, the California Public Utilities Commission “ordered another 4 GW of supplemental generation on top of the 11.5 GW it ordered to be procured in June 2021,” reports California Energy Markets.

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Conversation Starters

• The Biden administration move to replenish the SPR. “The federal government plans to buy some 12 million barrels as part of efforts to refill the strategic petroleum reserve after drawing down more than 200 million barrels from it last year,” reports Oilprice.com. “This is according to an unnamed source that spoke to Reuters and that also suggested total purchases this year could exceed 12 million barrels. Earlier this month, the Department of Energy announced it had bought 3 million barrels of crude for the strategic petroleum reserve and planned to buy another 3 million.”

• Shell stays committed to natural gas. “Shell Plc will increase its dividend 15% and boost natural gas production as new Chief Executive Officer Wael Sawan refocuses on the fossil fuels that drove record profits last year,” reports Bloomberg. “It’s part of a pivot by the European oil major to expand the most profitable parts of its business, even if they are carbon intensive, while scaling back ventures that don’t make high enough returns. The company reiterated its pledge to achieve net-zero emissions by 2050, but didn’t present a clear plan to achieve that target.”

• America’s electric power sector continues to improve its water efficiency. “As the country’s generation mix moves away from the most water-intensive sources of generation, U.S. electric power sector water withdrawals for power plant cooling remained relatively constant in 2021, increasing by just 0.3% from 2020 to 47.7 trillion gallons of water. The slight increase compares to a 2.5% rise in U.S. electricity generation in 2021,” reports the Energy Information Administration. “The sector’s water-withdrawal intensity—the amount of water withdrawn per unit of electricity generated—continued to fall, declining 2.1% from 11,849 gallons per megawatthour (gal/MWh) in 2020 to 11,595 gal/MWh in 2021.”

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