Solar Gets Pricey // Blas: $200 Billion European Bailout If Russia Chokes Gas Flows // Belgium and Japan: More Nuclear, Please!

Solar Gets Pricey

Solar energy prices rose 8.1% in Q2 largely due to the Department of Commerce's tariff probe into duty evasion from Asian solar panel firms.

"The increase during the period contributed to a whopping 29.7% rise in the combined price of wind and solar contracts, known as power purchase agreements (PPAs), from the previous year," reports Reuters.

The metrics come from LevelTen energy, which released a new report on price increases in renewables last week. In the report, LevelTen writes that renewable PPAs rose 5.3% to $41.92 per MWh between Q1 and Q2 this year.

“PPA prices have now been rising for more than two years,” said Gia Clark, senior director of Developer Services at LevelTen Energy, in a press release. “It’s unclear when prices will stabilize or decline because demand for PPAs continues to grow faster than supply."

But, Utility Dive reports, despite the fact that solar PPA process outpaced wind PPA prices--"8.1% vs. 2.5% this past quarter"--wind PPAs have seen the larger increase in price over the last year.

According to Clark, it appears unlikely that wind and solar prices will return to their pre-2020 norm anytime soon. "Potential solar tariffs and very real inflation are the latest obstacles making it harder and more expensive to build new projects and put PPAs out on the market,” she added.

Still, Clark said, customers are lining up for renewables in large part to hit their climate goals.

Blas: $200 Billion European Bailout If Russia Chokes Gas Flows

Javier Blas at Bloomberg estimates that bailing out the European power sector in response to a potential Russian clampdown on gas exports would run up a fat $200 billion tab.

Blas understands how flippant that sounds--and that it's more "back of the napkin" than hardboiled calculation. But he also thinks it's conservative. "It doesn’t cover the worst-case scenario of both Russia fully shutting down natural gas supply to Europe and a colder-than-average winter," he writes. To bolster his point, the estimates for the total cost of the Texas blackouts last year top out at $200 billion.

I agree with Blas that few European leaders seem to grasp just how dire the situation is. He names France's Macron and Germany's Scholz as exceptions. I would have disagreed on the latter until recently. Germany's insane drive to shutter its nuclear plants during an energy crisis made them appear immune to the sobering influence of real-world events. But, as Der Spiegel reports, German nuclear still has hope: "The federal government is leaving a door open for the continued operation of the three remaining nuclear power plants in Germany beyond the end of the year." Fingers crossed.

To weather this crisis, Blas writes that the EU will have to band together. "The EU will have to decide on a big energy savings program, including a public campaign to support it, and make clear that nations will help each other by sharing the little gas that will be available." Norway, the Swiss, and the Brits will need to get invites to Brussels, too.

But no matter what, utilities and customers will need bailouts. The pain will be intense and it will flood society with resentment and hardship. "European governments should be upfront about the costs," says Blas. "They can win the argument that this is money well spent to stop Vladimir Putin."

Blas knows more about Europe than I do--he knows more than I do about many things. But my nagging suspicion is that he seems to assume incredible unity among Europeans against Russia in dire conditions that have a simple solution: buy Russian energy. I don't mean to cast aspersions about European virtue. Only to ask: in February, does hated for Putin win out over your own shivering, hungry child?

Belgium and Japan: More Nuclear, Please!

Belgium and Japan want to keep their nuclear.

"Flemish Energy Minister Zuhal Demir has called on the federal government to prioritize energy supply during the current European energy crisis and avoid cutting off important supplies of electricity," reports the Brussels Times. "Namely, the minister has asked the government to consider extending the operation of Belgium’s Doel 3 and Tihange 2 nuclear power plants."

The current plan is to shutter the nuclear plants by 2023. Belgium was hoping to transition from nuclear to natural gas, but the Ukraine war and the resultant sanctions against Russian energy put the kibosh on that.

“The law on phasing out nuclear power was passed, but in the meantime, the world has changed. We are entering winter and we cannot afford to activate the Federal emergency plan,” Demir stated. “We also know what international energy prices mean for our bills. Less energy means the bills skyrocket." Luckily, there is a legal precedent to save the plants.

As for Japan, "Prime Minister Fumio Kishida has called for up to nine of the ten reactors that have already been restarted to be in operation over the winter to avoid electricity shortages," reports World Nuclear News.

"There are concerns about the supply and demand of energy this winter," Kishida said at a press conference last week. "At any rate, we need to prevent such a situation. Therefore, I have told the Minister of Economy, Trade and Industry that as many nuclear power plants as possible - up to nine - this winter will be put into operation to secure about 10% of Japan's total electricity consumption."

Japan currently has five reactors in operation at the moment.

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Conversation Starters

• Texas's grid is facing tight supply conditions after it saw quadruple-digit prices on July 17. "As of about 11:30 am CT, ERCOT forecast load to peak at 79.5 GW, well above the 78.4 GW all-time record set July 12, which was the eighth record set so far in 2022. The forecast also calls for peak loads above the existing record on July 19, 20, and 25," reports SPG.

• Gazprom has declared a force majeure on gas deliveries to some European customers due to "extraordinary" circumstances. "The July 14 letter from the Russian state gas monopoly said it was retroactively declaring force majeure on supplies dating from June 14. The news comes as Nord Stream 1, the key pipeline delivering Russian gas to Germany and beyond, is undergoing annual maintenance meant to conclude on Thursday," reports Reuters.

• The EIA seems to have evidence of gasoline demand destruction.

Crom's Blessing