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Southwest Power Pool Expands // US Offshore Wind: Suffering Continues

Welcome to Grid Brief! Here’s what we’re looking at today: the Southwest Power Pool is set to expand with new members, American governors ask Biden to intercede to save the offshore wind industry, and more.

Southwest Power Pool Expands

The Southwest Power Pool has announced that Basin Electric Power Cooperative and three regions of the Western Area Power Administration have decided to pursue full membership in SPP’s regional transmission organization.

“Southwest Power Pool (SPP) will soon become the first organization in the U.S. to provide full regional transmission organization (RTO) services in both the Eastern and Western Interconnections of the nation’s power grid,” the SPP said in a statement.

The utility companies seeking SPP membership are already members of its Western Energy Imbalance Service market (WEIS). SPP has stated that these complete membership commitments represent the “first major expansion” of its service region in nearly eight years. The utilities will join SPP by 2026.

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US Offshore Wind: Suffering Continues

Six governors have asked the Biden administration to intervene and help the offshore wind industry as soaring costs threaten multi-billion dollar projects.

“The governors, including those from Connecticut, Massachusetts, New York and New Jersey, made their plea in a letter to Biden obtained by Bloomberg News,” reports Bloomberg.

“Absent intervention, these near-term projects are increasingly at risk of failing,” the governors said in the letter. “Without federal action, offshore wind deployment in the US is at serious risk of stalling because states’ ratepayers may be unable to absorb these significant new costs alone.”

States are currently struggling to reevaluate power purchase agreements that were cut before the surge in costs across the industry, including financing and the essential infrastructure like towers, turbines, and foundations. Shell and Avangrid are spending out tens of millions to quit these contracts. Other companies have asked for 54% price hikes on their power or have threatened to “walk away” from their projects without more federal support.

The governors called for the Treasury Department to establish attainable criteria to qualifying for additional tax credits. They propose the possibility of a bonus credit of up to 10% linked to the use of domestically manufactured equipment. They have also asked for the government to simplify offshore wind project permitting plus revenue sharing from offshore wind leasing that currently flows into federal funds.

Experts and industry insiders have gone on record to say that the Biden administration’s goal of 30 GW of offshore wind by 2030 is no longer achievable even with help.

"The U.S. will not reach the 30 GW by 2030 target," Samantha Woodworth, North American wind analyst at Wood Mackenzie, told Reuters.

Conversation Starters

  • Generac sees a massive product recall. “Amid this year’s damaging hurricane season, with generators in demand, Generac Power Systems has recalled about 64,000 of its portable generators after more than two dozen reports of overheating, some of which resulted in severe burns, the Consumer Product Safety Commission said in a statement. The Wisconsin company received more than two dozen reports, “of the generators overheating and pressurizing or expelling fuel when opened. At least three incidents resulted in severe burn injuries, the commission said,” reports CNN. “‘The ‘recalled generators’ fuel tank can fail to vent adequately from the rollover valve, causing the gas tank to build up excess pressure and expel fuel when opened, posing fire and burn hazards,’ the commission said. The group is advising people to immediately stop using the recalled generators and contact Generac for a free repair kit.”

  • Chevron continues LNG exports amid strikes. “Chevron's two western Australian plants continued exports of liquefied natural gas (LNG) on Friday, despite a step-up in strikes and a fault at the Wheatstone plant that cut production by a quarter, shipping data on LSEG Eikon and Kpler showed,” reports Reuters. “Workers at Gorgon and Wheatstone, responsible for over 5% of global supply, on Thursday escalated what had been six days of limited strikes. Until roughly the end of September, unions can strike for up to 24 hours each day and refuse tasks like loading tankers. However, tanker Pacific Enlighten docked at the Wheatstone terminal on Thursday and loaded 140,650 cubic metres of LNG, the data showed. The tanker is controlled by Japan's largest LNG importer JERA and will be heading to Japan.”

  • Irish Environmental Minister rejects an LNG project. “Environment Minister Eamon Ryan has rejected claims that An Bord Pleanála’s refusal today of permission for the Shannon Liquefied Natural Gas (LNG) project will cost jobs in the West and jeopardise national energy security,” reports the Irish Independent. “Mr Ryan said energy security would come from deploying greater renewables and with greater efficiency in energy use, arguing it was over-dependency on gas had caused the spike in prices and concerns over supply. He also said Kerry, Clare and Limerick would receive a huge jobs boost from focusing on offshore wind.”

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