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Welcome to Grid Brief! Here’s what we’re looking at today: the United Auto Workers splits with Biden over electric vehicles, Germany ponders subsidizing power costs for its industrial sector, FERC commissioners testify before the Senate, and more.

UAW Pulls Biden Support Over EVs

The United Auto Workers (UAW) plans to withhold its endorsement of President Biden in the early stages of the 2024 race due to concerns over the electric vehicle transition.

“The EV transition is at serious risk of becoming a race to the bottom,” the UAW president Shawn Fain wrote in a memo to the White House. “We want to see national leadership have our back on this before we make any commitments.”

“The U.A.W. has shrunk in size in recent decades, but it still counts about 400,000 active members, with a robust presence in Michigan, a critical battleground state for Democrats,” reports the New York Times.

Last month, the Biden administration proposed aggressive climate regulation that would ensure that two-thirds of new passenger cars are all-electric by 2032. But the allegedly climate-friendly move comes at the expense of UAW membership—it takes fewer than half the laborers to assemble an all-electric vehicle as it does to build a gasoline-powered car.

The UAW seems to be looking for leverage. If companies get federal subsidies for the EV transition, workers “must be compensated with top wages and benefits,” the memo reads. Mr. Fain also notes that 150,000 autoworkers are fighting for a new contract with the Big Three auto companies this fall. “We’ll stand with whoever stands with our members in that fight,” Fain writes.

Auto-makers may have their own gripes with the transition as well. According to reporting from Robert Bryce, Ford lost around $1 billion on EVs in 2021, $2.1 billion last year, and has lost $66,446 on each of the over ten thousand EVs it sold in Q1 of this year.

Germany May Subsidize Energy Security

Germany’s economy and climate minister, Robert Habeck, has proposed state subsidies for energy-intensive companies to help them cut electricity costs in exchange for promises to decarbonize and remain in Germany.

“The minister’s new proposal – which has not yet been cleared by the government as a whole – would guarantee certain companies electricity for 6 cents per kilowatt hour for 80 percent of their consumption until 2030, which will require 25-30 billion euros [27.8-33.4 billion USD] in state funds,” reports Clean Energy Wire.

The proposal has been welcomed by industry groups as a “clear game changer” for international competitiveness. But Habeck’s plan has detractors, including chancellor Olaf Scholz and finance minister Christian Lindner, who have both publicly criticized it. Scholz told the press that he believed Habeck’s policy would “not end well.” Lindner said that he thought such a plan would be "economically unwise.”

The subsidies are likely to draw the ire of Germany’s not as wealthy neighbors. Habeck confessed that he is “aware of the concern of other member states that Germany could unilaterally distort competition due to its financial strength.” Thus, he said, the German government will “enter into a constructive exchange with the European Commission on all competition-relevant questions.”

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FERC Visits the Senate

Commissioners of the Federal Energy Regulatory Commission appeared before the Senate last week, warning senators about the American grid’s increasing unreliability. Each of the commissioners’ perspectives revealed much about the divides within the regulator over the main drivers of the problem.

There is a “looming reliability crisis in our electricity markets,” FERC Commissioner James Danly told the Senate. Danly cited two main causes for the crisis, according to reporting by Utility Dive: kludgy capacity markets and a lack of pipeline infrastructure. Danly also contends that the price distortions brought on by subsidized renewables undermine the economics of coal and natural gas plants, jeopardizing reliability.

“FERC has allowed the markets to fall prey to the price distorting and warping effects of subsidies and public policies that have driven the advancement of large quantities of intermittent renewable resources onto the electric system,” Danly said.

Commissioner Mark Christie said, “The United States is heading for a very catastrophic situation in terms of reliability.” From his vantage, the problem is that reliable power plants are retiring before they can be replaced.

“The arithmetic doesn’t work,” he said. “This problem is coming. It’s coming quickly. The red lights are flashing.”

Head Commissioner Willie Phillips echoed Christie and Danly’s worries about the crisis, but focused on the need for interregional transmission and transmission upgrades to speed the energy transition and firm up reliability issues. Phillips has clearly states synching up renewable generation between regions is an adequate solution for America’s mounting reliability challenges.

“Transmission plays a critical role in facilitating the interconnection of new resources, while ensuring that the electric system remains reliable,” Phillips said.

Lastly, Commissioner Allison Clements anchored her concerns in climate change and security—both cyber and physical. Clements is surely correct on the latter, and it should be mentioned that Danly vehemently disagrees with her analysis of extreme weather triggered by climate change as a driver of unreliability, per a letter he wrote to the House Energy and Commerce Committee last year.

Regardless of their differences in perspective, the commissioners agree that unreliability will become an increasingly difficult issue for the electricity system. All told, they used the word “reliability” 34 times in their prepared testimony.

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Conversation Starters

• Norwegian natural gas is getting the Lazaro Cardenas treatment. “Norway’s plan to nationalize natural gas assets includes more than just Gassled’s natural gas pipelines, new information revealed in a letter from the Norwegian energy minister showed on Friday. The surprise move to nationalize the country’s gas assets will also include other assets—including the Nyhamna processing plant,” reports Oilprice.com. “Last Friday, Norway’s oil and energy minister said it would nationalize its natural gas pipelines within the next five years when existing concessions are set to expire. But now, a new letter to licensees seen by Reuters on Friday said that that plan also includes ‘other central parts of the Norwegian gas infrastructure that are currently owned by Nyhamna and Plarled, as well as Vestprosess DA.’”

• India wants more foreign investment in nuclear. “India is considering overturning a ban on foreign investment in its nuclear power industry and allowing greater participation by domestic private firms, two government sources told Reuters, as part of a push for cleaner energy.

  The measures have been recommended by a government panel, set up by think-tank Niti Aayog which is headed by Prime Minister Narendra Modi,” reports Reuters. “Under India's Atomic Energy Act 1962, the government plays a central role in developing and running nuclear power stations. Domestic private companies are allowed to participate as ‘junior equity partners’ by supplying components and helping build them. The panel has recommended changes to the act and to India's foreign investment policies so that both domestic and foreign private companies can complement nuclear power generation by public companies.”

• Thailand is on the brink of an energy misstep. “The fallout from the global energy crisis is pushing Thailand to accelerate its shift to renewables after dragging its feet for years, the latest nation to embrace wind and solar in order to reduce dependence on imported fuel,” reports Bloomberg. “The Southeast Asian country was forced to rethink its renewable energy strategy following last year’s surge in natural gas prices sparked by Russia’s invasion of Ukraine, said Wattanapong Kurovat, director-general of the Energy Policy and Planning Office. The situation was exacerbated by Thailand’s drop in production.”

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