US Grid: More Gas, More Renewables // Europe’s Interconnection Problems // Austria Beefs Up Its Energy Windfall Tax
Welcome to Grid Brief! Here’s what we’re looking at today: the US grid gets gassier despite the renewables boom, European solar runs into interconnection problems, Austria squeezes its energy sector, and more.
US Grid: More Gas, More Renewables
In 2023, the American electrical system has gotten gassier despite the growth in renewables.
“Total power generation across the lower 48 states through Aug. 20, 2023 declined by 2.1% from the same period in 2022, data compiled by Refinitiv shows. But generation from natural gas climbed by over 10%, widening gas' lead as the country's main source of electricity,” reports Reuters. “The share of power generated from gas averaged 40.4% through mid-August, up from under 36% in the same period in 2022.”
Natural gas generation has outpaced wind, solar, nuclear, and hydro in proportion of electricity generated.
Between January and August 20th of this year, clean power made for 40.5% of power generation, a 0.6% increase from the same period last year. The tiny growth in clean power generation is due, in part, to low hydro and wind output and despite an uptick in solar capacity.
Meanwhile, coal output dropped by 21% in the same window of time.
As the grid becomes more dependent on natural gas, emissions reductions will slow and become vulnerable to failures in pipeline infrastructure and/or natural gas price swings.
Europe’s Interconnection Problems
Europe has 40 GW of solar panels gathering dust in warehouses—that’s equal to the amount of solar the continent deployed last year. The number looks to increase to 100 GW by year’s end.
“A growing number of solar panels are sitting in storage because of various bottlenecks and barriers along the supply chain, including labour shortages, critical material delays and long interconnection queues,” reports Energy Monitor.
Europe’s struggles to connect its solar farms suggests that interconnection is not just an American problem, but a difficulty inherent in land-hungry, site-specific technology.
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Austria Beefs Up Its Energy Windfall Tax
Austria plans to strengthen its windfall tax for energy companies amidst rising discontent around cost of living.
“The levy that skims 40% of additional net income will apply to profits exceeding a pre-crisis average from 2018 to 2021 by more than 10%, compared with the 20% threshold in place until now, the government in Vienna said in a statement late Saturday,” reports Bloomberg.
Increasing the windfall tax for fossil producers comes after Austria put the squeeze on power producers, which now must pay 90% of profits deemed excessive.
The Texas grid operator issued an appeal for conservation yesterday. “Texas' electric grid operator asked residents and businesses to conserve energy on Sunday as its reserves were expected to decrease during a scorching heat wave that has caused demand to surge,” reports Reuters. “The Electric Reliability Council of Texas (ERCOT) issued an appeal for conservation from 4 p.m. to 9 p.m. local time (2100-0200 GMT) on its website, saying reserves could run low due to high demand and a lack of wind and solar power generation.”
Saudi Arabia considers a nuclear power deal with China. “Saudi Arabia is weighing a Chinese bid to build a nuclear-power plant in the kingdom, Saudi officials familiar with the matter said, in a move designed to pressure the Biden administration to compromise on its conditions for U.S. help in the kingdom’s quest for nuclear power,” reports the Wall Street Journal. “The U.S. has said American nuclear aid is contingent on the Saudis agreeing to not enrich their own uranium or mine their own uranium deposits in the kingdom—nonproliferation conditions not sought by China, which has been seeking to strengthen its influence in the Middle East, to the consternation of Washington.”
UK oil and gas company Ithaca defers projects over windfall tax. “Ithaca Energy, one of the largest oil and gas producers in the UK, has reduced investments and is deferring some projects this year and next, due to the burden of the windfall tax Britain has levied on the industry. The windfall tax, the so-called Energy Profits Levy, has prompted many companies operating offshore the UK to cut investments and review projects,” reports Oilprice.com. “After the UK raised the windfall tax to 35% at the end of last year, Harbour Energy, the biggest oil and gas producer in the UK North Sea, backed out of the latest licensing round aimed at awarding more than 100 new licenses. Shell has said it would be re-evaluating each project comprising its $30.5 billion (25 billion pounds) planned investment in the UK energy system, and TotalEnergies has said it would slash its investment in the UK by 25%.”
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