Welcome to Grid Brief! Here’s what we’re looking at today: Vogtle Unit 3 is officially in business, a study finds high ESG scores don’t reflect good environmental performance, Turkmenistan struggles to gin up support for the Trans-Caspian pipeline, and more.

Vogtle 3 Begins Commercial Operations

The Vogtle Unit 3 nuclear reactor began commercial operations yesterday.

“Today is a historic day for the State of Georgia, Southern Company, and the entire energy sector, as we continue transforming the way we power the lives of millions of Americans,” Chris Womack, president and CEO of Southern Company, said in a statement. “With Unit 3 completed, and Unit 4 in the final stages of construction and testing, this project shows just how new nuclear can and will play a critical role in achieving a clean energy future for the United States.”

The Vogtle expansion project is in the process of adding two 1,117-MW Westinghouse AP1000 pressurized water reactors, known as Units 3 and 4, to the existing plant, which has been operating two reactors since 1987 and 1989. Before the completion of Vogtle Unit 3, the most recent reactor to enter service in the U.S. was the Tennessee Valley Authority's Watts Bar Unit 2, which came online in 2016. But Watts Bar Unit 2 was technically considered a deferred unit—construction on it began in the 1970s. As a result, the Vogtle project is considered Southern Company's first "newly constructed" reactor to be built in the U.S. since Comanche Peak Unit 2 in August 1993 or Watts Bar Unit 1 in May 1996.

“Progress has also been noted on Unit 4. Last week, Georgia Power announced the receipt of the 103(g) finding from the Nuclear Regulatory Commission (NRC) for Vogtle Unit 4,” reports Power Magazine. “This finding was confirmed in an official letter received by Southern Nuclear, and signifies that the new unit has been constructed and will be operated in conformance with the Combined License and NRC regulations. No further NRC findings are necessary in order for Southern Nuclear to load fuel or begin the startup sequence for Unit 4.”

The Vogtle project has faced significant challenges, including delays and cost overruns throughout its duration. Originally scheduled for completion in 2016, Unit 3 experienced extensive setbacks due to contractor changes and various issues, leading to a substantial increase in costs for both units. Some estimates indicate that the expenses might have more than doubled the initial projections, amounting to over $30 billion. One Unit 4 is up and running, Vogtle will be the largest nuclear power plant in the country.

Good ESG Scores Mean Nothing for Emissions

A new study observes that companies with high ESG scores pollute just as much as companies with lower ESG scores, according to Scientific Beta, an index provider and consultancy.

“ESG ratings have little to no relation to carbon intensity, even when considering only the environmental pillar of these ratings,” said Felix Goltz, research director at Scientific Beta. “It doesn’t seem that people have actually looked at [the correlations]. They are surprisingly low.”

“The carbon intensity reduction of green portfolios can be effectively cancelled out by adding ESG objectives,” he added.

“Goltz and his colleagues looked at 25 different ESG scores from three major providers: Moody’s, MSCI and Refinitiv. They found that 92 per cent of the reduction in carbon intensity that investors gain by solely weighting stocks for their carbon intensity is lost when ESG scores are added as a partial weight determinant,” reports the Financial Times. “Even just using environmental scores, rather than the whole panoply of ESG, ‘leads to a substantial deterioration in green performance’, they found. Worse still, mixing social or governance ratings with carbon intensity typically creates portfolios than are less green than the comparable market capitalisation-weighted index, the researchers noted.”

So, why does this happen?

“[T]he correlation between ESG scores and carbon intensity is close to zero [at 4 per cent]. The two objectives are unrelated and are therefore hard for investors to simultaneously achieve,” said Goltz.

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Turkmenistan’s Pipeline Problems

Turkmenistan is running out of time to cash in on Europe’s hot market for natural gas.

“The country is losing out to other nations as Europe seeks new supply lines following an historic energy crisis. Its proposal to build a multibillion-dollar gas pipeline across the Caspian Sea faces major financing challenges, and climate change is quickly diminishing the appeal of big fossil-fuel projects,” reports Bloomberg. “All of which means that if Turkmenistan wants to become a gas provider to the EU, it needs to act quickly.”

Located at the intersection of Asia, the country has the potential to serve the rapidly expanding global gas markets. Among these, the European Union stands out as a critical region with a pressing need to replace Russian gas flows due to the ongoing conflict in Ukraine, leading them to take unprecedented measures. Turkmenistan also sit on the fourth-largest reserve of natural gas in the world.

But Turkmenistan, a former Soviet republic that has remained tight with Russia, has few connections with Western countries. Currently, there are no discussions or contacts with Turkmenistan concerning future gas exports. This will make it an uphill fight to get the Trans-Caspian pipeline—an idea that has been floating around since 2007—off the ground. Discussions with European countries on the pipeline are slow-moving.

Conversation Starters

• Another Japanese nuclear reactor has been restarted. “Unit 1 of the Takahama nuclear power plant in Japan's Fukui Prefecture has been restarted after being taken offline more than 12 years ago. Kansai Electric Power Company plans to return the 780 MWe (net) pressurised water reactor (PWR) to commercial operation at the end of August,” reports World Nuclear News. “Takahama 1 entered a regular inspection outage in January 2011, two months before the accident at the Fukushima Daiichi plant that resulted in all of Japan's operable reactors being taken offline. Unit 2 of the plant was taken offline in November 2011.”

• South Korea raises concerns about Australia’s green ambitions. “South Korea became the latest country to express concern Australia’s new emissions reduction policies could pose a risk to gas projects,” reports Bloomberg. “The Ministry of Trade, Industry and Energy said it has asked Australia to exclude already planned gas investments from rules that will make new projects subject to stricter climate targets. It said Trade Minister Lee Chang-yang raised the issue during a meeting with Australian Climate Change and Energy Minister Chris Bowen in Seoul earlier this week.”

• Britain leans into North Sea gas. “Britain on Monday committed to granting hundreds of licences for North Sea oil and gas extraction as part of efforts to become more energy independent, drawing criticism from environmental campaigners. Prime Minister Rishi Sunak confirmed plans for more than 100 such licences, which attracted bids earlier this year and said hundreds of future licenses could also be granted,” reports Reuters. “He also announced fresh support for two carbon capture and storage (CCS) clusters in Scotland and northern England. Britain has a target to reach net-zero emissions by 2050, but Prime Minister Rishi Sunak said even by this date the country is expected to get more than a quarter of its energy from oil and gas.”

Crom’s Blessing

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