David Fuller and Eoin Treacy's Comment of the Day
Category - Energy

    Europe's Power Crunch Shuts Down Factories as Prices Hit Record

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    Electricite de France SA said last week it will halt four reactors accounting for 10% of the nation’s nuclear capacity, straining power grids already faced with the prospect of a spell of cold weather. At the beginning of January, almost 30% of France’s nuclear capacity will be offline, increasing the country’s reliance on gas, coal and even oil.

    “If we have a very, very cold day, it could be problematic, especially if we have to import and our neighbors have problems as well,” said Paris-based Anne-Sophie Corbeau, a research scholar at the Center on Global Energy Policy at Columbia University. “This is the domino effect we need to fear. But electricity will be expensive, there’s going to be a cost to pay.”

    German power for next year jumped to a high of 335 euros a megawatt-hour, following a 25% rally on Tuesday, before slipping back. The French equivalent rose as much as 2.5% to record of 408 euros. Prices gained amid thin holiday trading even as gas declines. There was also speculation some traders may be closing short positions due to rising capital requirements from exchanges.

    “The strength in the French market has been the main engine -- aside from gas prices -- of strength in neighboring markets, including Germany, in recent days,” said Glenn Rickson, head of European power analysis at S&P Global Platts.

    “I also suspect that any big moves ahead of the run-up to Christmas have as much to do with the thinness of the market and traders needing to close short positions ahead of shutting down for the holidays as anything else.”

    Soaring gas and power prices have already forced European utility giants from RWE AG to Uniper SE to boost liquidity requirements. Many smaller suppliers didn’t have the same option, with more than 20 going out of business in the U.K. alone.

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    Equinor Wants the World's Last Drop of Oil to Come from Norway

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    Equinor’s Johan Sverdrup oil field is already fully electrified. It started production two years ago and is expected to operate for more than 50 years. The process of extracting the crude emits 0.67 kilograms (1.5 pounds) of carbon dioxide per barrel, compared with the company average of 9 kilograms. The global average is 18 to 19 kilograms.

    Yet Norway isn’t the only country with this idea. Saudi Arabia, leader of the Organization of Petroleum Exporting Countries, also says it wants to pump the world’s last barrel. The carbon intensity of the kingdom’s crude matches that of Equinor, at 9 kilograms a barrel, according to Oslo-based consultant Rystad Energy A/S.

    There’s also the question of whether it will remain politically possiblefor Norway to remain as a major exporter of carbon-based fuels even as it implements its own emissions reductions, and strives for leadership in areas such as electric cars. Its neighbor the U.K. is already facing stiff opposition to new oil and gas developments on climate grounds, contributing to the shelving of the Cambo field earlier this month. 

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    Email of the day on charging station stocks

    Additionally, while individuals do not have gas pumps installed at their home, they can have a level 2 ev charger installed that would seriously compromise the market share of a commercial charging station.

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    U.K. Plans Giant Battery to Manage Surge in Offshore Wind

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    The first phase of the Teesside battery is due to be completed by 2023, a Sembcorp spokeswoman said by phone, adding that the investment required would be in the “hundreds of millions” of pounds.

    “Flexible energy sources play an increasingly important role in maintaining secure and reliable energy supplies,” Andy Koss, Sembcorp’s chief executive officer for the U.K. and Middle East, said in the statement. With a growing reliance on renewables, the U.K. energy system must be “able to respond

    quickly to changes.”

    The new storage site is expected to top the largest current planned battery -- a 100-megawatt facility by Zenobe Energy Ltd. Sembcorp said its total U.K. battery pipeline is now almost half a gigawatt. It already operates 70 megawatts and has a further 50 megawatts due to come online in early 2022.

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    Email of the day on carbon sequestration

    Montreal company Carbicrete has developed a method for sequestering carbon in concrete, claiming its product captures more carbon than it emits. The technology cuts out the need for calcium-based cement, a key ingredient in traditional concrete that is responsible for around eight per cent of all global CO2 emissions. I thought you might be interested in this.

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    Global Shortage of Fertilizers Sends Demand for Dung Soaring

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    “The arable area still requires significant tonnage of synthetic fertilizer, but this is reduced by the use of manures,” Butler said. Since the animal waste from his farm is not enough, he has been buying biosolids from utility Thames Water, which produces over 750,000 meters squared of sludge each year for farmers across Britain’s southeast. 

    However, Butler said that it’s increasingly difficult to source human excrement as “there is more demand than supply for biosolid materials.”

    In the U.S., biosolids are regulated by the Environmental Protection Agency, and in Europe, biosolids have been in use since 1986 when it received regulatory approval from the European Union. 

    While manure is an inexpensive alternative to pricey synthetic fertilizers, it is a “poor replacement for those accustomed to traditional fertilizer products,” said Alexis Maxwell, an analyst at Bloomberg’s Green Markets. For example, the fertilizer diammonium phosphate has six times the nitrogen and 15 times the phosphate as manure on a per ton basis.

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    SEC probes Tesla over whistleblower claims on solar panel defects

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    Henkes, a former Toyota Motor quality division manager, was fired from Tesla in August 2020 and he sued Tesla claiming the dismissal was in retaliation for raising safety concerns. Tesla did not respond to Reuters' emailed questions, while the SEC declined to comment.

    In the SEC complaint, Henkes said Tesla and SolarCity, which it acquired in 2016, did not disclose its "liability and exposure to property damage, risk of injury of users, fire etc to shareholders" prior and after the acquisition.

    Tesla also failed to notify its customers that defective electrical connectors could lead to fires, according to the complaint.

    Tesla told consumers that it needed to conduct maintenance on the solar panel system to avoid a failure that could shut down the system. It did not warn of fire risks, offer temporary shutdown to mitigate risk, or report the problems to regulators, Henkes said.

    Tesla shares fell 5.5% at $960.25 on Monday after the Reuters report.

    More than 60,000 residential customers in the U.S. and 500 government and commercial accounts were affected by the issue, according to his lawsuit filed in November last year against Tesla Energy over wrongful termination.

    It is not clear how many of those remain after Tesla's remediation program.

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    Euro-Area Inflation Tops All Forecasts With Record 4.9%

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    Anticipating a spike in inflation this month, ECB officials have redoubled efforts in recent days to reassure citizens that they are facing a once-in-a-generation cost-of-living squeeze that won’t endure, driven by energy and a series of one-time factors.

    While President Christine Lagarde is sticking to that script, some colleagues are warning that price pressures might take longer to subside, stoking speculation about the future course of monetary policy. 

    At a Dec. 16 gathering, the Governing Council is set to announce the end of its pandemic bond-buying plan and outline how regular purchases and interest rates will develop as the economy continues its recovery.

    “While energy costs and statistical effects can explain the bulk of this month’s jump, today’s reading also revealed some stronger than anticipated underlying pressure. That will add to concern over upside risks to the outlook, but the ECB is still likely to see inflation falling below 2% by the end of next year.” - Maeva Cousin, senior euro-area economist. 

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