North Mississippi sees surge in power plant construction

By Memphis Business Journal


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Construction of a 900-megawatt power plant in Benton County is just the latest in a long list of power production projects in North Mississippi spurred, in part, by the deregulation of wholesale markets.

The plant, being built by Boston-based InterGen, Inc., will sell power on the open market as a merchant plant using the Tennessee Valley Authority's transmission system. Like several other projects in the area like AES Enterprise's 500-megawatt power plant in West Point, InterGen's project is one of 19 merchant plants in production or planned for North Mississippi.

The movement to build so many of these merchant plants, at an estimated cost of $5.5 billion, in North Mississippi began in April 1996 with Order 888 of the Federal Energy Regulatory Commission, says Ken Ulrich, asset manager at InterGen.

That ruling, which deregulated the wholesale markets in an attempt to spur development of generation capacity, called on public utilities like TVA to open their transmission lines to carry power produced by independent producers like InterGen and AES.

The order signaled a historic change in the way electricity was sold in the wholesale markets.

North Mississippi is a nexus of power lines that form the means of transmitting wholesale power and the gas pipelines that fire the turbines that produce it.

The area offers merchant plants access to the territories of Entergy and TVA, which have multitude of the large 500 kilovolt transmission lines that carry power into the regional grid. The area is also home to pipelines operated by TexGas, Texas Eastern Gas Co. and Koch Gateway.

Natural gas prices were deregulated by an act of Congress in 1992.

Another explanation for the migration of so many power plants to the northern reaches of the state is demand.

The area is part of the territory of the Southeast Electric Reliability Council, a division of the North American Electric Reliability Council.

SERC, a not-for-profit industry group that works with all segments of the electric industry to set standards, policies, principles and guidelines on the transmission of electricity, estimates that over the next decade the Southeast will require an additional 40,000 megawatts of generating capacity to meet demand growth.

"There are a lot of projections that say demand will continue to escalate nationally," says Robert P. Thornton, president of the International District Energy Association, an industry group whose members build merchant plants.

Projects built or under construction in Mississippi will have a potential output of 12,570 megawatts.

"These merchant plants will definitely add to the stability of the grid in the Southeast where their power will be sold," says Neilson Cochran, chairman of the Mississippi Public Service Commission.

Perhaps based on SERC's projections, Ulrich says InterGen, despite not having any production contracts in place, is confident there will be adequate demand for its power to make the $450-million project viable.

Although there has been talk in Mississippi since 1996 about deregulating retail electrical markets, the influx of merchant plants has been spurred mostly by the call of the wholesale market, industry experts say.

Even if the promise of retail regulation was a draw for independent producers, MPSC's Cochran says that his agency has recommended to Mississippi lawmakers that no action be taken to deregulate retail markets after watching consumer rates rise in several other states like California that lead the race to restructure consumer markets.

"The legislature is not looking into restructuring the electrical system at this time," Cochran says. "We already have below average electricity rates, and the evidence does not point to restructuring leading to lower rates."

Ulrich denies that the promise of access to the retail market was ever a draw for InterGen.

He says his firm would probably not be interested in the consumer market anyway.

Cochran concurs.

"They weren't building here with the hope of retail deregulation, it is not a driving force," he says.

But IDEA's Thornton points to retail deregulation in California as an example of a situation that actually boosted the wholesale markets as well.

Utilities, who had divested themselves of the means of production under the pretense that power could be purchased cheaper than it could be produced, were forced to buy spot power on the open market at hourly market prices, which rose as demand rose.

Merchant plants selling into TVA's system and already swelling wholesale power to utilities and local power companies could potentially benefit greatly from such a situation.

If Mississippi lawmakers have their way, that may never happen.

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Canadians Support Tariffs on Energy and Minerals in U.S. Trade Dispute

Canada Tariffs on U.S. Energy and Minerals signal retaliatory tariffs amid trade tensions, targeting energy exports and critical minerals, reflecting sovereignty concerns and shifting consumer behavior, reduced U.S. purchases, and demand for Canadian-made goods.

 

Key Points

They are proposed retaliatory tariffs on energy exports and critical minerals to counter U.S. trade pressures.

✅ 75% support tariffs; 70% back dollar-for-dollar retaliation

✅ Consumer shift: fewer U.S. purchases, more Canadian-made goods

✅ Concerns over sovereignty and U.S. trade tactics intensify

 

A recent survey has revealed that a significant majority of Canadians—approximately 75%—support the implementation of tariffs on energy exports and critical minerals in response to electricity exports at risk amid trade tensions with the United States. This finding underscores the nation's readiness to adopt assertive measures to protect its economic interests amid escalating trade disputes.​

Background on Trade Tensions

The trade relationship between Canada and the United States has experienced fluctuations in recent years, with both nations navigating complex issues related to tariffs and energy tariffs and trade tensions as well as trade agreements and economic policies. The introduction of tariffs has been a contentious strategy, often leading to reciprocal measures and impacting various sectors of the economy.​

Public Sentiment Towards Retaliatory Tariffs

The survey, conducted by Leger between February 14 and 17, 2025, sampled 1,500 Canadians and found that 70% favored implementing dollar-for-dollar retaliatory tariffs against the U.S. Notably, 45% of respondents were strongly in favor, while 25% were somewhat in favor. This strong support reflects widespread dissatisfaction with U.S. trade policies and growing support for Canadian energy projects among voters, alongside a collective sentiment favoring decisive action. ​

Concerns Over U.S. Economic Strategies

The survey also highlighted that 81% of Canadians are apprehensive about potential U.S. economic tactics aimed at drawing Canada into a closer political union. These concerns are fueled by statements from U.S. President Donald Trump, who has suggested annexation and employed tariffs that could spike NY energy prices to influence Canadian sovereignty. Such sentiments have heightened fears about the erosion of Canada's political autonomy under economic duress. ​

Impact on Consumer Behavior

In response to these trade tensions, including reports that Ford threatened to cut U.S. electricity exports, many Canadians have adjusted their purchasing habits. The survey indicated that 63% of respondents are buying fewer American products in stores, and 62% are reducing online purchases from U.S. retailers. Specific declines include a 52% reduction in Amazon purchases, a 50% drop in fast-food consumption from American chains, and a 43% decrease in spending at U.S.-based retail stores. Additionally, 30% of Canadians have canceled planned trips to the United States, while 68% have increased their purchases of Canadian-made products. These shifts demonstrate a tangible impact on consumer behavior driven by nationalistic sentiments and support for retaliatory measures. ​

Economic and Political Implications

The widespread support for retaliatory tariffs and the corresponding changes in consumer behavior have significant economic and political implications. Economically, while tariffs can serve as a tool for asserting national interests, they also risk triggering trade wars that can harm various sectors, including agriculture, manufacturing, and technology, with experts cautioning against cutting Quebec's energy exports in response. Politically, the situation presents a challenge for Canadian leadership to balance assertiveness in defending national interests with the necessity of maintaining a stable and mutually beneficial relationship with the U.S., Canada's largest trading partner.​

As Canada approaches its federal elections, trade policy is emerging as a pivotal issue. Voters are keenly interested in how political parties propose to navigate the complexities of international trade, particularly with the United States and how a potential U.S. administration's stance, such as Biden's approach to the energy sector could shape outcomes. The electorate's strong stance on retaliatory tariffs may influence party platforms and campaign strategies, emphasizing the need for clear and effective policies that address both the immediate concerns of trade disputes and the long-term goal of sustaining positive international relations.​

The survey results reflect a nation deeply engaged with its trade dynamics and protective of its sovereignty. While support for retaliatory tariffs is robust, it is essential for policymakers to carefully consider the broader consequences of such actions. Striking a balance between defending national interests and fostering constructive international relationships will be crucial as Canada navigates these complex trade challenges in the coming years.

 

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Nunavut's electricity price hike explained

Nunavut electricity rate increase sees QEC raise domestic electricity rates 6.6% over two years, affecting customer rates, base rates, subsidies, and kWh overage charges across communities, with public housing exempt and territory-wide pricing denied.

 

Key Points

A 6.6% QEC hike over 2018-2019, affecting customer rates, subsidies, and kWh overage; public housing remains exempt.

✅ 3.3% on May 1, 2018; 3.3% on Apr 1, 2019

✅ Subsidy caps: 1,000 kWh Oct-Mar; 700 kWh Apr-Sep

✅ Territory-wide base rate denied; public housing exempt

 

Ahead of the Nunavut government's approval of the general rate increase for the Qulliq Energy Corporation, many Nunavummiut wondered how the change would impact their electricity bills.

QEC's request for a 6.6-per-cent increase was approved by the government last week. The increase will be spread out over two years, a pattern similar to BC Hydro's two-year rate plan, with the first increase (3.3 per cent) effective May 1, 2018. The remaining 3.3 per cent will be applied on April 1, 2019.

Public housing units, however, are exempt from the government's increase altogether.

The power corporation also asked for a territory-wide rate, so every community would pay the same base rate (we'll go over specific terms in a minute if you're not familiar with them). But that request was denied, even as Manitoba Hydro scaled back increases next year, and QEC will now take the next two years reassessing each community's base rate.

#google#

So, what does this mean for your home's power bill? Well, there's a few things you need to know, which we'll get to in a second.

But in essence, as long as you don't go over the government-subsidized monthly electricity usage limit, you're paying an extra 3.61 cents per kilowatt hour (kWh).

To be clear, we're talking about non-government domestic rates — basically, private homeowners — and those living in a government-owned unit but pay for their own power.

 

The basics

First, some quick terminology. The "base rate" term we're going to use (and used above) in this story refers to the community rate. As in, what QEC charges customers in every community. The "customer rate" is the rate customers actually pay, after the government's subsidy.

 

The first thing you need to know is everyone in Nunavut starts off by paying the same customer rate, unlike jurisdictions using a price cap to limit spikes.

That's because the government subsidizes electricity costs, and that subsidy is different in every community, because the base rate is different.

For example, Iqaluit's new base rate after the 3.3 per cent increase (remember, the 6.6 per cent is being applied over two years) is 56.69 cents per kWh, while Kugaaruk's base rate rose to 112.34 cents per kWh. Those, by the way, are the territory's lowest and highest respective base rates.

However, customers in both Iqaluit and Kugaaruk will each now pay 28.35 cents per kWh because, remember, the government subsidizes the base rates in every community.

Now, remember earlier we mentioned a "government-subsidized monthly electricity usage limit?" That's where customers in various communities start to pay different amounts.

As simply as we can explain it, the government will only cover so much electricity usage in a month, in every household.

Between October and March, the government will subsidize the first 1,000 kilowatt hours, and only 700 kilowatt hours from April to September. QEC says the average Nunavut home will use about 500 kilowatt hours every month over the course of a year.

But if your household goes over that limit, you're at the mercy of your community's base rate for any extra electricity you use. Homes in Kugaaruk in December, for instance, will have to pay that 122.34 cents for every extra kilowatt hour it uses, while homes in Iqaluit only have to pay 56.69 cents per kWh for its extra electricity.

That's where many Nunavummiut have criticized the current rate structure, because smaller communities are paying more for their extra costs than larger communities.

QEC had hoped — as it had asked for — to change the structure so every community pays the same base rate. So regardless of if people go over their electricity usage limits for the government subsidy, everyone would pay the same overage rates.

But the government denied that request.

 

New rate is actually lower

The one thing we should highlight, however, is the new rate after the increase is actually lower than what customers were paying in 2014.

For the past seven months, customers have been getting power from QEC at a discount, whereas Newfoundland customers began paying for Muskrat Falls during the same period, to different effect.

That's because when QEC sets its rates, it does so based on global oil price forecasts. Since 2014, the price of oil worldwide has slumped, and so QEC was able to purchase it at less than it had anticipated.

When that happens, and QEC makes more than $1 million within a six month period thanks to the lower oil prices, it refunds the excess profits back to customers through a discount on electricity base rates — a mechanism similar to a lump-sum credit used elsewhere — the government subsidy, however, doesn't change so the savings are passed on directly to customers.

Now, the 6.6 per cent increase to electricity rates, is actually being applied to the discounted base rate from the last seven months.

So again, while customers are paying more than they have been for the last seven months, it's lower than what they were paying in 2014.

Lastly, to be clear, all the figures used in this story are only for domestic non-government rates. Commercial rates and changes have not been explored in this story, given the differences in subsidy and rate application.

 

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Canada's Electricity Exports at Risk Amid Growing U.S.-Canada Trade Tensions

US-Canada Electricity Tariff Dispute intensifies as proposed tariffs spur Canadian threats to restrict hydroelectric exports, risking cross-border energy supply, grid reliability, higher electricity prices, and clean energy goals in the Northeast and Midwest.

 

Key Points

Trade clash over tariffs and hydroelectric exports that threatens power supply, prices, and grid reliability.

✅ Potential export curbs on Canadian hydro to US markets

✅ Risks: higher prices, strained grids, reduced clean energy

✅ Diplomacy urged to avoid retaliatory trade measures

 

In early February 2025, escalating trade tensions between the United States and Canada have raised concerns about the future of electricity exports from Canada to the U.S. The potential imposition of tariffs by the U.S. has prompted Canadian officials to consider retaliatory measures, including restricting electricity exports and pursuing high-level talks such as Ford's Washington meeting with federal counterparts.

Background of the Trade Dispute

In late November 2024, President-elect Donald Trump announced plans to impose a 25% tariff on all Canadian products, citing issues related to illegal immigration and drug trafficking. This proposal has been met with strong opposition from Canadian leaders, who view such tariffs as unjustified and detrimental to both economies, even as tariff threats boost support for Canadian energy projects among some stakeholders.

Canada's Response and Potential Retaliatory Measures

In response to the proposed tariffs, Canadian officials have discussed various countermeasures. Ontario Premier Doug Ford has threatened to cut electricity supplies to 1.5 million Americans and ban imports of U.S.-made beer and liquor. Other provinces, such as Quebec and Alberta, are also considering similar actions, though experts advise against cutting Quebec's energy exports due to reliability concerns.

Impact on U.S. Energy Supply

Canada is a significant supplier of electricity to the United States, particularly in regions like the Northeast and Midwest. A reduction or cessation of these exports could lead to energy shortages and increased electricity prices in affected U.S. states, with New York especially vulnerable according to regional assessments. For instance, Ontario exports substantial amounts of electricity to neighboring U.S. states, and any disruption could strain local energy grids.

Economic Implications

The imposition of tariffs and subsequent retaliatory measures could have far-reaching economic consequences. In Canada, industries such as agriculture, manufacturing, and energy could face significant challenges due to reduced access to the U.S. market, even as many Canadians support energy and mineral tariffs as leverage. Conversely, U.S. consumers might experience higher prices for goods and services that rely on Canadian imports, including energy products.

Environmental Considerations

Beyond economic factors, the trade dispute could impact environmental initiatives. Canada's hydroelectric power exports are a clean energy source that helps reduce carbon emissions in the U.S., where policymakers look to Canada for green power to meet targets. A reduction in these exports could lead to increased reliance on fossil fuels, potentially hindering environmental goals.

The escalating trade tensions between the United States and Canada, particularly concerning electricity exports, underscore the complex interdependence of the two nations. While the situation remains fluid, it highlights the need for diplomatic engagement to resolve disputes and maintain the stability of cross-border energy trade.

 

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U.S. Ends Support for Ukraine’s Energy Grid Restoration

US Termination of Ukraine Energy Grid Support signals a policy shift: USAID halts aid for grid restoration amid Russia attacks, impacting energy security, infrastructure resilience, winter readiness, and negotiations leverage with Moscow and allies.

 

Key Points

A US policy reversal ending USAID support for Ukraine's grid, impacting energy security, resilience, and leverage.

✅ USAID halt reduces funds for grid restoration and winter prep

✅ Policy shift may weaken Kyiv's leverage in talks with Russia

✅ Ukraine seeks EU, IFIs, private capital for energy resilience

 

The U.S. government has recently decided to terminate its support for Ukraine's energy grid restoration, a critical initiative managed by the U.S. Agency for International Development (USAID). This decision, reported by NBC News, comes at a time when Ukraine is grappling with significant challenges to its energy infrastructure due to ongoing Russian attacks. The termination of support was reportedly finalized before Ukrainian President Volodymyr Zelensky's scheduled visit to Washington, marking a significant shift in U.S. policy and raising concerns about the broader implications for Ukraine's energy resilience and its negotiations with Russia.

The Critical Role of U.S. Support

Since Russia's invasion of Ukraine, the country’s energy infrastructure has been one of the primary targets of military strikes. Russia has launched numerous attacks on Ukraine's power generation facilities, substations, and power lines, causing power outages across multiple regions. These attacks have led to significant material losses, with damage reaching billions of dollars. As part of its commitment to Ukraine, the U.S. government, through USAID, had been instrumental in funding restoration efforts aimed at rebuilding and reinforcing Ukraine’s energy grid.

USAID's support was crucial in helping Ukraine withstand the damage inflicted by Russian missile strikes. This aid was not just about restoring basic services but also about fortifying the energy grid to ensure that Ukraine could continue functioning amidst the war and keep the lights on this winter as temperatures drop. The U.S. contribution to Ukraine's energy sector, alongside international support, helped reduce the immediate vulnerabilities faced by Ukraine's civilians and industries.

The Abrupt Change in U.S. Policy

The decision to cut support for energy grid restoration is seen as a sharp reversal in U.S. policy, particularly as the Biden administration has previously shown strong backing for Ukraine in the aftermath of the invasion. This shift in policy was reportedly made by the U.S. State Department, which directed USAID to halt its involvement in the energy sector.

According to NBC News, USAID officials expressed concern about the timing of this decision. One official noted that terminating support for Ukraine’s energy grid restoration would severely undermine the U.S. government's ability to negotiate on issues like ceasefires and peace talks with Russia. The official argued that such a move would signal to Russia that the U.S. is backing away from its long-term investments in Ukraine, potentially weakening Ukraine's position in the ongoing war.

The abrupt end to this support is also seen as a blow to the morale of Ukraine’s government and people. Ukraine had been heavily reliant on the U.S. for resources to repair its critical infrastructure, and the decision to cut this support without warning has created uncertainty about the future of such recovery efforts.

Ukraine’s Response and Search for Alternatives

In response to the termination of U.S. support, Ukrainian officials have been seeking alternative sources of funding to continue the restoration of their energy grid. Deputy Prime Minister Olha Stefanishyna reported that Ukraine has already reached preliminary agreements with other international partners to secure financial support for energy resilience, cyber defense, and recovery programs including new energy solutions for winter blackouts.

These efforts come at a time when Ukraine is working to rebuild its war-torn economy and safeguard critical sectors like energy and infrastructure. The termination of U.S. support for energy restoration projects underscores the growing pressure on Ukraine to diversify its sources of aid and not become overly dependent on any one nation. Ukrainian leaders are in ongoing talks with European governments, international financial institutions, and private investors to ensure that essential programs do not stall due to the lack of funding from the U.S., as energy cooperation grows and Ukraine helps Spain amid blackouts in solidarity.

Implications for Ukraine’s Energy Security

Ukraine's energy security remains a critical issue in the context of the ongoing conflict with Russia. The war has made the country’s energy infrastructure vulnerable to repeated attacks, and the restoration of this infrastructure is essential for ensuring that Ukraine can keep the lights on and recover in the long term. The U.S. has been one of the largest contributors to Ukraine's energy security efforts, and its withdrawal could force Ukraine to look for other partners who may not have the same level of financial or technological resources.

This development also raises questions about the future of U.S. involvement in Ukraine's recovery efforts more broadly. As the war continues and winter looms over the battlefront for frontline communities, the need for reliable and sustained support from international partners will only increase. If the U.S. significantly scales back its aid, Ukraine may face even greater challenges in maintaining its energy infrastructure and achieving long-term recovery.

Moving Forward

The termination of U.S. support for Ukraine’s energy grid restoration serves as a reminder of the complexities involved in international aid and geopolitics during wartime. As Ukraine faces the ongoing realities of the war, it must adapt to a shifting international landscape where traditional allies may not always be reliable sources of support. Ukraine’s leadership will need to be strategic in its search for alternative sources of aid, while also focusing on strengthening its energy grid, managing electricity reserves to stabilize supply, and reducing its vulnerabilities to Russian attacks.

While the end of U.S. support for Ukraine's energy restoration is a significant setback, it also underscores the urgent need for Ukraine to diversify its international partnerships. The future of Ukraine’s energy resilience may depend on how effectively it can navigate these changing dynamics while maintaining the support of the international community in the fight against Russian aggression.

 

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Toronto Power Outages Persist for Hundreds After Spring Storm

Toronto Hydro Storm Outages continue after strong winds and heavy rain, with crews restoring power, clearing debris and downed lines. Safety alerts and real-time updates guide affected neighborhoods via website and social media.

 

Key Points

Toronto Hydro Storm Outages are weather-related power cuts; crews restore service safely and share public updates.

✅ Crews prioritize areas with severe damage and limited access

✅ Report downed power lines; keep a safe distance

✅ Check website and social media for restoration updates

 

In the aftermath of a powerful spring storm that swept through Toronto on Tuesday, approximately 400 customers remain without power as of Sunday. The storm, which brought strong winds and heavy rain that caused severe flooding in some areas, led to significant damage across the city, including downed trees and power lines. Toronto Hydro crews have been working tirelessly to restore service, similar to efforts by Sudbury Hydro crews in Northern Ontario, focusing on areas with the most severe damage. While many customers have had their power restored, the remaining outages are concentrated in neighborhoods where access is challenging due to debris and fallen infrastructure.

Toronto Hydro has assured residents that restoration efforts are ongoing and that they are prioritizing safety and efficiency, in step with recovery from damaging storms in Ontario across the province. The utility company has urged residents to report any downed power lines and to avoid approaching them, as they may still be live and dangerous, and notes that utilities sometimes rely on mutual aid deployments to speed restoration in large-scale events. Additionally, Toronto Hydro has been providing updates through their website and social media channels, keeping the public informed about the status of power restoration in affected areas.

The storm's impact has also led to disruptions in other services, and power outages in London disrupted morning routines for thousands earlier in the week. Some public transportation routes experienced delays due to debris on tracks, and several schools in the affected areas were temporarily closed. City officials are coordinating with various agencies to address these issues and ensure that services return to normal as quickly as possible, even as Quebec contends with widespread power outages after severe windstorms.

Residents are advised to stay updated on the situation through official channels and to exercise caution when traveling in storm-affected areas. Toronto Hydro continues to work diligently to restore power to all customers and appreciates the public's patience during this challenging time, a challenge echoed when Texas utilities struggled to restore power during Hurricane Harvey.

 

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Europe Stores Electricity in Natural Gas Pipes

Power-to-gas converts surplus renewable electricity into green hydrogen or synthetic methane via electrolysis and methanation, enabling seasonal energy storage, grid balancing, hydrogen injection into gas pipelines, and decarbonization of heat, transport, and industry.

 

Key Points

Power-to-gas turns excess renewable power into hydrogen or methane for storage, grid support, and clean fuel.

✅ Enables hydrogen injection into existing natural gas networks

✅ Balances grids and provides seasonal energy storage capacity

✅ Supplies low-carbon fuels for industry, heat, and heavy transport

 

Last month Denmark’s biggest energy firm, Ørsted, said wind farms it is proposing for the North Sea will convert some of their excess power into gas. Electricity flowing in from offshore will feed on-shore electrolysis plants that split water to produce clean-burning hydrogen, with oxygen as a by-product. That would supply a new set of customers who need energy, but not as electricity. And it would take some strain off of Europe’s power grid as it grapples with an ever-increasing share of hard-to-handle EU wind and solar output on the grid.

Turning clean electricity into energetic gases such as hydrogen or methane is an old idea that is making a comeback as renewable power generation surges and crowds out gas in Europe. That is because gases can be stockpiled within the natural gas distribution system to cover times of weak winds and sunlight. They can also provide concentrated energy to replace fossil fuels for vehicles and industries. Although many U.S. energy experts argue that this “power-to-gas” vision may be prohibitively expensive, some of Europe’s biggest industrial firms are buying in to the idea.

European power equipment manufacturers, anticipating a wave of renewable hydrogen projects such as Ørsted’s, vowed in January that, as countries push for hydrogen-ready power plants across Europe, all of their gas-fired turbines will be certified by next year to run on up to 20 percent hydrogen, which burns faster than methane-rich natural gas. The natural gas distributors, meanwhile, have said they will use hydrogen to help them fully de-carbonize Europe’s gas supplies by 2050.

Converting power to gas is picking up steam in Europe because the region has more consistent and aggressive climate policies and evolving electricity pricing frameworks that support integration. Most U.S. states have goals to clean up some fraction of their electricity supply; coal- and gas-fired plants contribute a little more than a quarter of U.S. greenhouse gas emissions. In contrast, European countries are counting on carbon reductions of 80 percent or more by midcentury—reductions that will require an economywide switch to low-carbon energy.

Cleaning up energy by stripping the carbon out of fossil fuels is costly. So is building massive new grid infrastructure, including transmission lines and huge batteries, amid persistent grid expansion woes in parts of Europe. Power-to-gas may be the cheapest way forward, complementing Germany’s net-zero roadmap to cut electricity costs by a third. “In order to reach the targets for climate protection, we need even more renewable energy. Green hydrogen is perceived as one of the most promising ways to make the energy transition happen,” says Armin Schnettler, head of energy and electronics research at Munich-based electric equipment giant Siemens.

Europe already has more than 45 demonstration projects to improve power-to-gas technologies and their integration with power grids and gas networks. The principal focus has been to make the electrolyzers that convert electricity to hydrogen more efficient, longer-lasting and cheaper to produce.

The projects are also scaling up the various technologies. Early installations converted a few hundred kilowatts of electricity, but manufacturers such as Siemens are now building equipment that can convert 10 megawatts, which would yield enough hydrogen each year to heat around 3,000 homes or fuel 100 buses, according to financial consultancy Ernst & Young.

The improvements have been most dramatic for proton-exchange membrane electrolyzers, which are akin to the fuel cells used in hydrogen vehicles (but optimized to produce hydrogen rather than consume it). The price of proton-exchange electrolyzers has dropped by roughly 40 percent during the past decade, according to a study published in February in Nature Energy. They are also five times more compact than older alkaline electrolysis plants, enabling onsite hydrogen production near gas consumers, and they can vary their power consumption within seconds to operate on fluctuating wind and solar generation.

Many European pilot projects are demonstrating “methanation” equipment that converts hydrogen to methane, too, which can be used as a drop-in replacement for natural gas. Europe’s electrolyzer plants, however, are showing that methanation is not as critical to the power-to-gas vision as advocates long believed. Many electrolyzers are injecting their hydrogen directly into natural gas pipelines—something that U.S. gas firms forbid—and they are doing so without impacting either the gas infrastructure or natural gas consumers.

Europe’s first large-scale hydrogen injection began in eastern Germany in 2013 at a two-megawatt electrolyzer installed by Essen-based power firm E.ON. Germany has since ratcheted up the amount of hydrogen it allows in natural gas lines from an initial 2 percent by volume to 10 percent, in a market where renewables now outpace coal and nuclear in Germany, and other European states have followed suit with their own hydrogen allowances. Christopher Hebling, head of hydrogen technologies at the Freiburg-based Fraunhofer Institute for Solar Energy Systems, predicts that such limits will rise to the 20-percent level anticipated by Europe’s turbine manufacturers.

Moving renewable hydrogen and methane via natural gas pipelines promises to cut the cost of switching to renewable energy. For example, gas networks have storage caverns whose reserves could be tapped to run gas-fired electric generation power plants during periods of low wind and solar output. Hebling notes that Germany’s gas network can store 240 terawatt-hours of energy—roughly 25 times more energy than global power grids can presently store by pumping water uphill to refill hydropower reservoirs. Repurposing gas infrastructure to help the power system could save European consumers 138 billion euros ($156 billion) by 2050, according to Dutch energy consultancy Navigant (formerly Ecofys).

For all the pilot plants and promise, renewable hydrogen presently supplies a tiny fraction of Europe’s gas. And, globally, around 4 percent of hydrogen is supplied via electrolysis, with the bulk refined from fossil fuels, according to the International Renewable Energy Agency.

Power-to-gas is catching up, however. According to the February Nature Energy study, renewable hydrogen already pays for itself in some niche applications, and further electrolyzer improvements will progressively extend its market. “If costs continue to decline as they have done in recent years, power-to-gas will become competitive at large scale within the next decade,” says study co-author Gunther Glenk, an economist at the Technical University of Munich.

Glenk says power-to-gas could scale up faster if governments guaranteed premium prices for renewable hydrogen and methane, as they did to mainstream solar and wind power.

Tim Calver, an energy storage researcher turned consultant and Ernst & Young’s executive director in London, agrees that European governments need to step up their support for power-to-gas projects and markets. Calver calls the scale of funding to date, “not proportionate to the challenge that we face on long-term decarbonization and the potential role of hydrogen.”

 

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