Unreliable power means diesel for HP data center

By ComputerWorld


Electrical Testing & Commissioning of Power Systems

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Hewlett-Packard Co. has built a data center in Bangalore, India, that will be powered by diesel fuel because of the unreliability of local power supplies.

Such energy self-reliance is how most data centers operate in Bangalore, HP said. But the approach comes with an energy cost that could be nearly four times what it would be at a California-based data center.

HP claims that the 70,000-square-foot data center may be one of India's largest IT facilities. It consolidates 14 existing facilities ranging in size from closets to computer rooms with a few thousand square feet of floor space. They had been used by the Bangalore research and development operation of the company's HP Labs unit.

The vendor is trying to make the best of Bangalore's unreliable electrical grid by using the new data center to demonstrate its Dynamic Smart Cooling technology, which uses small sensors to monitor the temperature of systems.

Under HP's scheme, five sensors are placed on both the front and back of individual server racks. HP has installed about 7,500 of the sensors in the new data center, said John Sontag, director of virtualization and data center architecture at HP Labs.

Diesel fuel is "the power of choice in Bangalore," Sontag said. He added that HP will keep a supply of 170,000 liters - or about 45,000 gallons - of fuel on hand at the data center.

But the cost of diesel means that HP is paying upward of 26 cents per kilowatt-hour, compared with electricity costs in California that can range from 7 to 14 cents per kilowatt-hour.

Sontag said that the temperature sensors, which are connected by wires and send readings to a centralized control panel, have enabled HP to reduce its initial power consumption at the facility by about 20%. And he said he thinks that the power-reduction level can reach 40% as the sensor-based system is optimized.

The system adjusts fan speeds and the amount of chilled water that is being circulated to cool the data center. According to Sontag, many data centers "overprovision" by installing more cooling technologies than needed - an added cost that the sensors are designed to avoid.

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Gov. Greg Abbott touts Texas power grid's readiness heading into fall, election season

ERCOT Texas Fall Grid Forecast outlines ample power supply, planned maintenance outages, and grid reliability, citing PUC oversight and Gov. Abbott's remarks, with seasonal assessment noting mild demand yet climate risks and conservation alerts.

 

Key Points

ERCOT's seasonal outlook for Texas on fall power supply, outages, and reliability expectations under PUC oversight.

✅ Projects sufficient supply in October and November

✅ Many plants scheduled offline for maintenance

✅ Notes PUC oversight and Abbott's confidence

 

Gov. Greg Abbott said Tuesday that the Texas power grid is prepared for the fall months and referenced a new seasonal forecast by the state’s grid operator, which typically does not draw much attention to its fall and spring grid assessments because of the more mild temperatures during those seasons.

Tuesday’s new forecast by the Electric Reliability Council of Texas showed that there should be plenty of power supply to meet demand in October and November. It also showed that many Texas power plants are scheduled to be offline this fall for maintenance work. Texas power plants usually plan to go down in the fall and spring for repairs to improve reliability ahead of the more extreme temperatures in winter and summer, when Texans crank up their heat and air conditioning and raise demand for power.

ERCOT for at least a decade announced its seasonal forecasts, but did not do so on Tuesday. The grid operator stopped announcing the reports after the 2021 winter storm event. A spokesperson for the grid operator, which posted the report to its website midday without notifying the public or power industry stakeholders, said there were no plans to discuss the latest forecast and referred questions about it to the Public Utility Commission, which oversees ERCOT. Abbott appoints the board of the PUC.

Abbott on Tuesday expressed his confidence about the grid in a news release, which included photos of the governor sitting at a table with incoming ERCOT CEO Pablo Vegas, outgoing interim CEO Brad Jones and Public Utility Commission Chair Peter Lake.

“The State of Texas continues to monitor the reliability of our electric grid, and I thank ERCOT and PUC for their hard work to implement bipartisan reforms we passed last year and for their proactive leadership to ensure our grid is stronger than ever before,” Abbott said in the release.

Abbott has not previously shared or called attention to ERCOT’s forecasts as he did on Tuesday.

Up for reelection this fall, Abbott has faced continued criticism, including from the Sierra Club over his handling of the 2021 deadly power grid disaster, when extended freezing temperatures shut down natural gas facilities and power plants, which rely on each other to keep electricity flowing. The resulting blackouts left millions of Texans without power for days in the cold, and hundreds of people died.

ERCOT’s forecasts for fall and spring are typically the least worrisome seasonal forecasts, energy experts said, because temperatures are usually milder in between summer and winter, even as ERCOT has issued an RFP to procure winter capacity to address shortages, so demand for power usually does not skyrocket like it does during extreme temperatures.

But they’ve warned that climate change could potentially lead to more extreme temperatures during times when Texas hasn’t experienced such weather in the past. For example, in early May six power plants unexpectedly broke down when a spring heat wave drove power demand up and highlighted broader heat-related blackout risks across the grid. ERCOT asked Texans to conserve electricity at home at the time.

Abbott released the seasonal report at a time when he has asserted unprecedented control over ERCOT. Although he had no formal role in ERCOT’s search for a new permanent CEO, he put a stranglehold on the process, The Texas Tribune previously reported. Since the winter storm, Abbott’s office has also dictated what information about the power grid ERCOT has released to the public.

 

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Alberta ratepayers on the hook for unpaid gas and electricity bills from utility deferral program

Alberta Utility Rate Rider will add a modest fee to electricity bills and natural gas charges as the AUC recovers outstanding debt from the COVID-19 deferral program via AESO and the Balancing Pool.

 

Key Points

A temporary surcharge on Alberta power and gas bills to recover unpaid COVID-19 deferral debt, administered by the AUC.

✅ Applies per kWh and per GJ based on consumption

✅ Recovers unpaid balances from 2020-21 bill deferrals

✅ Collected via AESO and the Balancing Pool under AUC oversight

 

The province says Alberta ratepayers should expect to see an extra fee on their utility bills in the coming months.

That fee is meant to recover the outstanding debt owed to gas and electricity providers resulting from last year's three-month utility deferral program offered to struggling Albertans during the pandemic.

The provincial government announced the utility deferral program in March 2020 then formalized it with legislation, alongside a consumer price cap on power bills that shaped later policy decisions.

The program allowed residential, farm and small commercial customers who used less than 250,000 kilowatt hours of electricity per year — or consumed less than 2,500 gigajoules per year — to postpone their bills amid the COVID-19 pandemic.

According to the province, 350,000 customers, or approximately 13 per cent of the natural gas and electricity consumer base, took advantage of the program.

Customers had a year to repay providers what they owed. That deadline ended June 18, 2021.

The Alberta Utilities Commission (AUC), which regulates the utilities sector and natural gas and electricity markets and oversees a rate of last resort framework, said the vast majority of consumers have squared up.

But for those who didn't, provincial legislation dictates that Alberta ratepayers must cover any unpaid debt. The legislation exempts Medicine Hat utility customers for electricity and gas co-operative customers for gas.

"When the program was announced, it was very clear that it was a deferral program and that the monies would need to be paid back," said Geoff Scotton, a spokesperson with the Alberta Utilities Commission.

"Now we're in the situation where the providers, in good faith, who enabled those payment deferrals, need to be made whole. That's really the goal here."

Amount to be determined
Margeaux Maron, a spokesperson for Associate Minister of Natural Gas and Electricity Dale Nally, said based on early estimates, $13 to $16 million of $92 million in deferred payments remain outstanding.

As a result, the province expects the average Albertan will end up paying, unlike jurisdictions offering a lump-sum credit, a fraction of a dollar extra per monthly gas and electricity bill over a handful of months.

Scotton said at this point, there are too many unknown factors to know the exact size of the rate rider. However, he said he expects it to be modest.

Scotton said affected parties first have until the end of this week to notify the AUC exactly how much they are still owed.

Those parties include the Alberta Electric System Operator and the Balancing Pool, who essentially acted as bankers with respect to the distribution and transmission of the utilities to customers who deferred their payments.

Regulated service providers may also seek reimbursement on administrative and carrying costs, even as issues like a BC Hydro fund surplus spark debate elsewhere.

Then, Scotton said, once the outstanding amounts are known, the AUC will hold a public proceeding, similar to a Nova Scotia rate case, to determine the amount and the duration of the rate rider to be applied to each natural gas and electricity bill.

The amount will be based on consumption: per kilowatt hour for electricity and per gigajoule for natural gas.

That means larger businesses will end up paying more than the average Albertan.

Scotton said the AUC will expedite the hearing process and it expects to have a decision by the end of the summer.

Rate rider a 'surprise'
Joel MacDonald with Energyrates.ca — an organization which compares energy rates across the country — said it's not the amount of the rate rider that bothers him, but the fact that the repayment process wasn't made clear at the onset of the program.

"It came to us as a bit of a surprise," MacDonald said.

He said what was sold as a deferral program seems more like an electricity rebate program, or an "ability to pay" program.

"As opposed to the retailers looking into collection methods, anything that wasn't paid is basically just being forced upon all Alberta consumers," MacDonald said.

The expectation set out in the deferral legislation and regulations state utility providers such as Enmax and Epcor are expected to use reasonable efforts to try to collect the unpaid balances. It must then detail those reasonable efforts to the AUC.

A spokesperson for Enmax said it first works with its customers to find manageable payment arrangements and connects them with support services if they are unable to pay.

Then, if payment can't be arranged, it said it will work with a collection agency, which may even result in disconnection of service.

The spokesperson said only after all efforts have failed would Enmax seek reimbursement through this program.

Use tax revenues?
MacDonald also questioned why a government program isn't being paid for through general tax revenues.

He compared the utility deferral program to a mortgage subsidy program.

"Imagine that [Canada Mortgage And Housing Corporation] said, 'Hey, we had to give mortgage deferrals and some of these people never paid back their deferrals, so we're going to add an extra $300 to everyone's mortgage,'" he said.

"You'd expect that to come off of some sort of general taxation — not being assigned to other people's mortgages, right?"

In response, Maron said due to the current fiscal challenges facing the government — and the expected minimal costs to consumers, and even as a consumer price cap on electricity remains in place — it was determined that a rate rider would be an appropriate mechanism to repay bad debt associated with the program.

Scotton said rate riders aren't unusual — they're used to fine-tune rates for a set period of time.

He said under normal circumstances, regulated service providers can apply to the AUC to impose a rate rider to recover unexpected costs. And in some instances, they can provide a credit.

But in this situation, he said the debt is aggregated and, in turn, being collected more broadly.

 

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TagEnergy Launches France’s Largest Battery Storage Platform

TagEnergy France Battery Storage Platform enables grid flexibility, stability, and resilience across France, storing wind and solar power, balancing supply and demand, reducing curtailment, and supporting carbon neutrality with fast-response, utility-scale capacity.

 

Key Points

A utility-scale BESS in France that stores renewable energy to stabilize the grid, boost flexibility, and cut emissions.

✅ Several hundred MW utility-scale capacity for peak shaving.

✅ Fast-response frequency regulation and voltage support.

✅ Reduces fossil peaker use and renewable curtailment.

 

In a significant leap toward enhancing France’s renewable energy infrastructure, TagEnergy has officially launched the country's largest battery storage platform. This cutting-edge project is set to revolutionize the way France manages its electricity grid by providing much-needed flexibility, stability, and resilience, particularly as the country ramps up its use of renewable energy sources and experiences negative prices in France during periods of oversupply,

The new battery storage platform, with a total capacity of several hundred megawatts, will play a crucial role in facilitating the country's transition to a greener, more sustainable energy future. It marks a significant step forward in addressing one of the most pressing challenges of renewable energy: how to store and dispatch power generated from intermittent sources such as wind and solar energy.

The Role of Battery Storage in Renewable Energy

Battery storage systems are key to unlocking the full potential of renewable energy sources. While wind and solar power are increasingly important in reducing reliance on fossil fuels, their intermittent nature—dependent on weather conditions and time of day—presents a challenge for grid operators. Without an efficient way to store surplus energy produced during peak generation periods, when negative electricity prices can emerge, the grid can become unstable, leading to waste or even blackouts.

This is where TagEnergy’s new platform comes into play. The state-of-the-art battery storage system will capture excess energy when production is high, and then release it back into the grid during periods of high demand, supporting peak demand strategies or when renewable generation dips. This capability will smooth out the fluctuations in renewable energy production and ensure a constant, reliable supply of power to consumers. By doing so, the platform will not only stabilize the grid but also increase the overall efficiency and utilization of renewable energy sources.

The Scale and Scope of the Platform

TagEnergy's battery storage platform is one of the largest in France, with a capacity capable of supporting a wide range of energy storage needs across the country. The platform’s size is designed to handle significant energy loads, making it a critical piece of infrastructure for grid stability. The project will primarily focus on large-scale energy storage, but it will also incorporate cutting-edge technologies to ensure fast response times and high efficiency in energy release.

France’s energy mix is undergoing a transformation as the country aims to achieve carbon neutrality by 2050. With ambitious plans to expand renewable energy production, particularly from offshore wind such as North Sea wind potential, solar, and hydropower, energy storage becomes essential for managing supply and demand. The new battery platform is poised to provide the necessary storage capabilities to keep up with this shift toward greener, more sustainable energy production.

Economic and Environmental Impact

The launch of the battery storage platform is a major boon for the French economy, creating jobs and attracting investment in the clean energy sector. The project is expected to generate hundreds of construction and operational jobs, providing a boost to local economies, particularly in the areas where the storage facilities are located.

From an environmental perspective, the platform’s ability to store and release renewable energy will greatly reduce the country’s reliance on fossil fuels, decreasing greenhouse gas emissions. The efficient storage of solar and wind energy will mean that more clean electricity can be used, with solar-plus-storage cheaper than conventional power in Germany underscoring cost competitiveness, even during times when these renewable sources are not producing at full capacity. This will help France meet its energy and climate goals, including reducing carbon emissions by 40% by 2030 and achieving carbon neutrality by 2050.

The development also aligns with broader European Union goals to increase the share of renewables in the energy mix. As EU nations work toward their collective climate commitments, energy storage projects like TagEnergy’s platform will be vital in helping the continent achieve a greener, more sustainable future.

A Step Toward Energy Independence

The new battery storage platform also has the potential to enhance France’s energy independence. By increasing the storage capacity for renewable energy, France will be able to rely less on imported fossil fuels and energy from neighboring countries, particularly during periods of high demand. Energy independence is a key strategic goal for many nations, as it reduces vulnerability to geopolitical tensions and fluctuating energy prices.

In addition to bolstering national security, the platform supports France’s energy transition by facilitating the deployment of more renewable energy. As storage capacity increases, grid operators will be able to integrate larger quantities of intermittent renewable energy without sacrificing reliability. This will enable France to meet its long-term energy goals while also supporting the EU’s ambitious climate targets.

Future of Battery Storage in France and Beyond

TagEnergy’s launch of France’s largest battery storage platform is a monumental achievement in the country’s energy transition. However, it is unlikely to be the last of its kind. The success of this project could pave the way for similar initiatives across France and the wider European market. As battery storage technology advances, and affordable solar batteries scale up, the capacity for storing and utilizing renewable energy will only grow, unlocking new possibilities for clean, affordable power.

Looking ahead, TagEnergy plans to expand its operations and further invest in renewable energy solutions. The French market, along with growing demand for storage solutions across Europe, presents significant opportunities for further development in the energy storage sector. With the continued integration of renewable energy into the grid, large-scale storage platforms will play an increasingly critical role in shaping a low-carbon future.

The launch of TagEnergy’s battery storage platform marks a pivotal moment for France’s renewable energy landscape. By providing critical storage capacity and ensuring the reliable delivery of clean electricity, the platform will help the country meet its ambitious climate and energy goals. As technology advances and the global transition to renewables accelerates, with over 30% of global electricity now coming from renewables, projects like this one will play an essential role in creating a sustainable, low-carbon energy future.

 

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Ottawa making electricity more expensive for Albertans

Alberta Electricity Price Surge reflects soaring wholesale rates, natural gas spikes, carbon tax pressures, and grid decarbonization challenges amid cold-weather demand, constrained supply, and Europe-style energy crisis impacts across the province.

 

Key Points

An exceptional jump in Alberta's power costs driven by gas price spikes, high demand, policy costs, and tight supply.

✅ Wholesale prices averaged $123/MWh in December

✅ Gas costs surged; supply constraints and outages

✅ Carbon tax and decarbonization policies raised costs

 

Albertans just endured the highest electricity prices in 21 years. Wholesale prices averaged $123 per megawatt-hour in December, more than triple the level from the previous year and highest for December since 2000.

The situation in Alberta mirrors the energy crisis striking Europe where electricity prices are also surging, largely due to a shocking five-fold increase in natural gas prices in 2021 compared to the prior year.

The situation should give pause to Albertans when they consider aggressive plans to “decarbonize” the electric grid, including proposals for a fully renewable grid by 2030 from some policymakers.

The explanation for skyrocketing energy prices is simple: increased demand (because of Calgary's frigid February demand and a slowly-reviving post-pandemic economy) coupled with constrained supply.

In the nitty gritty details, there are always particular transitory causes, such as disputes with Russian gas companies (in the case of Europe) or plant outages (in the case of Alberta).

But beyond these fleeting factors, there are more permanent systemic constraints on natural gas (and even more so, coal-fired) power plants.

I refer of course to the climate change policies of the Trudeau government at the federal level and some of the more aggressive provincial governments, which have notable implications for electricity grids across Canada.

The most obvious example is the carbon tax, the repeal of which Premier Jason Kenney made a staple of his government.

Putting aside the constitutional issues (on which the Supreme Court ruled in March of last year that the federal government could impose a carbon tax on Alberta), the obvious economic impact will be to make carbon-sourced electricity more expensive.

This isn’t a bug or undesired side-effect, it’s the explicit purpose of a carbon tax.

Right now, the federal carbon tax is $40 per tonne, is scheduled to increase to $50 in April, and will ultimately max out at a whopping $170 per tonne in 2030.

Again, the conscious rationale of the tax, aligned with goals for cleaning up Canada's electricity, is to make coal, oil and natural gas more expensive to induce consumers and businesses to use alternative energy sources.

As Albertans experience sticker shock this winter, they should ask themselves — do we want the government intentionally making electricity and heating oil more expensive?

Of course, the proponent of a carbon tax (and other measures designed to shift Canadians away from carbon-based fuels) would respond that it’s a necessary measure in the fight against climate change, and that Canada will need more electricity to hit net-zero according to the IEA.

Yet the reality is that Canada is a bit player on the world stage when it comes to carbon dioxide, responsible for only 1.5% of global emissions (as of 2018).

As reported at this “climate tracker” website, if we look at the actual policies put in place by governments around the world, they’re collectively on track for the Earth to warm 2.7 degrees Celsius by 2100, far above the official target codified in the Paris Agreement.

Canadians can’t do much to alter the global temperature, but federal and provincial governments can make energy more expensive if policymakers so choose, and large-scale electrification could be costly—the Canadian Gas Association warns of $1.4 trillion— if pursued rapidly.

As renewable technologies become more reliable and affordable, business and consumers will naturally adopt them; it didn’t take a “manure tax” to force people to use cars rather than horses.

As official policy continues to make electricity more expensive, Albertans should ask if this approach is really worth it, or whether options like bridging the Alberta-B.C. electricity gap could better balance costs.

Robert P. Murphy is a senior fellow at the Fraser Institute.

 

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The Collapse of Electric Airplane Startup Eviation

Eviation Collapse underscores electric aviation headwinds, from Alice aircraft battery limits to FAA/EASA certification hurdles, funding shortfalls, and leadership instability, reshaping sustainability roadmaps for regional airliners and future zero-emission flight.

 

Key Points

Eviation Collapse is the 2025 shutdown of Eviation Aircraft, revealing battery, certification, and funding hurdles.

✅ Battery energy density limits curtailed Alice's range

✅ FAA/EASA certification timelines delayed commercialization

✅ Funding gaps and leadership churn undermined execution

 

The electric aviation industry was poised to revolutionize the skies through an aviation revolution with startups like Eviation Aircraft leading the charge to bring environmentally friendly, cost-efficient electric airplanes into commercial use. However, in a shocking turn of events, Eviation has faced an abrupt collapse, signaling challenges that may impact the future of electric flight.

Eviation’s Vision and Early Promise

Founded in 2015, Eviation was an ambitious electric airplane startup with the goal of changing the way the world thinks about aviation. The company’s flagship product, the Alice aircraft, was designed to be an all-electric regional airliner capable of carrying up to 9 passengers. With a focus on sustainability, reduced operating costs, and a quieter flight experience, Alice attracted attention as one of the most promising electric aircraft in development.

Eviation’s aircraft was aimed at replacing small, inefficient, and environmentally damaging regional aircraft, reducing emissions in the aviation industry. The startup’s vision was bold: to create an airplane that could offer all the benefits of electric power – lower operating costs, less noise, and a smaller environmental footprint. Their goal was not only to attract major airlines but also to pave the way for a more sustainable future in aviation.

The company’s early success was driven by substantial investments and partnerships. It garnered attention from aviation giants and venture capitalists alike, drawing support for its innovative technology. In fact, in 2019, Eviation secured a deal with the Israeli airline, El Al, for several aircraft, a deal that seemed to promise a bright future for the company.

Challenges in the Electric Aviation Industry

Despite its early successes and strong backing, Eviation faced considerable challenges that eventually contributed to its downfall. The electric aviation sector, as promising as it seemed, has always been riddled with hurdles – from battery technology to regulatory approvals, and compounded by Europe’s EV slump that dampened clean-transport sentiment, the path to producing commercially viable electric airplanes has proven more difficult than initially anticipated.

The first major issue Eviation encountered was the slow development of battery technology. While electric car companies like Tesla were able to scale their operations quickly during the electric vehicle boom due to advancements in battery efficiency, aviation technology faced a more significant obstacle. The energy density required for a plane to fly long distances with sufficient payload was far greater than what existing battery technology could offer. This limitation severely impacted the range of the Alice aircraft, preventing it from meeting the expectations set by its creators.

Another challenge was the lengthy regulatory approval process for electric aircraft. Aviation is one of the most regulated industries in the world, and getting a new aircraft certified for flight takes time and rigorous testing. Although Eviation’s Alice was touted as an innovative leap in aviation technology, the company struggled to navigate the complex process of meeting the safety and operational standards required by aviation authorities, such as the FAA and EASA.

Financial Difficulties and Leadership Changes

As challenges mounted, Eviation’s financial situation became increasingly precarious. The company struggled to secure additional funding to continue its development and scale operations. Investors, once eager to back the promising startup, grew wary as timelines stretched and costs climbed, amid a U.S. EV market share dip in early 2024, tempering enthusiasm. With the electric aviation market still in its early stages, Eviation faced stiff competition from more established players, including large aircraft manufacturers like Boeing and Airbus, who also began to invest heavily in electric and hybrid-electric aircraft technologies.

Leadership instability also played a role in Eviation’s collapse. The company went through several executive changes over a short period, and management’s inability to solidify a clear vision for the future raised concerns among stakeholders. The lack of consistent leadership hindered the company’s ability to make decisions quickly and efficiently, further exacerbating its financial challenges.

The Sudden Collapse

In 2025, Eviation made the difficult decision to shut down its operations. The company announced the closure after failing to secure enough funding to continue its development and meet its ambitious production goals. The sudden collapse of Eviation sent shockwaves through the electric aviation sector, where many had placed their hopes on the startup’s innovative approach to electric flight.

The failure of Eviation has left many questioning the future of electric aviation. While the industry is still in its infancy, Eviation’s downfall serves as a cautionary tale about the challenges of bringing cutting-edge technology to the skies. The ambitious vision of a sustainable, electric future in aviation may still be achievable, but the path to success will require overcoming significant technological, regulatory, and financial obstacles.

What’s Next for Electric Aviation?

Despite Eviation’s collapse, the electric aviation sector is far from dead. Other companies, such as Joby Aviation, Vertical Aerospace, and Ampaire, are continuing to develop electric and hybrid-electric aircraft, building on milestones like Canada’s first commercial electric flight that signal ongoing demand for green alternatives to traditional aviation.

Moreover, major aircraft manufacturers are doubling down on their own electric aircraft projects. Boeing, for example, has launched several initiatives aimed at reducing carbon emissions in aviation, while Harbour Air’s point-to-point e-seaplane flight showcases near-term regional progress, and Airbus is testing a hybrid-electric airliner prototype. The collapse of Eviation may slow down progress, but it is unlikely to derail the broader movement toward electric flight entirely.

The lessons learned from Eviation’s failure will undoubtedly inform the future of the electric aviation sector. Innovation, perseverance, and a steady stream of investment will be critical for the success of future electric aircraft startups, as exemplified by Harbour Air’s research-driven electric aircraft efforts that highlight the value of sustained R&D. While the dream of electric planes may have suffered a setback, the long-term vision of cleaner, more sustainable aviation is still alive.

 

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EU draft shows plan for more fixed-price electricity contracts

EU Electricity Market Reform advances two-way CfDs, PPAs, and fixed-price tariffs to cut volatility, support renewables and nuclear, stabilize investor revenues, and protect consumers from price spikes across wholesale power markets.

 

Key Points

An EU plan expanding two-way CfDs, PPAs, and fixed-price contracts to curb price swings and support low-carbon power.

✅ Two-way CfDs return excess revenues to consumers

✅ Boosts PPAs and fixed-price retail options

✅ Targets renewables, nuclear; limits fossil exposure

 

The European Union wants to expand the use of contracts that pay power plants a fixed price for electricity, a draft proposal showed, as part of an electricity market revamp to shield European consumers from big price swings.

The European Commission pledged last year to reform the EU's electricity market rules, after record-high gas prices, caused by cuts to Russian flows, sent power prices soaring, prompting debates over gas price cap strategies in response.

A draft of the EU executive's proposal, seen by Reuters on Tuesday and due to be published on Mar. 16, steered clear of the deep redesign of the electricity market that some member states have called for, even as nine EU countries opposed sweeping reforms as a fix earlier in the crisis, suggesting instead limited changes to nudge countries towards more predictable, fixed-price power contracts.

If EU countries want to support new investments in wind, solar, geothermal, hydropower and nuclear electricity, for example - a point over which France and Germany have wrestled - they should use a two-way contract for difference (CfD) or an equivalent contract, the draft said.

The aim is to provide a stable revenue stream to investors, and help make consumers' energy bills less volatile, even though rolling back electricity prices is tougher than it appears. Restricting this support to renewable and low-carbon electricity also aims to speed up Europe's shift away from fossil fuels.

Two-way CfDs offer generators a fixed "strike price" for their electricity, regardless of the price in short-term energy markets. If the market price is above the CfD strike price, then the extra revenue the generator receives should be handed out to final electricity consumers, the draft EU document said.

Countries should also make it easier for power buyers to sign power purchase agreements (PPA) - another type of long-term contract to directly buy electricity from a generator.

Governments should also make sure consumers have access to fixed-price electricity contracts - echoing France's new electricity pricing scheme to reassure Brussels - giving them the option to avoid a contract that would expose them to volatile prices swings in energy markets, the draft said.

If European energy prices were to spike to extreme levels again, the Commission suggested allowing national governments to temporarily intervene to fix prices while weighing emergency measures to limit prices where needed, and offer consumers and small businesses a share of their electricity at a lower price.

 

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