Wind farm proposed for lake

Hydrogen Energy Transition accelerates green hydrogen, electrolyzers, renewables, and fuel cells, as the EU and US scale decarbonization, NextEra tests hydrogen-to-power, and DOE funds pilots to replace natural gas and cut CO2.

Key Points

A shift to deploy green hydrogen tech to decarbonize power, industry, and transport across EU and US energy systems.

✅ EU targets 40 GW electrolyzers plus 40 GW imports by 2030

✅ DOE funds pilots; NextEra trials hydrogen-to-power at Okeechobee

✅ Aims to replace natural gas, enable fuel cells, cut CO2

Last month, the European Union set out a comprehensive hydrogen strategy as part of its goal to achieve carbon neutrality for all its industries by 2050. The EU has an ambitious target to build out at least 40 gigawatts of electrolyzers within its borders by 2030 and also support the development of another 40 gigawatts of green hydrogen in nearby countries that can export to the region by the same date. The announcement came as little surprise, given that Europe is regarded as being far ahead of the United States in the shift to renewable energy, even as it looks to catch up on fuel cells with Asian leaders today.

But the hydrogen bug has finally arrived stateside: The U.S. Department of Energy has unveiled the H2@Scale initiative whereby a handful of companies including Cummins Inc. (NYSE: CMI), Caterpillar Inc.(NYSE: CAT), 3M Company (NYSE: MMM), Plug Power Inc.(NASDAQ: PLUG) and EV startup Nikola Corp.(NASDAQ: NKLA), even as the industry faces threats to the EV boom that investors are watching, will receive $64 million in government funding for hydrogen research projects.

Hot on the heels of the DoE initiative: American electric utility and renewable energy giant, NextEra Energy Inc.(NYSE: NEE), has unveiled an equally ambitious plan to start replacing its natural gas-powered plants with hydrogen.

During its latest earnings call, NextEra’s CFO Rebecca Kujawa said the company is “…particularly excited about the long-term potential of hydrogen” and discussed plans to start a pilot hydrogen project at one of its generating stations at Okeechobee Clean Energy Center owned by its subsidiary, Florida Power & Light (FPL). NextEra reported Q2 revenue of $4.2B (-15.5% Y/Y), which fell short of Wall Street’s consensus by $1.12B while GAAP EPS of $2.59 (+1.1% Y/Y) beat estimates by $0.09. The company attributed the big revenue slump to the effects of Covid-19.

Renewable energy and hydrogen stocks have lately become hot property as EV adoption hits an inflection point worldwide, with NEE up 16% in the year-to-date; PLUG +144%, Bloom Energy Corp. (NYSE: BE) +62.8% while Ballard Power Systems (NASDAQ: BLDP) has gained 98.2% over the timeframe.

NextEra’s usual modus operandi involves conducting small experiments with new technologies to establish their cost-effectiveness, a pragmatic approach informed by how electricity changed in 2021 across the grid, before going big if the trials are successful.

CFO Kujawa told analysts:
“Based on our ongoing analysis of the long-term potential of low-cost renewables, we remain confident as ever that wind, solar, and battery storage will be hugely disruptive to the country’s existing generation fleet, while reducing cost for customers and helping to achieve future CO2 emissions reductions. However, to achieve an emissions-free future, we believe that other technologies will be necessary, and we are particularly excited about the long-term potential of hydrogen.”

NextEra plans to test the electricity-to-hydrogen-to-electricity model at its natural gas-powered Okeechobee Clean Energy Center that came online in 2019. Okeechobee is already regarded as one of the cleanest thermal energy facilities anywhere on the globe. However, replacing natural gas with zero emissions hydrogen would be a significant step in helping the company achieve its goal to become 100% emissions-free by 2050.

Kujawa said the company plans to continue evaluating other potential hydrogen opportunities to accelerate the decarbonization of transportation fuel, amid the debate over the future of vehicles between electricity and hydrogen, and industrial feedstock and also support future demand for low-cost renewables.

Another critical milestone: NextEra finished the quarter with a renewables backlog of approximately 14,400 megawatts, its largest in its 20-year development history. To put that backlog into context, NextEra revealed that it is larger than the operating wind and solar portfolios of all but two companies in the world.

Hydrogen Bubble?
That said, not everybody is buying the hydrogen hype.

Barron’s Bill Apton says Wall Street has discovered hydrogen this year and that hydrogen stocks are a bubble, even as hybrid vehicles gain momentum in the U.S. market according to recent reports. Apton says the huge runup by Plug Power, Ballard Energy, and Bloom Energy has left them trading at more than 50x future cash flow, making it hard for them to grow into their steep valuations. He notes that smaller hydrogen companies are up against big players and deep-pocketed manufacturers, including government-backed rivals in China and the likes of Cummins.

According to Apton, it could take a decade or more before environmentally-friendly hydrogen can become competitive with natural gas on a cost-basis, while new ideas like flow battery cars also vie for attention, making hydrogen stocks better long-term picks than the cult stocks they have become.

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Jordan-Saudi Electricity Linkage Project connects NEPCO and Saudi National Electricity Company to launch feasibility studies, advancing cross-border grid interconnection, Arab electricity linkage goals, and enhancing power reliability, stability, and energy security in both countries.

Key Points

A bilateral grid interconnection by NEPCO and Saudi Electricity Co. to improve reliability and stability.

✅ Enables joint technical and financial feasibility studies

✅ Improves cross-border grid reliability and stability

✅ Part of Arab electricity linkage; supports energy security

The Jordanian Cabinet on has approved the memorandum of understanding to implement the electricity linkage project between Jordan and Saudi Arabia, echoing regional steps such as Lebanon's electricity sector reform to modernize power governance.

The memo will be signed between the National Electric Power Company(NEPCO) and the Saudi National Electricity Company, mirroring cross-border efforts like CEA-Mexico electricity cooperation to strengthen regional interconnections.

The agreement will enable the two sides to initiate technical and financial feasibility studies for the project, which aims to enhance the stability and reliability of electricity networks in both countries, aligning with measures to secure power such as Ireland's electricity supply plan pursued internationally.

The initial feasibility studies, which came as part of the comprehensive Arab electricity linkage issued by the Arab League in 2014, had shown the possibility of implementing the Jordanian-Saudi linkage, as electricity markets evolve in places like Alberta electricity market changes toward new designs.

Regional developments, including a Lebanon electricity goodwill gesture that sowed discord, underscore the complexities of power-sector reform.

Also on Wednesday, the Government approved the third amendment to the grant agreement provided by the EU for a programme of financial inclusion through improving the governance and the spread of micro-financing in Jordan.

Jordan and the EU signed the grant agreement on December 14, 2014 to support the general budget.

The Cabinet also approved the recommendations of the ministerial team tasked with overseeing the annual and financial plans of public credit funds in the Kingdom.

The recommendations included establishing a guidance office to introduce the governmental lending programmes and windows within Iradah centres affiliated with the Planning and International Cooperation Ministry.

The Council of Ministers decided to oblige the government institutions to execute all of their correspondences to the Jordan Customs Department (JCD) electronically.

The decision also includes cancelling the provision of 55 JCD services by conventional paper works and to be provided only online.

The council also approved the outcomes of the study to restructure the governmental body.

The outcomes proposed activating the Higher Health Council, cancelling the independence of the Vocational and Technical Employment Training Fund transferring its functions to the Employment and Development Fund, and activating the National ICT Centre.

The government has cancelled the National Fund to Support Sports and the Scientific Support Fund.

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Ukraine Power Grid Restoration accelerates across liberated Kharkiv, restoring electricity, heat, and water amid missile and drone strikes, demining operations, blackouts, and winterization efforts, showcasing resilience, emergency repairs, and critical infrastructure recovery.

Key Points

Ukraine's rapid push to repair war-damaged grids, restore heat and water, and stabilize key services before winter.

✅ Priority repairs restore electricity and water in liberated Kharkiv.

✅ Crews de-mine lines and work under shelling, drones, and missiles.

✅ Winterization adds generators, mobile stoves, and large firewood supplies.

On the freshly liberated battlefields of northeast Ukraine, a pile of smashed glass windows outside one Soviet-era block of apartments attests to the violence of six months of Russian occupation, and of Ukraine’s sweeping recent military advances.

Indoors, in cramped apartments, residents lived in the dark for weeks on end.

Now, with a hard winter looming, they marvel at the speed and urgency with which Ukrainian officials have restored another key ingredient to their survival: electric power, a critical effort to keep the lights on this winter across communities.

Among those things governments strive to provide are security, opportunity, and minimal comfort. With winter approaching, and Russia targeting Ukraine’s infrastructure, add to that list heat and light, even as Russia hammers power plants nationwide. It’s requiring a concerted effort.

“Thank God it works! Electricity is civilization – it is everything,” says Antonina Krasnokutska, a retired medical worker, looking affectionately at the lightbulb that came on the day before, and now burns again in her tiny spotless kitchen.

“Without electricity there is no TV, no news, no clothes washing, no charging the phone,” says Ms. Krasnokutska, her gray hair pulled back and a small crucifix around her neck.

“Before, it was like living in the Stone Age,” says her grown son, Serhii Krasnokutskyi, who is more than a head taller. “As soon as it got dark, everyone would go to sleep.”

He shows a picture on his phone from a few days earlier, of a tangle of phone and computer charging cables – including his – plugged in at a local shop with a generator.

“We are very grateful for the people who repaired this electricity, even with shelling continuing,” he says. “They have a very complicated job.”

Indeed, although a lack of power might have been a novel inconvenience during the warm summer season, it increasingly has become a matter of great urgency for Ukrainian citizens and officials.

Coping through Ukraine’s winter with dignity and any degree of security will require courage and perseverance, as the severity and suffering that the season can bring here are being weaponized by Russia, as it seeks to compensate for a string of battlefield losses.

In recent days, Russian attacks have specifically targeted Ukraine’s electrical and other civilian infrastructure – all with the apparent aim of making this winter as hard as possible for Ukrainians, even as Moscow employs other measures to spread the hardship across Europe, while Ukraine helps Spain amid blackouts through grid support.

Ukrainian President Volodymyr Zelenskyy said Monday that Russian barrages across the country with missiles and Iran-supplied kamikaze drones had destroyed 30% of Ukraine’s power stations in the previous eight days, including strikes on western Ukraine that caused outages. Thousands of towns have been left without electricity.

Kharkiv’s challenges
Emblematic of the national challenge is the one facing officials in the northeast Kharkiv region, where Ukraine recaptured more than 3,000 square miles in a September counteroffensive. Ukrainian forces are still making gains on that front, as well as in the south toward Kherson, where Wednesday Russia started evacuating civilians from the first major city it occupied, after launching its three-pronged invasion last February.

Across the Kharkiv region, Ukrainians are stockpiling as much wood, fuel, and food as possible while they still can, and adopting new energy solutions as they prepare, from sources as diverse as the floorboards of destroyed schools and the pine forests in Izium, which are pockmarked with abandoned Russian trenches adjacent to a mass burial site.

“Of course, we have this race against time,” says Serhii Mahdysyuk, the Kharkiv regional director in charge of housing, services, fuel, and energy. “Unfortunately, we probably stand in front of the biggest challenge in Ukraine.”

That is not only because of the scale of liberated territory, he says, but also because the Kharkiv region shares a long border with Russia, as well as with the Russian-controlled areas of the eastern Donbas.

“It’s a great mixture of all threats, and we are sure that shelling and bombings will continue, but we are ready for this,” says Mr. Mahdysyuk. “We know our weak spots that Russia can destroy, but we are prepared for what to do in these situations.”

Ukraine’s battlefield gains have meant a surging need to pick up the pieces after Russian occupation, even as electricity reserves are holding if no new strikes occur, to ensure habitable conditions as more and more surviving residents require services, and as others return to scenes of devastation.

Restoring electricity is the top priority, amid shifting international assistance such as the end of U.S. grid support, because that often restarts running water, too, says Mr. Mahdysyuk. But before that, the area beneath broken power lines must be de-mined.

Indeed, members of an electricity team reconnecting cables on the outskirts of Balakliia – one of the first towns to see power restored, at the end of September – say they lost two fellow workers in the previous two weeks. One died after stepping on an anti-personnel mine, another when his vehicle hit an anti-tank device.

Ukrainian electricity workers restore power lines damaged during six months of Russian military occupation in Balakliia, Ukraine, Sept. 29, 2022. Ukrainians in liberated territory say the restoration of the electrical grid, and with it often the water supply, is a return to civilization.
“For now, our biggest problem is mines,” says the team leader, who gave the name Andrii. “It’s fine within the cities, but in the fields it’s a disaster because it’s very difficult to see them. There is a lot of [them] around here – it will take years and years to get rid of.”

Yet officials only have a few weeks to execute plans to provide for hundreds of thousands of residents in this region, in their various states of need and distress. Some 50 field kitchens capable of feeding 200 to 300 people each have been ordered. Another 1,000 mobile stoves are on their way.

And authorities will provide nearly 200,000 cubic yards of firewood for those who have no access to it, and may have no other means of keeping warm – or where shelling continues to disrupt repairs, says Mr. Mahdysyuk.

“The level of opportunity and resources we have is not the same as the level of destruction,” he says. People in districts and buildings too destroyed to have services restored soon, such as in Saltivka in Kharkiv city, may be moved.

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Germany Hydrogen-Ready Power Plants Tender accelerates the energy transition by enabling clean energy generation, decarbonization, and green hydrogen integration through retrofit and new-build capacity, resilient infrastructure, flexible storage, and grid reliability provisions.

Key Points

Germany tender to build or convert plants for hydrogen, advancing decarbonization, energy security, and clean power.

✅ Hydrogen-ready retrofits and new-build generation capacity

✅ Supports decarbonization, grid reliability, and flexible storage

✅ Future-proof design for green hydrogen supply integration

Germany, a global leader in energy transition and environmental sustainability, has recently launched an ambitious call for tenders aimed at developing hydrogen-ready power plants. This initiative is a significant step in the country's strategy to transform its energy infrastructure and support the broader goal of a greener economy. The move underscores Germany’s commitment to reducing greenhouse gas emissions and advancing clean energy technologies.

The Need for Hydrogen-Ready Power Plants

Hydrogen, often hailed as a key player in the future of clean energy, offers a promising solution for decarbonizing various sectors, including power generation. Unlike fossil fuels, hydrogen produces zero carbon emissions when used in fuel cells or burned. This makes it an ideal candidate for replacing conventional energy sources that contribute to climate change.

Germany’s push for hydrogen-ready power plants reflects the country’s recognition of hydrogen’s potential in achieving its climate goals. Traditional power plants, which typically rely on coal, natural gas, or oil, emit substantial amounts of CO2. Transitioning these plants to utilize hydrogen can significantly reduce their carbon footprint and align with Germany's climate targets.

The Details of the Tender

The recent tender call is part of Germany's broader strategy to incorporate hydrogen into its energy mix, amid a nuclear option debate in climate policy. The tender seeks proposals for power plants that can either be converted to use hydrogen or be built with hydrogen capability from the outset. This approach allows for flexibility and innovation in how hydrogen technology is integrated into existing and new energy infrastructures.

One of the critical aspects of this initiative is the focus on “hydrogen readiness.” This means that power plants must be designed or retrofitted to operate with hydrogen either exclusively or in combination with other fuels. The goal is to ensure that these facilities can adapt to the growing availability of hydrogen and seamlessly transition from conventional fuels without significant additional modifications.

By setting such requirements, Germany aims to stimulate the development of technologies that can handle hydrogen’s unique properties and ensure that the infrastructure is future-proofed. This includes addressing challenges related to hydrogen storage, transportation, and combustion, and exploring concepts like storing electricity in natural gas pipes for system flexibility.

Strategic Implications for Germany

Germany’s call for hydrogen-ready power plants has several strategic implications. First and foremost, it aligns with the country’s broader energy strategy, which emphasizes the need for a transition from fossil fuels to cleaner alternatives, building on its decision to phase out coal and nuclear domestically. As part of its commitment to the Paris Agreement and its own climate action plans, Germany has set ambitious targets for reducing greenhouse gas emissions and increasing the share of renewable energy in its energy mix.

Hydrogen plays a crucial role in this strategy, particularly for sectors where direct electrification is challenging. For instance, heavy industry and certain industrial processes, such as green steel production, require high-temperature heat that is difficult to achieve with electricity alone. Hydrogen can fill this gap, providing a cleaner alternative to natural gas and coal.

Moreover, this initiative helps Germany bolster its leadership in green technology and innovation. By investing in hydrogen infrastructure, Germany positions itself as a pioneer in the global energy transition, potentially influencing international standards and practices. The development of hydrogen-ready power plants also opens up new economic opportunities, including job creation in engineering, construction, and technology sectors.

Challenges and Opportunities

While the push for hydrogen-ready power plants presents significant opportunities, it also comes with challenges. Hydrogen production, especially green hydrogen produced from renewable sources, remains relatively expensive compared to conventional fuels. Scaling up production and reducing costs are critical for making hydrogen a viable alternative for widespread use.

Furthermore, integrating hydrogen into existing power infrastructure, alongside electricity grid expansion, requires careful planning and investment. Issues such as retrofitting existing plants, ensuring safe handling of hydrogen, and developing efficient storage and transportation systems must be addressed.

Despite these challenges, the long-term benefits of hydrogen integration are substantial, and a net-zero roadmap indicates electricity costs could fall by a third. Hydrogen can enhance energy security, reduce reliance on imported fossil fuels, and support global climate goals. For Germany, this initiative is a step towards realizing its vision of a sustainable, low-carbon energy system.

Conclusion

Germany’s call for hydrogen-ready power plants is a forward-thinking move that reflects its commitment to sustainability and innovation. By encouraging the development of infrastructure capable of using hydrogen, Germany is taking a significant step towards a cleaner energy future. While challenges remain, the strategic focus on hydrogen underscores Germany’s leadership in the global transition to a low-carbon economy. As the world grapples with the urgent need to address climate change, Germany’s approach serves as a model for integrating emerging technologies into national energy strategies.

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U.S. Grid Modernization is critical for renewable energy integration, EV adoption, climate resilience, and reliability, requiring transmission upgrades, inter-regional links, hardened substations, and smart grid investments to handle extreme weather and decarbonization targets.

Key Points

U.S. Grid Modernization upgrades power networks to improve reliability, integrate renewables, and support EV demand.

✅ $2T+ investment needed for transmission upgrades

✅ Extreme weather doubling outages since 2017

✅ Regulatory fragmentation slows inter-regional lines

After decades of struggle, the U.S. clean-energy business is booming, with soaring electric-car sales and fast growth in wind and solar power. That’s raising hopes for the fight against climate change.

All this progress, however, could be derailed, as the green revolution stalls without a massive overhaul of America’s antiquated electric infrastructure – a task some industry experts say requires more than $2 trillion. The current network of transmission wires, substations and transformers is decaying with age and underinvestment, a condition highlighted by catastrophic failures during increasingly frequent and severe weather events.

Power outages over the last six years have more than doubled in number compared to the previous six years, according to a Reuters examination of federal data. In the past two years, power systems have collapsed in Gulf Coast hurricanes, West Coast wildfires, Midwest heat waves and a Texas deep freeze and recurring Texas grid crisis risks, causing long and sometimes deadly outages.

Compounding the problem, the seven regional grid operators in the United States are underestimating the growing threat of severe weather caused by climate change, Reuters found in a review of more than 10,000 pages of regulatory documents and operators’ public disclosures. Their risk models, used to guide transmission-network investments, consider historical weather patterns extending as far back as the 1970s. None account for scientific research documenting today’s more extreme weather and how it can disrupt grid generation, transmission and fuel supplies simultaneously.

The decrepit power infrastructure of the world’s largest economy is among the biggest obstacles to expanding clean energy and combating climate change on the ambitious schedule laid out by U.S. President Joe Biden. His administration promises to eliminate or offset carbon emissions from the power sector by 2035 and from the entire U.S. economy by 2050. Such rapid clean-energy growth would pressure the nation’s grid in two ways: Widespread EV adoption will spark a huge surge in power demand; and increasing dependence on renewable power creates reliability problems on days with less sun or wind, as seen in Texas, where experts have outlined reliability improvements that address these challenges.

The U.S. transmission network has seen outages double in recent years amid more frequent and severe weather events, driven by climate change and a utility supply-chain crunch that slows critical repairs. The system needs a massive upgrade to handle expected growth in clean energy and electric cars. 

“Competition from renewables is being strangled without adequate and necessary upgrades to the transmission network,” said Simon Mahan, executive director of the Southern Renewable Energy Association, which represents solar and wind companies.

The federal government, however, lacks the authority to push through the massive grid expansion and modernization needed to withstand wilder weather and accommodate EVs and renewable power. Under the current regulatory regime, and amid contentious electricity pricing proposals in recent years, the needed infrastructure investments are instead controlled by a Byzantine web of local, state and regional regulators who have strong political incentives to hold down spending, according to Reuters interviews with grid operators, federal and state regulators, and executives from utilities and construction firms.

“Competition from renewables is being strangled without adequate and necessary upgrades to the transmission network.”

Paying for major grid upgrades would require these regulators to sign off on rate increases likely to spark strong opposition from consumers and local and state politicians, who are keen to keep utility bills low. In addition, utility companies often fight investments in transmission-network improvements because they can result in new connections to other regional grids that could allow rival companies to compete on their turf, even as coal and nuclear disruptions raise brownout risks in some regions. With the advance of green energy, those inter-regional connections will become ever more essential to move power from far-flung solar and wind installations to population centers.

The power-sharing among states and regions with often conflicting interests makes it extremely challenging to coordinate any national strategy to modernize the grid, said Alison Silverstein, an independent industry consultant and former senior adviser to the U.S. Federal Energy Regulatory Commission (FERC).

“The politics are a freakin’ nightmare,” she said.

The FERC declined to comment for this story. FERC Commissioner Mark Christie, a Republican, acknowledged the limitations of the agency’s power over the U.S. grid in an April 21 agency meeting involving transmission planning and costs.

“We can’t force states to do anything,” Christie said.

The White House and Energy Department did not comment in response to detailed questions from Reuters on the Biden administration’s plans to tackle U.S. grid problems and their impact on green-energy expansion.

The administration said in an April news release that it plans to offer $2.5 billion in grants for grid-modernization projects as part of Biden’s $1 trillion infrastructure package, complementing a proposed clean electricity standard to accelerate decarbonization over the next decade. A modernized grid, the release said, is the “linchpin” of Biden’s clean-energy agenda.

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Canada Oil Recession Outlook analyzes the Russia-Saudi price war, OPEC discord, COVID-19 demand shock, WTI and WCS collapse, Alberta oilsands exposure, U.S. shale stress, and GDP risks from blockades and fiscal responses.

Key Points

An outlook on how the oil price war and COVID-19 demand shock could tip Canada into recession and strain producers.

✅ WTI and WCS prices plunge on OPEC-Russia discord

✅ Alberta oilsands face break-even pressure near 30 USD WTI

✅ RBC flags global recession; GDP hit from blockades, virus

A war between Russia and Saudi Arabia for market share for oil may have been triggered by the COVID-19 pandemic in China, but the oil price crash contagion that it will spread could have impacts that last longer than the virus.

The prospects for Canada are not good.

Plunging oil prices, reduced economic activity from virus containment, and the fallout from weeks of railway blockades over the Coastal GasLink pipeline all add up to “a one-two-three punch that I think is almost inevitably going to put Canada in a position where its growth has to be negative,” said Dan McTeague, a former Liberal MP and current president of Canadians for Affordable Energy. The situation “certainly has the makings” of a recession, said Ken Peacock, chief economist for the Business Council of British Columbia.

“At a minimum, it’s going to be very disruptive and we’re going to have maybe one negative quarter,” Peacock said. “Whether there’s a second one, where it gets labeled a recession, is a different question. But it’s going to generate some turmoil and challenges over the next two quarters – there’s no doubt about that.”

RBC Economics on March 13 announced it now predicts a global recession and cut its growth projections for Canada's economy in 2020 by half a per cent.

Oil price futures plunged 30% last week, dragging stock markets and currencies, including the Canadian dollar, down with them, even as a deep freeze strained U.S. energy systems. That drop came on top of a 17% decline in February, due to falling demand for oil due to the virus.

The latest price plunge – the worst since the 1991 Gulf War – was the result of Russia and the Organization of Petroleum Exporting Countries (OPEC), led by Saudi Arabia, failing to agree on oil production cuts.

The COVID-19 outbreak in China – the world’s second-largest oil consumer – had resulted in a dramatic drop in oil demand in that country, and a sudden glut of oil, with the U.S. energy crisis affecting electricity, gas and EV markets.

OPEC has historically been able to moderate global oil prices by controlling output. But when Russia refused to co-operate with OPEC and agree to production cuts, Saudi Arabia’s state-owned company, Aramco, announced it plans to boost its oil output from 9.7 million barrels per day (bpd) to 12.3 million bpd in April.

In response to that announcement, West Texas Intermediate (WTI) prices dropped 18% to below US$34 per barrel while the Canadian Crude Index fell 24% to US$21. Western Canadian Select dropped 39% to US$15.73.

The effect on Alberta oilsands producers was severe and immediate. Cenovus Energy Inc. (TSX:CVE) saw roughly $2 billion in market cap erased on March 9, when its stock dropped by 52%, which came on top of a 12% drop March 6.

The company responded the very next day by announcing it would cut spending by 32% in 2020, suspend its oil-by-rail program and defer expansion projects.

MEG Energy Corp. (TSX:MEG), which suffered a 56% share price drop on March 9, also announced a 20% reduction in its 2020 capital spending plan.

Peter Tertzakian, chief economist for ARC Energy Research Institute, wrote last week that Russia’s plan is to try to hurt U.S. shale oil producers, who have more than doubled U.S. oil production over the past decade.

Anas Alhajji, a global oil analyst, expects that plan could work. Even before the oil price shock, he had predicted the great shale boom in the U.S. was coming to an end.

“Shale production will decline, and the myth of ‘explosive growth’ will end,” he told Business in Vancouver. “The impact is global and Canadian producers might suffer even more if the oil that Saudi Arabia sends to the U.S. is medium and heavy. This might last longer than what people think.”

The question for Alberta is how Canadian producers can continue to operate through a period of cheap oil. Alberta producers do not compete on the global market. They serve a niche market of U.S. heavy oil refiners, and Biden-era policy is seen as potentially more favourable for Canada’s energy sector than alternatives.

“On the positive side, the industry is battle-hardened,” Tertzakian wrote. “Over the past five years, innovative companies have already learned to endure some of the lowest prices in the world.”

But he added that they need WTI prices of US$30 per barrel just to break even.

“But that’s an average break-even threshold for an industry with a wide variation in costs. That means at that level about half the companies can’t pay their bills and half are treading water.”

Just prior to the oil price plunge, the International Energy Agency (IEA) updated its 2020 forecast for global oil consumption from an 825,000 bpd increase in oil consumption to a 90,000 bpd decrease, due to the COVID-19 virus and consequent economic contraction and reduction in travel.

The IEA predicts global oil demand won’t return to “normal” until the second half of 2020. But even if demand does return to pre-virus levels, that doesn’t mean oil prices will – not if Saudi Arabia can sustain increased oil production at low prices, and evolving clean grid priorities could influence the trajectory too.

The oil plunge was greeted in Alberta with alarm. Alberta Premier Jason Kenney warned Alberta is in “uncharted territory” as consumers are urged to lock in rates and said his government might have to review its balanced budget and resort to emergency deficit spending.

While British Columbians – who pay some of the highest gasoline prices in North America – will enjoy lower gasoline prices at a time when prices are usually starting a seasonal spike, B.C.’s economy could feel knock-on effects from a recession in Alberta.

“We sell a lot of inputs, do a lot of trade with Alberta, so it’s important for B.C., Alberta’s economic health,” Peacock said, “and recent tensions over electricity purchase talks underscore that.”

Last week, the Trudeau government announced $1 billion in emergency funding to cope with the virus and waived a one-week waiting period for unemployment insurance.

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