What could have gone wrong at Constellation?

By Jay Hancock, Baltimore Sun


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You leave the Web for 12 hours and look what happens. Who would have thought the financial worldÂ’s next holy guacamole moment would happen in Baltimore?

Obviously a potential ratings downgrade has triggered a Constellation Energy liquidity crisis – or vice versa. Translation: Rating agencies, shareholders and lenders fear it may run short on cash to carry out day-to-day operations. But we have no idea what’s causing it yet.

What’s clear is that Constellation’s reliance on borrowed money is putting it in dire straits. Much like many Wall Street firms that have run into problems, Constellation uses short-term loans to play the markets – in its case, mainly commodities such as wholesale electricity and natural gas. A huge portion of its profits – we don’t know exactly how huge – has depended on this play.

Two things could have gone wrong: 1) A critical trading blowup or 2) A perception by shareholders, lenders and rating agencies that the cheap, easy money Constellation needs to play the market wonÂ’t be there in the future.

WhatÂ’s a trading blowup? When you make a bad bet, lenders demand more collateral. When you make a really bad bet, you run out of collateral to post, which causes lenders to pull the plug, which threatens the whole enterprise.

We donÂ’t know that this is whatÂ’s going on. But itÂ’s one explanation given the plunge in ConstellationÂ’s stock and the companyÂ’s apparent decision to put itself up for sale.

Constellation had wagered on rising energy prices through the first half of the year. It was the right bet, and profits looked good at the end of June. But in July energy started to crater. If Constellation remained “long” energy after July, that might help explain what’s going on. But it’s speculation.

The alternative scenario is that Constellation lenders are simply declining to roll over its loans in order to lower their risk, and itÂ’s snowballing. One lender makes a prudent move. A rating agency starts to worry. The second lender worries a credit drought will hurt ConstellationÂ’s liquidity, and it becomes self-fulfilling.

There has been much worry that Constellation was owed money by Lehman Brothers or AIG or some other firm that just collapsed. Constellation said the Lehman collapse wouldn’t cause it any problems. And AIG got bailed out last night, so it is honoring its commitments. In any event, it’s hard to imagine that such “counterparty risk” could threaten Constellation enough to seek to sell itself.

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Scottish North Sea wind farm to resume construction after Covid-19 stoppage

NnG Offshore Wind Farm restarts construction off Scotland, backed by EDF Renewables and ESB, CfD 2015, 54 turbines, powering 375,000 homes, 500 jobs, delivering GBP 540 million, with Covid-19 safety measures and staggered workforce.

 

Key Points

A 54-turbine Scottish offshore project by EDF Renewables and ESB, resuming to power 375,000 homes and support 500 jobs.

✅ Awarded a CfD in 2015; 54 turbines off Scotland's east coast.

✅ Projected to power 375,000 homes and deliver GBP 540 million locally.

✅ Staggered workforce return with Covid-19 control measures and oversight.

 

Neart Na Gaoithe (NnG) Offshore Wind Farm, owned by  EDF Renewables and Irish firm ESB, stopped construction in March, even as the world's most powerful tidal turbine showcases progress in marine energy.

Project boss Matthias Haag announced last night the 54-turbine wind farm would restart construction this week, as the largest UK offshore wind farm begins supplying power, underscoring sector momentum.

Located off Scotland’s east coast, where wind farms already power millions of homes, it was awarded a Contract for Difference (CfD) in 2015 and will look to generate enough energy to power 375,000 homes.

It is expected to create around 500 jobs, and supply chain growth like GE's new offshore blade factory jobs shows wider industry momentum, while also delivering £540 million to the local economy.

Mr Haag, NnG project director, said the wind farm build would resume with a small, staggered workforce return in line social distancing rules, and with broader energy sector conditions, including Hinkley Point C setbacks that challenge the UK's blueprint.

He added: “Initially, we will only have a few people on site to put in place control measures so the rest of the team can start work safely later that week.

“Once that’s happened we will have a reduced workforce on site, including essential supervisory staff.

“The arrangements we have put in place will be under regular review as we continue to closely monitor Covid-19 and follow the Scottish Government’s guidance.”

NnG wind farm, a 54-turbine projects, was due to begin full offshore construction in June 2020 before the Covid-19 outbreak, at a time when a Scottish tidal project had just demonstrated it could power thousands of homes.

EDF Renewables sold half of the NnG project to Irish firm ESB in November last year, and parent company EDF recently saw the Hinkley C reactor roof lifted into place, highlighting progress alongside renewables.

The first initial payment was understood to be around £50 million.

 

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840 million people have no electricity – World Bank must fund more energy projects

World Bank Energy Policy debates financing for coal, oil, gas, and renewables to fight energy poverty, expand grid reliability, ensure baseload power, and balance climate goals with development finance for affordable, reliable electricity access.

 

Key Points

It outlines the bank's stance on financing fossil fuels and renewables to expand affordable, reliable electricity.

✅ Focus on energy access, baseload reliability, and poverty alleviation

✅ Debate over coal, gas, and renewables in development finance

✅ Geopolitics: China and Russia fill funding gaps, raising risks

 

Why isn’t the World Bank using all available energy resources in its global efforts to fight poverty? That’s the question I’ve asked World Bank President David Malpass. Nearly two years ago, the multilateral development bank decided to stop supporting critical coal, oil and gas projects that help people in developing countries escape poverty.

Along with 11 other senators, and as a member who votes on whether to give U.S. taxpayer dollars to the World Bank, I am pressing the bank to lift these restrictions. Developing countries desperately need access to a steady supply of affordable, reliable clean electricity to support economic growth.

The World Bank has pulled funding for critical electricity projects in poor countries, including high-efficiency power stations that are fueled by coal, even as efforts to revitalize coal communities with clean energy have grown.

Despite Kosovo having the world’s fifth-largest reserves of coal, the bank announced it would only support new energy projects from renewable sources going forward. Kosovo’s Minister of Economic Development Valdrin Lluka responded: “We don’t have the luxury to do such experiments in a poor country such as Kosovo. … It is in our national security interest to secure base energy inside our country.”

The World Bank’s misguided move comes as 840 million people worldwide are living without electricity, including 70 percent of sub-Saharan Africa, and as the fall in global energy investment may lead to shortages.

Even more troubling, nearly 3 billion people in developing countries rely on fuels like wood and other biomass for cooking and home heating, resulting in serious health problems and premature deaths, and the pandemic saw widespread electricity shut-offs that deepened energy insecurity. In 2016, household smoke killed an estimated 2.6 million people.

The World Bank’s mission is to lift people out of poverty. The bank is now compromising that mission in favor of a political agenda targeting certain energy sources.

With the World Bank blocking financing to affordable and reliable energy projects, Russia and China are stepping up their investments in order to gain geopolitical leverage.

President Vladimir Putin is pursuing Russian oil and gas projects in Mozambique, Gabon, and Angola. China’s Belt and Road Initiative is supporting traditional energy resources, with 36 percent of its power projects from 2014 to 2017 involving coal. South Africa had to turn to the China Development Bank to fund its $1.5 billion coal-fired power plant.

There are real risks for countries partnering with China and Russia on these projects. Developing countries are facing what some are calling China’s “debt trap” diplomacy. These nations have also raised concerns over safety compliance, unfair business practices, and labor standards.

As the bank’s largest contributor, the United States has a duty to make sure U.S. taxpayer dollars are used wisely and effectively. Every U.S. dollar at the World Bank should make a difference for people in the developing world.

My colleagues and I have asked the bank to pursue an all-of-the-above energy strategy as it strives to achieve its mission to end extreme poverty and promote shared prosperity. We will take the bank’s response into account during the congressional appropriations process.

The United States is a top global energy producer. And yet Democrats running for president are pursuing anti-energy policies that would hurt not only the United States but the entire world, with implications for U.S. national security as well.

Utilizing our abundant energy resources has fueled an American energy renaissance and a booming U.S. economy, even as disruptions in coal and nuclear have strained the grid, with millions of new jobs and higher wages.

People who are struggling to survive and thrive in developing countries deserve the same opportunity to access affordable and reliable sources of power.

As Microsoft founder and global philanthropist Bill Gates has noted of renewables: "Many people experiencing energy poverty live in areas without access to the kind of grids that are needed to make those technologies cheap and reliable enough to replace fossil fuels."

Ultimately, there is a role for all sources of energy to help countries alleviate poverty and improve the education, health and wellbeing of their people.

The solution to ending energy poverty does not lie in limiting options, but in using all available options. The World Bank must recommit to ending extreme poverty by helping countries use all of the world’s abundant energy resources. Let’s end energy poverty now.

 

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Alberta sets new electricity usage record during deep freeze

Alberta Electricity Demand Record surges during a deep freeze, as AESO reports peak load in megawatts and ENMAX notes increased usage in Calgary and Edmonton, with thermostats up amid a cold snap straining power grid.

 

Key Points

It is the highest electricity peak load recorded by AESO, reflecting maximum grid usage during cold snaps.

✅ AESO reported 11,729 MW peak during the deep freeze

✅ ENMAX saw a 13 percent demand jump week over week

✅ Cold snap drove thermostats up in Calgary and Edmonton

 

Albertans are cranking up their thermostats and blasting heat into their homes at overwhelmingly high rates as the deep freeze continues across the region. 

It’s so cold that the province set a new all-time record Tuesday evening for electricity usage. 

According to the Alberta Electric System Operator (AESO), as electricity prices spike in Alberta during extreme demand, 11,729 MW of power was used around 7 p.m. Tuesday, passing the previous record set in January of last year by 31 MW.

Temperatures reached a low of -29 C in Calgary, where rising electricity bills have strained budgets, on Tuesday while Edmonton saw a low of -30 C, according to Environment Canada. Wind chill  made it feel closer to -40.

“That increase — 31 Megawatts — is sizeable and about the equivalent of a moderately sized generation facility,” said AESO communications director, Mike Deising. 

“We do see higher demand in winter because it’s cold and it’s dark and that’s really exactly what we’re seeing right now as demand goes up, people turn on their lights and turn up their furnaces,” and with the UCP scrapping the price cap earlier that’s really exactly what we’re seeing right now as demand goes up, people turn on their lights and turn up their furnaces.”

Deising adds Alberta’s electricity usage over the last year has actually been much lower than average, though experts urge Albertans to lock in rates amid expected volatility, despite more people staying home during the pandemic. 

That trend was continuing into 2021, but as Alberta's rising electricity prices draw attention, it’s expected that more records could be broken. 

“If the cold snap continues we may likely set another record (Wednesday) or (Thursday), depending on what happens with the temperatures,” he said. 

Meanwhile, ENMAX has reported an average real-time system demand of 1,400 MW for the city of Calgary. 

That amount is still a far cry from the current season record of 1,619 MW (Aug. 18, 2020), the all-time winter record of 1,653MW (Dec. 2, 2013), and the all-time summer record of 1,692 MW (Aug. 10, 2018). 

ENMAX says electricity demand has increased quite significantly over the past week — by about 13 per cent — since the cold snap set in. 

As a result, the energy company is once again rolling out its ‘Winter Wise’ campaign in an effort to encourage Calgarians to manage both electricity and natural gas use in the winter, even as a consumer price cap on power bills is enabled by new legislation.

 

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Wall Street Backs Rick Perry’s $19 Billion Data Center Venture

Wall Street backs Rick Perry’s $19 billion nuclear-powered data center venture, Fermi America, combining nuclear energy, AI infrastructure, and data centers to meet soaring electricity demand and attract major investors betting on America’s clean energy technology future.

 

What is "Wall Street Backs Rick Perry’s $19 Billion Nuclear-Powered Data Center Venture”?

Wall Street is backing Rick Perry’s $19 billion nuclear-powered data center venture because it combines the explosive growth of AI with the promise of clean, reliable nuclear energy.

✅ Addresses AI’s massive power demands with nuclear generation

✅ Positions Fermi America as a pioneer in energy-tech convergence

✅ Reflects investor confidence in long-term clean energy solutions

Former Texas Governor and U.S. Energy Secretary Rick Perry has returned to the energy spotlight, this time leading a bold experiment at the intersection of nuclear power and artificial intelligence. His startup, Fermi America, headquartered in Amarillo, Texas, went public this week with an initial valuation of $19 billion after its shares surged 55 percent above the opening price on the first day of trading.

The company aims to tackle one of the most pressing challenges in modern technology: the staggering energy demand of AI data centers. “Artificial intelligence, which is getting more and more embedded in all parts of our lives, the servers that host the data for artificial intelligence are stored in these massive warehouses called data centers,” said Houston Chronicle energy reporter Claire Hao. “And data centers use a ton of electricity.”

Fermi America’s plan, Hao explained, is as ambitious as it is unconventional. Fermi America has a proposal to build what it claims will be the world’s largest data center, powered by what it asserts will be the country’s largest nuclear complex. So very ambitious plans.”

According to the company’s roadmap, Fermi aims to bring its first mega reactor online by 2032, followed by three additional large reactors. In the meantime, the firm intends to integrate natural gas and solar energy by the end of next year to support early-stage operations.

While much of the energy sector’s attention has turned toward small modular reactors, Fermi’s approach focuses on traditional large-scale nuclear technology. “What Fermi is talking about building are large traditional reactors,” Hao said. “These very large traditional reactors are a tried and true technology. But the nuclear industry has a history of taking a very long time to build them, and they are also very expensive to build.” She noted that the most recent example, completed in 2023 by a Georgia utility, came in $17 billion over budget and several years late.

To mitigate such risks, Fermi has recruited specialists with international experience. “They’ve hired folks that have successfully built these projects in China and in other countries where it has been a lot smoother to build these,” Hao said. “Fermi wants to try to make it a quicker process.”

Perry’s involvement lends both visibility and controversy. In addition to co-founding the company, Griffin Perry, his son, plays a role in its management. The firm has hinted that it might even name reactors after former President Donald Trump, under whom Perry served as Secretary of Energy. Perry has framed the project as part of a national effort to regain technological ground. “He really wants to help the U.S. catch up to countries like China when it comes to delivering nuclear power for the AI race,” Hao explained. “He says we’re already behind.”

Despite the fanfare, Fermi America is still a fledgling enterprise. Founded in January and announced publicly in June, the company reported a $6.4 million loss in the first half of the year and has yet to generate any revenue. Still, its IPO exceeded expectations, opening at $21 a share and closing above $32 on the first day.

“I think that just shows there’s a lot of hype on Wall Street around artificial intelligence-related ventures,” Hao said. “Fermi, in the four months since it announced itself as a company, has found a lot of different ways to grab people’s attention.”

For now, the project represents both a technological gamble and a test of investor faith — a fusion of nuclear ambition and AI optimism that has Wall Street watching closely.

 

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Gaza electricity crisis:

Gaza Electricity Crisis drives severe power cuts in the Gaza Strip, as Hamas-PA tensions and Mahmoud Abbas's supply reductions under blockade spur fuel shortages, hospital strain, and soaring demand for batteries, LED lights, and generators.

 

Key Points

A prolonged Gaza power shortage from politics, blockade, and fuel cuts, disrupting daily life, hospitals, and water.

✅ Demand surges for batteries, LED lights, and generators

✅ PA cuts to Israel-supplied power deepen shortages

✅ Hospitals, water, and sanitation face critical strain

 

In Imad Shlayl’s electronics shop in Gaza City, the customers crowding his store are interested in only two products: LED lights and the batteries to power them.

In the already impoverished Gaza Strip, residents have learned to adapt to the fact that electricity is only available for between two and four hours a day.

But fresh anger was sparked when availability was cut further last month, at the request of the Palestinian president, Mahmoud Abbas, in an escalation of his conflict with Hamas, the Islamist group.

The shortages have defined how people live their lives, echoing Europe’s energy crisis in other regions: getting up in the middle of the night, if there is power, to run washing machines or turn on water pumps.

Only the wealthy few have frequent, long-lasting access to electricity, even as U.S. brownout risks highlight grid fragility, to power lights and fans and fridges, televisions and wifi routers, in Gaza’s stifling summer heat.

“We used to sell all sorts of things,” says Shlayl. “But it’s different these days. All we sell is batteries and chargers. Because the crisis is so deep we are selling 100 batteries a day when normally we would sell 20.”

Gaza requires 430 megawatts of power to meet daily demand, but receives only half that. Sixty megawatts are supplied by its solitary power station, now short on fuel, while the rest is provided through the Israel’s power sector and funded by Abbas’s West Bank-based Palestinian Authority (PA).

Abbas’s move to cut supplies to Gaza, which is already under a joint Israeli and Egyptian blockade – now in its 11th year – has quickly made him a hate figure among many Gazans, who question why he is punishing 2 million fellow Palestinians in what appears to be an attempt to force Hamas to relinquish control of the territory.

Though business is good for Shlayl, he is angry at the fresh shortages faced by Gazans which, as pandemic power shut-offs elsewhere have shown, affect all areas of life, from hospital emergency wards to clean water supplies.

“I’ve not done anything to be punished by anyone. It is the worst I can remember but we are expecting it to get worse and worse,” he said. “Not just electricity, but other things as well. We are in a very deep descent.”

As well as cutting electricity, the PA has cut salaries for its employees in Gaza by upwards of 30% , prompting thousands to protest on the streets of Gaza city.

Residents also blame Abbas for a backlog in processing the medical referral process for those needing to travel out of Gaza for treatment, although who is at fault in that issue is less clear cut.

The problems facing Gaza – where high levels of unemployment are endemic – is most obvious in the poorest areas.

In Gaza City’s al-Shati refugee camp, home to the head of Hamas’s political bureau, Ismail Haniyeh, whole housing blocks were dark, while in others only a handful of windows were weakly illuminated.

In the one-room kiosk selling pigeons and chickens that he manages, just off the camp’s main market, Ayman Nasser, 32, is sitting on the street with his friends in search of a sea breeze.

His face is illuminated by the light of his mobile phone. He has one battery-powered light burning in his shop.

“Part of the problem is that we don’t have any news. Who should we blame for this? Hamas, Israelis, Abbas?” he said.

 A Palestinian girl reads by candle light due to power cut at the Jabalia Camp in Gaza City
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 A Palestinian girl reads by candlelight due to a power cut at the Jabalia camp in Gaza City. Photograph: Anadolu Agency/Getty Images
His friend, Ashraf Kashqin, interrupts: “It is all connected to politics, but it is us who is getting played by the two sides.”

If there is a question that all the Palestinians in Gaza are asking, it is what the ageing and remote Abbas hopes to achieve, a dynamic also seen in Lebanon’s electricity disputes, not least whether he hopes the cuts will lead to an insurrection against Hamas following demonstrations linked to the power supply in January.

While a senior official in the Fatah-led government on the West Bank said last month that the aim behind the move by the PA – which has been paying $12m (£9m) a month for the electricity Israel supplies to Gaza – was to “dry up Hamas’s financial resources”, others are dubious about the timing, the motive and the real impact.

Among them are human rights groups, such as Amnesty International, who have warned it could turn Gaza’s long-running crisis into a major disaster already hitting hospitals and waste treatment plants.

“For 10 years the siege has unlawfully deprived Palestinians in Gaza of their most basic rights and necessities. Under the burden of the illegal blockade and three armed conflicts, the economy has sharply declined and humanitarian conditions have deteriorated severely. The latest power cuts risk turning an already dire situation into a full-blown humanitarian catastrophe,” said Magdalena Mughrabi, of the group.

Then there is the question of timing. “Abbas is probably the only one who knows why he is doing this to Gaza,” adds Mohameir Abu Sa’da, a political science professor at Al Azhar University and analyst.

“I honestly don’t buy what he has been saying for the last three months: that he will take exceptional measures against Hamas to put pressure on it to give up control of the Gaza Strip.

 

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India to Ration Coal Supplies as Electricity Demand Surges

India Coal Supply Rationing redirects shipments from high-inventory power plants to stations facing shortages as electricity demand surges, inventories fall, and outages persist; Coal India, NTPC imports, and smaller mines bolster domestic supply.

 

Key Points

A temporary policy redirecting coal from high-stock plants to shortage-hit plants amid rising demand

✅ Shipments halted 1 week to plants with >14 days coal stock

✅ Smaller mines asked to raise output; NTPC to import 270,000 tons

✅ Outages at Adani and Tata Mundra units pressure domestic supply

 

India will ration coal supplies to power plants with high inventories to direct more shipments to stations battling shortages, even as shortages ease in some regions, as surging demand outstrips production.

Supplies to plants with more than two weeks’ coal inventory will be halted for a week, a team headed by federal Coal Secretary Alok Kumar decided on Saturday, the Power Ministry said in a statement. The government has also requested smaller mines to raise output to supplement shipments from state miner Coal India Ltd., and is taking steps to get nuclear back on track to diversify the energy mix.

A jump in electricity consumption spurred by a reviving economy and an extended summer, after an earlier steep demand decline in India, is driving demand for coal, which helps produce about 70% of the nation’s electricity. The surge in demand complicates India’s clean-energy transition efforts amid solar supply headwinds that cloud near-term alternatives, and may bolster arguments favoring the country’s dependence on coal to fuel economic growth.

“There’s no doubt India will continue to need coal for stable power for years,” said Rupesh Sankhe, vice president at Elara Capital India Pvt. in Mumbai. “Plants that meet environmental standards and are able to produce power efficiently will see utilization rising, but I doubt we’re going to have many new coal plants.”  

Coal stockpiles at the country’s power plants had fallen to 14.7 million tons as of Aug. 24, tumbling 62% from a year earlier, according to the latest data from the Central Electricity Authority. More than 88 gigawatts of generation plants, about half the capacity monitored by the power ministry, had inventories of six days or less as of that date, the data show. Power demand jumped 10.5% in July from a year earlier, even as global electricity use dipped 15% during the pandemic, according to the government.
Outages at some large plants that run on imported coal have increased the burden on those that burn domestic supplies, aiding shortfalls.

Adani Power Ltd. had almost 2 gigawatts of capacity in outage at its Mundra plant in Gujarat at the start of the week, while Tata Power Co. Ltd. had shut 80% of its 4-gigawatt plant in the same town for maintenance, power ministry data show.

NTPC Ltd., the largest power generator, will import the 270,000 tons of coal it left out from contracts placed earlier to mitigate the fuel shortage, reflecting higher imported coal volumes this fiscal, the power ministry said in a separate statement.

 

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