EU probes AustriaÂ’s green power act

By Reuters


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The European Commission opened an in-depth investigation into Austria's new green electricity act because of concerns it may favor large energy consumers.

The 27-nation European Union's executive also approved a plan to grant subsidized feed-in tariffs — electricity prices above market price — paid to producers of green electricity to compensate them for extra costs.

"The Commission supports the development of renewable energy," EU Competition Commissioner Neelie Kroes said in a statement.

"However, at this stage, the envisaged exemption of large electricity consumers from the funding of green electricity needs further investigation."

The Commission said it had doubts that the proposed exemptions for energy-intensive industries were compatible with EU state aid rules.

Austria's new green electricity act stipulates that energy intensive industries may be exempted from the obligation to buy green electricity and contribute to the funding of green electricity in Austria, the Commission said.

"An exemption from contributions to the funding of green electricity may provide these industries with an unfair competitive advantage," the EU executive said.

"As a result, enterprises not qualifying for exemption may be burdened with extra cost for purchasing additional amounts of green electricity," it added.

The Commission said the lunch of an in-depth probe did not prejudge its final decision and has invited third parties to comment on the case.

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Coronavirus and the U.S. grid: What to know

COVID-19 Impact on US Electric Grid: utilities, ERCOT, PJM, and MISO brace for load shifts as remote work rises, industrial demand falls, and nuclear plants enforce pandemic planning to maintain reliability and resilience.

 

Key Points

Pandemic-driven changes in electricity demand and operations as utilities shift to remote work and reduced industrial use.

✅ Utilities enact remote work and suspend disconnections

✅ Grid operators model load shifts and maintain reliability

✅ Nuclear plants sustain operations with pandemic protocols

 

Operators of the nation's electric grid and energy companies are bracing for the spread of a virus that is undercutting power demand in countries across Asia and Europe as daily activities grind to a halt.

Owners of U.S. utilities and nuclear plants are canceling events, halting travel, pushing remote work and testing ill workers to slow the spread of the novel coronavirus.

So far, grid operators in the United States say no substantial effect on the electricity demand has emerged, but that could change, even though some reports indicate the U.S. grid is safe for now amid COVID-19. Texas' main grid operator, the Electric Reliability Council of Texas (ERCOT), expressed uncertainty when asked whether it will see changes in demand patterns for power due to the virus.

"It's too early to tell," Leslie Sopko, a spokeswoman for ERCOT, said in an email.

The virus has already taken a toll on power demand overseas. The chairman of Japan's federation of electric utilities and president of Chubu Electric Power Co., Satoru Katsuno, told reporters Friday the country's power demand has weakened as industrial activity slows due to the outbreak, according to Reuters.

The news outlet similarly reported China's industrial power demand this year may decline as the virus curtailed factory output and prevented some employees from returning to work. And, according to Bloomberg, power use in Italy slumped 7.4% last week after the government there shut down schools and told workers to remain home, while Ontario electricity demand also declined as people stayed home.

U.S. utility executives said the sector is well prepared and has faced the threat of spreading infections before. More than a decade ago, global virus scares like SARS pushed companies to hammer out extensive disaster planning, and those have stuck.

"A lot of the foundational work on contingency planning is actually rooted in pandemic planning because of those experiences in the mid-2000s," Scott Aaronson, the Edison Electric Institute's vice president of security and preparedness, told E&E News. "There is a good body of work and a lot of planning and exercises that have gone into being able to operate through these challenges."

Keeping the nation's electric grid running is a top priority at the Department of Energy, said Chris Fall, the agency's point person for COVID-19, which the new coronavirus causes. "Our responsibility is to make sure the electrical grid is resilient and working," said Fall, who directs the department's Office of Science.

He told an agency podcast, called "Direct Current," that the department is working with the private sector and other elements of the energy system. "Obviously we are connected with other agencies like Homeland Security or [the Federal Energy Regulatory Commission] on things like the electrical grid and making sure we have power, and if those people get sick or impacted, we have backups for all of that," he said.

According to a bulletin EEI released on the issue, 40% of a company's employees could be out sick, be quarantined or stay home to care for sick family members. And pandemics may prevent "traditional mutual assistance programs that help companies restore service after natural disasters and weather events," EEI said, such as restoring power in Florida after major storms.

The utility sector is also juggling the needs of its customers. Many major utilities across the nation have vowed to suspend shut-offs and keep power, heat and water on for all customers — a particular concern for people who may be out of work and cannot afford to pay their bills. Companies are also suspending disconnections for nonpayment, some under direction from officials and regulators in states like Ohio and Connecticut, while in Canada Hydro One's peak rate policy has drawn attention among self-isolating customers.

Like other businesses preparing for pandemics, utilities focus on keeping the workforce healthy and operations running. But EEI's Aaronson noted that a key difference with keeping critical infrastructure humming is the possible requirement for the sheltering in place of essential employees who are unable to do their jobs from home, as some operators contemplate locking down key staff at work sites to ensure continuity.

Grid operators are also well-equipped to handle shifts in power demand, and he acknowledged the sector could see changes as more offices and businesses move to remote working. He compared it to the load demand shifts between weekdays and weekends.

"So on the weekends, you're going to have a lot of people at home," Aaronson said. "During the week, it's people in offices. But generally speaking, the ability to have that resiliency and redundancy, the ability to shift resources and the way the grid balances, that is not going to change."

Electricity demand from high-intensity industries like manufacturing or theme parks like Disneyland could also wane, he added, even as electricity inequality in California influences who is most affected.

"It's not just a load shift to the residential, but it's also the load drop in some cases," Aaronson said. "Some of the commercial and industrial customers are going to be working a little bit less than they are presently."

Nuclear plants
Work is continuing at the Plant Vogtle nuclear construction project after Georgia Power Co. announced that one of the site workers is being tested for the coronavirus. The utility does not have the results of that test, a Georgia Power spokesman said late yesterday afternoon. The person works primarily in an office setting and is not on the construction site where two nuclear reactors are being built.

A second worker was tested Saturday, and those results were negative, spokesman John Kraft told E&E News.

Vogtle boasts a high worker count of 9,000 across the entire construction site, which includes office buildings. This is mostly craft laborers, but there are also administrators, executives and Nuclear Regulatory Commission safety inspectors.

A number of contractors and vendors are also on site given the complexity of the project.

Employees who were near the office worker being tested have been sent home until the company receives results. If the test is positive, then those workers will stay home for 14 days, Georgia Power said.

"The company is taking every action to prepare for impacts of the COVID-19 pandemic," Kraft said in a statement. This includes using advice from medical professionals and the Atlanta-based Centers for Disease Control and Prevention.

Georgia Power, owned by Atlanta-based Southern Co., informed regulators at the NRC that a worker was being tested. The federal commission itself has pandemic plans in place to ensure continued oversight, including robust work-from-home capabilities and "social distancing" practices to limit close contact among employees at headquarters.

NRC spokesman Scott Burnell said in an email that telework is not unusual for the agency, and about 75% of its workforce is already equipped to work remotely. The commission tested its telework readiness Friday. Some positions require workers to stay on-site to ensure safe reactor operations, Burnell added.

The nuclear industry has maintained pandemic preparedness plans and procedures since 2006, which have been shared with federal agencies, according to Mary Love, a spokeswoman for the Nuclear Energy Institute. "NEI members are participating in weekly calls to facilitate communications, coordination and best practices," she said.

According to NEI statistics, each plant averages 500 to 1,000 workers. While not every position is essential to operations, some areas like the control room cannot be conducted remotely.

"We know that nuclear power plant operations and the availability of electric service will be tremendously important in minimizing the impact of the situation on the general public," Love added. "We are confident, based on extensive planning, that the industry will continue to operate nuclear plants safely as this event unfolds."

Grid operators
Hundreds of workers responsible for overseeing critical operations of the U.S. electric grid are being encouraged to work from home, their offices are being sanitized, and in-person meetings are being moved online.

PJM Interconnection, the nation's largest grid operator covering some 65 million people across Mid-Atlantic and Midwest states, said Friday a forecast on load changes was not yet available.

PJM has moved all stakeholder meetings online. Employee travel has been suspended, as have external visits to its headquarters in Valley Forge, Pa.

Employees "are equipped to work remotely, if necessary, to maintain business continuity," and PJM "is prepared and able to run and support all market applications from its campus or remotely, as needed," the operator said.

"PJM recognizes that these measures have significant impacts to our staff, members and stakeholders," PJM said on its coronavirus response webpage. "We are dedicated to striking a balance between those impacts and our number one priority — the reliability of the grid."

Still pending at the operator is a decision about its annual meeting in Chicago at the beginning of May. That decision will be made by April 3, PJM said.

The Midcontinent Independent System Operator (MISO), which runs the bulk power grid across 15 states and the Canadian province of Manitoba, is also holding meetings via conference call or online and restricting all business travel.

MISO has encouraged "nonessential" employees to work remotely, leaving only those who actively monitor and manage the operation of the grid working on-site.

The grid operator employs nearly 1,000 people, including 780 at its headquarters in Carmel, Ind.

A board meeting set for the last week of March in New Orleans hasn't yet been canceled, with a final decision on whether to move forward with the meeting expected today.

MISO said it hasn't encountered other changes in normal operations and has not seen significant shifts in electricity demand.

In Texas, ERCOT has about 750 employees, mostly at its campus in the city of Taylor. ERCOT's Sopko said the grid operator is encouraging employees who are not required to be on-site to work from home. The policy is voluntary at this time, but that could change quickly, she said Friday.

ERCOT is also taking extra steps to keep workers safe, including alternating use of facilities, encouraging social distancing and imposing control room measures as part of its pandemic planning, she added.

Energy companies
In the Midwest, utilities including DTE Energy Co., Commonwealth Edison, Consumers Energy and Ameren Corp. said they're following CDC guidance and working with state and local officials to help slow the spread of the virus. That means asking employees who can do their jobs at home to do so, restricting visitors to company offices, canceling large assemblies and nonessential business travel, and holding meetings by phone or online.

Chicago-based ComEd, which serves 4 million customers, is imposing a moratorium on service disconnections and waiving new late payment charges through at least May 1, in addition to working with customers who are facing financial hardships on a case-by-case basis to establish payment arrangements and identify energy assistance options, spokesman Paul Elsberg said.

Many of the Southeast's major energy companies are also curbing travel and encouraging telework, among other steps, in response to the coronavirus.

For Southern Co., this includes its Georgia Power unit; Southern Power; and employees of Southern Company Gas, who are in Illinois, Tennessee and Virginia. Southern has not extended the policies to its Alabama and Mississippi electric companies, spokesman Schuyler Baehman said.

Charlotte, N.C.-based Duke Energy Corp. has suspended all business travel unless workers are traveling by car. The energy giant also is encouraging its employees to rethink their own vacations if upcoming trips take them out of the country.

"Circumstances are changing rapidly around the world," the company said in a statement.

For workers who must come to the office, or work at power plants or on the lines, utilities are doubling down on disinfectant in those areas.

"We're also reminding our employees that we provide a very critical service; we need you well, we need you able," said Le-Ha Anderson, a spokeswoman for Richmond, Va.-based Dominion Energy Inc.

Dominion started asking employees a few weeks ago to take mobile devices home and make sure they have what they need to work remotely. Anyone who has traveled to one of the CDC-identified hot spots is asked to stay home for 14 days with no questions asked, Anderson said.

The federally owned Tennessee Valley Authority has reviewed and updated its plans on how it will operate during a pandemic but has not yet reached the point to have employees telework if they are able to do so.

"We come at this at a very phased approach," TVA spokesman Jim Hopson said. "We can't just shut the doors."

State utility commissions, too, have begun taking steps. In response to a state of emergency declared by Ohio Gov. Mike DeWine (R), the Public Utilities Commission of Ohio on Thursday directed utilities to act where possible to avoid suspending service to customers.

Will Seuffert, executive secretary of the Minnesota Public Utilities Commission, said in an email that the regulator has canceled all public hearings and agenda meetings for the next two weeks and has been supporting telework "throughout the agency" in response to the virus.

 

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Macron: France, Germany to provide each other with gas, electricity, to weather crisis

France-Germany Energy Solidarity underscores EU energy crisis cooperation: gas supply swaps, electricity imports, price cap talks, and curbs on speculation as Russian pipeline flows halt and winter demand rises across the bloc.

 

Key Points

A pact where France sends gas to Germany as Germany supplies power, bolstering EU cooperation and winter security.

✅ Gas to Germany; power to France amid nuclear outages.

✅ EU price cap, anti-speculation, joint gas purchasing.

✅ No new Spain-France pipeline unless case improves.

 

France will send gas to Germany if needed while Germany stands ready to provide it with electricity, President Emmanuel Macron said on Monday, saying this showcased European solidarity in the face of the energy crisis stemming from the war in Ukraine, which many view as a wake-up call to ditch fossil fuels across the bloc.

European gas prices surged, share prices slid and the euro sank on Monday after Russia stopped pumping gas via a major supply route, and Germany's 200 billion euro package sought to cushion the blow, in another warning to the 27-nation EU as it scrambled to respond to the crisis ahead of winter. read more

"Germany needs our gas and we need power from the rest of Europe, notably Germany," France's president told a news conference as EU electricity reform remains under debate following a phone call with German Chancellor Olaf Scholz.

The necessary connections for France to deliver gas to Germany when needed would be finalised in the coming weeks, he said, adding that France, which had long been a net exporter of electricity, will need help from its neighbours because of technical problems its nuclear plants face. read more

Macron, however, said that he did not understand demand for a third gas link between France and Spain, rejecting calls to increase capacity with a new pipeline.

He added he was open to changing his mind on that point, especially as Germany's utility troubles deepen, should Scholz or Prime Minister Pedro Sanchez argue convincingly for it.

Ahead of a meeting on Friday of EU energy ministers, Macron said France was in favour of buying gas at a European rather than a national level, as emergency electricity measures are weighed, and called for European Union measures to control energy prices.

He said it was necessary to act against speculation on energy prices at EU level, as the EU outlines possible gas price cap strategies for discussion, and also said France was in favour of putting a cap on the price of pipeline Russian gas.

Macron also repeated calls for all to turn down air conditioners when it's hot and to limit heating to 19 degrees Celsius this winter, noting that rolling back electricity prices is tougher than it appears this year.

"Everyone has to do their bit," he said.

 

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Energy Vault Lands $110M From SoftBank’s Vision Fund for Gravity Storage

Energy Vault Gravity Storage uses crane-stacked concrete blocks to deliver long-duration, grid-scale renewable energy; a SoftBank Vision Fund-backed, pumped-hydro analog enabling baseload power and a lithium-ion alternative with proprietary control algorithms.

 

Key Points

Gravity-based cranes stack blocks to store and dispatch power for hours, enabling grid-scale, low-cost storage.

✅ 4 MW/35 MWh modules; ~9-hour duration

✅ Estimated $200-$250/kWh; lower LCOE than lithium-ion

✅ Backed by SoftBank Vision Fund; Cemex and Tata support

 

Energy Vault, the Swiss-U.S. startup that says it can store and discharge electrical energy through a super-sized concrete-and-steel version of a child’s erector set, has landed a $110 million investment from Japan’s SoftBank Vision Fund to take its technology to commercial scale.

Energy Vault, a spinout of Pasadena-based incubator Idealab and co-founded by Idealab CEO and billionaire investor Bill Gross, unstealthed in November with its novel approach to using gravity to store energy.

Simply put, Energy Vault plans to build storage plants — dubbed “Evies” — consisting of a 35-story crane with six arms, surrounded by a tower consisting of thousands of concrete bricks, each weighing about 35 tons.

This plant will “store” energy by using electricity to run the cranes that lift bricks from the ground and stack them atop of the tower, and “discharge” energy by reversing that process. It’s a mechanical twist on the world’s most common energy storage technology, pumped hydro, which “stores” energy by pumping water uphill, and lets it fall to spin turbines when electricity is needed, even as California funds 100-hour long-duration storage pilots to expand flexibility worldwide.

But behind this simplicity lies some heavy-duty software to orchestrate the cranes and blocks, with a "unique stack of proprietary algorithms" to balance energy supply and demand, volatility, grid stability, weather elements and other variables.

CEO and co-founder Robert Piconi said in a November interview with GTM that the standard array would deliver 4 megawatts/35 megawatt-hours of storage, which translates to nearly 9 hours of duration — the equivalent of building the tower to its height, and then reducing it to ground level. It can be built on-site in partnership with crane manufacturers and recycled concrete material, and can run fully automated for decades with little deterioration, he said.

And the cost, which Piconi pegged in the $200 to $250 per kilowatt-hour range, with room to decline further, is roughly 50 percent below the upfront price of the conventional storage market today, and 80 percent below it on levelized cost, he said, a trend utilities see benefits in as they plan resources.

The result, according to Wednesday’s statement, is a technology that could allow “renewables to deliver baseload power for less than the cost of fossil fuels 24 hours a day,” in applications such as community microgrids serving low-income housing.

Wednesday’s announcement builds on a recent investment from Mexico's Cemex Ventures, the corporate venture capital unit of building materials giant Cemex, along with a promise of deployment support from Cemex's strategic network, and also follows project financing for a California green hydrogen microgrid led by the company. Piconi said in November that the company had sufficient investment from two funding rounds to carry it through initial customer deployments, though he declined to disclose figures.

This is the first energy storage investment for Vision Fund, the $100 billion venture fund set up by SoftBank founder Masayoshi Son. While large by startup standards, it’s in keeping with the capital costs that Energy Vault will face in scaling up its technology to meet its commitments, amid mounting demand in regions like Ontario energy storage that face supply crunches. Those include a 35 megawatt-hour order with Tata Power Company, the energy-producing arm of the Indian industrial conglomerate, first unveiled in November, as well as plans to demonstrate its first storage tower in northern Italy in 2019.

For Vision Fund, it’s also an unusual choice for a storage investment, given that the vast majority of venture capital in the industry today is being directed toward lithium-ion batteries, and even Mercedes-Benz energy storage ventures targeting the U.S. market. Lithium-ion batteries are limited in terms of how many hours they can provide cost-effectively, with about 4 hours being seen as the limit today.

The search for long-duration energy storage has driven investment into flow battery technologies such as grid-scale vanadium systems deployed on utility networks, compressed-air energy storage and variations on gravity-based storage, including a previous startup backed by Gross and Idealab, Energy Cache, whose idea of using a ski lift carrying buckets of gravel up a hill to store energy petered out with a 50-kilowatt pilot project.

 

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Nova Scotia Power says it now generates 30 per cent of its power from renewables

Nova Scotia Power Renewable Energy delivers 30% in 2018, led by wind power, hydroelectric and biomass, with coal and natural gas declining, as Muskrat Falls imports from Labrador target 40% renewables to cut emissions.

 

Key Points

It is the utility's 30% 2018 renewable mix and plan to reach 40% via Muskrat Falls while reducing carbon emissions.

✅ 18% wind, 9% hydro and tidal, 3% biomass in 2018

✅ Coal reliance fell from 76% in 2007 to 52% in 2018

✅ 58% carbon emissions cut from 2005 levels projected by 2030

 

Nova Scotia's private utility says it has hit a new milestone in its delivery of electricity from renewable resources, a trend highlighted by Summerside wind generation in nearby P.E.I.

Nova Scotia Power says 30 per cent of the electricity it produced in 2018 came from renewable sources such as wind power.

The utility says 18 per cent came from wind turbines, nine per cent from hydroelectric and tidal turbines and three per cent by burning biomass.

However, over half of the province's electrical generation still comes from the burning of coal or petroleum coke. Another 13 per cent come from burning natural gas and five per cent from imports, even as U.S. renewable generation hits record shares.

The utility says that since 2007, the province's reliance on coal-fired plants has dropped from 76 per cent of electricity generated to 52 per cent last year, as Prairie renewables growth accelerates nationally.

It says it expects to meet the province's legislated renewable target of 40 per cent in 2020, when it begins accessing hydroelectricity from the Muskrat Falls project in Labrador.

"We have made greener, cleaner energy a priority," utility president and CEO Karen Hutt said in a news release.

"As we continue to achieve new records in renewable electricity, we remain focused on ensuring electricity prices stay predictable and affordable for our customers, including solar customers across the province."

Nova Scotia Power also projects achieving a 58 per cent reduction in carbon emissions from 2005 levels by 2030.

 

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States have big hopes for renewable energy. Get ready to pay for it.

New York Climate Transition Costs highlight rising utility bills for ratepayers as the state pursues renewable energy, electrification, and a zero-emissions grid, with Inflation Reduction Act funding to offset consumer burdens while delivering health benefits.

 

Key Points

Ratepayer-funded costs to meet New York's renewable targets and zero-emissions grid, offset by federal incentives.

✅ $48B in projects funded by consumers over two decades

✅ Up to 10% of utility bills already paid by some upstate users

✅ Targets: 70% renewables by 2030; zero-emissions grid by 2040

 

A generational push to tackle climate change in New York that includes its Green New Deal is quickly becoming a pocketbook issue headed into 2024.

Some upstate New York electric customers are already paying 10 percent of their electricity bills to support the state’s effort to move off fossil fuels and into renewable energy. In the coming years, people across the state can expect to give up even bigger chunks of their income to the programs — $48 billion in projects is set to be funded by consumers over the next two decades.

The scenario is creating a headache for New York Democrats grappling with the practical and political risk of the transition.


It’s an early sign of the dangers Democrats across the country will face as they press forward with similar policies at the state and federal level. New Jersey, Maryland and California are also wrestling with the issue and, in some cases, are reconsidering their ambitious plans, including a 100% carbon-free mandate in California.

“This is bad politics. This is politics that are going to hurt all New Yorkers,” said state Sen. Mario Mattera, a Long Island Republican who has repeatedly questioned the costs of the state’s climate law and who will pay for it.

Democrats, Mattera said, have been unable to explain effectively the costs for the state’s goals. “We need to transition into renewable energy at a certain rate, a certain pace,” he said.

Proponents say the switch will ultimately lower energy bills by harnessing the sun and wind, result in significant health benefits and — critically — help stave off the most devastating climate change scenarios. And they hope new money to go green from the Inflation Reduction Act, celebrating its one-year anniversary, can limit costs to consumers.

New York has statutory mandates calling for 70 percent renewable electricity by 2030 and a fully “zero emissions” grid by 2040, among the most aggressive targets in the country, aligning with a broader path to net-zero electricity by mid-century. The grid needs to be greened, while demand for electricity is expected to more than double by 2050 — the same year when state law requires emissions to be cut by 85 percent from 1990 levels.

But some lawmakers in New York, particularly upstate Democrats, and similar moderates across the nation are worried about moving too quickly and sparking a backlash against higher costs, as debates over Minnesota's 2050 carbon-free plan illustrate. The issue is another threat to Democrats heading into the critical 2024 battleground House races in New York, which will be instrumental in determining control of Congress.

Even Gov. Kathy Hochul, a Democrat who is fond of saying that “we’re the last generation to be able to do anything” about climate change, last spring balked at the potential price tag of a policy to achieve New York’s climate targets, a concern echoed in debates over a fully renewable grid by 2030 elsewhere. And she’s not the only top member of her party to say so.

“If it’s all just going to be passed along to the ratepayers — at some point, there’s a breaking point, and we don’t want to lose public support for this agenda,” state Comptroller Tom DiNapoli, a Democrat, warned in an interview.

 

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Is Hydrogen The Future For Power Companies?

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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