Ordinance would darken businesses' overnight lights

Germany Energy Transition faces offshore wind expansion, grid bottlenecks, and North-South transmission delays, while Nord Stream 2 boosts Russian gas reliance and lignite coal persists amid a nuclear phaseout and rising re-dispatch costs.

Key Points

Germanys shift to renewables faces grid delays, boosting gas via Nord Stream 2 and extending lignite coal use.

✅ Offshore wind grows, but grid congestion curtails turbines.

✅ Nord Stream 2 expands Russian gas supply to German industry.

✅ Lignite coal persists, raising emissions amid nuclear exit.

On a blazing hot August day on Germany’s Baltic Sea coast, a few hundred tourists skip the beach to visit the “Fascination Offshore Wind” exhibition, held in the port of Mukran at the Arkona wind park. They stand facing the sea, gawking at white fiberglass blades, which at 250 feet are longer than the wingspan of a 747 aircraft. Those blades, they’re told, will soon be spinning atop 60 wind-turbine towers bolted to concrete pilings driven deep into the seabed 20 miles offshore. By early 2019, Arkona is expected to generate 385 megawatts, enough electricity to power 400,000 homes.

“We really would like to give the public an idea of what we are going to do here,” says Silke Steen, a manager at Arkona. “To let them say, ‘Wow, impressive!’”

Had the tourists turned their backs to the sea and faced inland, they would have taken in an equally monumental sight, though this one isn’t on the day’s agenda: giant steel pipes coated in gray concrete, stacked five high and laid out in long rows on a stretch of dirt. The port manager tells me that the rows of 40-foot-long, 4-foot-thick pipes are so big that they can be seen from outer space. They are destined for the Nord Stream 2 pipeline, a colossus that, when completed next year, will extend nearly 800 miles from Russia to Germany, bringing twice the amount of gas that a current pipeline carries.

The two projects, whose cargo yards are within a few hundred feet of each other, provide a contrast between Germany’s dream of renewable energy and the political realities of cheap Russian gas. In 2010, Germany announced an ambitious goal of generating 80 percent of its electricity from renewable sources by 2050. In 2011, it doubled down on the commitment by deciding to shut down every last nuclear power plant in the country by 2022, as part of a broader coal and nuclear phaseout strategy embraced by policymakers. The German government has paid more than $600 billion to citizens and companies that generate solar and wind power. As a result, the generating capacity from renewable sources has soared: In 2017, a third of the nation’s electricity came from wind, solar, hydropower and biogas, up from 3.6 percent in 1990.

But Germany’s lofty vision has run into a gritty reality: Replacing fossil fuels and nuclear power in one of the largest industrial nations in the world is politically more difficult and expensive than planners thought. It has forced Germany to put the brakes on its ambitious renewables program, ramp up its investments in fossil fuels, amid a renewed nuclear option debate over climate strategy, and, to some extent, put its leadership role in the fight against climate change on hold.

The trouble lies with Germany’s electricity grid. Solar and wind power call for more complex and expensive distribution networks than conventional large power plants do. “What the Germans were good at was getting new technology into the market, like wind and solar power,” said Arne Jungjohann, author of Energy Democracy: Germany’s ENERGIEWENDE to Renewables. To achieve its goals, “Germany needs to overhaul its whole grid.”

The North-South Conundrum

The boom in wind power has created an unanticipated mismatch between supply and demand. Big wind turbines, especially offshore plants such as Arkona, produce powerful, concentrated gusts of energy. That’s good when the factory that needs that energy is nearby and the wind kicks up during working hours. It’s another matter when factories are hundreds of miles away. In Germany, wind farms tend to be located in the blustery north. Many of the nation’s big factories lie in the south, which also happens to be where most of the country’s nuclear plants are being mothballed.

Getting that power from north to south is problematic. On windy days, northern wind farms generate too much energy for the grid to handle. Power lines get overloaded. To cope, grid operators ask wind farms to disconnect their turbines from the grid—those elegant blades that tourists so admired sit idle. To ensure a supply of power, operators employ backup generators at great expense. These so-called re-dispatching costs ran to 1.4 billion euros ($1.6 billion) last year.

The solution is to build more power transmission lines to take the excess wind from northern wind farms to southern factories. A grid expansion project is underway to do exactly that. Nearly 5,000 miles of new transmission lines, at a cost of billions of euros, will be paid for by utility customers. So far, less than a fifth of the lines have been built.

The grid expansion is “catastrophically behind schedule,” Energy Minister Peter Altmaier told the Handelsblatt business newspaper in August. Among the setbacks: citizens living along the route of four high-voltage power lines have demanded the cables be buried underground, which has added to the time and expense. The lines won’t be finished before 2025—three years after Germany’s nuclear shutdown is due to be completed.

With this backlog, the government has put the brakes on wind power, reducing the number of new contracts for farms and curtailing the amount it pays for renewable energy. “In the past, we have focused too much on the mere expansion of renewable energy capacity,” Joachim Pfeiffer, a spokesman for the Christian Democratic Union, wrote to Newsweek. “We failed to synchronize this expansion of generation with grid expansion.”

Advocates of renewables are up in arms, accusing the government of suffocating their industry and making planning impossible. Thousands of people lost their jobs in the wind industry, according to Wolfram Axthelm, CEO of the German Wind Energy Association. “For 2019 and 2020, we see a highly problematic situation for the industry,” he wrote in an email.

Fueling the Gap

Nord Stream 2, by contrast, is proceeding according to schedule. A beige and black barge, Castoro 10, hauls dozens of lengths of giant pipe off Germany’s Baltic Sea coast, where a welding machine connects them for lowering onto the seabed. The $11 billion project is funded by Russian state gas monopoly Gazprom and five European investors, at no direct cost to the German taxpayer. It is slated to cross the territorial waters of five countries—Germany, Russia, Finland, Sweden and Denmark. All but Denmark have approved the route. “We have good reason to believe that after four governments said yes, that Denmark will also approve the pipeline,” says Nord Stream 2 spokesman Jens Mueller.

Construction of the pipeline off Finland began in September, and the gas is expected to start flowing in late 2019, giving Russia leverage to increase its share of the European gas market. It already provides a third of the gas used in the EU and will likely provide more after the Netherlands stops its gas production in 2030. President Donald Trump has called the pipeline “a very bad thing for NATO” and said that “Germany is totally controlled by Russia.” U.S. senators have threatened sanctions against companies involved in the project. Ukraine and Poland are concerned the new pipeline will make older pipelines in their territories irrelevant.

German leaders are also wary of dependence on Russia but are under considerable pressure to deliver energy to industry. Indeed, among the pipeline’s investors are German companies that want to run their factories, like BASF’s Wintershall subsidiary and Uniper, the German utility. “It’s not that Germany is naive,” says Kirsten Westphal, an energy expert at the German Institute for International and Security Affairs. It’s just pragmatic. “Economically, the judgment is that yes, this gas will be needed, we have an import gap to fill.”

The electricity transmission problem has also opened an opportunity for lignite coal, as coal generation in Germany remains significant, the most carbon-intensive fuel available and the source for nearly a quarter of Germany’s power. Mining companies are expanding their operations in coal-rich regions to strip out the fuel while it is still relevant. In the village of Pödelwitz, 155 miles south of Berlin, most houses feature a white sign with the logo of Mibrag, the German mining giant, which has paid nearly all the 130 residents to relocate. The company plans to level the village and scrape lignite that lies below the soil.

A resurgence in coal helped raise carbon emissions in 2015 and 2016 (2017 saw a slight decline), maintaining Germany’s place as Europe’s largest carbon emitter. Chancellor Angela Merkel has scrapped her pledge to slash carbon emissions to 40 percent of 1990 levels by the year 2020. Several members have threatened to resign from her policy commission on coal if the government allows utility company RWE to mine for lignite in Hambach Forest.

Only a few years ago, during the Paris climate talks, Germany led the EU in pushing for ambitious plans to curb emissions. Now, it seems to be having second thoughts. Recently, the European Union’s climate chief, Miguel Arias Cañete, suggested EU nations step up their commitment to reduce carbon emissions by 45 percent of 1990 levels instead of 40 percent by 2030. “I think we should first stick to the goals we have already set ourselves,” Merkel replied, even as a possible nuclear phaseout U-turn is debated, “I don’t think permanently setting ourselves new goals makes any sense.”

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Mercury Energy Tilt Renewables acquisition signals a trans-Tasman energy push as PowAR and Mercury split assets via a scheme of arrangement, offering $7.80 per share and a $2.96b valuation across Australia and New Zealand.

Key Points

A PowAR-Mercury deal to buy Tilt Renewables, splitting Australian and New Zealand assets via a court-approved scheme.

✅ $7.80 per share, valuing Tilt at $2.96b

✅ PowAR takes AU assets; Mercury gets NZ business

✅ Infratil and Mercury to vote for the scheme

Mercury Energy and an Australian partner appear to have won the race to buy Tilt Renewables, an Australasian wind farm developer which was spun out of TrustPower, bidding almost $3 billion, amid wider utility consolidation such as the Peterborough Distribution sale to Hydro One.

Yesterday Tilt Renewables announced that it had entered a scheme implementation agreement under which it was proposed that PowAR would acquire its Australian business and Mercury would acquire the New Zealand business, mirroring cross-border approvals where U.S. antitrust clearance shaped Hydro One's bid for Avista.

Conducted through a scheme of arrangement, Tilt shareholders will be offered $7.80 a share, valuing Tilt at $2.96b.

Yesterday morning shares in Tilt opened about 18 per cent up at $7.65, though regulatory outcomes can swing valuations as seen when Hydro One-Avista reconsideration of a U.S. order came into play.

In early December Infratil, which owns around two thirds of Tilt's shares, announced it was undertaking a review of its investment after receiving approaches, with investor sentiment sensitive to governance shifts as when Hydro One shares fell after leadership changes in Ontario.

According to a report in the Australian Financial Review, the transtasman bid beat out other parties including ASX-listed APA Group, Canadian pension fund CDPQ and Australian fund manager Infrastructure Capital Group, as Canadian investors like Ontario Teachers' Plan pursue similar infrastructure deals.

“This compelling acquisition proposal is a result of Tilt Renewables’ constant focus on delivering long-term value for shareholders and the board is pleased that, with these new owners, the transition to renewables in Australia and New Zealand will continue to accelerate,” Tilt’s chairman Bruce Harker said.

Comparable community-led clean energy partnerships, such as initiatives with British Columbia First Nations highlighted in clean-energy generation, underscore the broader momentum.

Just prior to the announcement, Tilt shares had been trading for less than $4. Such repricing reflects how utilities can face perceived uncertainties, as one investor argued too many unknowns at the time.

Mercury is already Tilt’s second largest shareholder, at just under 20 per cent. Both Infratil and Mercury have agreed to vote in favour of the scheme. The deal values Tilt’s New Zealand business at $770m, however the value of Mercury’s existing shareholding is around $585m, meaning the company will increase debt by around $185m.

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Ontario Natural Gas Moratorium gains momentum as IESO weighs energy storage, renewables, and demand management to meet rising electricity demand, ensure grid reliability, and advance zero-emissions goals while long-term capacity procurements proceed.

Key Points

A proposed halt on new gas plants as IESO assesses storage and renewables to maintain reliability and cut emissions.

✅ Minister seeks interim IESO report by Oct. 7

✅ Near-term contracts extend existing gas plants for reliability

✅ Long-term procurements emphasize storage, renewables, conservation

Ontario's energy minister says he doesn't think the province needs any more natural gas generation and has asked the electricity system regulator to speed up a report exploring a moratorium.

Todd Smith had previously asked the Independent Electricity System Operator (IESO) to report back by November on the feasibility of a moratorium and a plan to get to zero emissions in the electricity sector.

He has asked them today for an interim report by Oct. 7 so he can make a decision on a moratorium before the IESO secures contracts over the long term for new power generation.

"I've asked the IESO to speed up that report back to us so that we can get the information from them as to what the results would be for our grid here in Ontario and whether or not we actually need more natural gas," Smith said Tuesday after question period.

"I don't believe that we do."

Smith said that is because of the "huge success" of two updates provided Tuesday by the IESO to its attempts to secure more electricity supply for both the near term and long term. Demand is growing by nearly two per cent a year, while Ontario is set to lose a significant amount of nuclear generation, including the planned shutdown of the Pickering nuclear station over the next few years.

'For the near term, we need them,' regulator says
The regulator today released a list of 55 qualified proponents for those long-term bids and while it says there is a significant amount of proposed energy storage projects on that list, there are some new gas plants on it as well.

Chuck Farmer, the vice-president of planning, conservation and resource adequacy at the IESO, said it's hoped that the minister makes a decision on whether or not to issue a moratorium on new gas generation before the regulator proceeds with a request for proposals for long-term contracts.

The IESO also announced six new contracts — largely natural gas, with a small amount of wind power and storage — to start in the next few years. Farmer noted that these contracts were specifically for existing generators whose contracts were ending, while the province is exploring new nuclear plants for the longer term.

"When you look at the pool of generation resources that were in that situation, the reality is most of them were actually natural gas plants, and that we are relying on the continued use of the natural gas plants in the transition," he said in an interview. 

"So for the near term, we need them for the reliability of the system."

The upcoming request for proposals for more long-term contracts hopes to secure 3,500 megawatts of capacity, as Ontario faces an electricity shortfall in the coming years, and Farmer said the IESO plans to run a series of procurements over the next few years.

Opposition slams reliance on natural gas
The NDP and Greens on Tuesday criticized Ontario's reliance in the near term on natural gas because of its environmental implications.

The IESO has said that due to natural gas, greenhouse gas emissions from the electricity sector are set to increase for the next two decades, but by about 2038 it projects the net reductions from electric vehicles will offset electricity sector emissions.

Green Party Leader Mike Schreiner said it makes no sense to ramp up natural gas, both for the climate and for people's wallets.

"The cost of wind and solar power is much lower than gas," he said.

Ontario quietly revises its plan for hitting climate change targets
"We're in a now-or-never moment to address the climate crisis and the government is failing to meet this moment."

Interim NDP Leader Peter Tabuns said Ontario wouldn't be in as much of a supply crunch if the Progressive Conservative government hadn't cancelled 750 green energy contracts during their first term.

The Tories argued the province didn't need the power and the contracts were driving up costs for ratepayers, amid debate over whether greening the grid would be affordable.

The IESO said it is also proposing expanding conservation and demand management programs, as a "highly cost-effective" way to reduce strain on the system, though it couldn't say exactly what is on the table until the minister accepts the recommendation.

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SaskPower Rate Hike 2022-2023 signals higher electricity rates in Saskatchewan as natural gas costs surge; the Rate Review Panel approved increases, affecting residential utility bills amid affordability concerns and government energy policy shifts.

Key Points

An 8% SaskPower electricity rate increase split 4% in Sept 2022 and 4% in Apr 2023, driven by natural gas costs.

✅ 4% increase Sept 1, 2022; +4% on Apr 1, 2023

✅ Panel-approved amid natural gas price surge and higher fuel costs

✅ Avg residential bill up about $5 per step; affordability concerns

The NDP Opposition is condemning the provincial government’s decision to approve the Saskatchewan Rate Review Panel’s recommendation to increase SaskPower’s rates for the first time since 2018, despite a recent 10% rebate pledge by the Sask. Party.

The Crown electrical utility’s rates will increase four per cent this fall, and another four per cent in 2023, a trajectory comparable to BC Hydro increases over two years. According to a government news release issued Thursday, the new rates will result in an average increase of approximately $5 on residential customers’ bills starting on Sept. 1, 2022, and an additional $5 on April 1, 2023.

“The decision to increase rates is not taken lightly and came after a thorough review by the independent Saskatchewan Rate Review Panel,” Minister Responsible for SaskPower Don Morgan said in a news release, amid Nova Scotia’s 14% hike this year. “World events have caused a significant rise in the price of natural gas, and with 42 per cent of Saskatchewan’s electricity coming from natural gas-fueled facilities, SaskPower requires additional revenue to maintain reliable operations.”

But NDP SaskPower critic Aleana Young says the rate hike is coming just as businesses and industries are struggling in an “affordability crisis,” even as Manitoba Hydro scales back a planned increase next year.

She called the announcement of an eight per cent increase in power bills on a summer day before the long weekend “a cowardly move” by the premier and his cabinet, amid comparable changes such as Manitoba’s 2.5% annual hikes now proposed.

“Not to mention the Sask. Party plans to hike natural gas rates by 17% just days from now,” said Young in a news release issued Friday, as Manitoba rate hearings get underway nearby. “If Scott Moe thinks his choices — to not provide Saskatchewan families any affordability relief, to hike taxes and fees, then compound those costs with utility rate hikes — are defensible, he should have the courage to get out of his closed-door meetings and explain himself to the people of this province.”

The province noted natural gas is the largest generation source in SaskPower’s fleet. As federal regulations require the elimination of conventional coal generation in Canada by 2030, SaskPower’s reliance on natural gas generation is expected to grow, with experts in Alberta warning of soaring gas and power prices in the region. Fuel and Purchased Power expense increases are largely driven by increased natural gas prices, and SaskPower’s fuel and purchased power expense is expected to increase from $715 million in 2020-21 to $1.069 billion in 2023-24. This represents a 50 per cent increase in fuel and purchased power expense over three years.

“In the four years since our last increase SaskPower has worked to find internal efficiencies, but at this time we require additional funding to continue to provide reliable and sustainable power,” SaskPower president & CEO Rupen Pandya said in the release “We will continue to be transparent about our rate strategy and the need for regular, moderate increases.”

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Hydro-Quebec Rate Freeze maintains current electricity rates, aligned with Bill 34, inflation indexing, and energy board oversight, delivering rebates to residential, commercial, and industrial customers and projecting nearly $1 billion in savings across Quebec.

Key Points

A Bill 34 policy holding power rates, adding 2020 rebates, and indexing 2021-2024 rates to inflation for Quebec customers.

✅ 2020-21 rates frozen; savings near $1B over five years.

✅ $500M rebate: residential, commercial, industrial shares.

✅ 2021-2024 rates index to inflation; five-year reviews after 2025.

Hydro-Quebec Distribution will not file a rate adjustment application with the province’s energy board this year, amid a class-action lawsuit alleging customers were overcharged.

In a statement released on Friday the Crown Corporation said it wants current electricity rates to be maintained for another year, as pandemic-driven demand pressures persist, starting April 1. That is consistent with the recently tabled Bill 34, and echoes Ontario legislation to lower electricity rates in its aims, which guarantees lower electricity rates for Quebecers.

The bill also provides a $500 million rebate in 2020, similar to a $535 million refund previously issued, half of which will go to residential customers while $190 million will go to commercial customers and another $60 million to industrial ones.

Hydro-Quebec said the 2020-21 rate freeze will generate savings of nearly $1 billion for its clients over the next five years, even as Manitoba Hydro scales back increases in a different market.

Bill 34, which was tabled in June, also proposes to set rates based on inflation for the years 2021 to 2024, contrasting with Ontario rate increases over the same period. After 2025 Hydro-Quebec would have to ask the energy board to set new rates every five years, as opposed to the current annual system, while BC Hydro is raising rates by comparison.

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Pickering nuclear refurbishment will modernize Ontario's Candu reactors at Pickering B, sustaining 2,000 MW of clean electricity, aiding net-zero goals, and aligning with Ontario Power Generation plans and Canadian Nuclear Safety Commission reviews.

Key Points

An 11-year overhaul of Pickering B Candu reactors to extend life, keep 2,000 MW online, and back Ontario net-zero grid.

✅ 11-year project; 11,000 annual jobs; $19.4B GDP impact.

✅ Refurbishes four Pickering B Candu units; maintains 2,000 MW.

✅ Requires Canadian Nuclear Safety Commission license approvals.

The Ontario government has announced its intention to pursue a Pickering refurbishment at the venerable nuclear power station, which has been operational for over fifty years. This move could extend the facility's life by another 30 years.

This decision is timely, as Ontario anticipates a significant surge in electricity demand and a growing electricity supply gap in the forthcoming years. Additionally, all provinces are grappling with new federal mandates for clean electricity, necessitating future power plants to achieve net-zero carbon emissions.

Todd Smith, the Energy Minister, is expected to endorse Ontario Power Generation's proposal for the plant's overhaul, as per a preliminary version of a government press release.

The renovation will focus on four Candu reactors, known collectively as Pickering B, which were originally commissioned in the early 1980s. This upgrade is projected to continue delivering 2,000 megawatts of power, equivalent to the current output of these units.

According to the press release, the project will span 11 years, create approximately 11,000 annual jobs, and contribute $19.4 billion to Ontario's GDP. However, the total budget for the project remains unspecified.

The project follows the ongoing refurbishment of four units at the nearby Darlington nuclear station, which is more than halfway completed with a budget of $12.8 billion.

The proposal awaits the Canadian Nuclear Safety Commission's approval, and officials face extension request timing considerations before key deadlines.

The Commission is also reviewing a prior request from OPG to extend the operational license of the existing Pickering B units until 2026. This extension would allow the plant to safely continue operating until the commencement of its renovation, pending approval.

Ontario's Ambitious Nuclear Strategy

The announcement regarding Pickering is part of Ontario's broader clean energy plan for an unprecedented expansion of nuclear power in Canada.

Last summer, the province announced its intention to nearly double the output at Bruce Power, currently the world's largest nuclear generating station.

Additionally, Ontario revealed SMR plans to construct three more alongside the existing project at Darlington. These reactors are expected to supply enough electricity to power around 1.2 million homes.

Discussions about revitalizing the Pickering facility began in 2022, after the station had been slated to close as planned amid debate, with Ontario Power Generation submitting a feasibility report to the government last summer.

The Ford government emphasized the necessity of this nuclear expansion to meet the increasing electricity demands anticipated from the auto sector's shift to electric vehicles, the steel industry's move away from coal-fired furnaces, and the growing population in Ontario.

Ontario's capability to attract major international car manufacturers like Volkswagen and Stellantis to produce electric vehicles and batteries is partly attributed to the fact that 90% of the province's electricity comes from non-fossil fuel sources.

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