Texas battery rush: Oil state's power woes fuel energy storage boom


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Texas Battery Storage Investment Boom draws BlackRock, SK, and UBS, leveraging ERCOT price volatility, renewable energy growth, and utility-scale energy storage arbitrage to enhance grid reliability, resilience, and double-digit returns across high-demand nodes.

 

Key Points

Texas sees a rush into battery storage, using ERCOT price spreads to bolster grid reliability and earn about 20% returns.

✅ Investors exploit price volatility, peak-demand spreads.

✅ Utility-scale storage enhances ERCOT reliability.

✅ Top players: BlackRock, SK E&S, UBS; 700 MW deals.

 

BlackRock, Korea's SK, Switzerland's UBS and other companies are chasing an investment boom in battery storage plants in Texas, lured by the prospect of earning double-digit returns from the power grid problems plaguing the state, according to project owners, developers and suppliers.

Projects coming online are generating returns of around 20%, compared with single digit returns for solar and wind projects, according to Rhett Bennett, CEO of Black Mountain Energy Storage, one of the top developers in the state.

"Resolving grid issues with utility-scale energy storage is probably the hottest thing out there,” he said.

The rapid expansion of battery storage could help, through efforts like a virtual power plant initiative in Texas, prevent a repeat of the February 2021 ice storm and grid collapse which killed 246 people and left millions of Texans without power for days.

The battery rush also puts the Republican-controlled state at the forefront of President Joe Biden's push to expand renewable energy use.

Power prices in Texas can swing from highs of about $90 per megawatt hour (MWh) on a normal summer day to nearly $3,000 per MWh when demand surges on a day with less wind power, a dynamic tied to wind curtailment on the Texas grid according to a simulation by the federal government's U.S. Energy Information Administration.

That volatility, a product of demand and higher reliance on intermittent wind and solar energy, has fueled a rush to install battery plants, aided by falling battery costs, that store electricity when it is cheap and abundant and sell when supplies tighten and prices soar.

Texas last year accounted for 31% of new U.S. grid-scale energy storage, with much of it pairing storage with solar, according to energy research firm Wood Mackenzie, second only to California which has had a state mandate for battery development for a decade.

And Texas is expected to account for nearly a quarter of the U.S. grid-scale storage market over the next five years, a trajectory consistent with record U.S. solar-plus-storage growth noted by analysts, according to Wood Mackenzie projections shared with Reuters.

Developers and energy traders said locations offering the highest returns -- in strapped areas of the grid -- will become increasingly scarce as more storage comes online and, as diversifying resources for better projects suggests, electricity prices stabilize.

Texas lawmakers this week voted to provide new subsidies for natural gas power plants in a bid to shore up reliability. But the legislation also contains provisions that industry groups said could encourage investment in battery storage by supporting 'unlayering' peak demand approaches.

Amid the battery rush, BlackRock acquired developer Jupiter Power from private equity firm EnCap Investments late last year. Korea's SK E&S acquired Key Capture Energy from Vision Ridge Partners in 2021 and UBS bought five Texas projects from Black Mountain last year for a combined 700 megawatts (MW) of energy storage. None of the sales' prices were disclosed.

SK E&S said its acquisition of Key Capture was part of a strategy to invest in U.S. grid resiliency.

"SK E&S views energy storage solutions in Texas and across the U.S. as a core technology that supports a new energy infrastructure system to ensure American homes and businesses have affordable power," the company said in a statement.

 

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Ukraine's Green Fightback: Rising from the Ashes with Renewable Energy

Ukraine Green Fightback advances renewable energy, energy independence, and EU integration, rebuilding war-damaged grids with solar, wind, and storage, exporting power to Europe, and scaling community microgrids for resilient, low-carbon recovery and REPowerEU alignment.

 

Key Points

Ukraine Green Fightback shifts to renewables and resilient grids, aiming 50% clean power by 2035 despite wartime damage.

✅ 50% renewable electricity target by 2035, up from 15% in 2021

✅ Community solar and microgrids secure hospitals and schools

✅ Wind and solar rebuild capacity; surplus exports to EU grids

 

Two years after severing ties with Russia's power grid, Ukraine stands defiant, rebuilding its energy infrastructure with a resolute focus on renewables. Amidst the ongoing war's devastation, a remarkable green fightback is taking shape, driven by a vision of a self-sufficient, climate-conscious future.

Energy Independence, Forged in Conflict:

Ukraine's decision to unplug from Russia's grid in 2022 was both a strategic move and a forced necessity, aligning with a wider pushback from Russian oil and gas across the continent. While it solidified energy independence aspirations, the full-scale invasion pushed the country into "island mode," highlighting vulnerabilities of centralized infrastructure.

Today, Ukraine remains deeply intertwined with Europe, inching towards EU accession and receiving global support, as Europe's green surge in clean energy gathers pace. This aligns perfectly with the country's commitment to environmental responsibility, further bolstered by the EU's own "REPowerEU" plan to ditch fossil fuels.

Rebuilding with Renewables:

The war's impact on energy infrastructure has been significant, with nearly half damaged or destroyed. Large-scale renewables have borne the brunt, with 30% of solar and 90% of wind farms facing disruption.

Yet, the spirit of resilience prevails. Surplus electricity generated by solar plants is exported to Poland, showcasing the potential of renewable sources and mirroring Germany's solar power boost across the region. Ambitious projects are underway, like the Tyligulska wind farm, Ukraine's first built in a conflict zone, already supplying clean energy to thousands.

The government's vision is bold: 50% renewable energy share by 2035, a significant leap from 2021's 15%, and informed by the fact that over 30% of global electricity already comes from renewables. This ambition is echoed by civil society groups who urge even higher targets, with calls for 100% renewable energy worldwide continuing to grow.

Community-Driven Green Initiatives:

Beyond large-scale projects, community-driven efforts are flourishing. Villages like Horenka and Irpin, scarred by the war, are rebuilding hospitals and schools with solar panels, ensuring energy security and educational continuity.

These "bright examples," as Svitlana Romanko, founder of Razom We Stand, calls them, pave the way for a broader green wave. Research suggests replacing all coal plants with renewables would cost a manageable $17 billion, paving the way for a future free from dependence on fossil fuels, with calls for a fossil fuel lockdown gaining traction.

Environmental Cost of War:

The war's ecological footprint is immense, with damages exceeding €56.7 billion. The Ministry of Environmental Protection and Natural Resources is meticulously documenting this damage, not just for accountability but for post-war restoration.

Their efforts extend beyond documentation. Ukraine's "EcoZagroza" app allows citizens to report environmental damage and monitor pollution levels, fostering a collaborative approach to environmental protection.

Striving for a Greener Future:

President Zelenskyy's peace plan highlights ecocide prevention and environmental restoration. The ministry itself is undergoing a digitalization push, tackling corruption and implementing EU-aligned reforms.

While the European Commission's recent progress report acknowledges Ukraine's strides, set against a Europe where renewable power has surpassed fossil fuels for the first time, the "crazy rhythm" of change, as Ecoaction's Anna Ackermann describes it, reflects the urgency of the situation. Finding the right balance between war efforts and green initiatives remains a crucial challenge.

Conclusion:

Ukraine's green fightback is a testament to its unwavering spirit. Amidst the darkness of war, hope shines through in the form of renewable energy projects and community-driven initiatives. By embracing a green future, Ukraine not only rebuilds but sets an example for the world, demonstrating that even in the face of adversity, sustainability can prevail.

 

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Intersolar Europe restart 2021: solar power is becoming increasingly popular in Poland

Poland Solar PV Boom drives record installations, rooftop and utility-scale growth, EU-aligned incentives, net metering, PPAs, and auctions, pushing capacity toward 8.3 GW by 2024 while prosumers, grid upgrades, and energy management expand.

 

Key Points

A rapid expansion of Poland's PV market, driven by incentives, PPAs, and prosumers across rooftop and utility-scale.

✅ 2.2 GW added in 2020, triple 2019, led by small-scale prosumers

✅ Incentives: My Current, Clean Air, Agroenergia, net metering

✅ Growth toward 8.3 GW by 2024; PPAs and auctions scale utility

 

Photovoltaics (PV) is booming in Poland. According to SolarPower Europe, 2.2 gigawatts (GW) of solar power was installed in the country in 2020 - nearly three times as much as the 823 megawatts (MW) installed in 2019. This places Poland fourth across Europe, behind Germany, where a solar power boost has been underway (4.8 GW added in 2020), the Netherlands (2.8 GW) and Spain (2.6 GW). So all eyes in the industry are on the up-and-coming Polish market. The solar industry will come together at Intersolar Europe Restart 2021, taking place from October 6 to 8 at Messe München. As part of The smarter E Europe Restart 2021, manufacturers, suppliers, distributors and service providers will all present their products and innovations at the world's leading exhibition for the solar industry.

All signs point to continued strong growth, with renewables on course to set records across markets. An intermediate, more conservative EU Market Outlook forecast from SolarPower Europe expects the Polish solar market to grow by 35 percent annually, meaning that it will have achieved a PV capacity of 8.3 GW by 2024 as solar reshapes Northern Europe's power prices over the medium term. "PV in Poland is booming at every level - from private and commercial PV rooftop systems to large free-standing installations," says Dr. Stanislaw Pietruszko, President of the Polish Society for Photovoltaics (PV Poland). According to the PV Poland, the number of registered small-scale systems - those under 50 kilowatts (kW) - with an average capacity of 6.5 kilowatts (kW) grew from 155,000 (992 MW) at the end of 2019 to 457,400 (3 GW) by the end of 2020. These small-scale systems account for 75 percent of all PV capacity installed in Poland. Larger PV projects with a capacity of 4 GW have already been approved for grid connection, further attesting to the forecast growth.

8,000 people employed in the PV industry
Andrzej Kazmierski, Deputy Director of the Department for Low-emission Economy within the Polish Ministry of Economic Development, Labour and Technology, explained in the Intersolar Europe webinar "A Rising Star: PV Market Poland" at the end of March 2021 that the PV market volume in Poland currently amounts to 2.2 billion euros, with 8,000 people employed in the industry. According to Kazmierski, the implementation of the Renewable Energy Directive (RED II) in the EU, intended to promote energy communities and collective prosumers as well as long-term power purchase agreements (PPAs), will be a critical challenge, and ongoing Berlin PV barriers debates highlight the importance of regulatory coordination. Renewable energy must be integrated with greater focus into the energy system, and energy management and the grids themselves must be significantly expanded as researchers work to improve solar and wind integration. The government seeks to create a framework for stable market growth as well as to strengthen local value creation.


Government incentive programs in Poland
In addition to drastically reduced PV costs, reinforced by China's rapid PV expansion, and growing environmental consciousness, the Polish PV market is being advanced by an array of government-funded incentive programs such as My Current (230 million euros) and Clean Air as well as thermo-modernization. The incentive program Agroenergia (50 million euros) is specifically geared toward farmers and offers low-interest loans or direct subsidies for the construction of solar installations with capacities between 50 kW and 1 MW. Incentive programs for net metering have been extended to small and medium enterprises to provide stronger support for prosumers. Solar installations producing less than 50 kW benefit from a lower value-added tax of just eight percent (compared to the typical 23 percent). The acquisition and installation costs can be offset against income, in turn reducing income tax.
Government-funded auctions are also used to finance large-scale facilities, where the government selects operators of systems running on renewable energy who offer the lowest electricity price and funds the construction of their facilities. The winner of an auction back in December was an investment project for the construction of a 200 MW solar park in the Pomeranian Voivodeship.


Companies turn to solar power for self-consumption
Furthermore, Poland is now playing host to larger solar projects that do not rely on subsidies, as Europe's demand lifts US equipment makers amid supply shifts, such as a 64 MW solar farm in Witnica being built on the border to Germany whose electricity will be sold to a cement factory via a multi-year power purchase agreement. A new factory in Konin (Wielkopolska Voivodeship) for battery cathode materials to be used in electric cars will be powered with 100-percent renewable electricity. Plus, large companies are increasingly turning to solar power for self-consumption. For example, a leading manufacturer of metal furniture in Suwalki (Podlaskie Voivodeship) in northeastern Poland has recently started meeting its demand using a 2 MW roof-mounted and free-standing installation on the company premises.

 

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Canada must commit to 100 per cent clean electricity

Canada Green Investment Gap highlights lagging EV and clean energy funding as peers surge. With a green recovery budget pending, sustainable finance, green bonds, EV charging, hydrogen, and carbon capture are pivotal to decarbonization.

 

Key Points

Canada lags peers in EV and clean energy investment, urging faster budget and policy action to cut emissions.

✅ Per capita climate spend trails US and EU benchmarks

✅ EVs, hydrogen, charging need scaled funding now

✅ Strengthen sustainable finance, green bonds, disclosure

 

Canada is being outpaced on the international stage when it comes to green investments in electric vehicles and green energy solutions, environmental groups say.

The federal government has an opportunity to change course in about three weeks, when the Liberals table their first budget in over two years, the International Institute for Sustainable Development (IISD) argued in a new analysis endorsed by nine other climate action, ecology and conservation organizations.

“Canada’s international peers are ramping up commitments for green recovery, including significant investments from many European countries,” states the analysis, “Investing for Tomorrow, Today,” published March 29.

“To keep up with our global peers, sufficient investments and strengthened regulations, including EV sales regulations, must work in tandem to rapidly decarbonize all sectors of the Canadian economy.”

Deputy Prime Minister and Finance Minister Chrystia Freeland confirmed last week that the federal budget will be tabled April 19. The Liberals are expected to propose between $70 billion and $100 billion in fiscal stimulus to jolt the economy out of its pandemic doldrums.

The government teased a coming economic “green transformation” late last year when Freeland released the fall economic statement, promising to examine federal green bonds, border carbon adjustments and a sustainable finance market, with tweaks like tightening the climate-risk disclosure obligations of corporations.

The government has also proposed a wide range of green measures in its new climate plan released in December — which the think tank called the “most ambitious” in Canada’s history — including energy retrofit programs, boosting hydrogen and other alternative fuels, and rolling out carbon capture technology in a grid where 18% of electricity still came from fossil fuels in 2019.

But the possible “three-year stimulus package to jumpstart our recovery” mentioned in the fall economic statement came with the caveat that the COVID-19 virus would have to be “under control.” While vaccines are being administered, Canada is currently dealing with a rise of highly transmissible variants of the virus.

Freeland spoke with United States Vice-President Kamala Harris on March 25, highlighting potential Canada-U.S. collaboration on EVs alongside the “need to support entrepreneurs, small businesses, young people, low-wage and racialized workers, the care economy, and women” in the context of an economic recovery.

Biden is contemplating a climate recovery plan that could exceed US$2 trillion as Canada looks to capitalize on the U.S. auto pivot to EVs to spur domestic industry. Per capita, that is over 8 times what Canada has announced so far for climate-related spending in the wake of the pandemic, according to a new analysis from green groups.
U.S. President Joe Biden is contemplating a climate and clean energy recovery plan that could “exceed US$2 trillion,” White House officials told reporters this month. “Per capita, that is over eight times what Canada has announced so far for climate-related spending in the wake of the pandemic,” the IISD-led analysis stated.

Biden’s election platform commitment of $508 billion over 10 years in clean energy was also seen as “significantly higher per capita than Canada’s recent commitments.”

Since October 2020, Canada has announced $36 billion in new climate-focused funding, a 2035 EV mandate and other measures, the groups found. By comparison, they noted, a political agreement in Europe proposed that a minimum of 37 per cent of investments in each national recovery plan should support climate action. France and Germany have also committed tens of billions of dollars to support clean hydrogen.

As for electric vehicles (EVs), the United Kingdom has committed $4.9 billion, while Germany has put up $7.5 billion to expand EV adoption and charging infrastructure and sweeten incentive programs for prospective buyers, complementing Canada’s ambitious EV goals announced domestically. The U.K. has also committed $3.5 billion for bike lanes and other active transportation, the groups noted.

Canada announced $400 million over five years this month for a new network of bike lanes, paths, trails and bridges, the first federal fund dedicated to active transportation.

 

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California looks to electric vehicles for grid stability

California EV V2G explores bi-directional charging, smart charging, and demand response to enhance grid reliability. CPUC, PG&E, and automakers test incentives aligning charging with solar and wind, helping prevent blackouts and curtailment.

 

Key Points

California EV V2G uses two-way charging and smart incentives to support grid reliability during peak demand.

✅ CPUC studies feasibility, timelines, and cost barriers to V2G

✅ Incentives shift charging to align with solar, wind, off-peak hours

✅ High-cost bidirectional chargers and warranties remain hurdles

 

California energy regulators are eyeing the power stored in electric vehicles as they hunt for ways to avoid blackouts caused by extreme weather.

While few EV and their charging ports are equipped to deliver electricity back into the grid during emergencies, the California Public Utilities Commission wants more data on it as the agency rules on steps utilities must take to ensure they have enough power for this summer and next year. A draft CPUC decision due to be discussed this week asks about the feasibility of reversing the charge when needed (Energywire, March 8).

“Very few [EVs], maybe a couple of thousand at the most, can give power to the grid, and even fewer are connected into a charger that can do it,” said Gil Tal, director of the Plug-in Hybrid & Electric Vehicle Research Center at the University of California, Davis. EVs that feature the ability “have it at a more experimental level.”

The issue arises as California, where about half of all U.S. EVs are purchased, examines what role the vehicles can play in keeping lights on and refrigerators running and how a much bigger grid will support them in the long term. Even if grid operators can’t pull from EV batteries en masse, experts say cash and other incentives can prompt drivers to shift charging times, boosting grid stability.

“What we can do is not charge the electric cars at times of high demand” such as during heat waves, Tal said.

The EV focus comes after California’s grid manager last summer imposed rolling blackouts when power supplies ran short during a record-shattering heat wave. State energy regulators across the U.S., as EVs challenge state grids, are also looking at their disaster preparedness as Texas recovers from a winter storm last month that cut off electricity for more than 4 million homes and businesses there.

California’s EV efforts can help other states as they add more renewable power to their grids, said Adam Langton, energy services manager at BMW of North America.

That automaker ran a pilot program with San Francisco-based utility Pacific Gas & Electric Co. (PG&E) looking at whether money and other incentives could prompt EV drivers to charge their cars at different times. The payments successfully shifted charging to the middle of the night, when wind power often is plentiful. It also moved some repowering to mornings and early afternoons, when there’s abundant solar energy.

“That can be a tool that the utilities can use to deal with supply issues,” Langton said. “What our research has shown is that vehicles can contribute to [conservation] needs and emergency supply by shifting their charging time.”

Such measures can also help states avoid having to curtail solar production on days when there’s more generation than needed. On many bright days, California has more solar power than it can use.

“As more states add more renewable energy, we think that they’re going to find that EVs complement that really well with smart charging, because grid coordination can get that charging to align with the renewable energy,” Langton said. “It allows to add more and more renewable energy.”

High-cost equipment a hurdle
The CPUC at a future workshop plans to collect information on leveraging EVs to head off power shortages at key times.

But Tal said it will probably take a decade to get enough EVs capable of exporting electricity back to utilities “in high numbers that can make an impact on the grid.”

Barriers to reaching such “vehicle to grid” integration are technical and economic, he said. EVs export direct current and need a device on the other side that can convert it to alternating current, similar to a solar power inverter for rooftop panels.

However, the equipment known as a V2G capable charger is costly. It ranges from $4,500 to $5,500, according to a 2017 National Renewable Energy Laboratory report.

PG&E and Los Angeles-based Southern California Edison already have “expressed doubt that short-term measures could be developed in time to expand EV participation by summer 2021” in V2G programs, the draft CPUC proposal said. The utilities suggested instead that the agency encourage EV owners to participate in initiatives where they’d get paid for reducing power consumption or sell electricity back to the grid when needed, known as demand response programs.

Still, almost all major EV automakers are looking at two-directional charging, Tal said.

“The incentive is you can get more value for the car,” he said. “The disincentive is you add more miles in a way on the car,” because an owner would be discharging to the grid and re-charging, and “the battery has limited life.”

And right now, discharging a vehicle to the grid would violate many warranties, he said. Car manufacturers would need to agree to change that and could call for compensation in return.

Meanwhile, San Diego Gas & Electric Co., a Sempra Energy subsidy, plans to launch a pilot looking at delivering power to the grid from electric school buses. The six buses in the pilot transport students in El Cajon, Calif., east of San Diego.

“The buses are perfect because of their big batteries and predictable schedule,” Jessica Packard, SDG&E spokesperson, said in an email. “Ultimately, we hope to scale up and deploy these kinds of innovations throughout our grid in the future.”

She declined to say how much power the buses could deliver because the project isn’t yet operating. It’s set to start later this year.

Mobility needs
While BMW and PG&E did not review vehicle-to-grid power transfers in their own 2017 research ending last year, one study in Delaware did. But it was in a university setting about eight years ago and didn’t look at actual drivers, said Langton with BMW.

In their own findings from the San Francisco Bay Area pilot program, BMW and PG&E found that incentives could quickly change driver behavior in terms of charging.

Technology helps: Most new EVs have timers that allow the driver to control when to charge and when to stop charging. Langton said the pilot program got drivers to have their cars charge from roughly 2 to 6 a.m., when electricity rates typically are lowest.

There can be a lot of solar energy during the day, but in summer, optimum charging times get more complicated in California, he said. People want to run their air conditioners during peak heat hours, so it’s important to be able to get EV drivers to shift to less congested times, he said.

With the right incentives or messaging, Langton said, the pilot persuaded drivers to move charging from 10 a.m. to 2 p.m. or noon to 4 p.m. BMW technology allowed for detailed information on battery charge level, ideal charging times and other EV data to be transmitted electronically after plugging in.

The findings are a good first step toward future vehicle-to-grid integration, Langton added.

“One of the things we really pay attention to when we do smart charging is, ‘How does the driver’s mobility needs figure into shifting their charging?'” he said. “We want to make sure that our customers can always do the driving that they need to do.”

The pilot included safeguards such as an opt-out button if the driver wanted to charge immediately. It also made sure the vehicle had a certain level of minimum charge — 15% to 20% — before the delayed smart charging kicked in.

Vehicle-to-grid technology would need to wrestle with the same concepts in a different way. If a car is getting discharged, the driver would want assurances its battery wouldn’t dip below a level that meets their mobility needs, Langton said.

“If that happened even once to a customer, they would probably not want to participate in these programs in the future,” he said.

One group adding charging stations across the country said it isn’t tweaking pricing based on when drivers charge. That’s to help grow EV purchases, said Robert Barrosa, senior director of sales and marketing at Volkswagen AG subsidiary Electrify America, which operates about 450 charging stations in 45 states.

The company has installed battery storage at more than 100 sites to make sure they can provide power at consistent prices even if California or another state calls for energy conservation.

“It’s very important for vehicle adoption that the customer have that,” Barrosa said.

The company could sell that battery storage back to the grid if there are shortfalls, but some market changes are needed first, particularly in California, he said. That’s because the company buys electricity on the retail side but would be sending it back into the wholesale market.

With that cost differential, Barrosa said, “it doesn’t make sense.”

 

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Green energy in 2023: Clean grids, Alberta, batteries areas to watch

Canada 2023 Clean Energy Outlook highlights decarbonization, renewables, a net-zero grid by 2035, hydrogen, energy storage, EV mandates, carbon pricing, and critical minerals, aligning with IRA incentives and provincial policies to accelerate the transition.

 

Key Points

A concise overview of Canada's 2023 path to net-zero: renewables, clean grids, storage, EVs, and hydrogen.

✅ Net-zero electricity regulations target 2035

✅ Alberta leads PPAs and renewables via deregulated markets

✅ Tax credits boost storage, hydrogen, EVs, and critical minerals

 

The year 2022 may go down as the most successful one yet for climate action. It was marked by monumental shifts in energy policy from governments, two COP meetings and heightened awareness of the private sector's duty to act.

In the U.S., the Inflation Reduction Act (IRA) was the largest federal legislation to tackle climate change, injecting $369 billion of tax credits and incentives for clean energy, Biden's EV agenda and carbon capture, energy storage, energy efficiency and research.

The European Union accelerated its green policies to transition away from fossil fuels and overhauled its carbon market. China and India made strides on clean energy and strengthened climate policies. The International Energy Agency made its largest revision yet as renewables continued to proliferate.

The U.S. ratified the Kigali Amendment, one of the strongest global climate policies to date.

Canada was no different. The 2022 Fall Economic Statement was announced to respond to the IRA, offering an investment tax credit for renewables, clean technology and green hydrogen alongside the Canada Growth Fund. The federal government also proposed a 2035 deadline for clean electrical grids and a federal zero-emissions vehicle (ZEV) sales mandate for light-duty vehicles.

With the momentum set, more action is promised in 2023: Canadian governments are expected to unveil firmer details for the decarbonization of electricity grids to meet 2035 deadlines; Alberta is poised to be an unlikely leader in clean energy.

Greater attention will be put on energy storage and critical minerals. Even an expected economic downturn is unlikely to stop the ball that is rolling.

Shane Doig, the head of energy and natural resources at KPMG in Canada, said events in 2022 demonstrated the complexity of the energy transformation and opened “a more balanced conversation around how Canada can transition to a lower carbon footprint, whilst balancing the need for affordable, readily available electricity.”


Expect further developments on clean electricity
2023 shapes up as a crucial year for Canada’s clean electricity grid.

The federal government announced it will pursue a net-zero electricity grid by 2035 under the Clean Electricity Regulations (CER) framework.

It requires mass renewable and clean energy adoption, phasing out fossil fuel electricity generation, rapid electrification and upgrading transmission and storage while accommodating growth in electricity demand.

The first regulations for consultation are expected early in 2023. The plans will lay out pollution regulations and costs for generating assets to accelerate clean energy adoption, according to Evan Pivnick, the clean energy program manager of Clean Energy Canada.

The Independent Energy System Operator of Ontario (IESO) recently published a three-part report suggesting a net-zero conversion for Ontario could cost $400 billion over 25 years, even as the province weighs an electricity market reshuffle to keep up with increasing electricity demand.

Power Utility released research by The Atmospheric Fund that suggests Ontario could reach a net-zero grid by 2035 across various scenarios, despite ongoing debates about Ontario's hydro plan and rate design.

Dale Beguin, executive vice president at the Canadian Climate Institute, said in 2023 he hopes to see more provincial regulators and governments send “strong signals to the utilities” that a pathway to net-zero is realistic.

He recounted increasing talk from investors in facilities such as automotive plants and steel mills who want clean electricity guarantees before making investments. “Clean energy is a comparative advantage,” he said, which puts the imperative on organizations like the IESO to lay out plans for bigger, cleaner and flexible grids.

Beguin and Pivnick said they are watching British Columbia closely because of a government mandate letter setting a climate-aligned energy framework and a new mandate for the British Columbia Utilities Commission. Pivnick said there may be lessons to be drawn for other jurisdictions.

 

Alberta’s unlikely rise as a clean energy leader
Though Alberta sits at the heart of Canada’s oil and gas industry and at the core of political resistance to climate policy, it has emerged as a front runner in renewables adoption.

Billion of dollars for wind and solar projects have flowed into Alberta, as the province charts a path to clean electricity with large-scale projects.

Pivnick said an “underappreciated story” is how Alberta leaned into renewables through its “unique market.” Alberta leads in renewables and power purchase agreements because of its deregulated electricity market.

Unlike most provinces, Alberta enables companies to go directly to solar and wind developers to strike deals, a model reinforced under Kenney's electricity policies in recent years, rather than through utilities. It incentivizes private investment, lowers costs and helps meet increasing demand, which Nagwan Al-Guneid, the director of the Business Renewables Centre - Canada at the Pembina Institute, said is “is the No. 1 reason we see this boom in renewables in Alberta.”

Beguin noted Alberta’s innovative ‘reverse auctions,’ where the province sets a competitive bidding process to provide electricity. It ended up making electricity “way cheaper” due to the economic competitiveness of renewables, while Alberta profited and added clean energy to its grid.

In 2019, the Business Renewables Centre-Canada established a target of 2 GW of renewable energy deals by 2025. The target was exceeded in 2022, which led to a revised goal for 10 GW of renewables by 2030.

Al-Guneid wants to see other jurisdictions help more companies buy renewables. She does not universally prescribe deregulation, however, as other mechanisms such as sleeving exist.

Alberta will update its industrial carbon pricing in 2023, requiring large emitters to pay $65 per tonne of carbon dioxide. The fee climbs $15 per tonne each year until it reaches $175 per tonne in 2030. Al-Guneid said as the tax increases, demand for renewable energy certificates will also increase in Alberta.

Pivnick noted Alberta will have an election in 2023, which could have ramifications for energy policy.

 

Batteries and EV leadership
Manufacturing clean energy equipment, batteries and storage requires enormous quantities of minerals. With the 2022 Fall Economic Statement and the Critical Minerals Strategy, Canada is taking important steps to lead on this front.

Pivnick pointed to battery supply chain investments in Ontario and Quebec as part of Canada’s shift from “a fuel-based (economy) to a materials-based economy” to provide materials necessary for wind turbines and solar panels. The Strategy showed an understanding Canada has a major role to meet its allies’ needs for critical minerals, whether it’s the resources or supply chains.

There is also an opportunity for Canada to forge ahead on energy storage. The Fall Economic Statement proposes a 30 per cent tax credit for investments into energy storage. Pivnick suggested Canada invest further into research and development to explore innovations like green hydrogen and pump storage.

Doig believes Canada is “well poised” for batteries, both in terms of the technology and sustainable mining of minerals like cobalt, lithium and copper. He is bullish for Canada’s electrification based on its clean energy use and increased spending on renewables and energy storage.

He said the federal ZEV mandate will drive increased demand for the power, utilities, and oil and gas industries to respond.

The majority of gas stations, which are owned by the nation’s energy industry, will need to be converted into EV charging stations.

 

Offsetting a recession 
One challenge will be a poor economic forecast in the near term. A short "technical recession" is expected in 2023.

Inflation remains stubbornly high, which has forced the Bank of Canada to hike interest rates. The conditions will not leave any industry unscathed, but Doig said Canada's decarbonization is unlikely to be halted.

“Whilst a recession would slow things down, the concern around energy security definitely helps offset that concern,” he said.

Amid rising trade frictions and tariff threats, energy security is top of mind for governments and private organizations, accelerating the shift to renewables.

Doig said there is a general feeling a recession would be short-lived, meaning it would be unlikely to impact long-term projects in hydrogen, liquified natural gas, carbon capture and wind and solar.

 

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UK to fast-track vital grid connections

UK Grid Connection Fast-Track would let the Energy Secretary instruct network operators and National Grid ESO to accelerate substation upgrades and transmission links for Tata's gigafactory, electric arc furnaces, and ready-to-build renewable projects.

 

Key Points

A UK plan letting the energy secretary fast-track grid connections via priority substation and transmission upgrades.

✅ Prioritizes substations and lines for strategic projects

✅ Supports Tata gigafactory and electric arc furnace conversions

✅ Complements Ofgem queue reforms and National Grid ESO changes

 

The UK energy secretary could be handed powers to fast-track connecting electricity-hungry projects, such as Jaguar Land Rover’s owner Tata’s planned electric battery factory, to the grid, under plans being discussed between government and regulators as part of the government’s green industrial revolution strategy.

Amid concerns about supply delays of up to 15 years in hooking up large schemes, the Guardian understands the move would allow Claire Coutinho to request that energy network companies accelerate upgrades to substations and power lines to connect specific new developments.

It is understood that the government and the regulator Ofgem have told National Grid’s electricity systems operator that they are “minded” to adopt its grid reform proposals to change the model for connections, which now moves at a pace set by each network operator.

A source said: “Foreign investors need assurances that, if these things are going to be built, then they can be hooked up quickly. There are physical assets, like substations and cross-Channel cables that transmission companies will need to build or upgrade.”

The government is belatedly attempting to tackle a logjam that has resulted in some developments facing a 10- to 15-year wait for a connection to the grid. Ofgem announced on Monday plans to remove “zombie” projects from the queue to connect up to speed up those ready to produce renewable power for the grid, with wind leading the power mix.

Although no equivalent queue exists for those looking to take power from the grid, ministers and officials are concerned that large projects could struggle to secure final investment and proceed without guarantees over their connection to the electricity supply.

Sources said changes to the rules had been proposed with several big projects in mind: Tata’s new £4bn electric battery factory, expected to be built in Somerset; and the switch to electric arc furnaces at Britain’s biggest steelworks at Port Talbot in south Wales, also owned by the Indian group.

The £1.25bn plan from British Steel, which is owned by China’s Jingye, to replace two blast furnaces at Scunthorpe steelworks, with an electric arc furnace at the north Lincolnshire plant and another at a site in Teesside, North Yorkshire, has also formed part of the proposals. Negotiations over the closure of blast furnaces at Port Talbot and Scunthorpe are expected to lead to thousands of job losses.

All three projects are likely to involve significant investment from the UK government, where a state-owned generation firm has been touted as a cost-saving option, alongside the companies’ overseas owners.

Britain has 10 distribution network operators, including National Grid and Northern Powergrid, which operate monopolies in their regions and handle transmission of power from the grid to end users.

Sources said the move could be announced as soon as this month, and may be included within the “connections action plan”, a broader overhaul of Britain’s network connections.

The plan, which is expected to be announced alongside the chancellor’s autumn statement next week, will rebalance the planning system to help speed up the connection of new solar and windfarms to the grid, as the biggest offshore windfarm begins UK supply this week.

 

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