CERAWEEK FACTBOX: Regulatory uncertainty; renewables in flux; power demand surge seen

The penultimate day of CERAWeek by S&P Global in Houston focused on power, with talk of how to align legacy and new supply sources with a fast-moving demand outlook, an uncertain regulatory environment and unfolding energy transition.

Power

• Abu Dhabi's Masdar plans to grow its operating renewable energy capacity in the US to 10 GW in the next five years through its planned acquisition of Terra-Gen Power Holdings, nearly 10 times its current base in the country, according to CEO Mohamed Jameel Al Ramahi. "You can't be a global renewable energy company without having a strong presence in the United States," he said. "We have full trust in the United States, as a direct foreign investor." The company on March 19 said it would purchase a 50% stake in Terra-Gen from asset manager Energy Capital Partners.
• Renewable power is "going through a deep industry reset" in which "nobody's making any money," a New York State Energy Research and Development Authority official said. Asked how inflation in material and operations and maintenance costs have affected renewable project returns, Georges Sassine, NYSERDA vice president for large scale renewables, said, "Terribly. What happened in New York in December, I had around 80 projects and 7.3 GW canceled contracts in the same day," Sassine said. NYSERDA issued an expedited request for proposals, resulting in about 5 GW of capacity participating, "and we're in the process of evaluating and deciding what we're going to award, but we are definitely seeing higher prices to try to adjust the market," he said.
• Alaska may build the first large coal-fired power plant in the US in over a decade and is considering "probably two" equipped with carbon capture and storage technology, Governor Mike Dunleavy said. Alaska is constructing roads into remote mining areas, and they will need power, Dunleavy told S&P Global Commodity Insights. Situating coal plants near Alaska's coalfields could significantly reduce costs while meeting other power needs, he added. "You place the plant right on the coalfield and right on the coalfield is where the main transmission line for the entire Railbelt [an electric grid providing the majority of Alaskans' energy] is," Dunleavy said. Most US utilities have shut coal plants in favor of cleaner power. The 932-MW Sandy Creek Energy Station in Texas went online in 2013 and is the most recent coal plant larger than 100 MW to power up in the US.

Hydrogen

• Hydrogen hub investment opportunities can be identified by levels of CO2 emissions, Felipe Arbelaez, vice-president f hydrogen and carbon capture at BP, said. For example, he pointed out the US Gulf Coast's industrial cluster has about 300 million-400 million mtCO2e/year. One of the Biden administration's announced regional clean hydrogen hubs is the HyVelocity Hub based off the Gulf Coast. Co-locating hubs with market participants and potential offtakes, like industrial facilities seeking to decarbonize, fertilizer manufacturing assets and chemical facilities, not only shortens the supply chain but also makes large-scale development faster, speakers said. Hubs that are co-located with renewable energy sources and industrial emitters allows necessary technologies to be deployed easier and quicker, said Emmanouil Kakaras, vice-president of the NEXT Energy Business at Mitsubishi Heavy Industries in Europe, the Middle East and Africa.

Demand

• National Grid CEO John Pettigrew told S&P Global Commodity Insights that while regulation and policy were set up to "build infrastructure at the last possible moment when you're absolutely certain it was needed," times are changing with the energy transition. "We know that we're going to see electrification of transport. We know we're going to see more heat pumps. We know we're going to see more data centers, and load is going to increase," Pettigrew told S&P Global Commodity Insights. "Unless you can do anticipatory investment and sort of build-out in anticipation of what's coming, then you're always going to end up with some bottlenecks, which will slow down people's connections."
• The electrification and growth of demand on the electricity grid seem to be accelerating, which is a "daunting "challenge, Pattern Energy CEO Hunter Armistead told S&P Global Commodity Insights. "It's one thing to think about transitioning how the resources stack up to meet the electrical needs," Armistead said. "But to envision where the quantum of data centers and AI that are coming and even the prospect of a green fuels mix going into this, means that we're facing a grid that is even more strained than we were expecting. You can be overwhelmed by that or get excited about figuring it out."
• Power companies plan to combine natural gas-fired generation with zero-emissions resources to meet expected surging power demand, executives said March 21. Robert Blue, Dominion Energy chairman, president and CEO, cited surging data center demand in Northern Virginia as particularly challenging. "If you looked back a decade, we had roughly 500 MW of data center demand, which was a lot for one industry at the time," Blue said. "This year, we're more than six times that, about 3 GW," Blue said. "Looking forward, we expect to more than quadruple that over the course of the next 15 years, so it will be 13 gigawatts of data center demand. Just last year, the 15 data centers we connected had a capacity of nearly a gigawatt."
• Cheniere COO Corey Grindal said during a March 20 panel discussion that rising demand would cure pipeline developers of the "skittishness" created by the difficult planning system. "You'll continue to see demand develop, whether it be electricity, whether it be LNG, whether it be industry coming back to the United States," he said. "You're going to start seeing the market send signals. And at some point the signals will get there where people are willing to take the chance, to take the risk, to develop additional infrastructure."

Regulation

• There is a lot of uncertainty with the US being in an election year, but Portland General Electric President and CEO Maria Pope said she is confident the Inflation Reduction Act's benefits for green energy will remain intact. Pope's company has not only benefitted from the IRA but also other legislation, such as the CHIPS and Science Act and the Infrastructure Investment and Jobs Act. "These are laws passed by our Congress, and they benefit red states and blue states: in many ways, red states more than blue states," Pope said on the sidelines of the conference. "I don't see them being rolled back, but rather maybe being nuanced as we move forward."
• Colin Parfitt, Chevron vice president of midstream, told S&P Global Commodity Insights "it would be nice" if the Biden administration's pause on LNG export permitting was lifted by next year, as suggested earlier at the conference by Energy Secretary Jennifer Granholm. However, in the meantime, the pause has created uncertainty "that might take years to go away" over fears of the US limiting energy exports, Parfitt said. "That's bad for the climate. It's bad for the economy, and it's bad for the USA," Parfitt said, adding that LNG exports can replace coal generation at a lower emissions intensity.