Live “clean energy from Coachella”
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Welcome back to Energy Source – today from sweltering New Orleans.
I’m in town for the American Clean Power Association’s annual conference, the largest green adventure in the United States, which one executive called the “Coachella of clean energy.”
The gathering has never been bigger, with more than 8,000 attendees coming to town, from family-owned equipment manufacturers and cleantech brothers to major renewable energy developers and utility giants. Since capital is flowing into the sector on an unprecedented scale following the inflation-reducing law, the magnitude of the event is not surprising. To paraphrase Kermit the Frog, being green has never been easier.
However, the clean energy industry is no longer the domain of well-intentioned environmentalists. Today, Big Green is big business. And the industry came to the city with a lot of difficulties and demands.
Meanwhile, on the other side of the world, controversy is brewing over the role of Sultan al-Jaber, head of the UAE’s state-owned oil group, as president of the UN’s COP28 climate conference. Many US and EU lawmakers want to leave it out. My colleagues Aime and Camilla have the latest.
In today’s newsletter, I will delve into some of the major topics that arose during the ACP conference. In Data Drill, Derek returns to hydrocarbons and summarizes the largest private drillers in the United States—perhaps a shopping list for Big Oil in its search for reserves.
Thanks for reading – Myles
Top topics from NOLA’s green gathering
IRA cleantech supercharge is on
John Podesta, who has been tasked by the president with implementing the Green Revolution, took the stage at the opening of the conference to declare, “There has never been a better time for clean energy in America.”
“Almost every day there is news of another clean energy investment,” he said to cheers from the crowd.
He’s not wrong. This week, Enel announced it had chosen Oklahoma for a $1 billion solar manufacturing facility, while GE announced a massive expansion of a wind turbine parts assembly line in Schenectady.
More than $100 billion worth of green investment has been announced since the IRA was passed nine months ago, as the 10-year tax credits unleash a flood of capital.
“It’s extremely exciting to think about the growth you can project over a decade,” said Craig Cornelius, CEO of Clearway Energy, one of the nation’s largest developers. “We have not been able to do this throughout history [this industry].”
Praise for the IRA was effusive. But in panel discussions and on the sidelines of the conference, talk quickly turned to the headwinds holding the sector back.
But it takes too long to build things up
Among the complaints, the time required to implement the projects was in the first place.
The multitude of approvals from many different bodies and agencies at the local, state and federal levels means projects can take more than a decade to move forward.
This is true not only of large wind and solar developments, which require permits from the U.S. Fish and Wildlife Service to the Army Corps of Engineers and green lights at the state and county level, but especially of the transmission lines needed to send electrons across the country.
“A fundamental question is whether this nation can build big things quickly,” said Jason Grumet, ACP chief. “We have a particular problem with what we call linear infrastructure—anything that has to cross multiple jurisdictions—it’s much more difficult because literally every single process has to meet this perfect moment.”
Developers have complained about long queues when projects are connected to the network as regional network operators are overwhelmed by applications. The backlog hinders investments.
Various bills are underway in Congress to streamline the licensing process. But none of them have gained enough political traction yet. There is hope that a bipartisan agreement on the licensing reform package can be reached before the end of the year. According to those present, without this, the goals of the IRA will ultimately remain unfulfilled.
“We need to do better and do better and do better if we are to truly realize the potential of the industry – especially with this recently passed bill,” said David Hardy, US head of wind farm developer Orsted.
And the parts are too hard to grasp
Then there’s the issue of the supply chain—a particular point of contention for the solar industry.
The icy relations between the US and China are a constant headache – given that the latter is responsible for the vast majority of solar wafers and modules.
In many cases, hefty US anti-dumping duties on Chinese parts are being extended to parts from Southeast Asia, after a Commerce Department investigation found companies used it as a backdoor. (The White House has frozen such an extension until next year).
However, special rules prohibiting imports related to forced labor led to customs officials impounding individual parts for a long time while their custody was investigated.
The IRA has pitched grants to create a domestic solar component supply chain. But it will take time to wean the industry off its dependence on China.
“People are going to move these factories here because of the incentives,” said Leo Moreno, president of AES Clean Energy, a major clean energy developer. “They are moving these wafers, cells and module factories to the United States, but it will take years.”
“From now until these facilities come online, the supply chain will remain limited. There are still many suppliers unable to get products into the United States.”
According to AKCS, 40 percent of the solar developments that were supposed to be brought online in the United States last year were delayed. The industry fears that the tariffs will be extended next year before the domestic industry has taken root.
The ‘Big Green’ has arrived after all
Yet between the beers and bon tempsthe conference was underpinned by the feeling that the clean energy industry is no longer just the way to go.
This was not a ragtag group of activists and do-gooders. The industry is now organized and a force to be reckoned with in Washington. This month, the ACP even announced the hiring of Frank Macchiarola from his role as champion of fossil fuel regulation at the American Petroleum Institute.
Big Green is making big demands on the US political elite – it wants to be at the table. And he has big plans to make big money.
ACP Grumet said: “I think it’s fair to say that over the last 20 years the most outstanding people – in some ways the most successful – have been the fighters.”
“The most successful people in the next 20 years will be builders, mechanics and developers.”
For growth-hunting public companies, Enverus’ new catalog of the 100 largest private oil and gas producers is practically an M&A target list.
That’s because, compared to their public rivals, private equity-backed companies have less to monitor their environmental performance and don’t face the same pressure from Wall Street to rein in spending. Many are also secret, family-owned fiefdoms. And in recent months, they have increased output – and cash flow – to entice them to buy.
And they grew big. Data supporting the list below show that the top 100 US private oil companies produce about 2.4 million barrels per day, about 20 percent of the country’s total, and not far off the output of OPEC’s Kuwait power plant. They also pump about one-third of all U.S. natural gas production.
Continental Resources, which was shuttered last year by shale pioneer Harold Hamm, is the largest private oil producer in the United States, pumping 280,000 barrels of oil a day. It is also a natural gas power plant. Second and third place are held by Permian producers Mewbourne Oil and Endeavor Energy — hardly known outside of West Texas by any other name. Combined, the top five countries produce more oil than the UK.
Energy Source was written and edited by Derek Brower, Myles McCormick, Justin Jacobs, Amanda Chu and Emily Goldberg. Find us at [email protected] and follow us on Twitter at: @FTEnergy. Read previous editions of the newsletter here.
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