Joint Talks Agreed To. John Kerry is proving himself a deft handler of diplomatic processes. His counterpart in China and he have issued a joint communique on potential opportunities to raise the ambition on solving climate change. This comes ahead of the virtual climate change summit hosted by Biden later this week. Joint communiques ring hollow in the business world but in the sensitive process of US/China diplomacy, it has meaning. The undercurrent of all things climate for China is that they have spent the last 20 years investing in the infrastructure to be a central player providing the technology needed to solve the climate crisis. The US had much of the technology for solar, silicon and energy storage but thought about the market too short term and ended up ceding the manufacturing leadership to China many years ago.
Will Xi Show? It was largely expected that Xi Jinping would not be at the summit this week but the communication says that China will participate. A visit by the Chinese leader would be meaningful.
The Coal Towns. The role and responsibility for the renewable energy industry in the rebuilding of coal country has long been a complicated thought process. It’s not solar that made coal unwanted, in reality, the resource has been undone by both the emission as well as the volatility created by short term capitalism in that market. However, the opportunity for the energy sector to play a role in rebuilding is greater than trying to ignore the blame. We have spent the last year learning which jobs can be remote and building the systems to allow that to happen. Why couldn’t the tens of thousands of operations, design and back office functions be built out and trained for these towns? We are already sending installation crews to build out the pipelines, why can’t we focus our training dollars to do that for ex-coal miners?
Pay Now Or Pay More Later. Winterization in Texas is a pay now or more later problem. Or stated more simply, the design requirements have changed, will the design?
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Yann
Trade Rep Talks Climate. Trade is one of the more complicated parts of domestic and international policy. Solving climate change is going to revolve around the global nature of climate and the need for global trade to function properly. Good luck thinking that any one Country can do it all…
Satellite Sniffers. Big emitters will put on a show for carbon mapping technology in space, oil and gas wells may have to hope that methane leaks don’t trace in this technology.
Have a great weekend! Let’s talk maturing clean tech economies and the pace of adoption next week!
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All At Once, With Tailwinds. Everything appears to be headed into the same direction in the energy transition especially as it pertains to energy storage additions. This isn’t me talking my own book, this is in the headlines within the same media publications that have always shaped this newsletter. Bloomberg called for a quarter trillion dollar shift towards batteries earlier this week but are drastically underestimating the cost declines that are coming. We are already seeing a level of market maturity as solar executives are becoming one with the solar+ concept. Underpinning the global market is the shift from internal combustion to electric vehicles. Given the manufacturing overlap and both markets growing together, exponentially, the grid platform will benefit from a crazy increase in that manufacturing.
ERCOT Troubles Continue. On Tuesday morning there was a graph that made the online rounds where demand in ERCOT was forecast to be higher than the available power capacity. This was due to a large amount of thermal generation being down from maintenance, likely still catching up from the winter storm in February. At the 7-8pm hours, energy pricing rose to nearly $2,000/MWh for a short duration and the system operator called for consumers to shed demand as much as possible. The situation mellowed quickly and no emergency had to be declared but it came close.
The Climate Diplomat. John Kerry, as a special presidential envoy, is working with China this week to move along the climate conversations. As Kerry put it, they are talking about talking, working to have the US and China at the table working on climate issues.
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The Corporate Voice. Issues like divestment and ESG are driven by the expansion of the bottom line. It may lack the progressive do better component but in most cases, especially in corporate world, the alignment of higher earnings, better talent and larger markets with lower risk with climate related focus is driving the corporate agenda. Renewables and the broader energy transition has become a reality because solar, wind and resilience has become a more attractive investment for capital, a trillion dollar market that didn’t exist previously. That is why the lobbying done on behalf of our industries isn’t solely resting on trade groups’ shoulders, it includes the corporate and capital interests that want the market to expand further while lowering the risk profile. Interestingly, it’s the combination of wall street and corporate America that is making this lobbying focus even stronger.
Why It Matters. Picking winners and losers was the legislative pushback in the early days of solar lobbying. Let the market decide, especially in light of the need for subsidies some 15 years ago, and now the markets have declared renewables the winner and corporates, as customers and investors, are throwing their support behind it full force. Not just the support for policies that enable a better functioning market but also against policies that attempt to hurt the opportunity to compete or limit access to these new sources. The headlines may label this as a ‘woke’ effort to push societal desires but when it comes to renewable energy, the bipartisan support by consumers and voters is loud and clear.
Shifting The Center. One of the topics we covered in yesterday’s market call with Roth Capital was the regulatory fight we often mention on this platform, whether that is NEM 3.0 in California, NEM cap in Michigan or Federal issues. Regulatory proceedings sometimes welcome extreme initial proposals in an effort to draw the boundaries of the argument so far outside of the norm that a settlement would be considered a victory. It is important to see the first overture as an overture but also to reject it outright in most cases with a vigorous fight. I often hear from you saying that things will sort themselves out but they only do when everyone does their part in the process otherwise David cannot take on Goliath.
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