Tag Archives: Daily Rundown

This is your SolarWakeup for February 25th, 2020

Right Job Right Location. Part of our job is to make sure that the energy transition doesn’t change the location of the jobs that people have today. As someone that has moved for work, as many of you have, it isn’t easy to leave behind friends, family and comfort for a new beginning. For many in coal, gas and power sectors they are working jobs that may have been jobs in their families for generations, think coal miners. We’re getting data that show that job opportunities match where the energy transition is impacting the most workers and it’s up to many of you reading this to grow your businesses in those locations and not put them where you are comfortable. Hiring talent is surely one of the toughest challenges you will face in the coming years so go to the talent.

Speeding The Replacements. The fiscal climate dilemma will surely be centerstage this decade. The dilemma is to determine what to do with existing assets that have not reached their end of life while also acknowledging that they are not the best solution anymore especially with societal costs being included in today’s analysis. Yes, it was the wrong decision to build in the first place but now they are installed, capitalized and millions of retirement accounts, pension funds, and investments are taking the assumption of a full life for granted. Should we replace many of those plants? Yes, the climate and grid need it to happen but that doesn’t happen in a vacuum either.

Climate, Jobs And Wealth Creation. We are the center of the greatest wealth creation opportunity in a generation, that is a certainty. Because of that and how the grid is changing, it is also where the largest growth of jobs will happen. As I said in a recent interview, tell me the job you want and I’ll show you the job opportunity in our industry. While this is the SolarWakeup and I remember at every CALSSA board meeting that we have become the big S, solar plus storage industry. The best part is that we are creating jobs, careers, and wealth while ensuring that our kids inherit a cleaner planet.

The First Step. In the coming months and years, we are going to have tough conversations, some of which I outline above. We’ve been having net metering battles since the day I joined the industry 15 years ago and even in California, the biggest market in the Country where solar is literally keeping the lights on during peak shutoff events, the fight continues. The grid is transitioning, changing for the better. We can either work together to make it work better for everyone or we can fight the battles where one side shuts their eyes and points that clean energy is bad, bad, bad. Look at SEIA’s statement about Texas last week, no finger-pointing just simply saying we can solve this problem, shutoffs, and rampant costs, by including the lowest costs and more resilient technologies. It is a long past time for anti-renewables forces to stop saying that consumer choice and self-reliance by investing in their own energy source is bad for the grid and if they aren’t going to stop, then it’s time for regulators to stop hearing it because consumers are tired of it. 

Opinion

Best, Yann

 

This is your SolarWakeup for February 24th, 2020

Investigations Start. FERC is going to start looking at what happened in Texas. Meanwhile 4 members of the ERCOT board have resigned after last week’s shutoffs. However, most headlines have failed to highlight the role of the railroad commission and their oversight of the gas infrastructure which were some of the biggest cause of problems. The biggest question will come around winterization, what mandate is needed or what market signal has to be created for generators to spend the extra dollars and prepare for edge cases.

Impact To Generators. We learned quite a bit about the stress test that $9,000/MWh will cause to generators, especially with the situation that the fuel source is unavailable or the external weather event renders the generator inoperable. First, I have yet to hear the compelling reason why anyone will hedge the output going forward. Forget the leverage that the hedge opens up because the lender is going to ask about the what if scenario when you fail to deliver electrons and have to settle in the real-time market. Some generators are thinking about the revenue they lost not being able to monetize once in a lifetime energy rates.

To Retail Companies. This is going to get ugly. Most retailers sell energy to consumers with the plan to buy that commodity at a price lower than that. Sometimes they are upside down but it’s all within a risk range. When rates in the realtime market exceed the delivered price by 200x or more for several days, it’s bad news. You’re going to hear about retail companies seeking bailouts or risk going out of business. Free markets, am I right?

To Consumers. We talked about this on Monday but some consumers took the spread risk themselves. I assume that most had no idea what would possibly happen, not that any energy experts thought $9/kWh was possible. I can almost guarantee that these bills will be forgiven in some form, people aren’t going to pay $10,000 for 5 days of electricity, which means survival in some cases.

A Frozen Slinky. I can’t do this but if you want to explain Texas to your kids and live in the cold, put a slinky outside to freeze and then stretch it. Then compare the one from inside and see what happens to the resiliency and flexibility of the material. ERCOT could have avoided all of this with winterization but we’re also recognizing that the grid everywhere is going to need more mitigation capabilities. DERs, storage (on all parts of the infrastructure) and resilient generation are going to play a role to keep the lights on and business running. 

Opinion

Best, Yann

 

This is your SolarWakeup for February 23rd, 2020

Save California Net Metering. Sign this petition if you want to see the largest solar market continue thriving. Pass this on to your friends and colleagues, make sure to join CALSSA as well. 

Opinion

Best, Yann

 

This is your SolarWakeup for February 22nd, 2020

Independent Texas. On Friday I told you that ERCOT was an islanded grid, separated from the rest of the Country to avoid FERC jurisdiction. Shockingly, that was not correct but the correction will leave you shaking your head. The Blackwater DC Tie is a relatively small interconnect between ERCOT and SPP, in the eastern interconnection network. This means that supposedly, FERC could, at their discretion, argue jurisdiction to ERCOT but the counterpoint is that ERCOT could sever that tie and reestablish solitary confinement. So did this interconnection help during the winter storm? No, because the system at Blackwater was undergoing planned maintenance.

Unhedged Hedges. For the third time in this century, lack of winterization has caused generation to find itself on the wrong side of settlement trades. Building cheap in Texas is no longer the best business process, we’ll see if asset owners react differently going forward. Over the next few weeks and months, we will see hundreds of millions in losses announced as well as bankruptcies (see below about consumer impact). RWE renewables is first to identify a $300-$600million loss for its wind portfolio, of which they were part owner (meaning asset losses were even higher). While generation owners have their pricing hedged with off takers, they also have a production requirement to meet those deliveries. Since the turbines were frozen and unable to operate, RWE needed to go to the market at rates as high as $9,000/MWh to meet their contractual obligation. In short, being hedged caused a loss far exceeding any upside for being hedged in the first place since the hedge simply shift the risk from pricing to fuel availability layered on market rates. If you buy at $9/kWh and sell for $0.02/kWh, you’re underwater by 450X. If this happened for 3 days, the next 5 years will go to make up the error.

Understanding Texas Subsidies. Conservative leaders and primetime programming on Fox News are arguing that wind subsidies ruined the Texas grid. For the sake of the argument, we will ignore the fact that the lack of winterization caused the issue (regardless of fuel source), and look at where this is coming from. The root cause of the argument is that a transmission project called the Competitive Renewable Energy Zone (CREZ) was paid for by ratepayers and largely benefitted wind development. Since this cost was not paid by developers directly politicians are calling this a subsidy. CREZ caused wholesale power prices to drop by quite a bit, has plenty of gas generation connected to it and wasn’t paid by taxpayers. Here’s a 2014 review of the project by ERCOT in case you want to dunk on Tucker Carlson on Twitter.

The Fracked Methane Spike. Supply and demand will meet price gouging when it comes to Texas. At the peak energy crisis, natural gas prices went through the roof in Texas and abroad, something I wrote about last week. None other than the Dallas Cowboys’ owner Jerry Jones was the big winner and may find his CEO in front of a Senate committee. His words may already speak for themselves, see here.

Impact To Consumers. One of the first questions I asked on Twitter was whether consumers had exposure to variable pricing of if the retailers would suffer the negative spread. Most consumers are on fixed pricing agreements which means retailers lose the difference between contract and grid price. But some consumers, probably with some level of naïveté, signed variable cost agreements which match the market cost of electricity. One such provider, Griddy, has told its 29,000 customers to find an alternative source given their expectation that consumers will not be paying the $9/kWh that it cost them to heat their home.

POLR Vortex. Provider of last resort, POLR, is the customer acquisition following the winter event. Retailers will be suffering losses, some will not be able to survive from, and the big utilities like TXU, NRG and Reliant are fighting to get their share of POLR allocation which means consumers without retailers get assigned to them. There’s a certain stickiness to consumers so a $0 customer acquisition cost is business positive.

Solar’s Role. Solar was largely left out of the headlines. With only 6.5GW of capacity on the grid, solar generated nearly 3GW most of the time. Some capacity was offline due to grid shutoffs and some plants suffered from snowfall. We have not heard from asset owners about potential hedge issues at this point or how well storage owners were able to benefit during the peak pricing events.

Goodbye MOPR. FERC ends the pricing subsidy and PJM will be able to have the next capacity auction with more market driven bids.

Save California Net Metering. Sign this petition if you want to see the largest solar market continue thriving. 

Opinion

Best, Yann