Hello and welcome back to Energy Source, coming to you from rural Wisconsin today.
I’m in the state for an upcoming Energy Source film on the uphill battle to build out power lines in the US — an obstacle that threatens to stall the clean energy revolution Joe Biden is trying to drive.
The project in focus is Cardinal-Hickory Creek, a 102-mile power line running through the Midwestern US that, if completed, will allow more than 100 renewable projects to come online.
But the line has been ensnared in multiple legal challenges and undergone steep cost increases since it was first proposed more than a decade ago. The troubles faced by CHC are a classic example of a story playing out in regions across the US: it is almost impossible to build the power lines that are essential for getting electricity from remote wind and solar facilities to consumers.
In the second item, Myles looks at the role clean energy is set to play in the president’s bid for four more years in the White House. And Data Drill looks at yesterday’s surge in natural gas prices, which showed supply disruption still has the potential to upend markets — a year after last year’s chaos.
Elsewhere, the FT ran a must-read deep-dive series this week on how the shift to renewables is transforming the economics and geopolitics of energy.
The first instalment picks apart how countries that produce the metals central to the transition want to rewrite the rules of extraction. The second is about how China came to dominate clean energy technology.
Thanks for reading. — Amanda
The big problem standing in the IRA’s way
The US is poised for a clean energy boom, but difficulty building power lines is threatening to stop the transition in its tracks.
Take Cardinal-Hickory Creek for example. The 102-mile transmission line spans the US upper midwest and has been embroiled in multiple legal disputes since it was first approved in 2011.
At issue is whether the line’s owners can build across a wildlife refuge and the neighbouring area known as Driftless. The focus is on 1.3 miles, just over 1 per cent of the line, but more than a hundred renewable energy projects — roughly 17GW of clean energy — are at stake.
Last month, a US circuit court overturned a ruling that blocked the building out of the line, a big victory for CHC after a four-year battle with local residents and environmental groups.
“This project is kind of a bellwether that a lot of the industry is watching right now,” said Ben Porath, chief operating officer of the Dairyland Power Cooperative, one of CHC’s developers.
The ruling angered local residents, who don’t want the unsightly infrastructure in their backyards, as well as environmental groups. Even though the project is in the interest of the climate, campaigners worry it will disturb the local habitat which has protected status.
“The Driftless area is a very special place, and it is heavily dependent on people’s satisfaction with the terrain,” Michael McDermott, a local resident, told me. A Democrat, McDermott is against the buildout of CHC, but he’s supportive of less centralised clean energy projects.
The nearly half a decade dispute has not only slowed the decarbonisation of the grid, but it has also been expensive. Legal costs and surging prices for materials such as steel have increased the estimated price tag of the project by nearly 20 per cent, a price that will fall to utility customers.
“We don’t build transmission for transmission’s sake,” said Beth Soholt, executive director of the Clean Grid Alliance, a regional clean energy lobbying group. “If we want this kind of [clean energy] future, it’s going to take this kind of infrastructure to build out.”
The story of Cardinal-Hickory Creek is emblematic of challenges facing the expansion of clean energy across the country as local, often conservative, communities grapple with the land developments needed for an electrified future and an outdated regulation system makes it difficult for projects to get built.
“There’s a real battle for the heart and soul of the political apparatus in these states about whether to embrace the economic opportunities associated with the energy transition. It’s a lot of questions around how much infrastructure are these communities willing to host?” said Abe Silverman, director of the non-technical barriers programme at Columbia University’s Center on Global Energy Policy.
Roughly 575 wind and solar projects in the US have been rejected so far in 2023, according to the Renewable Rejection Database, up 15 per cent from the entirety of last year.
Lack of transmission, or long-distance power lines, is becoming an existential issue for America’s net zero ambitions as more clean energy projects are announced and come online. One study from Princeton’s Zero Lab estimates that if the buildout of transmission continues at its current snail-like pace, it would negate roughly 80 per cent of all emissions reductions from the Inflation Reduction Act.
Despite Congress’ recent efforts to make permitting easier and the Federal Energy Regulatory Commission’s move to speed up waiting times for grid connection, analysts say these changes do little to move the needle in the grand scheme of things.
“We have a long way to go to address transmission here,” said Rob Gramlich, founder and president of Grid Strategies, a consultancy.
“Republicans as well as Democrats, want all of that economic activity to be in this country as opposed to other countries. Those economic activities are going to consume a lot of energy . . . I think a lot of members on both sides of the aisle will come around to the idea that we need the transmission infrastructure to support that increasingly electrified economy.”
Biden touts clean energy jobs as he hits the campaign trail
At a wind tower factory in New Mexico yesterday, Joe Biden made clear that he intends to put clean energy at the forefront of his re-election campaign.
But as he tours the country making the case for another four years, the focus of the president’s clean energy pitch will not be emissions and rising temperatures — but rather the economic boost created by his climate legislation.
“When I think climate I think jobs,” Biden told a crowd gathered at the Arcosa Wind Towers facility near the city of Belen, repeating a favourite phrase.
As we have written many times in this newsletter, Biden’s green push has always been as much about reinvigorating US manufacturing as it has been about decarbonisation.
And with polls suggesting Americans still aren’t sold on his handling of the economy and stubbornly high inflation gnawing at his approval ratings, the president has been increasingly keen to hammer home the transformative impact of his “Bidenomics” agenda.
“Not only does it move us away from fossil fuels to cleaner technologies like wind,” he said, referring to the IRA, “but it means we’re going to make things and new technology here in America. And there’s no reason why we can’t do it.”
Biden cited examples across the country of projects spurred by the IRA — which turns a year old next week — making sure to mention those in Republican districts.
He was quick to point out that Pueblo, Colorado, where CS Wind in April began construction of what is set to be the world’s biggest wind tower plant, is in the congressional district of GOP firebrand Lauren Boebert — “that very quiet Republican lady”.
“Along with every other Republican [she] voted against this bill that is making all of this possible,” said Biden. “She railed against its passage — but that’s OK, she’s welcoming it now.”
“The vast majority voted against the Bipartisan Infrastructure Act,” he continued, goading his Republican opponents over their insufficient support for another signature piece of legislation.
“But that hasn’t stopped them from claiming credit for the billions of dollars and thousands of jobs that are coming to their states. Like I said at the State of the Union address, we’ll see them at the groundbreaking.”
As campaigning gains steam, expect the rhetoric to do likewise.
Natural gas prices surged across the world yesterday as traders fretted over potential disruptions to liquefied natural gas supply from Australia after reports of brewing strike action at some plants.
In Europe, the benchmark TTF price rose 40 per cent to $43.31 per megawatt hour. US prices, meanwhile, topped $3/mmbtu for the first time since March, jumping 9 per cent to a high of $3.02/mmbtu. Both markers later pulled back.
As my colleague Shotaro Tani reports, the jitters make clear that — despite efforts to build up gas storage — the market remains wary of supply shocks a year after Vladimir Putin’s weaponisation of gas exports sent prices to record levels. (Myles McCormick)