Welcome back to Energy Source — coming to you today from sweltering New Orleans.
I am in town for the American Clean Power Association’s annual conference, the US’s biggest green confab, dubbed by one executive as “clean energy Coachella”.
The gathering has never been bigger — with more than 8,000 attendees descending on the city, from family-run equipment makers and cleantech bros to big renewables developers and utility colossuses. As capital flows into the sector at an unprecedented rate in the wake of the Inflation Reduction Act, the event’s ballooning size is no surprise. To paraphrase Kermit the frog, it’s never been easier to be green.
But the clean energy industry is no longer the preserve of just well-meaning environmentalists. Today, Big Green is big business. And the industry came to town with plenty of gripes — and demands.
Meanwhile, on the far side of the world, a spat is unfolding 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. A host of US and EU lawmakers want him out. My colleagues Aime and Camilla have the latest.
In today’s newsletter, I dive into some of the big themes that have emerged from the ACP conference. In Data Drill, Derek returns to hydrocarbons and gives a rundown of the US’s biggest private drillers — a shopping list, perhaps, for Big Oil on the hunt for inventory.
Thanks for reading — Myles
Top themes from the green get-together in NOLA
The IRA cleantech supercharge is on
John Podesta — the man charged by the president with implementing the green revolution — took to the stage at the opening of the conference to proclaim “there’s never been a better time for clean energy in America”.
“Nearly every day there’s news of yet another new clean energy investment,” he said to cheers from the crowd.
He is not wrong. This week Enel announced it had selected Oklahoma for a $1bn solar panel manufacturing facility, while GE announced a massive buildout of a wind turbine parts assembly line in Schenectady.
More than $100bn worth of green investments have been announced since the passage of the IRA nine months ago as tax credits stretching out over a 10-year horizon unleash a flood of capital.
“It’s extraordinarily exciting to think about the growth that you can plan for over a decade,” said Craig Cornelius, chief executive of Clearway Energy, one of the country’s biggest developers. “We haven’t been able to do that in the history of [this industry].”
Praise for the IRA was exuberant. But in panel discussions and conversations on the conference sidelines, talk quickly turned to the headwinds holding the sector back.
But it takes too long to get things built
First among the complaints was the time involved in making projects a reality.
The plethora of approvals needed at the local, state and federal level, from a host of different bodies and agencies means it can take a decade-plus to get projects over the line.
That is true not just of big wind and solar developments, which need permits from agencies ranging from the US Fish and Wildlife Service to the Army Corps of Engineers, as well as state and county level green lights, but in particular it is a problem for the transmission lines needed to send electrons across the country.
“There is a fundamental question of the capacity of this nation to build big things quickly,” said ACP chief Jason Grumet. “We have particular trouble with what we call linear infrastructure — anything that has to transgress across multiple jurisdictions — is so much harder because you literally need to have every single process line up in this perfect moment.”
Developers also bemoaned lengthy queues in getting projects hooked up to the grid as regional grid operators are overwhelmed with applications. The backlog is hindering investment.
Various bills to streamline the permitting process have been kicking around in Congress. But none has yet gained sufficient political traction. There is hope that there can be bipartisan agreement on a permitting reform package before the year is out. Without that, attendees said, the aims of the IRA will ultimately be left unrealised.
“We need to do better and we can do better and we should do better if we really want to capitalise on the potential of this industry — especially with this bill that was recently passed,” said David Hardy, US head of wind developer Orsted.
And it is too difficult to get hold of parts
Then there is the supply chain problem — a particular bone of contention for the solar industry.
Icy relations between the US and China are a constant headache — given that the latter is responsible for manufacturing the vast majority of solar wafers and modules.
Hefty US antidumping tariffs on Chinese parts are set to be extended in many cases to parts coming from south-east Asia after a Department of Commerce probe found companies were using this as a backdoor route. (The White House has frozen any such extension until next year).
But separate rules prohibiting imports linked to forced labour have led to parts being impounded by customs officials for lengthy periods while their providence is investigated.
The IRA has thrown subsidies at creating a domestic solar parts supply chain. But it will take time to wean the industry off reliance on China.
“People will move these factories here because of the incentives,” said Leo Moreno, president of AES Clean Energy, a major clean energy developer. “They will move these wafers and cells and module factories to the US but it will take years.”
“Between now and the date when these facilities are online, the supply chain is still constrained. There are still several suppliers that can’t bring product to the US.”
Of solar developments that were supposed to be brought online in the US last year, 40 per cent were delayed, according to the ACP. The industry fears a cliff edge when tariffs are extended next year before a domestic industry has taken root.
Still, ‘Big Green’ has arrived
Yet between the beers and bons temps, the conference was underpinned by a sense that the clean energy industry was no longer just along for the ride.
A rag tag bunch of activists and do-gooders this was not. The industry is now organised and a force to be reckoned with in Washington. This month, the ACP even announced that it had hired Frank Macchiarola from his role as a champion of fossil fuel deregulation at the American Petroleum Institute.
Big Green has big demands of the US’s political elite — it wants to be at the table. And it has big plans to make big money.
ACP’s Grumet said: “I think it’s fair to say that the last 20 years the people who’ve been the most prominent — the people in some ways who have been most successful — they’ve been the fighters.”
“For the next 20 years the people who are going to be the most successful are going to be the builders and the fixers and the developers.”
For public companies hunting for growth, Enverus’s new catalogue of the largest 100 private oil and gas producers is practically an M&A target list.
That’s because compared with their public rivals, private-equity backed companies face less scrutiny of their environmental performance and aren’t under the same Wall Street pressure to hold back spending. Many are also secretive, family-owned fiefdoms. And they have been increasing output — and cash flow — in recent months to entice a buyout.
And they have grown big. Data that supports the list below shows that the top 100 private US oil companies produce about 2.4mn barrels a day, about 20 per cent of the country’s total and not far off the output of Opec powerhouse Kuwait. They also pump about a third of the US’s total natural gas production.
Continental Resources, which shale pioneer Harold Hamm took private last year, is the US’s biggest private oil producer, pumping 280,000 b/d. It’s also a natural gas powerhouse. Second and third place are held by Permian producers Mewbourne Oil and Endeavor Energy — hardly household names beyond West Texas. Collectively, the top five produce more oil than the UK.
Energy Source is written and edited by Derek Brower, Myles McCormick, Justin Jacobs, Amanda Chu and Emily Goldberg. Reach us at [email protected] and follow us on Twitter at @FTEnergy. Catch up on past editions of the newsletter here.