November 2023 Cleantech Roundup: Offshore Wind, Nuclear Cancellations | Federal Purchase Commitments | Lithium Extraction | Transformers
This month, we look at challenges deploying large low carbon power generation in the US, large purchase commitments from the federal government, a new role for oil and gas companies in the energy transition, and more!
Major Low-Carbon Energy Project Cancellations
Unfortunately it was a rough month for major offshore wind and next generation nuclear projects, with developer Orsted canceling a major project off the coast of New Jersey and nuclear developer NuScale canceling their project in Utah. There is enormous opportunity for both the technologies, and we need a whole lot of low carbon power. There remain significant challenges, although not necessarily fundamental technology ones (there’s a bunch of offshore wind in Europe). On the wind front, as far as I can tell some of this bad news has more to do with supply chain constraints and changing macroeconomic financial conditions, especially rates (projects were modeled under one set of assumptions and then things changed). That said, even if the projects are fundamentally sound, these delays mean we’re not ramping up the rate we need to be building renewables to meet our climate goals.
The cancellation of the NuScale project came down to it being too expensive. While folks will pay more today for firm dispatchable power in power purchase agreements (as opposed to more variable wind and solar), there’s not a broader regulatory/market mechanism to compensate new dispatchable low carbon power generation for it’s specific attribute, even though it is super valuable (there are tax credits, but not specific to being dispatchable). Princeton’s Jesse Jenkines has long made the case that making sure we have some (more expensive) low carbon firm power will actually be cheaper in the long run (than relying on just the cheapest, because it’s harder to solve for a fully decarbonized grid with just wind and solar).
Federal Government Doing Stuff that Makes Sense
With a new mechanism from the infrastructure law, the Department of Energy (DOE) is buying capacity on some upcoming transmission lines. This alone doesn’t ensure they are built, but it helps resolve some of the chicken and egg issues with building large transmission lines (where customers don’t want to sign up if they don’t know if the project is going to happen, but this reticence sometimes prevents it from going forward — here the government can serve as an anchor customer, and then just sell the capacity in the future. This is useful blocking and tackling stuff. Speaking of blocking and tackling, DOE is also funding $84 million worth of grid enhancing technologies, like dynamic line rating, which can enable existing transmission lines to carry more electricity — makes sense!
Meanwhile, the General Services Administration is committing $2B towards purchases of lower carbon building materials. The government builds a lot of buildings (largest real estate owner in the country I believe), and is an ideal early customer for lower embodied carbon materials.
The common thread here is that the federal government is leveraging its unique position to make purchase commitments (similar to Frontier Climate’s advance market commitments for carbon removal) to help enable and scale important market segments for the energy transition in catalytic fashion.
Resource Extraction? Energy Transition? Both?
Exxon announced it is drilling for lithium brine in southwest Arkansas, where there is a deposit that could potentially be a major source of the material for the energy transition. Exxon hasn’t been making a lot of moves in the energy transition space so it’s interesting to see this announcement, and is understandable from a strategic perspective — it’s drilling to extract resources under the ground, something Exxon is pretty familiar with.
Transformers — More Than Meets the Eye
With the growth in renewable energy projects, the supply chain for transformers is challenged — with some projects facing 3-year waits for equipment (hat tip Erik Birkerts for flagging this news).
So Hot Right Now
MIT Technology Review highlights their 15 climate tech companies to watch in 2023, including previously mentioned NuScale, Orsted, as well as other interesting deeptech climate solutions companies like Fervo (geothermal), Blue Frontier (air conditioning technology innovation), and Form Energy (long duration storage).
So Hot Right Now
The Fifth National Climate Assessment was published by the federal government — it seeks to address how climate change is affecting Americans. Here in the Midwest, it’s a mixed back — there’s more rain, which is good for crops but bad for water infrastructure. And, as the winters warm, there are more disease carrying bugs.
California Dreamin’ (of Carbon Removal)
The first commercial direct air capture plant opened in California by Heirloom, to do carbon removal — the beginning of a new industry in America.
Latitude
There’s a new climate media publication from Greentech Media alum Stephen Lacey, Latitude Media. It is covering emerging climate tech spaces, such as the new Heirloom plant and carbon removal more generally.
Going Nuclear
Illinois reversed a ban the state had on new nuclear for several decades to enable the potential development of small modular reactors, but not large scale traditional nuclear plants (although it’s federal regulatory/permitting issues that are the main hurdle for these projects to clear).
