Best in Energy – 21 July 2022

Russia restarts Nord Stream 1 gas pipeline

China doubles new solar power installations

EU urges member states to cut gas use by 15%

Shell chief discusses transition strategy ($FT)

EU energy system strained by heatwave ($FT)

China enters main flood season (trans.)

U.K. homes are worst in western Europe

What does an energy crisis look like in real-time to contemporary observers? The following secret diplomatic cable sent from the U.S. embassy in London to Washington on 7 February 1947 and reproduced in the Foreign Relations of the United States (FRUS, 1947, Volume 3, pages 487-489) illustrates how Britain’s coal and electricity crisis in the winter of 1946/47 appeared to observers at the time, without the colour of hindsight:

Telegram to the U.S. Secretary of State from the U.S. Chargé d’Affaires in the United Kingdom

7 February 1947

SECRET

Shinwell, Minister Fuel, announced in Parliament today that beginning Monday no power would be furnished industrial consumers in London, southeastern, midland and northwestern areas, that power to all domestic consumers these areas would be cut off between 9 and 12 a.m. and 2 and 4 p.m. Drastic step taken in order to assure maintenance of power such essential services as sewage, water, lighting, hospitals, bakeries, etc.

Immediate cause emergency is snow and cold weather of past weeks which has nearly paralyzed road, rail and coastwise traffic and disrupted coal movement. Basic cause is shortage of coal stocks which country entered winter on November 1 and which has resulted in steadily worsening crisis ever since cold snap mid-December. Duration of emergency measures will depend on weather improvements but even after that it will take several weeks to build up coal stocks in order to provide general power requirements.

Meanwhile, industrial concerns throughout country whose deliveries had already been cut in mid-January to 75% in case of iron and steel and 50% all other industries, are rapidly exhausting their stocks, and press each day carries accounts of new factory close downs and production curtailment. Although government has not given out figures, in our opinion number unemployed already numbers over 100,000 with considerably larger number on short-time work, and effect of paragraph 1 will be to put several million out of work next week in affected areas. To make matters worse many households have already exhausted their yearly coal allocation which should have lasted until May 1.

Although coal traffic has been given priority on all rail lines traffic disruption has caused shortage of coal cars at the pits and forced serious curtailment coal production. Output in Yorkshire, largest producing area in Britain, is down 50% this week, other areas somewhat less.

In our opinion coal stock exhaustion throughout country is now such, that even with improved weather, the country can only limp through until mid-April. For until then country must live on current coal output which is not sufficient to meet winter needs, even if substantial increase in output, which occurred after January 1 when the mines formally passed into public ownership, is maintained when transport becomes normal.

Also in our opinion, government is now facing its first real loss of public support. Failure of production and export drive to forge ahead during past two months has already caused widespread misgivings, and with production and export declines inevitable during next three months in view coal position, we do not see how government can continue maintain popularity at same high levels during past 19 months. We do not, however, anticipate any government crisis or any attempt to form a coalition and discount all rumours to this effect. Only bright spot for the government is that Labor MPs who led the rebellion against Bevin’s foreign policy last fall and meant to renew their attack when Parliament resumed on January 21, have decided hold their fire in view of serious domestic situation in order not to embarrass government further.

Best in Energy – 20 July 2022

EU asks member countries to cut gas consumption

EU countries most vulnerable to Russian gas cut off

(see also IMF working paper on gas shut off impact)

EU/Russia sanctions eased on food-related exports

Electric-vehicle charger market is growing rapidly

Bangladesh to start rationing electricity and gasoline

China boosts oil imports from Russia at Saudi expense

LONDON’s brief but exceptional heatwave has already ended, but 24-hour temperatures on both July 18 (27.3°C) and July 19 (27.4°C) were more than +8°C above the long-term seasonal average, straining transportation infrastructure and the electrical network.

In a normal year, London temperatures peak between July 20 and August 5, the result of seasonal lag. But weather conditions this year coincided with and compounded the normal seasonal peak pushing daily temperatures far above normal. Temperatures on both days were 2.2-2.6 standard deviations above the 2013-2021 average:

U.S REAL AVERAGE WEEKLY EARNINGS were down by almost -4.5% in June 2022 compared with June 2021, as inflation outstripped wage increases, underscoring the intensity of the squeeze on incomes and spending power:

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Best in Energy – 18 July 2022

[MUST READ] Europe must reduce gas consumption now, warns IEA

Russia/Europe locked in economic war of attrition ($WSJ)

Texas deploys power grid emergency measures ($BBG)¹

U.S./GCC summit ends with more oil output uncertain

Hebei’s efforts to reverse groundwater depletion (trans.)

¹ Power grid managers in Texas and elsewhere have a variety of tools to cope with an imminent emergency caused by insufficient generation, including orders to generators for “maximum generation” (mandating output from individual units above their normal recommended operating levels); “no touch” (prohibiting all but critical maintenance and repairs to enable maximum generation and transmission); “reliability must-run” (requiring and paying units to run regardless of their normal economics); and “system-to-system” mutual aid (requesting maximum imports from neighbouring networks). The isolated nature of the Texas grid restricts STS opportunities for ERCOT but it is frequently used in other networks. On the demand side, grid managers can invoke voluntary demand reduction contracts, issue public appeals for conservation, order voltage reductions (usually in two stages), and in the final resort use forcible disconnection, loading shedding and rotating blackouts.

LONDON temperatures have started to ramp towards a likely record on Monday and Tuesday, as the heat builds over southeast England, with each day’s temperature profile hotter the last:

U.S. CRUDE oil inventories around the NYMEX WTI delivery point at Cushing in Oklahoma stand at just 21.6 million bbl, the lowest seasonal level since 2014 and before that 2008, when front-month WTI prices were at $122 and $170 respectively adjusted for inflation:

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Best in Energy – 28 June 2022

France calls for easing sanctions on Iran, Venezuela

Australia’s coal miners seek higher contract prices

G7 summit defers price capping of Russia oil

OPEC production close to maximum capacity

China’s northern grid regions hit record load

China probes coal price manipulation (trans.)

Triple La Niña event possible in 2022 (trans.)

EU28 GAS INVENTORIES are accumulating at a relatively rapid rate of +5.2 TWh per day, notwithstanding the recent interruptions of pipeline supplies from Russia, compared with an average rate of +4.8 TWh per day over the previous ten years: 

CHINA’s central-northern region stretching from Ningxia and Gansu in the west to Henan and Shandong in the east, but not including Beijing and the wider Jīng-Jīn-Jì metropolitan region, has been experiencing temperatures well above normal, leading to record electricity consumption in recent weeks. The map also shows below normal temperatures in the south where the monsoon rains have been unusually heavy:

JAPAN has called for electricity conservation especially in Tokyo as temperatures have risen more than +6°C above the long-term seasonal average in recent days and the strong air-conditioning and refrigeration demand has strained the availability of power supplies:

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