solar power – JKempEnergy.com

Best in Energy – 19 April 2023

Russia oil price cap comes under strain (Reuters)

Tesla cuts prices again to boost sales (Bloomberg)

Brazil’s rising distributed solar generation (EIA)

Europe gas inventories at comfortable level (FT)

Dealmakers focus on Permian oil firms (Reuters)

U.K. forecasts enough gas this summer (Reuters)

NORTHERN INDIA’s temperatures have risen faster than normal since the start of April. Average daily temperatures in the New Delhi suburb of Palam reached 33.4°C on April 18 up from 20.7°C on March 31. Temperatures have been above the long-term seasonal average every day since April 14 after being continuously below average for almost a month between March 17 and April 13. So far, the transmission network has coped with the rapid increase in demand for refrigeration and air-conditioning. Network frequency has dipped as temperatures climb but remains reasonably close to the target of 50.0o Hz. Periods of severe under-frequency below 49.90 Hz are generally around 12% or less each day, which is fairly typical in India:

Best in Energy – 14 March 2023

U.S./EU economies boosted by lower energy prices ($WSJ)

Global LNG market balance becomes less clear after 2027

European steelmakers restart selected blast furnaces

Russia/India crude oil flows and market price reporting

Philippines set for big rise in wind and solar generation

U.S. ethane consumption by petrochemicals makers

Silicon Valley recriminations over bank failure ($FT)

U.S. central bank’s favourable collateral loans ($WSJ)

U.S. INTEREST RATE traders no longer expect the central bank to lift rates further following the failure of Silicon Valley Bank, with overnight rates expected to start falling from July onwards, as credit conditions tighten and force a slowdown in the economy. The path for interest rates over the rest of 2023/24 is now forecast to be much lower.

But the outcome of a financial failure is notoriously difficult to predict since it depends largely on confidence. Some failures are resolved quickly with little or no impact on the rest of the financial system and the real economy. In other cases, contagion occurs and the economic impact is significant:

EUROPE’s gas storage sites are 56.5% full, the second-highest on record for the time of year, well above the prior ten-year seasonal average of 36.3%. The end of the winter heating and inventory depletion season is now very near (with stocks usually hitting a minimum on March 30 ± 14 days):

Best in Energy – 7 March 2023

OPEC/U.S. shale firms discuss tight capacity

EU to launch joint gas buying system ($BBG)

China’s next premier will be Li Qiang

BP resets renewable energy strategy

South Korea boosts coal-fired power

Russia’s crude shipped to Middle East

U.S. Customs clears China solar panels

U.S. solar generation and wind farms

U.S. oil firms to get CCS subsidies (FT)

India trade pivots to U.S. allies ($WSJ)

U.S. recession postponed again ($WSJ)

U.S./China relations deteriorate ($FT)

U.S./China escalation strategies ($FT)

U.S. INTEREST RATE traders continue to boost their expectations for benchmark short rates at the end of the year as the central bank signals rates may have to go higher and stay there for longer to bring inflation back to target. Rates are now expected to be around 5.25-5.50% in December 2023 up from an expectation of 4.25-4.50% at the start of February:

COMMITMENT OF TRADERS reports – the U.S. Commodity Futures Trading Commission (CFTC) and ICE Futures Europe suspended publication of their commitments of traders reports in late January following a ransomware attack on a major market participant and infrastructure provider which resulted in incomplete submissions. Both are now starting to catch up with the backlog of missed weekly reports. ICE has caught up; the CFTC is still some weeks behind. I am not going to publish a weekly analysis again until they have both caught up fully since the reports now contain very out of date information. For reference, however, the hedge fund and money manager positions on February 7, the most recent currently available, are shown below:

Best in Energy – 2 March 2023

Global CO₂ emissions hit record high in 2022

India refinery processing hits seasonal record

Latin America accelerates solar deployment

U.S. gas turbines reach record operating rate

Argentina experiences mass blackout

United States explores more China sanctions

Passenger aviation demand stays high ($FT)

U.S. rail freight weakened further in February

China prepares economic team overhaul ($FT)

U.S. MANUFACTURERS reported business activity declined in February for the fourth month running. The ISM composite activity index was 47.7 in February up marginally from 47.4 in January but both readings were in only the 16th percentile for all months since 1980. New orders fell for the sixth month in a row. The new orders sub-index (47.0) was in only the 14th percentile for all months since 1980:

U.S. DISTILLATE inventories were unchanged over the seven days ending on February 24. Stocks were -14 million barrels (-11% or -0.87 standard deviations) below the prior ten-year seasonal average but the deficit has narrowed from -31 million barrels (-22% or -2.5 standard deviations) on October 7:

Best in Energy – 16 February 2023

China plans record solar deployment

Shell’s LNG market outlook for 2023

Sri Lanka hikes power prices by 66%

U.S. gas prices drop in warm January

U.S. energy transition subsidies ($FT)

Truck-makers explore hydrogen fuel cells

Norway examines restricting power exports

U.S. economic data and nonresponse ($BBG)

U.S. PETROLEUM INVENTORIES including the strategic reserve surged by +19 million barrels in the seven days ending on February 10. There was a huge accumulation in reported stocks of crude (+16 million barrels) with smaller increases in gasoline (+2 million) and jet fuel (+1 million) partly offset by a drawdown in distillate fuel oil (-1 million).

Total inventories were still -243 million barrels (-13% or -2.26 standard deviations) below the prior ten-year seasonal average. But stocks have been trending higher since late December and the deficit to the seasonal average is staring to narrow:

Best in Energy – 11 January 2023

U.S. energy transition hits workforce shortage

FedEx cuts parcel deliveries on falling demand

India considers temporarily lifting solar tariffs

Europe’s mild winter increases drought threat

EU regulator launches LNG price assessment

Plastics boost petroleum consumption ($BBG)

Chesapeake’s recovery after insolvency ($WSJ)

U.S. electricity price volatility

Quantum computing ($FT)

EUROPE’s gas inventories are rapidly nearing a record high for the time of year following warmer than normal temperatures and reductions in industrial consumption. EU28 inventories were 937 TWh on January 9 closing in on the seasonal record of 944 TWh set in winter 2019/20.

Stocks were +247 TWh (+36% or +2.37 standard deviations) above the prior ten-year seasonal average up from a surplus of +92 TWh (+10% or +0.86 standard deviations) at the start of the winter season on October 1. The storage surplus is still increasing.

Inventories are projected to reach a post-winter low of 591 TWh with a probable range of 460 TWh to 749 TWh. If that proves correct, storage facilities would end the winter 52% full, with a likely range from 41% to as much as 66%:

Best in Energy – 13 December 2022

EU agrees carbon border tariff in principle

China deletes epidemic phone tracking app

China faces exit wave of infections ($BBG)

China’s internal aviation rebounds ($BBG)

U.S. shale oil revolution is maturing ($BBG)

Turkish Straits re-open to oil tankers ($BBG)

U.S. solar roll out slows on trade restrictions

U.K. grid cancels stand-by notices for coal units

Battery materials technology

COAL-FIRED generators typically require 2-3 hours from initial notification to reach full power from a hot start, 6-7 hours from a warm start, and 10 or more hours from a cold start. Assuming the two massive coal units at Drax are typical, if the U.K. transmission operator wants them to be available during the evening peak from 1600 to 1900 GMT, notice to light up and begin warming must be given by 0600 GMT. If the forecast reserve margin improves during the day, however, the stand-by notices can be cancelled later, as happened on December 12.

The table below shows typical timelines for coal-fired and gas-fired generators showing how it takes (1) from initial notification from the grid controller to synchronisation with the grid – at which point the generator can start providing power to the network; and (2) from synchronisation to reaching maximum power output (“Technical Assessment of the Operation of Coal & Gas Fired Plants,” Parsons-Brinckerhoff for the U.K. Department of Energy, 2014):

LONDON and southeast United Kingdom are now a quarter of the way through the typical heating season. After an exceptionally warm period from mid-October to late November, which depressed heating demand, temperatures have plunged far below normal, erasing the earlier deficit in degree days, and putting winter heating demand on an entirely different trajectory:

Best in Energy – 18 November 2022

India’s coal-fired generation rises over 10%

China solar installers hit by lockdowns ($BBG)

China food and energy security focus (trans.)

Hess chief marks the end of shale revolution

U.S. heating oil prices up 65% from year ago

Australia’s changing defence strategy ($FT)

Qatar Energy – company profile and ($FT)

BRENT’s six-month calendar spread has fallen to a backwardation of $4.90 per barrel (95th percentile for all trading days since 1990) down from $7.60 (98th percentile) a month ago and a record over $15-20 in the first months after Russia’s invasion of Ukraine. The softening spread is consistent with a recession in Europe and China, possibly spreading across the rest of the world, easing pressure on oil supplies in 2023:

U.S. TREASURY yield curve is now more inverted between two-year and ten-year maturities than at any time since September 1981 at the start of the second instalment of the double-dip recession. U.S. interest rate traders anticipate an exceptionally rapid turn around in monetary policy. Such a rapid pivot is consistent with a soft-landing allowing the central bank to unwind rate rises quickly, or because a hard-landing eliminates inflation and requires it to support growth and employment instead:

Best in Energy – 12 August 2022

Australia presses producers to reserve gas for local market

Crypto-mining and electricity demand response

U.S. solar generation installations delayed

U.S./China try to manage Taiwan tensions ($WSJ)

U.S./Iran attempt to finalise nuclear accord ($WSJ)

EUROPE’s GAS INVENTORIES are well above the seasonal average and accumulating at a record or near-record rate as the region attempts to maximise its seasonal storage ahead of the winter and a possible disruption to gas imports from Russia.

EU28 gas inventories have risen to 823 TWh up from a post-winter low of 291 TWh on March 19.

Stocks are +62 TWh above the prior ten-year seasonal average (+8% or +0.48 standard deviations).

The increase in inventories to date from the post-winter low (+532 TWh) is the largest for at least ten years.

Inventories accumulated at an average rate of 6 TWh per day over the seven days to August 10, among the fastest seasonal increases in the last decade.

Inventories are on course to reach 995 TWh by the end of the refill season (with a likely range of 915-1069 TWh).

Expected post-summer stocks are significantly higher than the 878 TWh anticipated at the start of the refill season on April 1 (710-1066 TWh).

Expected post-summer inventories have steadily risen as operators have filled storage irrespective of prices.

Expected post-summer stocks are +63 TWh (+7%) above the prior ten-year average (932 TWh).

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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.