Weekly Climate Recap: GETs, Methane Monitoring, EVs

Happy Sunday! The stories this week are personally quite interesting with a new analysis on one of my favourite group of technologies in the energy transition, Grid Enhancing Technologies leading the pack. Followed by an update on methane monitoring with an assortment of corporate and policy news. Finally, we dive into unravelling the EV doom and gloom that has been hanging over the industry like a dark cloud as of late.

⚙️ Doing More with Less — The Role of Grid Enhancing Technologies

If there is one thing I enjoy, it is getting more done with less effort required. Fittingly, I am a huge fan of Grid Enhancing Technologies or GETs. I have previously defined these GETs on the glossary section of my website and will link below with a short definition for we are all on the same page before diving into the rest of the story.

• Dynamic line ratings involve real-time adjustments of power line capacities based on environmental conditions.
• Advanced power flow control employs sophisticated methods for managing and optimizing the distribution and flow of electrical power within a network.
• Topology optimization systematically refines network structures to enhance efficiency and reliability in power systems.

A new report from the Rocky Mountain Institute, aptly titled “GETting Interconnected in PJM” dives into the role of GETs and how they can increase the pace of interconnection in the notoriously congested queue. The report highlight several key findings:

Key Finding 1: The headline figure is that GETs in PJM could enable 6.6 GW of new solar, wind, and storage projects to interconnect 2027. GETs would enable faster and cheaper volumes of generation to connect to the grid while also supporting reliability.

Key Finding 2: GETs are significantly cheaper than the typical network upgrades that PJM may have to undergo in order to add more generation onto the grid. Compared with the typical network upgrades like rebuilding a line or reconductoring, GETs deployment costs are US$272M to US$523M less.

Key Finding 3: The inclusion of GETs could enable production cost savings of US$1B by 2030. The reduction in congestion and inclusion of new generation would create positive value for consumers and bring down electricity prices.

RMI

So if the benefits of GETs are so clear, why are grid operators not pushing for their inclusion? The simple answer is the utility business model, one that revolves around the concept of the rate case. Essentially, a utility’s revenue is tied to an approved rate. Utilities discuss what investment in infrastructure is required to meet the grid’s needs and regulators decide what is necessary. Then the regulators determine based on the required capital expenditure, what the revenue requirement is. Due to this structure, utilities are incentivized to forecast large capital expenditures as that will drive more revenue for them.

GETs are cheap to deploy, their cost pales in comparison to the cost of building a new natural gas plant, transmission lines, or reconductoring. As such, utilities are not incentivized to prioritize on deployment of GETs despite the benefits that they bring to the grid and to consumer. Fortunately for us, FERC 2023 requires that utilities to use GETs.

Takeaway: GETs are a critical technology to help aid in the massive issue that is the interconnection process and lack of required transmission infrastructure to connect the massive backlog of resources in interconnection queues. For reference the Lawrence Berkeley National Laboratory estimates that there is over 1.2 GW of generation and over 650 MW of storage (greater than the ensure US electricity system) in the queue. With interconnection wait times and costs rising, doing more with less is with GETs is a value proposition that the US and the world in general cannot afford to be stuck behind utilities on. The report from RMI highlights what we already knew, that GETs are cheaper, faster, and superior to new build or reconductoring and present a lifeline to accelerate deployment of clean energy.

👓 Methane Monitoring Gets Busy

I promise that this story about methane will not include any references to agriculture being the LARGEST source of methane emissions and that the focus on methane emissions from the oil & gas industry is only a partial solution…

Avid readers of Weekly Climate Recap will recall a story I discussed in mid-January, a start-up called LongPath raised US$189M for methane monitoring from the ground. Well the world of methane monitoring has actually grown rapidly since then. Further, interesting policies and events have brought methane to the forefront of my climate thinking as of late. I want to use this story to recap the past few weeks.

To level set on methane, per the IEA, it is responsible for ~30% of the rise in global temperatures. Methane has two key characteristics, it remains in the atmosphere for a far shorter time than CO2 at approximately 12 years. Secondly, is is 80x worse for global warming than CO2. To that extent, addressing the emissions of methane should be a top priority given its outsized warming potential for our planet. Now into the news.

🚀 Google and EDF — In Space

The Environmental Defence Fund and Google announced a partnership last week to advance EDF’s MethaneSat project. Per Google, this project will use methane detecting algorithms with cloud computing and applying AI to satellite imagery to enable the goal of helping EDF quantify and trace methane emissions to their source point. The satellite will reportedly orbit Earth 15 times a day and scan for both high emitting sources and smaller sources. Similar to your favourite navigation tool, Google Maps, that uses AI to detect street features such as sidewalks, signs, and road names, MethaneSat’s AI will identify oil and gas infrastructure and combine it with EDF’s knowledge on oil and gas infrastructure to pin down emissions.

✈️ Kairos Aerospace — In the Air

Kairos, or as rebranded, Insight M, announced a successful US$52M Series D raise of capital. The company is focused on aerial methane detection, the use of spectrometers to measure the absorption of reflected sunlight by methane molecules. The company mounts their spectrometers on small planes and flies over oil and gas basins to collect data then analyzes the data to determine leak locations. Interestingly, Kairos Aerospace or Insight M, has a highlight on their website showing that they have saved US$277M in volume of gas for their customers. This one highlight is incredibly interesting as it shows that it may be marketing itself towards the carrot side of the spectrum, encouraging oil and gas companies to use the technology for the savings and incremental gas that can be sold.

🌲LongPath — On the Ground

As I discussed above, LongPath recently raised US$189M from the DOE. Where LongPath comes in for methane detection is for constant detection. While flying over oilfields with planes and satellites leave gaps in their detection, LongPath will be able to continuously monitor and fill the gaps between flyovers. Per the DOE announcement, this technology is expected to prevent methane emissions equivalent to at least six million tons of CO2 every year through enabling operators to respond quickly to leaks.

🚔 EPA Methane Emission Charges — The Stick

Right on time, the EPA is working on implementing annual methane emissions charges that are within our favourite, the Inflation Reduction Act through the Methane Emissions Reduction Program. Our friends at Kairos actually published a useful analysis of the Waste Emission Charge Rule here. Essentially, operators will be charged for each ton of methane that is emitted above the methane intensity threshold with fees starting at US$900/ton over the threshold in 2024 and increasing to US$1,200 in 2025 and US$1,500 in 2026 onwards. This applies to facilities that are emitting more than 25,000 tons of CO2e methane per year and thus should catalyze the industry to work with some of the companies mentioned above due to the financial incentive.

Takeaway: The methane monitoring business model is predicated on the government acting as the stick to punish the companies and assets that are emitting methane. While corporate social responsibility in internal environmental concerns may play a role in the monitoring of these emissions, as profit-seeking entities, these fossil fuel companies have incentive to maximize profits which, if allowed to, would result in them emitting freely. The US EPA Methane Emissions Reduction Program is a catalyst to turbocharge the deployment of methane monitoring. Another view is that the incremental losses from leakages impact the profitability and by plugging holes in their systems, they can sell more fossil fuels on the market. Regardless of corporate intention, the influx of funding to methane monitoring is a huge boon in the fight against emissions, especially given the potency of methane. I know I promised not to mention it again, but please, limit your consumption of animal products, they are the top contributor to methane emissions. With events like Nord Stream leak and the more recently detected Kazakhstan mega-leak, and continued leaks from infrastructure, it is critical to start knowing what we don’t know about leakages and emissions.

🔌 Behind the EV Doom

If you have been keeping up to date with electric vehicle news over the past month or so, you have likely been inundated with stories about how we have already reached peak EV in the US, how sales are declining, and that they have just been a temporary fad. A concerning trend given the fact that private cars and vans reportedly account for 10% of global energy-related CO2 emissions. In developed economies such as the US, this percentage rises to ~30% of emissions. It turns out that this doom and gloom just simply isn’t true.

New research and data from Clean Investment Monitor actually suggests the opposite in the US.

Clean Investment Monitor

Projections for sales of EVs came in at a share of 8.1% to 9.4% of total light-duty vehicle sales based on estimated from EI, REPEAT, and Rhodium. The actual figure according to initial data from Clean Investment Monitor suggests a share of 9.2%, concretely putting this figure at the upper end of the range. This growth expressed in a pure EV comparison way is that the growth rate in 2023 was 52.1%. On a unit basis, the US EIA projected 588,000 EV sales in 2023, the actual figure is estimated to be 1.43 million.

So what actually fuelled these stories and this belief that the EV transition was over. A couple of things:

• GM altering EV production guidance
• Ford scaling back EV production
• Mercedes-Benz backs off plans to only sell EVs by 2030
• Hertz changing the order for Teslas

Particularly on the Hertz note, the executives quoted increased repair costs. Though from regular use, the costs were lower, the increased amount of collisions resulted in higher repair costs overall. This was said to be attributable to the fact that the operation of an electric car is different than that of an ICE car given its faster acceleration. The story of Hertz and their Tesla decision is covered in great detail here.

While the above point to challenges, there are some serious issues with the media running with the story that EV demand died in my opinion as an over exaggeration. Actual challenges faced by the EV industry in my view are twofold:

• Charging: the network is in a bit of a chaotic state with problems of compatibility and reliability plaguing the availability of chargers. Canary Media has a great read on the subject here.
• Price Points: The passion for onshoring that the US has with the clean energy transition poses threats to the affordability and applicability of tax credits for EVs. Starting in fiscal year 2023, to qualify for the US$7,500 credit, regulations mandate that at least 50% of the value of battery components used in vehicles must be produced in North America, with annual increases. Additionally, 40% of the value of critical minerals utilized in electric vehicle (EV) manufacturing, such as cobalt, copper, nickel, graphite, and lithium, must be sourced domestically or from countries with free trade agreements, with the minimum percentage rising annually.

Takeaway For a longer and more in depth look at what is going on in EVs check out this podcast. In short, the growth is still there, despite the negative stories. In my home country of Canada, it is estimated that sales of ICE vehicles have actually peaked! When it comes to the energy transition, this is a particular bright spot for me despite the negative stories popping up as of late. While the optimal solution is to change our car centric infrastructure to walkable cities, decarbonizing electric vehicles is the second best option. There are frictions and there are positive aspects of the transition to EVs, same as every other industry undergoing the transition to a cleaner future, in my mind, these are growing pains and we are on the right path.

What Else is in the News

• The European Commission has approved €6.9 billion in state aid for hydrogen infrastructure projects in seven EU countries through the IPCEI Hy2Infra scheme. This funding will support 32 companies and 33 projects in electrolysis, pipelines, storage, and handling terminals to build a renewable hydrogen network. The aim is to establish regional infrastructure clusters and pave the way for future interconnections in line with the European Hydrogen Strategy. Public funding is set to unlock an additional €5.4 billion in private investments, with projects expected to be completed between 2026 and 2029, contributing to the development of renewable and low-carbon hydrogen across Europe.
• BOEM has designated two final Wind Energy Areas offshore Oregon, totalling approximately 195,012 acres with 2.4 GW of clean energy potential, to support the Biden-Harris administration’s goals for deploying offshore wind energy capacity. These areas were developed with extensive engagement and feedback to reduce conflicts with ocean users, particularly commercial fishing. BOEM plans to publish a notice for environmental assessment and potential lease sales in the designated areas, emphasizing coordination with the state, Tribes, and other stakeholders to ensure a transparent offshore wind planning process. Additionally, BOEM has partnered with NOAA to assess wind energy development opportunities while minimizing impacts on other ocean uses in Oregon. How effective this announcement will be in spurring new wind development largely revolves around a law that is over 100 years old that is hampering offshore wind deployment.
• Almost as if Joe Biden is an avid reader of my blog, the Biden Administration announced US$500M towards wildfires as announced on Feb 20. Last week I covered how air quality in the USA had started to worsen despite years of positive progress. The Biden administration will allocate $500 million to address wildfires, with $400 million from the Inflation Reduction Act and Bipartisan Infrastructure Law going to 21 high-risk landscapes identified by the Agriculture Department. The U.S. Forest Service’s Collaborative Wildfire Risk Reduction Program will receive the remaining funds to focus on risk mitigation outside priority areas. Secretary Vilsack emphasized the importance of this funding for building local capacity in wildland urban interface areas and highlighted the necessity of Congress finalizing a budget to support ongoing firefighting efforts. The administration sees this investment as crucial for mitigating climate change-related risks and reducing the impact of wildfires in the U.S.