Addressing the Mess

Good morning and happy Friday,

In this week’s headlines, New York approved a new transmission?cost analysis approach, New England is exploring a?winter reliability program?with the FERC, and researchers are taking a micro-level look at why?clean energy recycling is complicated.?

Also, hot off the presses, the IEA World Energy Investment Report saw a record?$1.4 trillion investment in clean energy in 2022, marking exciting growth for the industry.?

Read on for more.

Addressing the Mess

At the end of last year, there were over 1,400 GW of generation and storage waiting in the interconnection queue, and the transmission system couldn’t keep up. After months of collective chaos over the grid backlog, the FERC has come to a unanimous conclusion on how to?address the backlog mess?and help projects connect to the queue in an efficient, timely manner. The proposed rules:

• Use a first-ready, first-served cluster process.?Transmission providers will conduct larger studies on multiple shovel-ready projects to increase efficiency of the review process.?
• Speed up the interconnection queue processing times.?Firm deadlines and delay penalties will help keep transmission providers on deadline.?
• Update requirements for system reliability.?New modeling and performance standards for non-synchronous generating facilities will help the flow of the changing resource mix.?
• Upgrade technology in the interconnection process.?To remove barriers for co-located resources, transmission providers will be required to let multiple resources locate on sites and share interconnection requests.

?? The Takeaway

One step forward.?These proposed rules adopt many of the reforms long sought by renewables advocates and should help streamline and speed up the queue. However, there’s one missing piece: cost allocation. The question of who will bear the costs of grid upgrades remains unresolved. It’s significant progress, but there’s still major work to be done.

Supply Chain Saga

Last year, over 100 MW worth of solar panels were blocked from entering the U.S. due to suspected ties to Hoshine Silicon Industry, a supplier based in China’s Xinjiang province. Hoshine was identified as using forced labor, leading to restricted imports connected to the company. Now, U.S. restrictions are tightening even further and the solar industry is working to prove its panels come from?an ethical supply chain. Where things stand:

• The Uyghur Forced Labor Prevention Act was passed by Congress and signed by Biden last year. It extends an import ban to anything produced in or using materials from the Xinjiang region.?
• It’s not entirely certain how the U.S Customs and Border Protection (CPB) will enforce the law. The impact of the legislation will largely depend on their enforcement strategy.?
• To improve traceability in the solar supply chain, the CPB advised that companies importing products using polysilicon must provide complete supply-chain documents that detail products’ manufacturers, manipulators, exporters, and country of origin for each material.

?? The Takeaway

The bar is set, but will it be met??It is unclear how smooth the new process of tracing panels and materials will go. Solar companies will have to put together extremely granular accounts of their supply chain to prove that no component was made with forced labor. From individual cells to source polysilicon, there will be supply chain gymnastics to thoroughly trace each part.?

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Pumping Profits

For consumers, Russia’s invasion of Ukraine led to troubling gas prices. For oil giants, it led to a financial windfall in booming profits.?They are pumping profits?– Shell reported a record $9.1 billion quarterly profit despite $4 billion in losses related to its leaving Russia. BP also broke company records despite losing $26 billion for leaving Russia. Exxon doubled its profits from last year, and Chevron’s quadrupled.

Now, all four companies plan to return money to investors by boosting share buybacks and raising dividends. The excess profits also illustrate how dependent the global economy is on fossil fuels. It’s an interesting trend in windfall, and time will tell if these tides work in the O&G giants’ favor.