Energy Industry Verdict 2023: Dead Infrastructure Development in the OECD

The energy industry in 2023 faced significant challenges, particularly in infrastructure projects within OECD countries. The Federal Energy Regulatory Commission's (FERC) rule encapsulated the core issue of this energy transition. FERC’s Order 2023, issued on July 28, 2023, aimed to address interconnection processes that delayed generation and energy storage projects. The rule followed a "first-ready, first-served" cluster study approach for grid upgrades and introduced increased financial commitments for interconnection customers. However, the rule did not fully address the fundamental issues of high interconnection costs and delays.

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Interconnection queues around the country grew 40% in 2022 compared with the year before, with more than 10,000 projects — representing 1,350 GW of generation and 680 GW of storage — waiting for approval to connect to the grid. The vast majority of the planned projects are solar, storage and wind. The typical project built in 2022 took five years from its interconnection request to commercial operations, up from three years in 2015. FERC's acting Chairman Willie Phillips stated, “We've seen long [interconnection] wait lines, which is hurting our reliability, hurting our resilience, and raising costs for all customers”1.

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In societies valuing transparency and fairness, the democratic process ensures extensive procedures for public projects. This complexity often results in delays, particularly in infrastructure essential for the energy transition. The delay in infrastructure projects is a global issue, as evidenced by similar challenges faced in the European Union (EU). The EU's ambitious energy transition goals have frequently clashed with the bureaucratic and regulatory hurdles that slow down project implementation.

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In Germany, for instance, as of October 24, 2023, six times more renewables projects were stuck in permitting than there were under construction, largely due to local opposition. The German government was not on track to meet its net-zero emissions by 2045 target at the end of 2022. Only 2GW of new solar and wind-power capacity was being built in Germany, compared with more than 8GW each in Spain and the UK, which are Europe’s leaders. Permitting times across Europe were so slow that they exceeded the EU limit, and this was also true in Germany. In 2022, Germany’s onshore wind-generation capacity expanded by a negligible amount, and local opposition to renewables projects remained an obstacle.

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The Netherlands has also faced delays in offshore wind farm projects due to regulatory and environmental concerns. The Dutch government has set a target of having at least 4.5 GW’s worth of offshore wind turbines in operation by 2023?. However, the permitting process has been slow and complex, resulting in wind farms with a total capacity of more than 10 GW waiting for approval. Licenses for wind parks now take two to four years to come, as opposed to 10 months previously. Despite these challenges, the Netherlands is making progress. In 2022 and 2023, the wind farms in the Hollandse Kust (zuid) wind farm zone were the first subsidy-free operational wind farms in the world. The next offshore wind farm tenders will open at the end of February 2024. These concern the IJmuiden Ver Wind Farm Sites Alpha and Beta, which combined account for 4 GW. IJmuiden Ver (noord) V and VI and Nederwiek (zuid) I are scheduled to be auctioned off in the second quarter of 2025.

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Amidst these challenges, Standard Carbon ’s technology offers a solution by enabling the creation of self-sufficient renewable energy microgrids. These microgrids can operate independently of the main grid, bypassing extensive backlogs in grid interconnection processes. Standard Carbon’s process transforms green hydrogen and CO2 into renewable natural gas (RNG), converting renewable assets into dispatchable power. This capacity is crucial for grid stability amid rising peak demand and generator retirements.

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By operating independently of the main grid, Standard Carbon’s microgrids avoid interconnection delays, facilitating quicker deployment and integration of renewable energy resources. Standard Carbon’s technology aligns with the climate and security goals of OECD countries, providing a sustainable and reliable energy source without the lengthy processes involved in public infrastructure projects. The technology offers an economically viable model that can be scaled to meet the growing energy needs of various regions.

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Technically, Standard Carbon’s process involves mechanisms for converting green hydrogen and CO2 into RNG. This process not only ensures grid stability but also enhances the storage capabilities of renewable energy sources. Financially, Standard Carbon's approach is viable due to the increasing value of RNG in the energy market. The intrinsic value of RNG is not just in the gas itself, but also in the carbon credits that RNG generates that can be traded separately. In 2022, major energy companies invested at least US$8 billion in RNG M&A deals. The market for RNG is expected to increase tenfold by 2050.

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Politically, Standard Carbon’s technology offers a solution that aligns with the environmental objectives of various governments while addressing the practical needs of the energy grid. It demonstrates how innovative technology can reshape energy policy towards more sustainable and reliable energy systems.

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2023 has indeed been a year of realization for the energy industry, underlining the urgent need for innovative solutions like Standard Carbon's. The company’s approach to creating renewable energy microgrids is a crucial development, offering an efficient, scalable, and sustainable solution that aligns with societal values and achieves critical climate and security goals. As the world progresses, such solutions will be vital in shaping a resilient and sustainable energy future. The increasing value of RNG in the energy market and the intrinsic value of RNG in the carbon credits that RNG generates that can be traded separately further underscore the economic viability of Standard Carbon's approach. In 2022, major energy companies invested at least US$8 billion in RNG M&A deals, and the market for RNG is expected to increase tenfold by 2050, indicating a promising future for Standard Carbon's technology in the energy sector.

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