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Energy Industry Update Volume 22, Issue 1

ScottMadden

Under Pressure

This Energy Industry Update (EIU) examines how the combination of rising post-pandemic energy demand, ambitious decarbonization targets, high commodity prices, and geopolitical events are combining to put pressure on the global energy industry. In this spring 2022 edition of the EIU, you will learn how utilities are considering portfolios of carbon emissions reduction options to meet their net-zero commitments. We will explore how power supply developers are navigating the lengthy timelines for interconnection to the grid and the impact on the addition of renewable energy resources into the resource mix. We will also examine how rising natural gas prices have, at least temporarily, reversed the secular trend of coal-to-gas fuel switching, with some unexpected implications.
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For an overview of this report, watch this video as industry experts share what’s covered and why it’s important.

Highlights

Join more than 10,000 executives who rely on the EIU for the most important trends and data-driven insights.

  • Learn about transmission interconnection and how developers and investors are navigating the lengthy timelines from proposed interconnection to final approval as the queue of power generation projects looking to connect to the bulk power system grows
  • Explore decarbonization portfolios and how states, municipalities, and utilities are working to meet their net-zero targets
  • Discover the impacts of fuel switching as global energy markets continue to add significant amounts of renewables to their resource mix

Capital Markets and Capital Needs

Utilities, energy companies, and public and private investment firms are pursuing investments opportunistically in utility, power generation, and natural gas sectors. Indeed, private equity is playing a greater role in energy sector investment. Beyond opportunistic investment, companies are using acquisitions for strategic objectives, such as business focus, increased scale, and growing their renewable resource portfolios. Large capex needs provide investment opportunities, but utilities remain measured, keeping an eye on affordability and rate impacts.

Fossil Fuel Switching

Global energy markets continue to add significant amounts of renewables to their resource mix. However, fossil-fueled capacity remains a critical, dispatchable resource. And while the demise of coal-fired generation has been predicted, a recent run-up in natural gas prices has had the unintended consequence of increasing generation by those coal plants. Is this a temporary dislocation or a longer-lived phenomenon?

Utility Decarbonization Portfolios

While much has been made of state, municipal, and utility commitments to net-zero targets, the specifics of how to achieve them have been deferred. With interim targets now looming less than a decade away, some utilities are engaging in planning exercises that consider technology readiness, cost, and suitability for their particular circumstances.

Interconnection Queue Reform

Many regions have a long and growing queue of power generation projects—many of which are wind and solar—seeking to connect to the bulk power system. Transmission operators and regulators are looking at potential approaches to manage this backlog, including grouping, increasing required levels of financial commitment, and process changes.

Energy Transition: What Are We Learning?

Reducing greenhouse gas emissions is top-of-mind for policy makers around the world. However, the clean energy transition doesn’t happen overnight. Flexibility, optionality, and affordability are key. Recent geopolitical events remind us of the need for energy security, even during the transition. Europe has been pursuing decarbonization and transition for well over a decade and may provide a glimpse into what other regions, including North America, can expect and, more importantly, what we can learn.

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