Karbone’s Post

Karbone Research has some helpful insight on the outlook of offshore wind for the East Coast. Check it out below:

In a notable development within the offshore wind sector, #Eversource Energy has recently finalized the sale of its 50% ownership stake in South Fork Wind and Revolution Wind to Global Infrastructure Partners (#GIP), yielding approximately $1.1 billion in cash proceeds. - This move comes against the backdrop of chronic #undersupply in the northeastern Renewable Energy Certificate (#REC) markets, marked by supply chain disruptions, escalating costs, and economic uncertainties  - Eversource’s departure from its #offshore wind stakes underscores the complex and difficult development landscape in the Northeast, where #NIMBYism and economic constraints battle with renewable energy goals and compliance mechanisms - It remains to be seen how this change in ownership shapes the trajectory of offshore wind development and its impact on the broader #energy landscape Although the northeast appears to be lucrative for #renewables through high pricing for attributes and rampant undersupply, the realities of the development process are what led to this point. Currently, there are more than 33 GWs of #offshore wind in the development pipeline with over 900 MW under construction, which once interconnected, offer a glimmer of hope for mitigating price pressures in northeastern #compliance REC markets. Karbone tracks compliance REC spot and forward pricing on the Karbone Data Hub. Additionally, Karbone’s Research Desk provides in-depth supply and demand #fundamentals for these markets alongside merchant price forecasts. Contact [email protected] for more information! #OffshoreWind #RenewableEnergy #RECMarkets

In its November Short-term Energy Outlook, the U.S. Energy Information Administration shared their expectation that #solar will generate 14% more electricity than #hydropower in 2024. This will be a notable change to America’s resource mix, but an expected development. Solar MW #capacity has had nearly a 2000% increase in the last 10 years, remarkable against the negligible growth in hydro MW capacity in the same timespan. Because of the difference between solar’s 24-25% #capacityfactor and hydro’s 36-38% capacity factor, there needs to be nearly 1.5x MWs of solar to hydro for these resources to generate an equal amount of #electricity in a year. An interesting and underappreciated trend is that hydro’s national, annualized capacity factor has decreased nearly 7% in the last 5 years, whereas solar has remained steady. This runs contrary to the classic reputation of hydro as a more reliable “#baseload” resource, versus the notorious #intermittency of solar and wind. This performance #volatility is even more interesting on a #seasonal basis, where intra-year standard deviation in capacity factors looks almost at par between the two resources. The average standard deviation in capacity factors for the last 2.5 years (2021 through YTD 2023) reached 4.64% for hydro and 6.14% for solar, with notably greater variation in standard deviation for hydro throughout. • 2021: 3.92% for Hydro, 6.29% for Solar • 2022: 5.71% for Hydro, 6.31% for Solar • 2023: 4.29% for Hydro, 5.83% for Solar Furthermore, the 2022 spread in monthly capacity factors, i.e. the difference between worst performing months vs. best performing months, was 21% for hydro and 20.70% for solar. By these metrics, hydro appears more intermittent than solar. Assuming this trend continues, the importance of blending resources with different profiles will be critical for the #energytransition.

As Maryland's SREC market navigates an evolving policy landscape, the passage of Senate Bill 783, the Brighter Tomorrow Act, promises to alleviate the strained supply-demand dynamics in the state. In our latest whitepaper, we delve into the nuances of this legislation and its potential market impact. - The Brighter Tomorrow Act, signed by Governor Wes Moore on May 9th, introduces the “Small Solar Energy Generating Incentive Program”. This program offers "Certified SRECs" with a 150% compliance value, targeting new solar projects within a specific size and COD criteria. - Despite ongoing interconnection challenges, this legislation aims to boost SREC supply and provide some relief to the undersupplied market, potentially exerting a downward pressure on prices that are already trading in close proximity to the SACP. Maryland's solar future holds potential, but the rate of new project build and market balance will ultimately hinge on the success of the PJM interconnection queue reforms and other regulatory changes in the state’s RPS. For a closer look at SB 783 and its expected impact on Maryland's supply-demand dynamics, access our whitepaper via the link below. Also keep an eye out for our PJM SREC Merchant Curves that will soon be accessible on the Karbone Data Hub! #CleanEnergy #Solar #SREC #Maryland #BrighterTomorrowAct #RenewableEnergy #EnergyPolicy #SolarEnergy #KarboneInsights

Earlier last month, the U.S. Department of Energy (DOE) and the Internal Revenue Service (IRS) issued guidance on technology-neutral clean energy tax credits via the #IRA. These guidelines come amid rising prices for carbon-free electricity attributes, like California Carbon-Free Specified Source, whose prices have remained above ~$25/MWh since January. The IRA’s tax credits aim to expand financial incentives for carbon-free electricity facilities beyond #wind and #solar, extending to hydropower, nuclear, and certain waste-to-energy and waste recovery technologies. Importantly, the credits are only applicable to projects with a commercial operation date on or after December 31, 2024. - The Clean Electricity Investment Credit (CEIC) targets investments in zero-emission electricity generating facilities and select energy storage facilities with a base credit rate of 6%, potentially increasing to 30% for facilities adhering to wage and apprenticeship standards. - The Clean Electricity Production Credit (CEPC) applies to facilities generating clean energy with zero greenhouse gas emissions, offering a base credit rate of 0.3 cents per kWh ($3/MWh), increasing to 1.5 cents for smaller facilities meeting wage and apprenticeship standards. This credit is available for 10 years from the in-service date of the facilities. Both the CEIC and CEPC will phase out starting in 2032 or when U.S. electricity production emissions are reduced to 25% of 2022 levels, with a complete phase-out occurring four years later. Long-term tax credit revenue streams and strong pricing for Carbon-Free and Emission-Free Energy Certificates (EFECs) create an ideal investment environment for carbon-free resources. However, as tax credits increasingly contribute to revenue, the prices for carbon-free attributes may retreat due to the resulting increase in cash flow. For more insight into IRA guidance and updates on Carbon-free Specified Source pricing, register for the Karbone Data Hub!

Within the intricacies of global energy markets, the relationship between traditional fuel pricing and Renewable Identification Numbers (RINs) is riveting to observe. Back in 2022, traditional fuels #volatility surged in response to global crises, notably Russia's invasion of Ukraine. Pricing surged, most notably for #NaturalGas. However, market recalibration into 2023 saw volatility tethered more to production dynamics cuts, shaping a new balance for the global economy and #energy landscape. Meanwhile for RINs, the year 2023 brought its own storyline, marked by unpredictable swings in pricing. A tranquil first half was disrupted by the release of pivotal Renewable Volume Obligations (#RVOs), triggering shifts in biofuel market dynamics. Pricing volatility across all D-codes nearly doubled. Amidst these fluctuations, traditional fuel prices per gallon demonstrated slight falls and relative stability compared to the prior year’s price climb, with pricing volatility nearly halved. As shown in the table below, there has been a complete flip in volatility dynamics between RINs and traditional fuels. If anticipated #undersupply in the D3 market and #oversupply in the D4-6 markets prevails as 2024 begins, time will tell how, or if, traditional fuels will respond. Karbone’s Research Desk just completed a deep RNG market analysis and 10-year D3 RIN merchant curve. Contact [email protected] for more information or to find out more about our fuels offerings! #WTICrude #HenryHub #NYMEX #Gas #RINs #EnergyMarkets #Biofuels #MarketInsight

🔋Our CEO Daniel Brdar recently sat down with Investing.com to share his insights into how we’re revolutionizing renewable energy. With our Power Packet Switching Architecture (PPSA) and Bi-Directional Power Switch (B-TRAN™), we're enhancing efficiency, reliability, and cost-effectiveness in energy storage, electric vehicles, and more. Dan highlights the importance of integrating advanced technologies to maintain a steady energy flow and ensure grid stability as renewable sources expand while emphasizing the need for efficient energy storage solutions and accurate forecasting tools to optimize renewable energy generation. ⚡Learn more about our progress and future plans in his interview: https://lnkd.in/e5abD2XQ #RenewableEnergy #EnergyTransition #Innovation #CleanTech

Market Update: 29 February 2024 Rex International* (REXI SP) - Flash note - Robust cash flows and new drilling plans Aminex (AEX LN) - Ntorya gas volume estimate doubles Zephyr Energy (ZPHR LN) - New production ahead of expectations VAALCO Energy (EGY LN) - Acquires Baobab production interest Seplat Energy (SEPL LN) - Robust FY23 results https://lnkd.in/ejFNeNUa

The article touches on serval issues, but the anticompetitive argument is an ongoing and relevant question that should be addressed for ratepayers and shareholders. Are independent utilities truly “irrelevant alternatives” compared to their corporate conglomerates? If they are significantly different, which entity provides the best value, in relation to cost, effectiveness and reliability, to the ratepayer? Has the ratepayer borne any costs over the years post-consolidation at the benefit of shareholders? Based on the article, I predict these, and related antirust challenges will increase with rate growth trends. For quantitative nerds like me, the regulatory analyses to support these cases, should they occur, will be intriguing.

Part4# - REMIT II introduced new reporting requirements earlier this month. Here are some more details on the new type of transactions requiring reporting and when these obligations start. Any questions? Please feel free to reach out. #REMIT #MarketAbuse #EnergyMarkets #REMITrepresentative #RegulatoryReporting #Gas #Power #SybiusConsulting