We include a couple of headlines and charts in today's daily report that step into the central theme of this week’s ESG and climate report, which will be published tomorrow (see here). The offshore wind ambitions and the EIA solar and battery projections both assume that the materials are available to build the capacity. In the case of the offshore wind leases, the winning bidders do not need to be in the market for all of the projects today and while the opportunities will lead to a step-change in demand for turbines in the US, the timing is less clear today that it will be in a few months and that timing may be adjusted to reflects equipment timing and costs, etc.
Source: Bureau of Ocean Energy Management, NatgasIntel, March 2022
The solar projection is potentially more troubling as the EIA is taking planned projects and likely not taking any view around delays. We saw delays in 2021 and the shortfalls are resulting in higher demand for natural gas and especially coal to meet power demand in the US in early 2022. Any power generator looking at the EIA estimates will base any alternate source-based investment on an estimate of incremental demand, which may be understated if the renewable plans are too ambitious. The need for fossil fuel-based power will also rise if the EIA and others are too low on demand assumptions, especially as we think about manufacturing re-shoring and the incremental effect it will have on industrial power demand – see our Sunday Report - Maybe It’s Not Just Going To Work Out – Time to Re-shore.
Source: EIA – Today In Energy, March 2022