GERMAN FEDERAL PARLIAMENT ADOPTS THE “EASTER PACKAGE”

Solar energy

Policy: Germany’s new government is aiming to accelerate the transition to renewable energy resources with a set of laws and regulations termed the “Easter Package” passed in early July.

The package incorporates measures necessary to increase installed wind and solar energy capacity, in particular.

Politics: In the past, local and regional political interests as well as powerful German wildlife defense lobbies have significantly slowed down the permitting process for wind especially, making needed growth in the renewable energy sector impossible.

In detail: The coalition of Social Democrats (SPD), Greens, and Liberals (FDP) developed the reform of planning law, construction law, environmental protection law, and the renewable energies law.

  • By 2023, 2% of the Germany’s land mass must be designated onshore wind areas. Every state needs to designate areas on its own for wind energy.
    • In the windy north, proportionally more (2.2 % by 2032 in Lower Saxony) than in the Southern states (1.1 % by 2026 in Bavaria, and 1.8 % by 2032).  
    • Targets will be enforced by revoking the state’s distance regulations for renewable energy production, if the state fails to deliver. (Some German states wrote into law required distances between houses and wind turbines, which reduce the available area for wind energy so much that the country previously couldn’t meet agreed targets.)
    • In order to increase solar energy, the Easter Package focuses on removing existing obstacles to rooftop solar panels. The legislation further strengthens the installation of solar energy destined for private usage by apartment blocks.
    • Also in the spotlight is hydrogen: New combined-heat-and-power plants have to ensure their adaptability from gas to hydrogen, i.e.“hydrogen readiness.” In addition, the law promotes new wind and solar energy plants , that can store energy via producing hydrogen; the energy can later be recovered from the hydrogen in the form of electricity.
    • Capacity targets by 2030: 115 GW installed capacity of onshore-wind energy (today: 56.13 GW), 30 GW installed capacity of offshore-wind energy (today: 7.8 GW) and 215 GW installed capacity of solar energy (today: 59 GW)
    • The final passed legislation was close to the original proposal, but with a few changes, e.g. it no longer included the 2035 target to achieve climate neutral electricity supply.

Market: The legislation will change the renewable energy landscape in Germany. Investors will find designated areas that enable shorter permitting procedures and an easier permission process for repowering existing wind energy plants. In solar energy, the exploitation of rooftops offers new usable space with a direct customer base (tenants).

The German wind industry has praised the government’s commitment to shorten permitting procedures, but also demanded clearer rules on protected species and other environmental protection, to establish a more stable situation for investors.

Timeline: Several items enter into force over the coming weeks with the full package taking effect at the start of 2023.

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THE EUROPEAN PARLIAMENT DECIDES TO INCLUDE GAS AND NUCLEAR IN THE EU TAXONOMY ON CLIMATE-FRIENDLY ENERGY SOURCES

Problem: The EU Commission’s proposed Taxonomy Complementary Climate Delegated Act (Third Delegated Act) was agreed to in early July, after the EU Parliament voted not to object to it. The regulation includes specific nuclear and gas energy activities in the list of environmentally sustainable economic activities covered by the taxonomy and its disclosure requirements.

The decision will weaken the position of renewable energies in the EU Taxonomy by putting them in direct competition to fossil gas and nuclear energy, assuming it goes into effect.

Politics: In contrast to the ordinary legislative procedure, a “delegated act” put forward by the EU Commission is automatically adopted, if neither the EU Parliament nor the Council of the EU voice objection to the proposal.

The inclusion of fossil gas faced criticism of “greenwashing” and problematic investment incentives in the face of the Russian war in Ukraine.

On the issue of nuclear energy, member states like France see in nuclear plants their climate-neutral future, while others say that, due to nuclear waste, it is not a sustainable energy. The drastic increase in energy prices and the looming gas shortages convinced many of the (short-term) necessity for nuclear energy.

Austria and Luxembourg have indicated their intention to sue to revoke the inclusion of nuclear and natural gas, with Spain and Denmark considering joining them.

Timeline: The delegated act will enter into force, if no lawsuits are successful, and be fully operational by January 1, 2023.

EUROPE INTRODUCES AN EMBARGO ON RUSSIAN OIL

Policy: The EU bans seaborn oil imports from Russia, but leaves out the 30% of Russian oil that arrives through land-based pipelines.

Context: The countries most reliant on pipeline gas (Hungary, the Czech Republic, and Slovenia) are also dependent on land-based alternatives to deliver fuel, since they have no coastline or seaports, though hydrogen infrastructure may be able to replace the current fossil fuel pipelines. Poland and Germany pledged to end pipeline imports, which represents blocking 90% of Russian oil to Europe.

Politics: Hungary forced an exemption for itself because around 65% of the landlocked country’s oil demand is met by the Druzhba (“friendship”) pipeline, which delivers crude oil from Russia.

Timeline: The embargo entered into force immediately and the member states will evaluate the initial results next month.

The EU will revisit the exemption of the final 10-11% supply to Hungary, Slovakia, and the Cech Republic.

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 REPOWEREU INITIATIVE TAKES SHAPE

solar panels with wind turbine and sunset .concept power energy in nature

Problem: Much of the EU has been heavily dependent on oil, gas, and coal, in particular from Russia. Europe’s infrastructure is designed for traditional energy sources and there has not been sufficient political will to transition to renewables and build the infrastructure they require – until now.

Background: Russia’s attack on Ukraine has motivated the EU to publish the REPowerEU initiative as a pathway to get to energy independence. The initiative’s three key ideas are:

1. Speed up the transition to renewable energy (solar and wind)

2. Increase efficiency and energy savings

3. Switch to green gases, particularly hydrogen, and diversify the import channels of these sources

Policy aims:

The REPowerEU initiative, if turned into law, will expand the scope – or increase the ambition – of current EU Commission proposals, primarily the Energy Efficiency Directive (EED), the Renewable Energy Directive (RED) and the Energy performance of buildings directive (EPBD).

  • To meet its climate targets, the EU must sharply increase the number of heat pumps and solar panels installed in or on buildings over the coming few years.
    • Gas heating will need to be replaced by renewable sources like biomass, solar thermal, geothermal, and excess heat.
    •  The proposed legislation includes:
      • Improving building insulation, increase renovation rates, and change to smart home features
      • Switching to district heating (H2, geothermal, excess heat)
      • Expanding public charging networks for electric vehicles
      • Attracting investment in the tech and infrastructure necessary for fully electrified cities.
  • The legislation calls for defined “go-to areas” for renewables, shortening the permitting process and enabling greater investment.
  • In the short run, liquified natural gas (LNG) will replace Russian gas, with renewable “green” hydrogen the focus for the mid- and long run. The policy’s target for 2030 is 10 million tonnes (mt) of domestic hydrogen production from renewable sources and 10 mt of imported renewable hydrogen.
  • The EU additionally proposes measures to enhance planning security and build in other incentives, since innovation in and expansion of hydrogen and its infrastructure will require long-term, large-scale public as well as private investments.

Timeline: In late September 2022, the EU Parliament will make concrete proposals of how to implement and incorporate the objectives of the RePowerEU plan into the RED and EED. The amendments will also entail an additional law that is looking to fast-track permitting procedures for renewables and low-carbon infrastructure projects of critical strategic importance.

In detail: On July 12, the EU Parliament’s ITRE committee already considered parts of the RePowerEU ambitions in its position on the RED, and the EED raised the ambition level of the EU Commission (EU COM) significantly:

  • 45% renewable energy by 2030, in line with the RePowerEU objective (EU COM had proposed only 40%) 
  • 14% energy savings by 2030 (had been only 9%, from EU COM)
  • 5,7% e-fuels in transportation by 2030 (instead of the 2,6% from the EU COM), which would translate into > 50 GW hydrogen capacity for the transport sector alone
  • 5% quota for innovative renewable energy technologies (floating PV, etc.)

On July 26, the European energy ministers will discuss the current gas crisis, scenarios for the winter, and ways to curb gas demand and to fill the gas storages.

The ITRE agreement will seek plenary adoption by the EU Parliament in September 2022, after the summer break and before the trilogue negotiations with the EU Council (Member States) and the EU Commission are initiated.

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THE EU’S AMBITIOUS FITFOR55 CLIMATE INITIATIVE PASSES THE EU PARLIAMENT

Context: Last year, the EU Commission put forward a group of new laws and regulations, FitFor55, aiming to reduce emissions 55% by 2030 — particularly, reforms to its Emissions Trading System (ETS).

Currently: Some of the most important pieces of Europe’s highly publicized FitFor55 climate initiative passed the European Parliament in an second vote, including:

  • the reform of the ETS
  • the introduction of a carbon border tax
  • and the establishment of a Social Climate Fund.

It is hoped that a new ETS, in particular, will help set a precedent for other regions to emulate.

Background: The ETS is Europe’s central tool to cut emissions and reach its climate targets. Today, certain industries that are deemed at risk of carbon leakage (cement, steel, chemicals etc.) receive free carbon emission allowances. They will have to invest in emissions reduction innovation and the EU ETS review now plans to shorten the timeline to phase-out free allowances. A new parliamentary compromise demands an end to CO2 emissions by 2032, while the EU Commission had originally proposed 2035.

The Carbon Border Adjustment Mechanism (CBAM) is supposed to build a level playing field and diminish the possibility of carbon leakages. It gives EU companies the chance to develop disruptive technologies and increases requirements for non-EU-suppliers.

The sectors proposed by the EU Commission for increased investment in innovation: aluminum, cement, fertilizer, electricity, iron and steel. The Parliament also added: hydrogen, ammonia, organic chemicals and polymers.

Timeline: The EU Parliament plenary voted in favor on June 22, and the EU Council agreed in its “general approach.” The “trilogues” between the EU Council, the EU Commission, and EU Parliament will now begin.

The ETS revision and CBAM could be adopted by the first half of 2023.

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News Roundup

Ultium Receives Conditional Commitment for $2.5 billion Loan Guarantee

On 25 July, 2022, the U.S. Department of Energy (DOE) announced that it has made a conditional commitment to guarantee a $2.5 billion loan to Ultium Cells to support the construction of three battery cell factories in the United States. Ultium is a joint venture between Korea’s LG and General Motors, and plans to build facilities in Michigan, Ohio, and Tennessee to make large-format nickel-cobalt-manganese-aluminum cells for use in EVs.

Under solar industry pioneer Jigar Shah, the DOE’s Loans Programs Office issued its first loan guarantee in nearly a decade to the ACES green hydrogen storage and generation project in Utah in June 2022. DOE also issued a conditional commitment to Syrah Technologies to build a graphite-based active anode material processing facility in Louisiana in April 2022.

Source: LPO Offers Conditional Commitment for Loan to Build New EV Battery Cell Manufacturing Facilities in Ohio, Tennessee, Michigan (Loan Programs Office)

TVA Seeks 5 GW of Carbon-Free Electric Generation

On 11 June, 2022, the Tennessee Valley Authority issued a request for proposals for up to 5 gigawatts of carbon-free generation that must come online by the end of 2028. Eligible generation sources include solar, wind (onshore or offshore), hydro, geothermal, biomass, nuclear, “green gas,” and battery energy storage, or any combination of these resources. TVA will require that developers submit proposals by 19 October, 2022.

TVA is a federally owned electric power company that provides wholesale electricity to utilities serving roughly 10 million people in Tennessee and parts of six other states in the U.S. South. It has a goal of reducing the greenhouse gases emissions from its operations 70% by 2030.

Source: TVA Issues One of the Nation’s Largest Requests for Carbon-Free Energy (TVA)

GM, EVgo, and Pilot Plan Nationwide Fast-Charging Network

Pilot, the owner of the nation’s largest truck stop chain, has partnered with General Motors (GM) and charging company EVgo to build out a network of 2,000 fast-chargers at up to 500 locations spanning the continental United States. Unlike Tesla’s Supercharger network, this network will be open to all EVs. However, GM customers will receive special benefits at Pilot Company’s Pilot Flying J locations. A map provided by Pilot shows a particularly high density of chargers in the Midwest and South. These chargers are in addition to an EVgo/GM partnership to build more than 3,250 charging stations in U.S. cities and suburbs by the end of 2025.

Source: GM and Pilot Company to Build Out Coast-to-Coast EV Fast Charging Network (Pilot Company)

Panasonic Chooses Kansas for $4 Billion EV Battery Factory

Panasonic has announced that it has provisionally chosen DeSoto, Kansas as the location for a new $4 billion factory to produce lithium-ion batteries for electric vehicles. Panasonic currently produces cells for Tesla, and CEA has concluded that this will likewise be a battery cell facility.

In its statements, Panasonic has sited the approval of a state incentive program for large businesses as a key factor, and Canary media reports that Panasonic will receive $829 million in tax breaks in exchange for meeting hiring targets. Panasonic has said that it will hire 4,000 workers for the site. According to state officials cited by Canary Media, the shell of a 4-million square foot facility could be completed next fall, allowing for the installation of manufacturing tools.

Source: Panasonic Energy and Kansas Partner to Advance Plans for US-based EV Battery Facility (Panasonic Energy Co. Ltd.)

Georgia Power Plan with 3.2 Gigawatts of Renewables Approved

On 21 July, 2022, regulators in the U.S. State of Georgia approved Georgia Power’s latest long-term plan, which includes procuring an additional 2300 megawatts of renewable energy over the next three years, as part of 6000 megawatts to be added by 2035. Under the plan, by 2028 the utility will also retire all its coal-fired power plants except one, Plant Bowen. Georgia Power further plans to procure an additional 2000 megawatts of electricity from natural gas-fired generators, and to make investments  in its legacy hydroelectric plants.

Source: Georgia Power’s transformational plan for state’s energy future approved, helps ensure company will continue to meet needs of customers and state (Georgia Power)

U.S. Postal Service to Increase EV Purchases

By Christian Roselund

The U.S. Postal Service has made changes to its plans to retrofit its fleet, planning for at least 40% of an order of 84,500 vehicles to be battery electric vehicles (BEVs). This is an increase from the 20% of an order of 50,000 vehicles previously planned, and comes after complaints by environmental groups, states, and the Biden Administration.

USPS’ fleet of 212,000 vans is the largest civilian vehicle fleet in the world, and President Biden has set a goal to move all federal vehicles to BEVs by 2035. Given that many USPS vehicles are more than 30 years old, if USPS buys any new gasoline-powered vehicles they may still be on the road in 2035 and could cause this goal to be missed.

The volume of vehicles which USPS plans to purchase is still small compared to the overall U.S. EV market. U.S. consumers bought 608,000 BEVs and plug-in hybrid electric vehicles (PHEVs) in 2021, or roughly 4% of the 14.9 million cars, pickups, and sport utility vehicles sold during the year. However, it could spur more production of short-range delivery vehicles that could be used by other fleets, thus increasing overall U.S. electrification.

USPS is holding a public hearing on the new order on August 8, 2022. It plans to take written public comment through August 15. Once finalized, USPS expects the first vehicles to arrive under this new order in 2023.

Source: Postal Service Modernization Enables Expanded Electric Vehicle Opportunity (USPS)

26% of U.S. Homes Were Already All-Electric in 2020

By Christian Roselund

The U.S. Department of Energy’s Energy Information Administration (EIA) has published a state-by-state analysis of the degree of electrification of homes in the United States, finding that in 2020 26% of U.S. homes were all-electric. This information provides a baseline for electrification efforts and shows the need for attention in certain regions. The portion of all-electric homes varies widely from state to state, from a high of 77% in Florida to a low of 7% in New York and Michigan.

Source: EIA

EIA observes that in colder climates most homes use natural gas, fuel oil, and/or propane for space and water heating. A map released by EIA confirms this, showing that less than 20% of homes in all states in the Northeast and Midwest are all-electric. California is an outlier; despite a mild climate only 8% of California homes are
all-electric.

The information provided by EIA comes amid both a movement by cities, counties, and states to mandate electrification of new buildings (See “Washington D.C. Passes Climate, All-Electric Buildings bills”) and a wave of states passing laws to prohibit municipalities from passing these all-electric mandates. It also follows U.S. natural gas hitting its highest monthly price in 14 years in
May 2022.

However, in many cases the states that have passed laws pre-empting municipal electrification mandates either already have high rates of all-electric buildings and/or have smaller populations. While Alabama, Arizona, Florida, Louisiana, and Tennessee are among the 20 states that have pre-empted municipal gas bans, in all these states more than 40% of homes were already all-electric in 2020. This suggests that state pre-emption will not necessarily have a major impact in terms of prolonging gas as the dominant fuel for meeting U.S. residential energy needs.

EIA also supplied information on the uses of electrification in homes. While 88% of homes use electricity for air conditioning, only 33% of homes use electricity for space heating. Rates of electricity use for water heating, cooking, and clothes drying fell between these two numbers.

Source: 2020 U.S. Residential Energy Consumption Survey (EIA)

Washington D.C. Passes Climate, All-Electric Buildings Bills

By Christian Roselund

The City Council of Washington D.C. has approved two bills that increase the city’s greenhouse gas reductions targets and as well as setting in place concrete measures to implement these reductions, particularly in the buildings sector. This includes net-zero and all-electric mandates for broad categories of new buildings, starting in 2025 and 2027, as well as mandating that the city only purchase electric vehicles for city government use.

Washington D.C. Mayor Muriel Bowser has expressed support for both bills, and upon signing they will give Washington D.C. stronger economy-wide greenhouse gas reduction targets than any U.S. state. This follows on New York City mandating all-electric buildings in December 2021, and dozens of cities and counties in California passing similar measures.

The Climate Commitment Act of 2021 begins by requiring a 45% reduction in economy-wide greenhouse gas emissions by 2025, a 60% reduction in 2030, and additional targets to reach carbon neutrality by 2045. As part of this, it mandates that the district shall not install any fossil fuel infrastructure in any of its buildings during initial construction or major renovations, including city schools, starting in 2025. In addition, it mandates that the city purchase only zero-emissions vehicles starting in 2026.

The second bill, the Clean Energy DC Building Code Amendment Act of 2021, will require that all new construction and substantial improvements will have to meet a net-zero energy standard starting in 2027. This includes a ban on installing appliances that burn fossil fuels in these buildings which applies to all commercial buildings as well as residential buildings four stories and higher.

This will make Washington D.C. the second city on the East Coast to mandate all-electric new buildings, and likely not the last. Legislation was introduced in Maryland, New York, and Rhode Island to mandate all-electric new buildings in the most recent legislative sessions.

Source: B24-0420 – Clean Energy DC Building Code Amendment Act of 2021 (Council of the District of Columbia)

Source: B24-0267 – Climate Commitment Act of 2021 (Council of the District of Columbia)

News coverage: Washington set to be 2nd East Coast city with gas ban (E&E News)

QCells Begins Georgia Factory Expansion

By Christian Roselund

QCells North America has begun preparing the site for a second factory building at its production site in Dalton in the U.S. state of Georgia. The new building will host the capacity to assemble an additional 1.4 gigawatts of solar PV modules per year, with initial operation planned for the second half of 2023. This adds to QCells’ existing 1.7 gigawatts of production capacity at the site. QCells will host around one quarter of the nation’s total solar module manufacturing capacity when this facility and another under construction by First Solar are complete in 2023.

The modules made in the factory will feature high-efficiency cells which utilize tunnel oxide passivated contact (TOPCon) technology. These are more expensive than the standard passivated emitter and rear cell (PERC) cells that are standard in solar production, and the modules made from them will primarily serve the residential and commercial and industrial solar markets. CEA has confirmed that these cells will be imported from cell factories in Korea owned by QCells’ parent company Hanwha.

Photo: Scott Moskowitz, Twitter

Despite this expansion and a 3.3-gigawatt factory under construction by First Solar in Ohio, the United States is expected to remain dependent on imported solar modules to meet demand. Wood Mackenzie’s latest estimate is that the United States will install 18 gigawatts-DC of PV modules in 2022, far more than its 8 gigawatts of module production capacity. In 2023 the United States is expected to install 26 gigawatts of solar, and with these two factories will have only 12.7 gigawatts of module capacity by the end of the year. Actual production of U.S modules will be lower than these figures, given that U.S. factories are not running at
full utilization.

Source: QCells North America Head of Public Affairs Scott Moskowitz (Twitter)

Source: additional CEA Research