Ford to Build $3.5 Billion LFP Battery Cell Factory in Michigan

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By Christian Roselund

Ford Motor Company has announced that it will invest $3.5 billion to build a new factory to make lithium ferrous phosphate (LFP) battery cells for its electric vehicles in Marshall, Michigan. The automaker expects its new plant to begin producing cells in 2026 and when fully ramped the new factory will have the capacity to make 35 gigawatt-hours of batteries annually. Ford estimates that the move will create 2,500 new jobs.

Ford will partner with the Contemporary Amperex Technology Company Ltd. (CATL) to use its LFP cell knowledge and services. CATL is the world’s largest producer of lithium-ion batteries for electric vehicles and stationary energy storage. Ford states that it will begin introducing LFP batteries for its Mustang Mach-E and F-150 Lightning vehicles in 2024, before the plant opens.

LFP batteries are less expensive to make per unit of energy delivered than nickel-manganese-cobalt (NMC) lithium-ion batteries, and additionally have the benefit of not using nickel or cobalt. Cobalt prices have been highly erratic over the past few years, peaking at over $9,000 per ton in 2018 and $8,000 per ton in March and April of 2022. Additionally, the use of child labor in small-scale cobalt mines in the Democratic Republic of Congo has been well documented.

This move could make Ford the first major automaker to move a portion of its production to LFP for vehicles destined for the U.S. market. Tesla is using an increasing share of LFP batteries in its vehicles but has not been transparent about how much if any of its U.S. vehicle supply was moving to LFP.

These moves follow a global shift from NMC to LFP in EV manufacturing. After years of growing share, Bloomberg New Energy Finance has estimated that in 2022 LFP made up 40% of EV batteries, with NMC representing the other 60%.

Ford’s move to Michigan follows Virginia Governor Glen Youngkin’s (R) rejection of the plant in January 2023. Youngkin claimed that the battery plant was a “Trojan horse” for China.

Press Release: Ford Taps Michigan for New LFP Battery Plant; New Battery Chemistry Offers Customers Value, Durability, Fast Charging, Creates 2,500 More New American Jobs (Ford
Motor Co.)

EIA Expects Lower Natural Gas Prices
in 2023

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By Christian Roselund

In a February update, U.S. Department of Energy’s Energy Information Administration (EIA) has forecast that U.S. natural gas prices will fall to an average of $3.40 per Million British Thermal Units (MMBtu) over the course of 2023. This represents a 47% decrease from the average 2022 price and a 30% decrease from EIA’s forecast just a month prior, which EIA credits to a warmer than expected winter, reduced gas demand, and increased storage levels. However, it does not expect the share of electricity generation from natural gas to increase in 2023.

EIA also notes that natural gas prices remain highly volatile. Average U.S. natural gas prices were above $7/MMBtu at the Henry Hub national trading hub each month from June through September, peaking at nearly $9/MMBtu in August. This was the highest monthly price in more than a decade. Prices then fell to around $5.50/MMBtu for October through December, and then again to $3.27/MMBtu in January. In supply-constrained markets such as New England prices can be much higher than Henry Hub or the national average.

Due to this volatility, there is extreme variation in the range of future potential natural gas prices. The New York Mercantile Price Exchange (NYMEX), forecasts with 95% confidence that natural gas prices will be somewhere between around $1.50/MMBtu and nearly $12/MMBtu by the end of 2023.

In U.S. wholesale power markets, natural gas generation plays a primary role in setting wholesale power prices. This means that higher gas prices cause increases in retail electricity rates, but also create more favorable economics for other generation sources including wind and solar. Regardless of its anticipation of lower gas prices, EIA still expects the portion of gas-fired generation to remain flat at 39% in 2023, while increased solar, wind, hydro, and nuclear power displace coal-fired generation during the year.

EIA also expects liquefied natural gas (LNG) exports to increase 11% in 2023 to 11.8 billion cubic feet. In recent years the United States has become the world’s largest exporter of LNG.

Source: February 2023 Short-Term Energy Outlook (EIA)

Judge Upholds Massive Lithium Mine
in Nevada

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By Christian Roselund

A judge has upheld the US federal government’s approval of the largest proposed lithium mine in the United States. Lithium Americas Corp. plans to start construction in 2023 on the Thacker Pass Lithium Mine on land controlled by the Bureau of Land Management in Northern Nevada near the Oregon border. Once built, Thacker Pass will be the second lithium mine in the United States.

Four conservationist organizations filed suit in February 2021 to stop the project, which they claim will endanger nearby aquifers, wildlife, and a rare wildflower. Native American groups also oppose the mine and claim that the land in question was the site of an 1865 massacre of Native Americans.

Despite these concerns, the federal government approved the mine in January 2021. On 6 February 2023 U.S. District Judge Miranda Du denied the appeal by conservationist groups, stating that the federal government had acted appropriately, and that Native American groups had not proven that the 1865 massacre occurred in the area to be covered by mining operations. However, Judge Du found that the BLM violated federal law by failing to confirm that Lithium Americas has rights to dump waste and mine tailings on a portion of the site.

Thacker Pass will be an open pit mining project covering 5,700 acres that will be able to produce 66,000 tons of lithium annually at full capacity.

General Motors has stated that it will invest $650 million into the Thacker Pass mine on the condition that it survives the lawsuit. This would be the largest single investment to date by any U.S. automaker into a lithium mining project.

News analysis: Judge backs federal approval of massive lithium mine (E&E News)

Buy American Provisions Proposed for Infrastructure Act Awards

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By Christian Roselund

As highlighted in President Biden’s 7 February 2023 State of the Union speech, the U.S. Office of Management and Budget (OMB) has proposed new “Buy American” provisions for projects which receive funding under the 2021 Infrastructure Investment and Jobs Act (IIJA). OMB’s new measures would require iron, steel, and manufactured products which are used in IIJA projects to be made in the United States, and the agency is currently seeking comments on multiple details including how to define “U.S.-made.”

These new proposed regulations will replace existing temporary regulations. More stringent requirements could affect the sourcing of components for the large numbers of EV charging stations, and zero-emissions busses and ferries funded by the law, as well as electricity system and hydrogen infrastructure funded by various portions of the law (for more details on IIJA funding see the 17 November 2021 US Energy Transition Report).

Buy American provisions have been a concern for U.S. allies. However, they are one of the few areas of consensus between the Democratic and Republican parties in the United State. During President Biden’s state of the union, House Speaker Kevin McCarthy (R-California) applauded during Biden’s description of the Buy American provision, as did several Republican members
of Congress.

OMB is currently seeking feedback on how to calculate cost of components, a definition for “predominantly” iron and steel items, how to distinguish between categories of products, how to reduce the burden on recipients, and many other details. Comments are due by 13 March 2023.

News analysis: White House details ‘buy American’ plan (E&E News)

News coverage: White House unveils plan to boost use of U.S.-made goods in infrastructure (Reuters)

Source: Guidance for Grants and Agreements (Federal Register)

Minnesota Sets 100% by 2040 Carbon-Free Electricity Mandate

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By Christian Roselund

On 7 February 2023, Minnesota Governor Tim Walz signed a bill to mandate that the state’s electric utilities procure 100% of their electricity from carbon-free sources by 2040. This is one of the most ambitious timelines for electricity sector decarbonization in the United States, and House File 7
(HF 7) additionally sets ambitious targets for 2030 and 2035.

HF 7 passed the Minnesota Senate 34-33 on 2 February 2023 on party lines, with all Democrats voting in favor and all Republicans voting against the bill. A week earlier on 27 January 2023, HF 7 passed the Minnesota House of Representatives 70-60, again on partisan lines. During the debate on the bill Minnesota House Minority Leader Lisa Demuth (R) claimed that the move to zero-carbon electricity will make power “unreliable, unsafe, and even dangerous.”

Minnesota joins ten other states that have committed to move to 100% zero-carbon electricity: California, Hawaii, Illinois, Maine, New York, North Carolina, Oregon, Virginia, and Washington. Most of these states are in the Northeast or West Coast; Illinois is the only other state in the Midwest region to set a mandate for full electricity sector decarbonization.

HF 7 contains two main mechanisms. One sets more aggressive targets for the state’s renewable electricity mandate, and the second institutes the new carbon-free mandate. Currently Minnesota requires that utilities procure 25% of their electricity from renewable energy sources by 2025, a target that Minnesota exceeded in 2017. HF 7 extends that mandate to require that utilities source 55% of electricity from renewables in 2035.

For the carbon-free mandate, HF 7 requires that in 2030, investor-owned utilities source 60% of their electricity from zero-carbon sources, and that publicly owned utilities source 80% from zero-carbon sources. The required portion of zero-carbon sources moves to 90% by 2035, regardless of ownership. This 90% by 2035 target is the third or fourth-strongest such mandate in the nation, with only Rhode Island (100% by 2033) and Washington D.C. (100% by 2032) setting more ambitious mandates for the 2032-2035 timeframe. Vermont has a roughly equivalent mandate of 75% renewable energy by 2032.

Minnesota’s largest electric utility, Xcel Energy, has sent a statement to multiple publications declaring that it supports the bill. In 2018 Xcel committed to moving to 100% carbon-free electricity by 2050, as one of the first commitments to fully decarbonize issued by a U.S. utility. “We’re actually excited about being pushed to go faster,” stated Chris Clark, Xcel’s president in Minnesota, North and South Dakota.

North Dakota Governor Doug Burgam has threatened to sue Minnesota over concerns that North Dakota electricity generators might not be able to export electricity from coal- and gas-fired power plants to Minnesota. Minnesota Governor Walz has dismissed the threat of this suit.

Source: HF 7 (Minnesota Legislature)

News coverage: Walz signs carbon-free energy bill, prompting threat of lawsuit (MNPR)

Analysis: Minnesota’s carbon-free electricity bill: 8 questions, answered (MNPR)

EIA: More Solar, Batteries to Replace Coal in 2023

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By Christian Roselund

The U.S. Department of Energy’s Energy Information Administration (EIA) estimates that developers plan to install 29.1 gigawatts-AC of utility-scale solar, 6.0 gigawatts of wind, and 9.4 gigawatts of battery storage in 2023. These numbers were revealed in EIA’s January 2023 Preliminary Monthly Electric Generator Inventory, and are projected to represent 54%, 11%, and 17%, respectively, of the new utility-scale generating capacity coming online in the United States in 2023.

For the last several years solar and wind have together made up the majority of new capacity on the U.S. grid. That said, EIA estimates that utility-scale solar installations fell 23% in 2022 versus 2021 levels. American Clean Power Association and Solar Energy Industries Association attribute the declines in 2022 installation levels primarily to the effects of the Uyghur Forced Labor Prevention Act (UFLPA) and the solar anti-circumvention investigation. UFLPA detentions are ongoing and there is a danger that the United States could install much less than the 29.1 gigawatts of planned solar if developers are unable to procure modules due to detentions.

EIA estimates that Texas will lead new utility-scale solar capacity in 2023, with 7.7 gigawatts planned, followed by California with 4.2 gigawatts. Texas and California have been the largest solar markets in recent years.

The 9.4 gigawatts of battery storage that is planned represents a substantial increase over prior years and EIA estimates that U.S. installed battery capacity will double in 2023. By contrast, only 7.5 gigawatts of natural gas-fired power plants are planned, and these are the only utility-scale fossil fuel generation anticipated. This could mean that 2023 will be the first year that the nation adds more battery capacity than fossil fuel generation. 71% of the planned battery storage is in California
and Texas.
 
Wind deployment has slowed in recent years, and the 6 gigawatts planned for 2023 is much less than the more than 14 gigawatts deployed in both 2020 and 2021. Among major wind projects, EIA is anticipating the 130-megawatt South Fork Wind Farm to come online off the coast of Massachusetts in 2023. The agency has not included the 800-megawatt Vineyard Wind in its 2023 capacity estimates, which could mean that the offshore wind project’s completion date has been pushed out to 2024.
 
In addition to the solar, wind, battery, and natural gas-fired capacity, EIA reports that Southern Company plans to put online two units totaling 2.2 gigawatts at the Vogtle Electric Generating Plant in the state of Georgia. These join the 1.16-gigawatt Watts Barr Unit 2 as the only three commercial-scale nuclear reactors that the United States has brought online in more than 30 years.
 
15.4 GW of Fossil Fuel-Fired Generation to Retire
 
EIA is projecting that 6.2 gigawatts of natural gas-fired plants, 8.9 gigawatts of coal plants, and 0.4 gigawatts of oil-fired power plants will retire in 2023. This includes 1.49 gigawatts at the W.H. Sammis coal-fired power plant in Ohio and 1.278 gigawatts at the coal-fired Pleasants Power Station in West Virginia, as well as three aging gas plants totaling 2.2 gigawatts near Los Angeles, California. Even after accounting for the 7.5 gigawatts of new natural gas-fired power plants planned for 2023, this still translates to a net loss of 8 gigawatts of fossil fuel-fired generation.
 
This shift from coal to renewables is driven by not only policy but the dismal economics of coal-fired power as compared to new renewable generation. A recent report by Energy Innovation found that 99% of existing coal-fired power plants in the United States are more expensive to operate than to replace with wind or solar, with a median cost differential of 50%-60%.
 
Source: More than half of new U.S. electric-generating capacity in 2023 will be solar (EIA, Today in Energy)
 
Source: Coal and natural gas plants will account for 98% of U.S. capacity retirements in 2023 (EIA, Today in Energy)
 
Source: The Coal Cost Crossover 3.0 (Energy Innovation)

News Roundup

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Senator Manchin Introduces Bill to Close Temporary Tax Credit Loophole

U.S. Senator Joe Manchin (D-West Virginia) has introduced a new bill that would require the critical mineral sourcing and battery component requirements for the electric vehicle tax credit in the Inflation Reduction Act (IRA) to be implemented at the beginning of 2023. This would void the language in the IRA stating that these requirements go into effect when the Treasury Department issues
its guidance.

Manchin has expressed anger that Treasury expects to take until March 2023 to issue guidelines implementing the new rules. If Manchin’s bill passes the House and Senate and is signed into law, then consumers who bought vehicles which qualify for the credit under existing rules could lose the ability to claim those credits at the end of the year.

Source: A bill to adjust the effective date for application of certain amendments made with respect to the credit for new clean vehicles (U.S. Congress)

News analysis: Here’s why Joe Manchin’s new bill that would disqualify most EVs from tax credits is ridiculous (Electrek)

Microsoft, Q Cells to Collaborate on 2.5 Gigawatts of Solar

QCells will supply Microsoft with more than 2.5 gigawatts of PV modules as well as engineering and construction services to projects with which the software giant power contracts under a new “strategic alliance.” While Microsoft has not provided a timeline for deployment, the company referenced its plans to cover 100% of its electricity demand with renewable energy by 2025.

Microsoft has also referenced QCell’s position as the only company that has yet announced plans to make solar from ingot to module in the United States. This announcement is in line with QCells’ plans to integrate its activities downstream, including project development and providing engineering, procurement, and construction services for projects using its modules.

Press release: Microsoft and Qcells announce strategic alliance to curb carbon emissions and power the clean energy economy (Microsoft)

NREL Helps Puerto Rico Plan for 100% Renewable Energy

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By Christian Roselund

The U.S. Department of Energy’s National Renewable Energy Laboratories (NREL) has produced its second progress report in a 2-year effort to analyze pathways for the island territory to meet 100% of its electricity demand from renewable sources. The PR100 One-Year Progress Summary report reflects the mandate set in Puerto Rico’s Energy Policy Public Act that the territory reach 100% renewables in its electricity supply by 2050, with interim goals of 40% by 2025 and 60% by 2040.

A major theme in the report is the split between distributed and utility-scale solar. NREL’s modeling shows that if agricultural land, buildings, urban areas, rivers, and conservation areas are excluded, Puerto Rico does not have enough land to meet its targets with utility-scale solar and land-based wind. This means that some combination of the use of PV on brownfields and/or agricultural land, floating PV, and/or distributed rooftop solar is necessary.

Distributed rooftop solar is already popular in Puerto Rico, largely as a means to increase the resilience and reliability of electricity, particularly in the aftermath of hurricanes. In the report, NREL models deployment of between 3 and 7 gigawatts of distributed solar in four different scenarios. These range from the “economic” scenario in which distributed energy is deployed based on financial savings to building owners to the “maximum” scenario in which distributed solar is deployed on every suitable rooftop. The report finds that even in the economic scenario distributed solar increases 6x by 2050. Notably, the report does not look at the grid upgrades needed to support this massive expansion of rooftop PV, or external challenges that could limit deployment such as supply
chain issues.

The report also makes an important resilience argument for expanded deployment of distributed solar, finding that the modeled future system with smaller renewable energy projects spread across the bulk electric grid tends to recover power faster than the current system. NREL also found that the deployment of advanced inverters with black-start capability to accompany this distributed energy can reduce recover time following hurricane-driven outages by up to 3x.

NREL has now begun year 2 of the study. For this phase the organization is looking at issues including the impact of the modeled scenarios on the transmission system, the impact of adding high levels of distributed energy to the distribution grid, and the use of microgrids for enhanced resilience. It will also look at potential impact on electricity rates.

Source: Puerto Rico Grid Resilience and Transitions to 100% Renewable Energy Study
(PR100) (DOE)

Texas Regulators Approve Controversial Reliability Credit System

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By Christian Roselund

On 19 January 2023, the Public Utilities Commission of Texas (PUCT) voted to recommend the creation of a system of credits to ensure that the state has enough power online during periods of supply/demand mismatch. E3 Consulting proposed the Performance Credit Mechanism (PCM) in a report to comply with the 2021 legislation ordering Texas’ grid operator to study ways to restructure the state’s electricity market in the wake of the extensive power failures caused by Winter Storm Uri in 2021.

Unlike other electricity markets in the U.S., the Electric Reliability Council of Texas (ERCOT) market is an energy-only market and does not offer capacity payments to generators. The PCM proposal would create a new system to provide credits to generators that can guarantee that they will be available during the hours when the grid most needs power. The proposal approved by PUCT includes a set of principles such as a defined reliability standard and clear performance standards that generators must meet to qualify for the credit.

While natural gas-fired power plants would qualify for the credit, PUCT Chair Peter Lake has stated that demand response programs would not. Despite this new subsidy for gas plants, E3 expects that solar and wind will still represent an increasing share of Texas’ electricity mix.

E3 estimates the total cost of the program at $460 million annually, and it is expected to add $2 to the monthly bill of the average residential customer. The proposal now goes to the Texas Legislature, where it must be approved by both houses before being implemented by Texas’ grid operator.

The PCM system is supported by Texas Governor Greg Abbot. However, it is strongly opposed both by Sierra Club and the author of the 2021 bill that mandated the report’s creation. In a Twitter thread, Texas Senator Charles Schwertner called the PCM “unacceptable,” stating that it is a “substantial departure from the legislative intent” of the 2021 legislation. Senator Schwertner has further stated that the legislature has the responsibility to build a reliable and resilient electric grid “within the confines of the energy-only market.”

News analysis: How Texas’ electricity plan could change the grid (E&E News)

News analysis: Texas regulators adopt performance credit in market overhaul proceeding, teeing up battle with lawmakers (UtilityDive)

Source: Wholesale Electric Market Design Implementation (PUCT)

House Republicans Prepare to Oppose China, Clean Energy

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By Christian Roselund

In its first month since taking office, the new Republican majority in the U.S. House of Representatives has signaled an aggressive anti-China position, an opposition to the energy transition, and an attempt to link these two positions. Specific actions include setting up a new committee on competition between the United States and China and threatening to introduce legislation to undo President Biden’s emergency proclamation freezing duties on solar imports from Southeast Asia for two years.

On 10 January 2023 the U.S. House voted to form a Select Committee on Competition between the United States and the Chinese Communist Party. All House Republicans voted in favor as well as more than 2/3 of Democrats. The committee will not be able to write laws but will hold hearings and provide policy advice.

House Republican Leadership has appointed Rep. Mike Gallagher (R-Wisconsin) as chair of the Select Committee. Gallagher identified a focus on supply chains and critical mineral dependencies as a priority for the committee in a December op-ed in Fox News. However, given Republican opposition to subsidies for clean energy and unified opposition to the Inflation Reduction Act, it is likely that the Republican-led committee will act to strengthen trade barriers instead of pushing for proactive industrial policy to “on-shore” production.

House Republicans are also expected to challenge Biden’s climate agenda through the Energy and Commerce Committee. Representative Robert Latta (R-Ohio), a leader on the Energy and Commerce Committee, has told E&E News that he intends to question Biden Administration officials on the 2-year moratorium on duties on modules from Southeast Asia under the anti-circumvention investigation. Latta is one of the six co-sponsors of H.J.Res.22, which would void the regulations implementing Biden’s emergency proclamation.

Additional insights into Republican priorities and talking points could be heard at the first hearing of the House Energy and Commerce Committee on 26 January 2023. The Roundtable on American Energy Security featured four experts who admitted to the existence of the climate crisis but expressed opposition to the transition to solar, wind, and other forms of non-hydro renewable energy to address it. These same experts usually referenced dependence on Chinese supply chains as a reason to oppose increased deployment of solar and wind and maintain use of fossil fuels and nuclear power.

This rhetorical admission of climate change is consistent with existent trends. An increasing number Republican politicians are moving from denying the existence of man-made climate change and downplaying its severity to admitting its existence even as the party largely opposes most means to reduce emissions.

The same Republican politicians that are leading opposition to Biden’s climate agenda and the energy transition are also among the largest recipients of funding from the oil & gas industry. Open Secrets found that among the 435 members of the U.S. House, House Energy & Commerce Chair Cathy McMorris Rodgers (R-Washington) received the 7th-highest level of contributions from the oil and gas industry at $295,467 in 2022. House Speaker Kevin McCarthy (R-California) received the highest level of donations at $616,563, and House Majority Leader Steven Scalise (R-Louisiana) received the 4th-highest level at $368,291. Of the 20 candidates with the highest level of oil & gas contributions, 17 were members of the Republican Party.

News analysis: Chairman Gallagher outlines China committee’s agenda (Roll Call)