Energy Transition in Motion (Week of Jan. 26, 2024)

NextEra Energy’s clean energy business unit saw its best year ever in 2023 for origination, adding about 9 gigawatts (GW) of new renewables and battery storage projects to its backlog.

Reporting on earnings Jan. 25, executives said NextEra Energy Resources’ renewables backlog now stands at more than 20 GW. The renewables unit placed about 5.6 GW of renewables into service in 2023, helping to grow its adjusted earnings by nearly 13% to about $2.8 billion compared to the prior year.

“Energy Resources continues to see strong demand and is well positioned to realize its development expectations over the four-year period ending 2026,” NextEra Energy CEO John Ketchum said on the earnings webcast. “Assuming we achieve the midpoint of the range, Energy Resources will be operating a roughly 63-gigawatt renewables portfolio by the end of 2026 that would be larger than the installed renewables capacity of all but 9 countries.”

Since October 2023 alone, the company said it has added about 1 GW of solar, 75 megawatts (MW) of wind, 805 MW of storage and 175 MW of wind repowering to its backlog.

The growth comes amid continued global efforts to lower greenhouse gas emissions by increasing use of renewable energy. The Biden administration is on a mission to decarbonize the U.S. electricity grid by 2035.

Ketchum said the strong performance “reflects continued strong demand from power customers looking for the least cost alternative to serve load and to replace uneconomic generation and commercial and industrial customers looking to help decarbonize their operations or meet their data center and AI demand.”

However, the year did not come without challenges. Higher interest rates and inflation were among the headwinds for NextEra, particularly for the solar supply chain, which executives said the company navigated to deliver earnings per share growth of about 11.5% since 2021.

“Disruption often presents opportunity,” Ketchum said.

However, the winds weren’t as strong.

“Contributions from new investments increased by 35 cents per share due to strong growth in our renewables and storage portfolio,” said CFO Kirk Crews. “Contributions from our existing clean energy assets decreased results by 11 cents per share, driven primarily by the impact of weaker wind resource. 2023 was the lowest wind resource on record over the past 30 years.”

Overall, NextEra Energy—the largest renewable energy developer in the U.S.—reported fourth-quarter 2023 earnings of about $1.07 billion, up from about $1.01 billion a year earlier. Full-year 2023 earnings increased to about $6.44 billion, up from $5.74 billion.

Here’s a look at other renewable energy news:

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Energy storage

E3 Lithium Sees Higher Lithium Concentrations in Nisku

Calgary-based E3 Lithium said results from a six-well sampling program reveal the Nisku Aquifer has higher lithium concentrations than historic Nisku samples.

E3 Lithium sampled brine in the Nisku from six well locations, finding lithium concentrations as high as 87 mg/L, the company said on Jan. 25. Historic Nisku samples had lithium grades up to 75 mg/L. Previously reported lithium concentrations from oil and gas wells between 2017 and 2020 ranged from 37 mg/L to 75 mg/L.

“Finding higher concentrations of lithium in the Nisku is a significant discovery,” said E3 Lithium CEO Chris Doornbos. “This opens the door to potentially produce from an additional aquifer to the Leduc in the future. The Nisku is well known in Alberta as a prolific oil producer and is similar to the Leduc in that respect.”

Located in the Clearwater project area in Alberta’s Leduc County, the Nisku sits above the Leduc Aquifer and stretches across the company’s entire permit area. E3 described both aquifers, which are about 2 km-3 km belowground and confined, as Devonian stacked reef complexes with high porosity and permeability, though the Nisku is not as thick as the Leduc.

“E3 Lithium has not completed a resource estimate in the Nisku, and if successful, would add additional resources to our already significant resource base from the Leduc,” Doornboss added.

Standard Selects Ausenco for SWA FEED Work, Feasibility Study

Standard Lithium tapped Ausenco Engineering Canada to complete a definitive feasibility study and FEED services for its South West Arkansas (SWA) project, according to a Jan. 24 news release.

With an average lithium grade of 437 mg/L, Vancouver-based Standard Lithium’s SWA project is nearing commercial scale direct lithium extraction in southwest Arkansas. The project has the potential to produce up to 35,000 tonnes of battery-quality lithium hydroxide over its 20-year operating life, Standard said in a news release.

“Despite recent headwinds in the global lithium macroeconomic environment, our projects remain very attractive,” said Standard Lithium COO Andy Robinson. “Based on our preliminary feasibility study (‘PFS’) results, the SWA Project is expected to sit at the lower end of the cost curve in comparison to other lithium projects. The selection of Ausenco for the SWA Project’s [definitive feasibility study] and FEED was a critical next step for us to advance the Project and maintain development and construction timelines.”

The project moves forward as global lithium prices fall on slower demand for EVs. Citing data group Benchmark Mineral Intelligence, the Financial Times reported the price of lithium has dropped by more than 80% in the past year to about $13,200 per ton, marking its lowest level since 2020.

Ausenco’s FEED work scope includes designing and developing technical solutions for the proposed plant and related infrastructure for the extraction facility.

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Geothermal

XGS Energy Secures $9.7MM in New Financing

Geothermal technology company XGS Energy announced an additional $9.7 million in new financing on Jan. 23.

This new financing, led by Constellation Technology Ventures, will help demonstrate XGS’ upcoming thermal reach enhancement (TRE) prototype.

XGS’ TRE system delivers high efficiency thermal energy by leveraging materials 50 times more conductive than native rock, XGS said. Unlike traditional geothermal solutions that require access to hot water reservoirs and specific geological formations, the technology can be deployed anywhere in the world.

Hydrogen

Plug Power Jumps on Govt Loan, Liquid Green Hydrogen Production Start

Plug Power said on Jan. 23 that it secured over $1 billion in government funding and started producing liquid green hydrogen at its Georgia plant, sending the company's shares up about 20% in morning trade.

The hydrogen fuel cell firm said it finalized a term sheet negotiation with the U.S. Department of Energy (DOE) for a $1.6 billion loan facility.

The company has been facing liquidity issues amid supply challenges in the liquid hydrogen market in North America, and had raised going concern doubts in November. It also planned a $1 billion equity raise earlier this month.

“This funding, when received, will support the development construction and ownership of up to six hydrogen production facilities, significantly advancing green hydrogen deployment in the United States,” CEO Andrew Marsh said during an investor call.

“With our Georgia plant operational, and the Tennessee plant coming online, we expect a significant reduction in costs,” he added.

Talking about the Georgia plant, Marsh said while “the construction took slightly longer than expected,” the facility will bolster Plug’s supply of liquid hydrogen deliveries to its customers for material handling operations, fuel cell electric vehicle fleets and stationary power applications.

The plant, which the company said is the largest liquid green hydrogen plant in the U.S. market, is designed to produce 15 tons per day of liquid electrolytic hydrogen.

“The DOE loan facility seems well baked, but we have to wait until the second half of 2024. Seems they are getting the finance options they need and wiggling out of a very tight spot,” said Craig Irwin, an analyst at Roth Capital Partners.

As companies are moving towards their net-zero emission targets, hydrogen, a zero-emission gas at point-of-use, serves as both a fuel and as energy storage, helping them reduce their carbon footprint.

The company said the production is expected to positively impact its bottom line and provide an additional step change in fuel margin expansion. 

Solar

Germany’s NexWafe Expands to US, Eyes Solar Wafer Production

Germany-based NexWafe said Jan. 26 it has set up a U.S. subsidiary as it evaluates developing an initial 6 GW of solar wafers.

The company has appointed Jonathan Pickering as vice president of business development for North America. Pickering was previously president of JA Solar Americas and a former vice president at Applied Materials.

NexWafe said its move into the U.S. aims to lessen solar wafer supply chain vulnerabilities, which “remains subject to China’s market dominance and potential geopolitical disruption.” The company intends to leverage incentives made possible by the Inflation Reduction Act.

Recurrent Lands $500MM Capital Commitment from BlackRock

BlackRock, through a fund managed by its climate infrastructure business, has made a $500 million private equity commitment to utility-scale solar company Recurrent Energy, according to a Jan. 23 news release.

The investment, which represents 20% of the outstanding fully diluted shares of Recurrent Energy on an as-converted basis, will be used to grow Recurrent’s project pipeline, its parent company Canadian Solar Inc. said Jan. 23 in a news release.

“We believe this partnership will help unlock the full potential of Recurrent Energy’s impressive renewable energy project development platform,” said David Giordano, global head of climate infrastructure and chief investment officer of transition capital for BlackRock. “Recurrent Energy is emblematic of our strategy of investing in leading renewable power generation assets and transition-enabling infrastructure.”

Recurrent seeks to become a long-term owner and operator in various markets. Its global development pipeline contains 26 GW in solar and 55 GWh in storage. The company aims to have 4 GW of solar and 2 GWh of storage in operation in the U.S. and Europe by 2026, Canadian Solar said.

Wind

Ørsted Plans to Reposition Skipjack Wind Offshore Maryland

Danish wind developer Ørsted has withdrawn its current offshore wind renewable energy certificates for the two-part Skipjack Wind development offshore Maryland, citing inflation, high interest rates and supply chain constraints.

The company said Jan. 25 it withdrew orders from the Maryland Public Service Commission approving the project. The change followed a review that determined payment amounts in the orders for offshore wind renewable energy certificates were not commercially viable.

Ørsted said it will reposition the combined 966-MW Skipjack Wind development. Plans are to move forward with development and permitting, including submission of an updated construction and operations plan to the U.S. Bureau of Ocean Energy Management.

“As we explore the best path forward for Skipjack Wind, we anticipate several opportunities and will evaluate each as it becomes available,” said David Hardy, executive vice president and CEO of Ørsted’s Americas region. “We’ll continue to advance Skipjack Wind’s development milestones, including its construction and operations plan.”

BP, Equinor Enter Empire Wind, Beacon Wind Swap

Offshore wind partners BP and Equinor decided to pursue development of two wind projects offshore New York separately, according to a Jan. 25 news release.

As part of a swap transaction, Equinor said it will take full ownership of Empire Offshore Wind Holdings LLC, as well as BP’s 50% share of the South Brooklyn Marine Terminal lease, subject to certain conditions. The Empire Wind is being developed as two projects—the 810-MW Empire Wind 1 and the 1.2-GW Empire Wind 2. Both have already secured offtake contracts with New York.

BP will take over Beacon Wind Holdings LLC, taking full ownership and operatorship of the wind projects, and the associated project company that holds the Astoria Gateway for Renewable Energy site. Beacon Wind is also being developed as two projects—the 1.23-GW Beacon Wind 1 and the 1.36-GW Beacon Wind 2.

With the exception of standard settlements of cash and working capital items, the transaction will be cash neutral, according to the release. Subject to regulatory approval, the transaction is expected to close in the second or third quarter of 2024 with an effective date of Jan. 1, 2024.

“The agreement provides Equinor and BP with the flexibility to pursue their respective priorities under their corporate strategies,” Equinor said in the release.

Both projects have been impacted by challenging macroeconomic conditions that have included supply chain issues, inflationary pressure and high interest rates. Equinor and BP were among the offshore wind developers that sought in 2023 to renegotiate prices in New York due to the industrywide challenges that impacted project economics. After denying the requests, New York unveiled a 10-point action plan that included a fourth offshore wind solicitation round (NY4), providing companies a rapid rebid offering.

“Empire Wind 1 is bidding into the NY4 solicitation, Empire Wind 2 will be matured for future solicitation round,” Equinor said. “Subject to the award of a new OREC (offshore wind renewable energy certificates) contract in the NY4 solicitation, the project is expected to deliver a real base project return towards the lower end of the guided range for renewable projects of 4%-8% on a forward-looking basis.”

The company also said the New York State Energy Research and Development Authority has agreed to terminate the Offshore Wind Renewable Energy Certificate purchase and sale agreement for the Beacon Wind 1 project.

Ørsted Agrees to Take Entire Ownership of Sunrise Wind

Ørsted said Jan. 24 it has agreed to acquire full ownership of the Sunrise Wind project it is developing with partner Eversource offshore New York, subject to certain conditions.

As stated in a news release, those conditions include Sunrise Wind being awarded in the ongoing New York 4 solicitation for offshore wind capacity, signing a contract with the New York State Energy Research and Development Authority, entering long-form acquisition agreements and other regulatory approvals.

Final federal permits for the project are expected this summer, Ørsted said.

“Following a thorough risk review of our U.S. portfolio, we’re comfortable with taking full ownership of Sunrise Wind if the project is awarded in New York 4,” said David Hardy, executive vice president and CEO for Ørsted’s Americas region. “This transaction is a value-accretive opportunity for Ørsted and the best path forward for the project.”

The New York 4 solicitation is expected to be complete in 2026. If the project is provisionally awarded, a new contract will be negotiated with NYSERDA under the updated terms of the current solicitation.

Financial details of the acquisition of Eversource’s 50% stake in the 924-MW offshore wind farm were not disclosed.

The agreement between Ørsted and Eversource was reached about three months after Ørsted announced it would stop development of two 1.1-GW wind projects offshore New Jersey and book about $4 billion of impairment charges. The company cited reasons including higher interest rates and supplier delays.

New Jersey Approves Two Giant Offshore Wind Power projects

New Jersey’s utility regulator on Jan. 24 approved two offshore wind power projects with a combined capacity of 3,742 MW and whose backers include Invenergy and TotalEnergies.

“Today’s action moves New Jersey closer to achieving Governor Phil Murphy’s goal of reaching 100% clean energy by 2035,” the New Jersey Board of Public Utilities (BPU) said. The board said the two projects would bring about $6.8 billion in economic benefits to the state and provide enough energy to power around 1.8 million homes.

The offshore wind industry is expected to play a major role in helping several states and U.S. President Joe Biden meet goals to decarbonize the power grid and combat climate change.

But progress was slow last year after offshore developers canceled contracts to sell power in Massachusetts, Connecticut and New Jersey, and threatened to cancel agreements in other states, as soaring inflation, interest rate hikes and supply-chain problems increased project costs.

The latest approvals were part of New Jersey’s third solicitation for offshore wind, which sought 1,200 MW to 4,000 MW of power capacity. In total, the state wants about 11,000 MW of offshore wind power by 2040.

Specifically, the BPU approved the 1,342-MW Attentive Energy Two project and the 2,400-MW Leading Light project as qualified offshore wind projects to receive offshore wind renewable energy certificates, or ORECs.

Attentive Energy Two is a joint venture between units of French oil major TotalEnergies and wind developer Corio Generation. Leading Light, which is expected to start producing power in 2031, is a partnership between U.S. energy firms Invenergy and energyRe.

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Reuters and Hart Energy Staff contributed to this report.