Consider Malaysia.

According to a recent Reuters article, Malaysia’s power mix has evolved in a surprising way: coal use has continued to climb while gas generation has been flat for more than a decade.

Figure 1 | Electricity Generation in Malaysia

That’s not because Malaysia lacks access to gas. It remains one of the world’s top LNG exporters.

Figure 2 | Largest LNG Exporting Countries

The issue lies, at least in part, in stagnant domestic gas output. With production flat, Malaysia faces a trade-off: use its gas to meet rising domestic electricity demand or preserve LNG exports that generate valuable foreign revenue.

Figure 3 | Malaysian Oil and Gas Production

Price dynamics make the choice easier. Coal prices have fallen, LNG prices have risen, and export margins remain strong. The economic signal is clear: keep exporting LNG and burn more coal at home.

Figure 4 | Thermal Coal Price Markers

Figure 5 | Global Price of LNG, Asia

This matters beyond Malaysia’s borders. Roughly a year ago, the Wall Street Journal profiled Johor as one of the “AI boomtowns” benefiting from data-center expansion.

Johor’s advantages are strategic: proximity to Singapore (a key global data-transit hub), political balance between the U.S. and China, and abundant land, water, and power. As AI infrastructure continues to scale, Malaysia’s electricity demand will keep rising. And for now, that growth is being powered by coal.

TL;DR

• Nuclear up

• Wind and solar rolling over (down for Rep/lean Rep).

• Offshore drilling, fraccing and coal mining drifting up (up for Rep/lean Rep).

Google and Brookfield have entered a Framework Agreement (HFA) for up to 3,000 MW of hydroelectric capacity across the United States. This partnership, initially valued at over $3 billion, includes long-term contracts for the 670 MW Holtwood and Safe Harbor facilities in Pennsylvania.

This agreement is consistent with the strategy that has made nuclear, and now hydro, popular:

• Target existing assets: The 3,000 MW target encompasses assets that will undergo relicensing, overhaul, or upgrades to extend their operational lifespan.

• Key Market Focus: The initial facilities are strategically located in PJM and MISO, two critical power markets for Google's operations.

• Long-Term Certainty: The 20-year Power Purchase Agreements (PPAs) provide both parties with long-term economic stability.

The deal also highlights the ongoing drive for hyperscalers to secure 24/7 carbon-free power to meet the escalating demands of data centers and artificial intelligence (AI). Specifically, balancing the power needs of companies like Google and Microsoft at the forefront of the AI boom, while also meeting their ambitious carbon neutrality goals (such as Google's aim to power its operations with round-the-clock carbon-free energy).

The result is many leaders of the AI boom are placing value on all three attributes of the electrons they source: the energy, carbon attributes and reliability attributes.

Case in point: Based on the initial contracts for the relicensing of the Holtwood and Safe Harbor facilities, the implied cost is approximately $70/MWh. This is derived from the $3 billion investment over 20 years for 670 MW, assuming a 36.5% capacity factor.

The premium is real for reliable, dispatchable, and carbon-free electricity.

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That was the conclusion of a recent report from the DOE “Evaluating the Reliability and Security of the United States Electric Grid”.

The combination of planned retirements of firm power capacity, new generation concentrated on wind and solar generation, and load growth (from AI data centers as well as other load drivers) “𝗶𝗻𝗰𝗿𝗲𝗮𝘀𝗲 𝘁𝗵𝗲 𝗿𝗶𝘀𝗸 𝗼𝗳 𝗽𝗼𝘄𝗲𝗿 𝗼𝘂𝘁𝗮𝗴𝗲𝘀 𝗯𝘆 𝟭𝟬𝟬𝘅 𝗶𝗻 𝟮𝟬𝟯𝟬” in the DOE’s analysis.

Consider the Loss of Load Hours (LOLH) metric, which measures the expected duration of power outages when a system's load exceeds its available generation capacity. Based on a "1-in-10 year" reliability standard for electricity grids, on average, there should be no more than one day (24 hours) of lost load over a ten-year period. This translates to a maximum of 2.4 hours of lost load per year.

In the DOE’s “Plant Closures” scenario, which combines 104 GW of announced retirements (~71 GW of coal and ~25 GW of natural gas) and 209 GW of additions (20GW of natural gas, 31 GW of 4-hour batteries, 124 GW of solar and 32 GW of wind) 𝗺𝗼𝘀𝘁 𝗿𝗲𝗴𝗶𝗼𝗻𝘀 𝗮𝗿𝗲 𝗹𝗶𝗸𝗲𝗹𝘆 𝘁𝗼 𝗳𝗶𝗻𝗱 𝘁𝗵𝗲𝗺𝘀𝗲𝗹𝘃𝗲𝘀 𝘄𝗶𝘁𝗵 𝗟𝗢𝗟𝗛 𝘄𝗲𝗹𝗹 𝗮𝗯𝗼𝘃𝗲 𝘁𝗵𝗲 “𝟭-𝗶𝗻-𝟭𝟬 𝘆𝗲𝗮𝗿” 𝘁𝗵𝗿𝗲𝘀𝗵𝗼𝗹𝗱 𝗯𝘆 𝟮𝟬𝟯𝟬.

In contrast, if retirements are delayed, or that capacity is replaced 1-for-1 (in addition to the other additions), the picture looks much better.

But 2030 is not that far off, in infrastructure construction time. 𝗪𝗵𝗮𝘁 𝗺𝗼𝗿𝗲 𝗰𝗮𝗻 𝗴𝗲𝘁 𝗯𝘂𝗶𝗹𝘁, 𝗮𝗻𝗱 𝗵𝗼𝘄 𝗺𝘂𝗰𝗵 𝗰𝗮𝗻 𝘁𝗵𝗼𝘀𝗲 𝘁𝗶𝗺𝗲𝗹𝗶𝗻𝗲𝘀 𝗴𝗲𝘁 𝗮𝗰𝗰𝗲𝗹𝗲𝗿𝗮𝘁𝗲𝗱?

Governor Kathy Hochul has directed the New York Power Authority (NYPA) to develop at least 1 gigawatt of new nuclear capacity, according to the Wall Street Journal. That would expand the state’s current nuclear fleet—currently 3.3 GW, operated by Constellation Energy—by nearly 30%.

Hochul has the authority to enforce this directive through her control of NYPA’s board appointments, oversight of key energy agencies, and influence over permitting and public funding priorities.

The directive looks analogous to Renewable Portfolio Standards (RPS) which have driven wind and solar growth by setting binding clean energy targets. But instead of requiring a percentage of renewable generation from private utilities, this directive tasks a public power agency with delivering a specific amount of firm, zero-carbon energy—nuclear—through state-backed action.

It may have an electricity problem.

Recent data from the EIA shows that US energy production rose to a new record in 2024, about ~1% higher than the record set in 2023.

Natural gas, crude oil, natural gas plant liquids, and renewables all reached new highs. That sounds good from an energy perspective (and it is). However, the leading sources are all combustion fuels. Two highlights:

• Natural gas plant liquids exceeded total renewables energy production (this says more about natural gas production growth than anything).

• Biofuels production was roughly equivalent to solar and wind generation combined.

As power generation grows in importance - driven by AI and electrification trends - energy resources that produce electricity, particularly of the dispatchable and low-carbon flavor, grow in importance. From that standpoint the data is less rosy:

• Nuclear, hydro and geothermal energy production (low-carbon baseload?) were both their historical peaks 2007, 1997 and 2023 peaks.

• Coal continues its 15+ year decline in absolute terms.

• Natural gas, albeit the majority is destined for LNG and non-power consumption.

So while the US energy picture is as strong as ever, the shifting taste of consumers (towards electrical versus combustion pathways), suggest the mix may be falling out of sync with demand.

𝗦𝘂𝗺𝗺𝗲𝗿𝘀 𝗵𝗮𝘃𝗲 𝘄𝗮𝗿𝗺𝗲𝗱 𝗶𝗻 𝟵𝟳% 𝗼𝗳 𝟮𝟰𝟮 𝗨.𝗦. 𝗰𝗶𝘁𝗶𝗲𝘀 analyzed — by an average of 𝟮.𝟲°𝗙 𝘀𝗶𝗻𝗰𝗲 𝟭𝟵𝟳𝟬 (check out the map from Climate Central below). The warming trend isn’t news.

But 𝟯% 𝗼𝗳 𝗰𝗶𝘁𝗶𝗲𝘀 𝘀𝗮𝘄 𝘁𝗲𝗺𝗽𝗲𝗿𝗮𝘁𝘂𝗿𝗲𝘀 𝗖𝗢𝗢𝗟𝗜𝗡𝗚 𝗼𝘃𝗲𝗿 𝘁𝗵𝗶𝘀 𝟱𝟱 𝘆𝗲𝗮𝗿 𝗽𝗲𝗿𝗶𝗼𝗱 might be.

The cooling trend shows up in the mid-west, in states like the Dakota’s, Nebraska, Kansas, Missouri and Iowa.

At the other extreme, 𝗮 𝗻𝘂𝗺𝗯𝗲𝗿 𝗼𝗳 𝗰𝗼𝘂𝗻𝘁𝗶𝗲𝘀 𝗵𝗮𝘃𝗲 𝘀𝗲𝗲𝗻 𝘁𝗲𝗺𝗽𝗲𝗿𝗮𝘁𝘂𝗿𝗲𝘀 𝗿𝗶𝘀𝗲 𝗯𝘆 𝟱°𝗙 𝗼𝗿 𝗺𝗼𝗿𝗲, notably in west Texas and New Mexico.

So what? For starters it is a good reminder of the variability of climate change. The impact, however, varies. A few examples:

• 𝗖𝗼𝗼𝗹𝗶𝗻𝗴 𝗗𝗲𝗺𝗮𝗻𝗱: Widespread warming drives electricity demand for AC, necessitating significant grid and renewable energy investments.

• 𝗟𝗼𝗰𝗮𝗹𝗶𝘇𝗲𝗱 𝗥𝗶𝘀𝗸: Investors must pinpoint regional climate risks; warming areas face higher asset vulnerability, while cooling spots present unique considerations.

• 𝗧𝗮𝗿𝗴𝗲𝘁𝗲𝗱 𝗥𝗲𝘀𝗶𝗹𝗶𝗲𝗻𝗰𝗲 𝗜𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁: Capital must flow into tailored, heat-resilient infrastructure where temperatures spike, adapting strategies to specific regional climate shifts.

𝗧𝗵𝗲 𝗱𝗲𝗮𝗹 𝗽𝘂𝘁𝘀 𝗲𝘅𝗽𝗹𝗶𝗰𝗶𝘁 𝘃𝗮𝗹𝘂𝗲 - 𝗽𝗲𝗿𝗵𝗮𝗽𝘀 $𝟭.𝟱 𝗯𝗶𝗹𝗹𝗶𝗼𝗻 - 𝗼𝗻 𝘁𝗵𝗲 𝟮𝟰/𝟳 𝗹𝗼𝘄-𝗰𝗮𝗿𝗯𝗼𝗻 𝗲𝗻𝘃𝗶𝗿𝗼𝗻𝗺𝗲𝗻𝘁𝗮𝗹 𝗮𝘁𝘁𝗿𝗶𝗯𝘂𝘁𝗲𝘀 of this power and effectively replaces the Illinois Zero Emission Credit (ZEC) program set to expire mid-2027. In effect, the PPA is a privatization of the ZEC.

$𝟭.𝟱 𝗯𝗶𝗹𝗹𝗶𝗼𝗻? The ZEC program compensates plants for their carbon-free electricity generation and effectively puts a price on that attribute. For the year June 1 2024 to May 31, 2025, 𝗭𝗘𝗖 𝗽𝗿𝗶𝗰𝗲𝘀 𝘄𝗲𝗿𝗲 $𝟵.𝟯𝟴/𝗠𝗪𝗵 according to "Zero Emission Standard Final Payment Calculation Notice" published by the Illinois Power Agency (IPA). For 20 years at ~85% capacity factor that would be ~$1.5 billion.

The deal is similar to Microsoft’s 20 year PPA the launch the Crane Clean Energy Center and restart Three Mile Island Unit 1 (TMI1). In neither case is a data center expected to be co-located on the site.

In both the TMI1 and Clinton cases 𝗲𝗻𝘁𝗶𝘁𝗶𝗲𝘀 (𝗠𝗘𝗧𝗔 𝗮𝗻𝗱 𝗠𝗶𝗰𝗿𝗼𝘀𝗼𝗳𝘁) 𝘁𝗵𝗮𝘁 𝘃𝗮𝗹𝘂𝗲 𝘁𝗵𝗲 𝗹𝗼𝘄 𝗰𝗮𝗿𝗯𝗼𝗻 𝟮𝟰/𝟳 𝗽𝗼𝘄𝗲𝗿 𝗺𝗼𝘀𝘁 - 𝗯𝗲𝗰𝗮𝘂𝘀𝗲 𝗼𝗳 𝘁𝗵𝗲 𝗱𝗲𝗺𝗮𝗻𝗱𝘀 𝗼𝗳 𝘁𝗵𝗲𝗶𝗿 𝗱𝗮𝘁𝗮 𝗰𝗲𝗻𝘁𝗲𝗿 𝗴𝗿𝗼𝘄𝘁𝗵 𝗮𝗻𝗱 𝘀𝘂𝘀𝘁𝗮𝗶𝗻𝗮𝗯𝗶𝗹𝗶𝘁𝘆 𝗴𝗼𝗮𝗹𝘀 - 𝗮𝗿𝗲 𝘄𝗶𝗹𝗹𝗶𝗻𝗴 𝘁𝗼 𝗽𝗮𝘆 for that attribute at a sufficiently high price to restart or extend the life of a plant that might otherwise close.

Not a bad market outcome.

Today’s headlines on the WSJ’s Artificial Intelligence page today serve as a reminder of just how broad the technology’s reach has become:

• 𝗠𝗨𝗦𝗜𝗖: “Universal, Warner and Sony Are Negotiating AI Licensing Rights for Music”

• 𝗧𝗥𝗔𝗗𝗘𝗦: “AI Is Here for Plumbers and Electricians. Will It Transform Home Services?”

• 𝗔𝗗𝗩𝗘𝗥𝗧𝗜𝗦𝗜𝗡𝗚: “Meta Aims to Fully Automate Ad Creation Using AI”

AI is coming to industry - all industries - fast. And so are the data centers (and power demand) that enable it.

For energy, 𝘁𝗵𝗲 𝗾𝘂𝗲𝘀𝘁𝗶𝗼𝗻 𝗶𝘀𝗻’𝘁 𝗷𝘂𝘀𝘁 “𝗵𝗼𝘄 𝗺𝘂𝗰𝗵” 𝘄𝗶𝗹𝗹 𝗴𝗲𝘁 𝗯𝘂𝗶𝗹𝘁, 𝗶𝘁’𝘀 𝗮𝗹𝘀𝗼 “𝘄𝗵𝗲𝗿𝗲”. Turns out “𝗺𝗼𝗿𝗲 𝘁𝗵𝗮𝗻 𝟲𝟱,𝟬𝟬𝟬 𝗯𝘂𝗶𝗹𝗱𝗮𝗯𝗹𝗲 𝗮𝗰𝗿𝗲𝘀 𝗮𝗹𝗿𝗲𝗮𝗱𝘆 𝗮𝗰𝗾𝘂𝗶𝗿𝗲𝗱 𝗯𝘆 𝗱𝗮𝘁𝗮 𝗰𝗲𝗻𝘁𝗲𝗿 𝗱𝗲𝘃𝗲𝗹𝗼𝗽𝗲𝗿𝘀 𝗮𝗻𝗱 𝘁𝗵𝗲𝗶𝗿 𝘀𝘂𝗯𝘀𝗶𝗱𝗶𝗮𝗿𝗶𝗲𝘀 𝗮𝗰𝗿𝗼𝘀𝘀 𝘁𝗵𝗲 𝗟𝗼𝘄𝗲𝗿 𝟰𝟴”.

Here’s a hotspot around New Albany:

𝗪𝗵𝗮𝘁 𝗴𝗲𝘁’𝘀 𝗯𝘂𝗶𝗹𝘁 𝗳𝗶𝗿𝘀𝘁? That’s a “speed to power” question. And while some of the hotspots are obvious, others are not.

𝗪𝗵𝗶𝗰𝗵 𝗮𝗿𝗲𝗮𝘀 𝗱𝗼 𝘆𝗼𝘂 𝘀𝗲𝗲 𝗮𝘀 𝘂𝗻𝗱𝗲𝗿𝗮𝗽𝗽𝗿𝗲𝗰𝗶𝗮𝘁𝗲𝗱 (𝗼𝗿 𝗼𝘃𝗲𝗿-𝗵𝘆𝗽𝗲𝗱) 𝗳𝗼𝗿 𝗱𝗮𝘁𝗮 𝗰𝗲𝗻𝘁𝗲𝗿 𝗱𝗲𝘃𝗲𝗹𝗼𝗽𝗺𝗲𝗻𝘁?

This week Malaysia announced a “sovereign, full-stack AI ecosystem powered by Huawei GPUs” and plans to deploy a localized version of the DeepSeek opensource LLM.

That got me thinking: As countries consider their sovereign AI strategies, 𝙬𝙝𝙖𝙩 𝙖𝙧𝙚 𝙩𝙝𝙚 𝙞𝙢𝙥𝙡𝙞𝙘𝙖𝙩𝙞𝙤𝙣𝙨 𝙤𝙛 𝙩𝙝𝙚 𝙩𝙚𝙘𝙝 𝙨𝙩𝙖𝙘𝙠 𝙩𝙝𝙚𝙮 𝙘𝙝𝙤𝙤𝙨𝙚?

One is the durability of these choices. 𝗧𝗲𝗰𝗵𝗻𝗼𝗹𝗼𝗴𝘆 𝗹𝗼𝗰𝗸-𝗶𝗻, the idea that the more a society adopts a certain technology the more unlikely users are to switch, suggests that these early choices are likely to be sticky over time. If that’s right, 𝗲𝗰𝗼𝘀𝘆𝘀𝘁𝗲𝗺 𝗰𝗵𝗼𝗶𝗰𝗲, 𝗮𝗻𝗱 𝘁𝗵𝗲 𝘀𝗽𝗼𝗻𝘀𝗼𝗿 𝗮𝗹𝗶𝗴𝗻𝗺𝗲𝗻𝘁 𝘁𝗵𝗮𝘁 𝗰𝗼𝗺𝗲𝘀 𝘄𝗶𝘁𝗵 𝗶𝘁, 𝗺𝗮𝘆 𝗵𝗮𝘃𝗲 𝗶𝗺𝗽𝗹𝗶𝗰𝗮𝘁𝗶𝗼𝗻𝘀 𝘄𝗲 𝗰𝗮𝗻𝗻𝗼𝘁 𝘆𝗲𝘁 𝗶𝗺𝗮𝗴𝗶𝗻𝗲.

Another is what drives the choice? Leaving questions about geopolitical alignment aside, some of the key strengths of the Huawei stack include cost competitiveness and system-level scalability, while Nvidia currently boasts better per-chip performance, power efficiency and a stronger software system.

𝗜𝗳 𝘆𝗼𝘂 𝗮𝗿𝗲 𝗰𝗼𝘀𝘁 𝗰𝗼𝗻𝘀𝗰𝗶𝗼𝘂𝘀 𝗮𝗻𝗱 𝗵𝗮𝘃𝗲 𝗽𝗹𝗲𝗻𝘁𝗶𝗳𝘂𝗹 𝗮𝗰𝗰𝗲𝘀𝘀 𝘁𝗼 𝗲𝗻𝗲𝗿𝗴𝘆, 𝘁𝗵𝗲 𝗛𝘂𝗮𝘄𝗲𝗶 𝘀𝘁𝗮𝗰𝗸 𝗵𝗮𝘀 𝗮 𝗹𝗼𝘁 𝘁𝗼 𝗼𝗳𝗳𝗲𝗿. A quick look at the Malaysian power stack reveals steady growth with about about 80% of it’s power coming from coal and gas (43% from coal). It’s a good reminder that low-carbon power for data centers is not a hot topic every region.

Last, 𝗠𝗮𝗹𝗮𝘆𝘀𝗶𝗮 𝗶𝘀 𝗴𝗿𝗼𝘄𝗶𝗻𝗴 𝗮𝘀 𝗮 𝗱𝗮𝘁𝗮 𝗰𝗲𝗻𝘁𝗲𝗿 𝗵𝘂𝗯 𝘄𝗶𝘁𝗵 𝗺𝗮𝗷𝗼𝗿 𝗶𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁𝘀 𝗳𝗿𝗼𝗺 𝗔𝗪𝗦, 𝗚𝗼𝗼𝗴𝗹𝗲, 𝗠𝗶𝗰𝗿𝗼𝘀𝗼𝗳𝘁 𝗮𝗻𝗱 𝗼𝘁𝗵𝗲𝗿𝘀 (the WSJ wrote on this last fall). Many of these facilities will host completing tech stacks (like Nvidia), so while the “sovereign AI” choice might be Huawei, there will be plenty competitors present at scale in the country as well.

𝗪𝗵𝗮𝘁 𝗱𝗼 𝘆𝗼𝘂 𝘀𝗲𝗲 𝗮𝘀 𝘁𝗵𝗲 𝗹𝗼𝗻𝗴-𝘁𝗲𝗿𝗺 𝗰𝗼𝗻𝘀𝗲𝗾𝘂𝗲𝗻𝗰𝗲𝘀 𝗼𝗳 𝘀𝗼𝘃𝗲𝗿𝗲𝗶𝗴𝗻 𝘁𝗲𝗰𝗵 𝘀𝘁𝗮𝗰𝗸 𝗰𝗵𝗼𝗶𝗰𝗲? 𝗜𝘀 𝗶𝘁 𝗮 𝗯𝗶𝗴 𝗱𝗲𝗮𝗹?

Multiple exponential forces underpin predictions for power demand from data centers.

But 𝗲𝘅𝗽𝗼𝗻𝗲𝗻𝘁𝗶𝗮𝗹 𝗼𝘂𝘁𝗰𝗼𝗺𝗲𝘀 𝗮𝗿𝗲 𝗻𝗼𝘁𝗼𝗿𝗶𝗼𝘂𝘀𝗹𝘆 𝗵𝗮𝗿𝗱 𝘁𝗼 𝗳𝗼𝗿𝗲𝗰𝗮𝘀𝘁. The result is plenty of opinions and uncertainty “how big”, and “how fast”, this load is coming at the grid.

A few of the big factors at work:

• 𝗖𝗼𝗺𝗽𝘂𝘁𝗲 𝗱𝗲𝗺𝗮𝗻𝗱: Historically exponential, and expectations that AI will lead to an inflection in the growth rate.

• 𝗖𝗼𝗺𝗽𝘂𝘁𝗲 𝗲𝗻𝗲𝗿𝗴𝘆 𝗲𝗳𝗳𝗶𝗰𝗶𝗲𝗻𝗰𝘆: Each generation of chip has consistently delivered more compute per watt.

• 𝗣𝗼𝘄𝗲𝗿 𝗨𝘀𝗮𝗴𝗲 𝗘𝗳𝗳𝗶𝗰𝗶𝗲𝗻𝗰𝘆 (𝗣𝗨𝗘): The ratio of total energy consumed by a facility to the energy used by the IT equipment alone continues to improve.

• 𝗖𝗮𝗽𝗶𝘁𝗮𝗹 𝗘𝗳𝗳𝗶𝗰𝗶𝗲𝗻𝗰𝘆 𝗼𝗳 𝗣𝗼𝘄𝗲𝗿: While dollar per unit of compute continues to decline, dollars per unit of energy consumed is rising.

• 𝗠𝗮𝗶𝗻𝘁𝗲𝗻𝗮𝗻𝗰𝗲 𝗖𝗮𝗽𝗶𝘁𝗮𝗹 𝗥𝘂𝗻-𝗥𝗮𝘁𝗲: Chips are getting replaced on a 4-6 year cycle. As facility capacity expands, so does the run-rate of maintenance capital.

Add in the land grab (see image below) as stakeholders across the country look to take advantage of the AI boom, and it’s no wonder that the headlines (such as Microsoft pulling back from data center leases) can be hard to interpret.

𝗪𝗵𝗲𝗿𝗲 𝗱𝗼 𝘆𝗼𝘂 𝗳𝗶𝗻𝗱 𝘁𝗵𝗲 𝗴𝗿𝗲𝗮𝘁𝗲𝘀𝘁 𝗱𝗲𝗯𝗮𝘁𝗲 𝗮𝗻𝗱 𝗱𝗶𝗳𝗳𝗲𝗿𝗲𝗻𝗰𝗲𝘀 𝗶𝗻 𝘆𝗼𝘂𝗿 𝗳𝗮𝘃𝗼𝗿𝗶𝘁𝗲 𝗳𝗼𝗿𝗲𝗰𝗮𝘀𝘁𝘀 𝗳𝗼𝗿 𝗱𝗮𝘁𝗮 𝗰𝗲𝗻𝘁𝗲𝗿 𝗽𝗼𝘄𝗲𝗿 𝗱𝗲𝗺𝗮𝗻𝗱?

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There remains a lot of speculation about the true cause of the black out, and at times its tough to separate opinions from data. EPRI did a nice job in this webinar laying out what is visible in the public data and contextualizing what is known about the event.

Listening in reminded me of a few recurrent themes:

📍𝗠𝗼𝗿𝗲 𝗶𝗻𝘁𝗲𝗿𝗰𝗼𝗻𝗻𝗲𝗰𝘁𝗲𝗱 𝗴𝗿𝗶𝗱𝘀 𝗰𝗮𝗻 𝗶𝗻𝘁𝗿𝗼𝗱𝘂𝗰𝗲 𝗻𝗲𝘄 𝗰𝗼𝗺𝗽𝗹𝗲𝘅𝗶𝘁𝘆 𝗮𝗻𝗱, 𝗽𝗼𝘁𝗲𝗻𝘁𝗶𝗮𝗹𝗹𝘆, 𝗻𝗼𝘃𝗲𝗹 𝗽𝗿𝗼𝗯𝗹𝗲𝗺𝘀 𝗳𝗼𝗿 𝗴𝗿𝗶𝗱 𝗼𝗽𝗲𝗿𝗮𝘁𝗼𝗿𝘀 𝘁𝗼 𝗺𝗮𝗻𝗮𝗴𝗲. Case in point: the potential for new oscillations in the European grid due to integrating Latvia.

📍𝗚𝗿𝗲𝗮𝘁𝗲𝗿 𝗶𝗻𝘁𝗲𝗿𝗰𝗼𝗻𝗻𝗲𝗰𝘁𝗶𝗼𝗻 𝗺𝗮𝘆 𝗵𝗮𝘃𝗲 𝗰𝗼𝗺𝗽𝗼𝘂𝗻𝗱𝗲𝗱 𝘁𝗵𝗲 𝗶𝗻𝗶𝘁𝗶𝗮𝗹 𝗲𝘃𝗲𝗻𝘁𝘀 𝗯𝘂𝘁 𝗮𝗹𝘀𝗼 𝗵𝗲𝗹𝗽𝗲𝗱 𝘄𝗶𝘁𝗵 𝘁𝗵𝗲 𝗯𝗹𝗮𝗰𝗸𝘀𝘁𝗮𝗿𝘁. There are puts and takes for everything. What a bonus to be able to pull ~1,500 MW from France during the Spanish grid restoration.

📍𝗚𝗿𝗼𝘄𝗶𝗻𝗴 𝗱𝗶𝘃𝗲𝗿𝘀𝗶𝘁𝘆 𝗼𝗳 𝗿𝗲𝘀𝗼𝘂𝗿𝗰𝗲𝘀 (𝗮𝗻𝗱 𝗿𝗲𝘀𝗼𝘂𝗿𝗰𝗲 𝗮𝘁𝘁𝗿𝗶𝗯𝘂𝘁𝗲𝘀) 𝗺𝗲𝗮𝗻𝘀 𝗲𝘃𝗼𝗹𝘃𝗶𝗻𝗴 𝗴𝗿𝗶𝗱 𝗱𝘆𝗻𝗮𝗺𝗶𝗰𝘀. Established assumptions can lead to emergent risks. For example, did existing protection setup create a vulnerability exposed by a changing system?

As more data becomes available in the coming days and weeks, we’ll get a clearer explanation of the cause and cascade of events, but for now I found this a helpful way to understand what is known.

Source | EPRI

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Once considered “unconventional,” hydraulic fracturing is now standard practice in North American oil and gas.

But the same techniques that revolutionized fossil fuel production are now 𝘂𝗻𝗹𝗼𝗰𝗸𝗶𝗻𝗴 𝗼𝗽𝗽𝗼𝗿𝘁𝘂𝗻𝗶𝘁𝘆 𝗶𝗻 𝗻𝗲𝘄 𝘀𝗲𝗰𝘁𝗼𝗿𝘀 𝗹𝗶𝗸𝗲 𝗴𝗲𝗼𝘁𝗵𝗲𝗿𝗺𝗮𝗹 𝗮𝗻𝗱 𝗵𝘆𝗱𝗿𝗼𝗴𝗲𝗻.

In geothermal, fracking has enabled 𝘁𝗵𝗲 𝗿𝗶𝘀𝗲 𝗼𝗳 𝗘𝗻𝗵𝗮𝗻𝗰𝗲𝗱 𝗚𝗲𝗼𝘁𝗵𝗲𝗿𝗺𝗮𝗹 𝗦𝘆𝘀𝘁𝗲𝗺𝘀 (𝗘𝗚𝗦), where companies like Fervo and AltaRock Energy are creating artificial reservoirs in hot, dry rock to tap thermal energy where conventional geothermal doesn’t work (see the map below).

In hydrogen, we’re seeing 𝘁𝗵𝗲 𝗲𝗺𝗲𝗿𝗴𝗲𝗻𝗰𝗲 𝗼𝗳 𝗦𝘁𝗶𝗺𝘂𝗹𝗮𝘁𝗲𝗱 𝗚𝗲𝗼𝗹𝗼𝗴𝗶𝗰 𝗛𝘆𝗱𝗿𝗼𝗴𝗲𝗻 (𝗦𝗚𝗛). Companies like GeoRedox are using subsurface stimulation to accelerate natural reactions between water and iron-rich rock, producing clean hydrogen directly from the Earth.

Fracking, what was once a defining feature of “unconventional” oil and gas may now be t𝗵𝗲 𝗳𝗼𝘂𝗻𝗱𝗮𝘁𝗶𝗼𝗻 𝗳𝗼𝗿 𝗮 𝗻𝗲𝘄 𝘄𝗮𝘃𝗲 𝗼𝗳 𝗶𝗻𝗱𝘂𝘀𝘁𝗿𝘆 𝘁𝗿𝗮𝗻𝘀𝗳𝗼𝗿𝗺𝗮𝘁𝗶𝗼𝗻𝘀.

𝗪𝗵𝗲𝗿𝗲 𝗲𝗹𝘀𝗲 𝗱𝗼 𝘆𝗼𝘂 𝘀𝗲𝗲 𝗵𝘆𝗱𝗿𝗮𝘂𝗹𝗶𝗰 𝗳𝗿𝗮𝗰𝘁𝘂𝗿𝗶𝗻𝗴 𝗺𝗮𝗸𝗶𝗻𝗴 𝗮𝗻 𝗶𝗺𝗽𝗮𝗰𝘁 𝗯𝗲𝘆𝗼𝗻𝗱 𝗼𝗶𝗹 𝗮𝗻𝗱 𝗴𝗮𝘀?

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𝗧𝗵𝗲 𝘁𝗼𝗽 𝗮𝗻𝗱 𝗯𝗼𝘁𝘁𝗼𝗺 𝗾𝘂𝗮𝗿𝘁𝗶𝗹𝗲𝘀 𝗼𝗳 𝗮𝘀𝘀𝗲𝘁 𝗲𝗺𝗶𝘀𝘀𝗶𝗼𝗻𝘀 𝗶𝗻𝘁𝗲𝗻𝘀𝗶𝘁𝘆 𝗮𝗿𝗲 𝗴𝗼𝗶𝗻𝗴 𝗶𝗻 𝗼𝗽𝗽𝗼𝘀𝗶𝘁𝗲 𝗱𝗶𝗿𝗲𝗰𝘁𝗶𝗼𝗻𝘀 according to benchmarking by BCG.

The best assets (top quartile) have seen emissions intensities fall (improve) by about 4 kg CO2e/boe/yr from 2020-2023. 𝗧𝗵𝗲 𝘄𝗼𝗿𝘀𝘁 (𝗯𝗼𝘁𝘁𝗼𝗺 𝗾𝘂𝗮𝗿𝘁𝗶𝗹𝗲)? 𝗧𝗵𝗲𝘆 𝗶𝗻𝗰𝗿𝗲𝗮𝘀𝗲𝗱 𝗶𝗻𝘁𝗲𝗻𝘀𝗶𝘁𝘆 𝗯𝘆 ~𝟮.𝟱 𝗸𝗴 𝗖𝗢𝟮𝗲/𝗯𝗼𝗲/𝘆𝗿.

The divergence is not that surprising given that the benchmarking was based on “data from multiple companies in all major oil and gas producing regions, ranging from small independents to enterprises with global portfolios”. 𝗗𝗶𝗳𝗳𝗲𝗿𝗲𝗻𝘁 𝗽𝗿𝗶𝗼𝗿𝗶𝘁𝗶𝗲𝘀 𝗺𝗲𝗮𝗻 𝗱𝗶𝗳𝗳𝗲𝗿𝗲𝗻𝘁 𝗼𝘂𝘁𝗰𝗼𝗺𝗲𝘀.

What did catch my attention was that the 𝘁𝗼𝗽 𝗾𝘂𝗮𝗿𝘁𝗶𝗹𝗲 𝗮𝘀𝘀𝗲𝘁𝘀 𝗯𝗲𝗻𝗲𝗳𝗶𝘁𝗲𝗱 𝗺𝘂𝗰𝗵 𝗺𝗼𝗿𝗲 𝗳𝗿𝗼𝗺 𝗹𝗼𝘄 𝗰𝗮𝗽𝗶𝘁𝗮𝗹 𝗶𝗻𝘁𝗲𝗻𝘀𝗶𝘃𝗲 𝗮𝗰𝘁𝗶𝘃𝗶𝘁𝗶𝗲𝘀 like “More efficient energy and operations” relative to the average (see image below). In other words, cheap (and easy) led to more progress than expensive.

𝗗𝗼𝗶𝗻𝗴 𝘁𝗵𝗲 𝗰𝗵𝗲𝗮𝗽 𝘀𝘁𝘂𝗳𝗳 𝗳𝗶𝗿𝘀𝘁 𝗺𝗮𝗸𝗲𝘀 𝘀𝗲𝗻𝘀𝗲. However, the median asset made virtually no improvement in intensity at all (the average saw improvements of ~0.5 kg CO2e/boe/yr) while relying on more capital intensive activity on average. 𝗘𝗶𝘁𝗵𝗲𝗿 𝗮 𝗹𝗼𝘁 𝗺𝗼𝗿𝗲 𝗲𝗳𝗳𝗼𝗿𝘁 (𝗮𝗻𝗱 𝗰𝗮𝗽𝗶𝘁𝗮𝗹) 𝗶𝘀 𝗴𝗼𝗶𝗻𝗴 𝘁𝗼 𝗯𝗲 𝗿𝗲𝗾𝘂𝗶𝗿𝗲𝗱, 𝗼𝗿 𝘁𝗵𝗲 𝗽𝗮𝗰𝗲 𝗼𝗳 𝗶𝗺𝗽𝗿𝗼𝘃𝗲𝗺𝗲𝗻𝘁 𝗶𝘀 𝗴𝗼𝗶𝗻𝗴 𝘁𝗼 𝘀𝗹𝗼𝘄 𝗱𝗼𝘄𝗻.

Carbon prices (taxes and incentives) can help, and so can technology improvements and cost deflation. 𝗪𝗵𝗮𝘁 𝗱𝗼 𝘆𝗼𝘂 𝘁𝗵𝗶𝗻𝗸 - 𝗮𝗿𝗲 𝘁𝗵𝗲𝘀𝗲 𝗳𝗮𝗰𝘁𝗼𝗿𝘀 𝗲𝗻𝗼𝘂𝗴𝗵 𝘁𝗼 𝗸𝗲𝗲𝗽 𝘁𝗵𝗲 𝗽𝗮𝗰𝗲 𝗼𝗳 𝗲𝗺𝗶𝘀𝘀𝗶𝗼𝗻𝘀 𝗶𝗻𝘁𝗲𝗻𝘀𝗶𝘁𝘆 𝗶𝗺𝗽𝗿𝗼𝘃𝗲𝗺𝗲𝗻𝘁 𝗶𝗻𝘁𝗮𝗰𝘁? 𝗢𝗿 𝗶𝘀 𝗮 𝘀𝗹𝗼𝘄𝗱𝗼𝘄𝗻 𝗶𝗻𝗲𝘃𝗶𝘁𝗮𝗯𝗹𝗲?

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Here are few comments that caught my eye:

📍𝗚𝗘𝗩 𝗱𝗲𝘀𝗰𝗿𝗶𝗯𝗲𝗱 𝘁𝗵𝗲 𝗰𝘂𝗿𝗿𝗲𝗻𝘁 𝗲𝗻𝘃𝗶𝗿𝗼𝗻𝗺𝗲𝗻𝘁 𝗮𝘀 𝗮𝗻 “𝙞𝙣𝙫𝙚𝙨𝙩𝙢𝙚𝙣𝙩 𝙨𝙪𝙥𝙚𝙧 𝙘𝙮𝙘𝙡𝙚”: While load growth in North American “𝘪𝘴 𝘵𝘩𝘦 𝘮𝘰𝘴𝘵 𝘴𝘪𝘨𝘯𝘪𝘧𝘪𝘤𝘢𝘯𝘵 𝘴𝘪𝘯𝘤𝘦 𝘵𝘩𝘦 𝘱𝘰𝘴𝘵-𝘞𝘰𝘳𝘭𝘥 𝘞𝘢𝘳 𝘐𝘐 𝘪𝘯𝘥𝘶𝘴𝘵𝘳𝘪𝘢𝘭 𝘣𝘶𝘪𝘭𝘥 𝘰𝘶𝘵”, the difference in this cycle is that “𝘵𝘩𝘦 𝘨𝘳𝘰𝘸𝘵𝘩 𝘪𝘴 𝘨𝘭𝘰𝘣𝘢𝘭”.

📍𝗧𝗵𝗲 𝗶𝗺𝗽𝗮𝗰𝘁 𝗼𝗳 𝗱𝗮𝘁𝗮 𝗰𝗲𝗻𝘁𝗲𝗿𝘀 𝗶𝘀 𝗼𝗻𝗹𝘆 𝗷𝘂𝘀𝘁 𝘀𝘁𝗮𝗿𝘁𝗶𝗻𝗴 𝘁𝗼 𝘀𝗵𝗼𝘄 𝘂𝗽 𝗶𝗻 𝘁𝗵𝗲𝗶𝗿 𝗼𝗿𝗱𝗲𝗿 𝗯𝗼𝗼𝗸: “𝘖𝘧 𝘵𝘩𝘦 29 𝘨𝘪𝘨𝘢𝘸𝘢𝘵𝘵𝘴 𝘵𝘩𝘢𝘵 𝘢𝘳𝘦 𝘢𝘭𝘳𝘦𝘢𝘥𝘺 𝘰𝘯 𝘣𝘢𝘤𝘬𝘭𝘰𝘨, 𝘸𝘩𝘦𝘯 𝘪𝘵 𝘤𝘰𝘮𝘦𝘴 𝘵𝘰 𝘥𝘢𝘵𝘢 𝘤𝘦𝘯𝘵𝘦𝘳𝘴, 𝘪𝘵'𝘴 𝘧𝘢𝘪𝘳𝘭𝘺 𝘯𝘦𝘨𝘭𝘪𝘨𝘪𝘣𝘭𝘦”. An additional 21 gigawatts are on slot reservation agreements, with “𝘢𝘣𝘰𝘶𝘵 𝘢 𝘵𝘩𝘪𝘳𝘥 𝘰𝘧 𝘪𝘵... 𝘢𝘭𝘪𝘨𝘯𝘦𝘥 𝘸𝘪𝘵𝘩 𝘵𝘩𝘦 𝘥𝘢𝘵𝘢 𝘤𝘦𝘯𝘵𝘦𝘳 𝘣𝘶𝘪𝘭𝘥 𝘰𝘶𝘵.”

📍𝗗𝗮𝘁𝗮 𝗰𝗲𝗻𝘁𝗲𝗿 𝗰𝗮𝗻𝗰𝗲𝗹𝗹𝗮𝘁𝗶𝗼𝗻 𝗿𝗶𝘀𝗸 𝗶𝘀 𝗱𝗲𝗲𝗺𝗲𝗱 𝘀𝗺𝗮𝗹𝗹 𝗮𝗻𝗱 𝗳𝗶𝗿𝗺 𝗼𝗿𝗱𝗲𝗿 𝗱𝗲𝗽𝗲𝗻𝗱𝗲𝗻𝘁 𝗼𝗻 𝗰𝘂𝘀𝘁𝗼𝗺𝗲𝗿’𝘀 𝗳𝗶𝗿𝗺𝗶𝗻𝗴 𝘁𝗵𝗲𝗶𝗿 𝗳𝗶𝗻𝗮𝗹 𝘀𝗶𝘁𝗲 𝘀𝗲𝗹𝗲𝗰𝘁𝗶𝗼𝗻 𝗮𝗻𝗱 𝗘𝗣𝗖 𝗽𝗮𝗿𝘁𝗻𝗲𝗿: “... 𝘵𝘩𝘦𝘺 𝘮𝘢𝘺 𝘩𝘢𝘷𝘦 𝘱𝘶𝘵 𝘪𝘯 𝘢𝘪𝘳 𝘱𝘦𝘳𝘮𝘪𝘵 𝘳𝘦𝘲𝘶𝘦𝘴𝘵𝘴 𝘪𝘯 𝘮𝘶𝘭𝘵𝘪𝘱𝘭𝘦 𝘴𝘵𝘢𝘵𝘦𝘴 𝘧𝘰𝘳 𝘱𝘰𝘵𝘦𝘯𝘵𝘪𝘢𝘭 𝘣𝘶𝘪𝘭𝘥 𝘰𝘶𝘵𝘴. 𝘛𝘩𝘦𝘺'𝘳𝘦 𝘯𝘦𝘨𝘰𝘵𝘪𝘢𝘵𝘪𝘯𝘨 𝘸𝘪𝘵𝘩 𝘵𝘩𝘦 𝘌𝘗𝘊𝘴. 𝘈𝘯𝘥 𝘢𝘴 𝘵𝘩𝘰𝘴𝘦 𝘵𝘩𝘪𝘯𝘨𝘴 𝘧𝘪𝘳𝘮 𝘶𝘱, 𝘸𝘦'𝘭𝘭 𝘧𝘪𝘳𝘮 𝘵𝘩𝘦𝘮 𝘶𝘱 𝘪𝘯 𝘰𝘳𝘥𝘦𝘳𝘴...”

📍𝗜𝗻𝗳𝗹𝗮𝘁𝗶𝗼𝗻 𝗶𝘀 𝗰𝗼𝗺𝗶𝗻𝗴 𝗳𝗿𝗼𝗺 𝘁𝗮𝗿𝗶𝗳𝗳𝘀 𝗮𝗻𝗱 𝗱𝗲𝗺𝗮𝗻𝗱 𝘀𝘁𝗿𝗲𝗻𝗴𝘁𝗵: “𝘐𝘯 𝘨𝘢𝘴 𝘸𝘦 𝘤𝘰𝘯𝘵𝘪𝘯𝘶𝘦 𝘵𝘰 𝘣𝘦 𝘪𝘯 𝘢 𝘱𝘳𝘪𝘤𝘦 𝘶𝘱 𝘦𝘯𝘷𝘪𝘳𝘰𝘯𝘮𝘦𝘯𝘵.” Specific to tariffs, “𝘴𝘰𝘮𝘦 𝘱𝘭𝘢𝘤𝘦𝘴 ... 𝘸𝘦 𝘤𝘢𝘯 𝘱𝘢𝘴𝘴 𝘪𝘵 𝘵𝘩𝘳𝘰𝘶𝘨𝘩 𝘶𝘯𝘥𝘦𝘳 𝘤𝘰𝘯𝘵𝘳𝘢𝘤𝘵𝘴 𝘵𝘩𝘢𝘵 𝘩𝘢𝘷𝘦 𝘪𝘯𝘧𝘭𝘢𝘵𝘪𝘰𝘯𝘢𝘳𝘺 𝘤𝘭𝘢𝘶𝘴𝘦𝘴” and in others “𝘴𝘰𝘮𝘦 𝘰𝘧 𝘰𝘶𝘳 𝘤𝘰𝘯𝘵𝘳𝘢𝘤𝘵𝘴 𝘰𝘯 𝘵𝘩𝘦 𝘦𝘲𝘶𝘪𝘱𝘮𝘦𝘯𝘵 𝘴𝘪𝘥𝘦 𝘸𝘩𝘦𝘳𝘦 𝘸𝘦 𝘩𝘢𝘷𝘦 𝘵𝘩𝘦 𝘰𝘱𝘱𝘰𝘳𝘵𝘶𝘯𝘪𝘵𝘺 𝘵𝘰 𝘵𝘢𝘭𝘬 𝘵𝘰 𝘰𝘶𝘳 𝘤𝘶𝘴𝘵𝘰𝘮𝘦𝘳𝘴 𝘢𝘣𝘰𝘶𝘵 𝘩𝘰𝘸 𝘵𝘩𝘪𝘴 𝘮𝘪𝘨𝘩𝘵 𝘤𝘰𝘮𝘦 𝘵𝘩𝘳𝘰𝘶𝘨𝘩 𝘸𝘪𝘵𝘩 𝘢 𝘤𝘩𝘢𝘯𝘨𝘦 𝘪𝘯 𝘭𝘢𝘸 𝘬𝘪𝘯𝘥 𝘰𝘧 𝘤𝘭𝘢𝘶𝘴𝘦.”

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The deal would be Oxy's second DAC acquisition following it’s 2023 deal to acquire Carbon Engineering for $1.1B.

The deal continues the company's campaign of investments and acquisitions around CCUS and net-zero value chains (see map of the CCUS value chain below) and 𝗗𝗔𝗖 𝗵𝗮𝘀 𝘁𝗮𝗸𝗲𝗻 𝗼𝗻 𝗮 𝗽𝗮𝗿𝘁𝗶𝗰𝘂𝗹𝗮𝗿𝗹𝘆 𝗶𝗺𝗽𝗼𝗿𝘁𝗮𝗻𝘁 𝗿𝗼𝗹𝗲 𝗶𝗻 𝘁𝗵𝗶𝘀 𝘀𝘁𝗿𝗮𝘁𝗲𝗴𝘆, as described on their webpage:

𝘖𝘹𝘺 𝘪𝘴 𝘥𝘦𝘷𝘦𝘭𝘰𝘱𝘪𝘯𝘨 𝘢𝘯𝘥 𝘪𝘯𝘷𝘦𝘴𝘵𝘪𝘯𝘨 𝘪𝘯 𝘯𝘶𝘮𝘦𝘳𝘰𝘶𝘴 𝘵𝘦𝘤𝘩𝘯𝘰𝘭𝘰𝘨𝘪𝘦𝘴 𝘢𝘯𝘥 𝘢𝘱𝘱𝘳𝘰𝘢𝘤𝘩𝘦𝘴 𝘵𝘰 𝘩𝘦𝘭𝘱 𝘥𝘦𝘷𝘦𝘭𝘰𝘱 𝘭𝘰𝘸𝘦𝘳-𝘤𝘢𝘳𝘣𝘰𝘯 𝘧𝘶𝘦𝘭𝘴 𝘢𝘯𝘥 𝘱𝘳𝘰𝘥𝘶𝘤𝘵𝘴. 𝘼 𝙗𝙞𝙜 𝙥𝙖𝙧𝙩 𝙤𝙛 𝙩𝙝𝙞𝙨 𝙞𝙣𝙣𝙤𝙫𝙖𝙩𝙞𝙤𝙣 𝙞𝙣𝙫𝙤𝙡𝙫𝙚𝙨 𝙧𝙚𝙢𝙤𝙫𝙞𝙣𝙜 𝙚𝙢𝙞𝙨𝙨𝙞𝙤𝙣𝙨 𝙙𝙞𝙧𝙚𝙘𝙩𝙡𝙮 𝙛𝙧𝙤𝙢 𝙩𝙝𝙚 𝙖𝙩𝙢𝙤𝙨𝙥𝙝𝙚𝙧𝙚 𝘸𝘩𝘪𝘭𝘦 𝘴𝘪𝘮𝘶𝘭𝘵𝘢𝘯𝘦𝘰𝘶𝘴𝘭𝘺 𝘸𝘰𝘳𝘬𝘪𝘯𝘨 𝘵𝘰𝘸𝘢𝘳𝘥 𝘨𝘭𝘰𝘣𝘢𝘭 𝘦𝘮𝘪𝘴𝘴𝘪𝘰𝘯𝘴 𝘳𝘦𝘥𝘶𝘤𝘵𝘪𝘰𝘯.

𝗛𝗼𝗹𝗼𝗰𝗲𝗻𝗲 𝗮𝗻𝗱 𝗖𝗮𝗿𝗯𝗼𝗻 𝗘𝗻𝗴𝗶𝗻𝗲𝗲𝗿𝗶𝗻𝗴 𝗶𝗹𝗹𝘂𝘀𝘁𝗿𝗮𝘁𝗲 𝘁𝗵𝗲 𝗱𝗶𝘃𝗲𝗿𝘀𝗶𝘁𝘆 𝗼𝗳 𝘁𝗲𝗰𝗵𝗻𝗼𝗹𝗼𝗴𝗶𝗲𝘀 𝗯𝗲𝗶𝗻𝗴 𝗽𝘂𝗿𝘀𝘂𝗲𝗱 𝗳𝗼𝗿 𝗗𝗔𝗖 (NB: companies like Climeworks, Heirloom and Avnos are pursuing their own DAC technologies):

📍𝗖𝗵𝗲𝗺𝗶𝘀𝘁𝗿𝘆 𝗮𝗻𝗱 𝗣𝗿𝗼𝗰𝗲𝘀𝘀: Carbon Engineering uses a liquid-based potassium hydroxide system, reacting CO₂ to form potassium carbonate, processed with calcium carbonate for release, while Holocene employs a water-based Bis-iminoguanidine (BIG) solution, forming an insoluble crystalline salt for CO₂ capture and release.

📍𝗘𝗻𝗲𝗿𝗴𝘆 𝗮𝗻𝗱 𝗧𝗲𝗺𝗽𝗲𝗿𝗮𝘁𝘂𝗿𝗲 𝗥𝗲𝗾𝘂𝗶𝗿𝗲𝗺𝗲𝗻𝘁𝘀: Carbon Engineering requires high temperatures (900°C) for CO₂ regeneration, making it energy-intensive, whereas Holocene’s low-temperature process (110°C) is energy-efficient and compatible with renewables or waste heat.

📍𝗠𝗮𝘁𝘂𝗿𝗶𝘁𝘆 𝗮𝗻𝗱 𝗦𝗰𝗮𝗹𝗲: Carbon Engineering is more mature, operating megaton-scale DAC projects like Stratos, though at higher costs (hundreds per tonne), while Holocene, in an earlier pilot phase with a 10-tonne/year facility, aims for lower costs but has yet to achieve large-scale deployment.

𝗪𝗵𝗮𝘁 𝗱𝗼 𝘆𝗼𝘂 𝘁𝗵𝗶𝗻𝗸 𝗼𝗳 𝘁𝗵𝗲 𝗱𝗲𝗮𝗹 𝗮𝗻𝗱 𝘁𝗵𝗲 𝗿𝗲𝘀𝗽𝗲𝗰𝘁𝗶𝘃𝗲 𝘁𝗲𝗰𝗵𝗻𝗼𝗹𝗼𝗴𝗶𝗲𝘀? 𝗪𝗵𝗮𝘁 𝗱𝗼 𝘆𝗼𝘂 𝘀𝗲𝗲 𝗮𝘀 𝘁𝗵𝗲 𝗳𝘂𝘁𝘂𝗿𝗲 𝗼𝗳 𝗗𝗔𝗖 𝗮𝗻𝗱 𝗖𝗖𝗨𝗦 𝗶𝗻 𝘁𝗵𝗲 𝗲𝗻𝗲𝗿𝗴𝘆 𝗲𝗰𝗼𝘀𝘆𝘀𝘁𝗲𝗺?

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Capital Power just bought 𝟮.𝟮𝗚𝗪 𝗼𝗳 𝗳𝗹𝗲𝘅𝗶𝗯𝗹𝗲 (𝗴𝗮𝘀 𝗳𝗶𝗿𝗲𝗱) 𝗴𝗲𝗻𝗲𝗿𝗮𝘁𝗶𝗼𝗻 𝗶𝗻 𝗣𝗝𝗠 from LS Power Equity Advisors 𝗳𝗼𝗿 𝗨𝗦$𝟮.𝟮 𝗯𝗶𝗹𝗹𝗶𝗼𝗻. The deal included 1,124 MW of CCGT at Hummel Station and 1,023 MW of peaking capacity at Rolling Hills (see below).

With data center load surging, deals for flexible assets keep coming (𝘵𝘩𝘦 𝘵𝘦𝘢𝘮 𝘸𝘪𝘭𝘭 𝘩𝘢𝘷𝘦 𝘭𝘰𝘵𝘴 𝘵𝘰 𝘴𝘢𝘺 𝘰𝘯 𝘵𝘩𝘦 𝘲𝘶𝘢𝘭𝘪𝘵𝘺, 𝘷𝘢𝘭𝘶𝘢𝘵𝘪𝘰𝘯 𝘢𝘯𝘥 𝘰𝘶𝘵𝘭𝘰𝘰𝘬 𝘧𝘰𝘳 𝘵𝘩𝘦𝘴𝘦 𝘢𝘴𝘴𝘦𝘵𝘴).

But 𝗛𝘂𝗺𝗺𝗲𝗹 𝗦𝘁𝗮𝘁𝗶𝗼𝗻 𝗰𝗮𝘂𝗴𝗵𝘁 𝗺𝘆 𝗮𝘁𝘁𝗲𝗻𝘁𝗶𝗼𝗻 𝗳𝗼𝗿 𝗼𝘁𝗵𝗲𝗿 𝗿𝗲𝗮𝘀𝗼𝗻𝘀. It was 𝗯𝘂𝗶𝗹𝘁 𝗼𝗻 𝘁𝗵𝗲 𝗳𝗼𝗿𝗺𝗲𝗿 𝘀𝗶𝘁𝗲 𝗼𝗳 𝘁𝗵𝗲 𝗿𝗲𝘁𝗶𝗿𝗲𝗱 𝟰𝟬𝟬𝗠𝗪 𝗦𝘂𝗻𝗱𝗯𝘂𝗿𝘆 𝗰𝗼𝗮𝗹-𝗳𝗶𝗿𝗲𝗱 𝗽𝗼𝘄𝗲𝗿 𝗽𝗹𝗮𝗻𝘁. And like Homer City, 𝗿𝗲𝗱𝗲𝘃𝗲𝗹𝗼𝗽𝗶𝗻𝗴 𝘁𝗵𝗲 𝘀𝗶𝘁𝗲 𝗮𝘀 𝗮 𝗴𝗮𝘀 𝗳𝗮𝗰𝗶𝗹𝗶𝘁𝘆 𝗹𝗲𝗱 𝘁𝗼 𝗺𝗼𝗿𝗲 𝘁𝗵𝗮𝗻 𝗱𝗼𝘂𝗯𝗹𝗲 𝘁𝗵𝗲 𝗴𝗲𝗻𝗲𝗿𝗮𝘁𝗶𝗻𝗴 𝗰𝗮𝗽𝗮𝗰𝗶𝘁𝘆 at the facility (from 400MW to 1,124MW).

I am left wondering: As coal fired generation heads into retirement, 𝗰𝗼𝘂𝗹𝗱 𝗰𝗼𝗮𝗹 𝘀𝗶𝘁𝗲𝘀 𝗯𝗲 𝘁𝗵𝗲 𝗿𝗲𝗮𝗹 𝗼𝗽𝗽𝗼𝗿𝘁𝘂𝗻𝗶𝘁𝘆 𝗳𝗼𝗿 𝗱𝗶𝘀𝗽𝗮𝘁𝗰𝗵𝗮𝗯𝗹𝗲 (𝗳𝗹𝗲𝘅𝗶𝗯𝗹𝗲) 𝗽𝗼𝘄𝗲𝗿 𝘀𝗼𝗹𝘂𝘁𝗶𝗼𝗻 𝘀𝗼 𝗺𝗮𝗻𝘆 𝗶𝗻 𝘁𝗵𝗲 𝗺𝗮𝗿𝗸𝗲𝘁 𝗮𝗿𝗲 𝘀𝗲𝗲𝗸𝗶𝗻𝗴 (𝗲𝘀𝗽𝗲𝗰𝗶𝗮𝗹𝗹𝘆 𝗶𝗳 𝗹𝗮𝗻𝗱 𝗳𝗼𝗿 𝗹𝗼𝗮𝗱 𝗰𝗼𝗹𝗼𝗰𝗮𝘁𝗶𝗼𝗻 𝗶𝘀 𝗮𝘃𝗮𝗶𝗹𝗮𝗯𝗹𝗲)?

What do you think? 𝗛𝗼𝘄 𝗯𝗶𝗴 𝗮 𝗿𝗼𝗹𝗲 𝘄𝗶𝗹𝗹 𝗿𝗲𝗱𝗲𝘃𝗲𝗹𝗼𝗽𝗺𝗲𝗻𝘁 𝗼𝗳 𝗰𝗼𝗮𝗹-𝗳𝗶𝗿𝗲𝗱 𝘀𝗶𝘁𝗲𝘀 𝗽𝗹𝗮𝘆 𝗶𝗻 𝗺𝗲𝗲𝘁𝗶𝗻𝗴 𝗨𝗦 𝗹𝗼𝗮𝗱 𝗴𝗿𝗼𝘄𝘁𝗵 𝗼𝘃𝗲𝗿 𝘁𝗵𝗲 𝗻𝗲𝘅𝘁 𝗱𝗲𝗰𝗮𝗱𝗲?

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Yesterday President Trump signed an Executive Order to reinvigorate “America’s beautiful clean coal industry”.

While the directives for a rollback of regulation and increased Federal land access were not surprising, I was intrigued by 𝘁𝗵𝗲 𝗽𝘂𝘀𝗵 𝗳𝗼𝗿 “𝘂𝘀𝗶𝗻𝗴 𝗰𝗼𝗮𝗹 𝘁𝗼 𝗽𝗼𝘄𝗲𝗿 𝗻𝗲𝘄 𝗮𝗿𝘁𝗶𝗳𝗶𝗰𝗶𝗮𝗹 𝗶𝗻𝘁𝗲𝗹𝗹𝗶𝗴𝗲𝗻𝗰𝗲 (𝗔𝗜) 𝗱𝗮𝘁𝗮.”

𝗣𝗼𝘄𝗲𝗿 𝗴𝗲𝗻𝗲𝗿𝗮𝘁𝗶𝗼𝗻 𝗯𝘆 𝗳𝗮𝗿 𝗺𝗮𝗸𝗲𝘀 𝘂𝗽 𝘁𝗵𝗲 𝗹𝗮𝗿𝗴𝗲𝘀𝘁 𝘀𝗵𝗮𝗿𝗲 𝗼𝗳 𝗰𝗼𝗮𝗹 𝗰𝗼𝗻𝘀𝘂𝗺𝗽𝘁𝗶𝗼𝗻 𝗶𝗻 𝘁𝗵𝗲 𝗨𝗦, 𝗯𝘂𝘁 𝗮𝗹𝘀𝗼 𝗵𝗮𝘀 𝗯𝗲𝗲𝗻 𝗼𝗻 𝘁𝗵𝗲 𝗱𝗲𝗰𝗹𝗶𝗻𝗲 𝗳𝗼𝗿 𝗻𝗲𝗮𝗿𝗹𝘆 𝟮𝟬 𝘆𝗲𝗮𝗿𝘀 (see the image below). Retirements of coal fired facilities continue, and virtually zero new coal capacity is scheduled to be built.

The exception? 𝗦𝗼𝗺𝗲 𝗰𝗼𝗮𝗹 𝗽𝗼𝘄𝗲𝗿 𝘀𝗶𝘁𝗲𝘀 𝗮𝗿𝗲 𝗯𝗲𝗶𝗻𝗴 𝘁𝗮𝗿𝗴𝗲𝘁𝗲𝗱 𝗳𝗼𝗿 𝗿𝗲𝗱𝗲𝘃𝗲𝗹𝗼𝗽𝗺𝗲𝗻𝘁 𝗶𝗻𝘁𝗼 𝗱𝗮𝘁𝗮 𝗰𝗲𝗻𝘁𝗲𝗿 𝗰𝗮𝗺𝗽𝘂𝘀𝗲𝘀 (I noted this last week following headlines about the Homer City Generating Station).

𝗪𝗵𝗮𝘁 𝗱𝗼 𝘆𝗼𝘂 𝘁𝗵𝗶𝗻𝗸? 𝗖𝗼𝘂𝗹𝗱 𝘄𝗲 𝘀𝗲𝗲 𝗮 𝗰𝗼𝗮𝗹 𝗳𝗶𝗿𝗲𝗱 𝗱𝗮𝘁𝗮 𝗰𝗲𝗻𝘁𝗲𝗿 𝗶𝗻 𝗼𝘂𝗿 𝗳𝘂𝘁𝘂𝗿𝗲?

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