Tag Archives: Energy

Europe Has…Too Much Natural Gas?

Russia has cut off Europe’s gas supplies. But despite Putin’s best efforts, it’s looking like a toasty winter on the continent.

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Ships carrying liquefied natural gas (LNG) are lined up in ports across Europe. The only problem: finding a place to put it all!

From a report out this morning in Bloomberg:

Europe suddenly has more gas than it can use.

Starved of the Russian imports on which its long relied, Europe has rushed to import liquefied natural gas from around the world to fill up storage. Now, a combination of unusually warm weather and successful bidding for cargoes means facilities are almost full before Europeans have even turned the thermostats up. Gas prices have also fallen back sharply, and are less than a third of their summer peak.

Bloomberg’s index for loaded tankers on the water for 20 days or more has risen to the highest since at least 2017. Last week, Spain’s Enagas SA warned it may need to limit numbers as it has little room to absorb excess imports.

This sudden turnabout shows how well markets work. Natural gas prices spiked in Europe, so suppliers sent their gas there.

After all, why not get the best price?

But so many sent gas, the price has plummeted. It’s now lower than when the war in Ukraine began.

Russia has lost its best bargaining chip. If it can’t freeze the continent, what other options does it have?

Russia has also damaged its economic future.

Europe will never view it as a reliable supplier again. Putin may struggle to find a buyer for his gas, given his prior treachery.

Russia should keep in mind that there’s an expiration date on that gas. Solar energy is already cheaper in many circumstances.

Governments are working to limit CO2 emissions. Renewables are scaling and getting cheaper every day.

In a few decades, there may be little demand for fossil fuels.

The future for Russia looks bleak. Meanwhile, with its energy supplies diversified, Europe will be more secure than ever.

What do you think the future holds for Russia and Europe? Leave a comment at the bottom and let me know.

More on markets:

Tiger Global Down 52% — Losses Over $18 Billion

Who Will Unfreeze the IPO Market?

SoftBank May Launch Third Vision Fund

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Photo: “#8962 LNG ship from BR189” by Nemo’s great uncle is licensed under CC BY-NC-SA 2.0.

Elon Musk’s Secret Battery May Be the World’s Largest

Elon Musk’s Tesla, Inc. has connected a massive battery to the Texas power grid:

A Tesla subsidiary registered as Gambit Energy Storage LLC is quietly building a more than 100 megawatt energy storage project in Angleton, Texas, a town roughly 40 miles south of Houston. A battery that size could power about 20,000 homes on a hot summer day.

This megabattery may be the world’s largest, surpassing another Tesla project in Australia:

Tesla’s battery project in South Australia, launched in 2017, is adjacent to a wind farm and can store surplus electricity generated on gusty nights for daytime demand. At 100 megawatts, it was the largest battery project in the world at its launch.

Battery packs like these could make it easier to store renewable energy when the sun is shining and the wind is blowing. And the energy market is so big, a major push in this area could help justify Tesla’s lofty valuation. From the Bloomberg report:

“I think long-term Tesla Energy will be roughly the same size as Tesla Automotive,” Musk said during an earnings call in July 2020. “The energy business is collectively bigger than the automotive business.”

Battery prices are falling precipitously, making such a future increasingly plausible. Prices have fallen from $668/kWh in 2013 to $137 last year, a decrease of nearly 80%.

For more on Tesla, electric vehicles, and financial markets, check out these posts:

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Photo: “Elon Musk” by dmoberhaus is licensed under CC BY 2.0

Texas Failed to Prepare Its Energy System for a Deep Freeze

As many in Texas enter a fifth day without power in freezing temperatures, I searched for information on how such a disaster could’ve happened.

I came upon some excellent perspective from Professor Daniel Cohan at Rice University:

See the entire Twitter thread here. Very much worth reading.

Not preparing the full energy system, from natural gas wells to the electrical grid, for a deep freeze seems to be the culprit.

This makes sense to me as someone who has lived his entire life in the frozen North…northern Maine, Wisconsin, and New Jersey. We’ve had storms and cold even worse than what Texas is experiencing on a regular basis, but I don’t recall the power ever going out. And I’m very grateful for that as I type this in my warm living room.

To me, this calls into serious question the Texas regulatory model, where ERCOT regulates a Texas-only grid that’s exempt from Federal oversight. If they can’t plan for extreme events, why do they exist?

In the mean time, as families resort to making little fires in their homes to stay warm, perhaps Governor Abbott can help. If the Governor’s Mansion has power, why not invite people to come there and warm up? Even a small gesture like that could bring warmth to a few people.

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Photo: “Caricature: Texas Governor Greg Abbott” by DonkeyHotey is licensed under CC BY-SA 2.0