Gain a quick and comprehensive understanding of the ever-changing energy sector with bite-sized insights from Enverus Intelligence® Research (EIR) Analysts. Stay ahead by effortlessly grasping the latest developments in carbon capture, renewables, EVs, power generation, hydrogen and more, enabling you to make well-informed decisions in the fast-paced energy transition landscape.
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Date Published: 03/30/2023
Carbon storage availability and costs are fundamental components when evaluating economical CCUS projects. On those criteria, much-touted CCS in the Appalachia region does not stack up. In stark contrast to the world-class carbon storage reservoirs of the Louisiana Gulf Coast, capable of storing 5-35 Mt/section at injection rates of 0.3-2.6 Mt/well/year, CO2 sequestration potential in Appalachia is very limited. Having thin and low porosity reservoirs, Appalachian storage potential ranges from 0.01-0.1 Mt/section with injection rates peaking around 0.2 Mt/well/year, revealing just a fraction of what Louisiana has to offer.
The Figure compares CO2 emissions and announced storage capacity between the Texas and Louisiana Gulf Coast and Appalachia. The Appalachia area accounted for roughly 8% (177 mtpa) of 2021 U.S. point source emissions, but only 0.3 mtpa (0.1%) of announced CO2 storage capacity. The Texas and Louisiana Gulf Coast makes up 13% (296 mtpa) of the country’s emissions and 75% of the storage project pipeline by capacity.
With considerable emissions, ambitious state-level emission reduction targets and a proposed multi-billion-dollar clean hydrogen hub (Decarbonization Network of Appalachia), the Appalachia area is relying on CCS to meet these goals. For a CCS project to be successful, low-cost capture, pipeline infrastructure and public support need to be in place; but ultimately you need the pore space in which to put the CO2 underground. In Appalachia, that could prove problematic.
Date Published: 04/06/2023
Mounting pressure to decarbonize and supportive policy are building significant momentum behind CCUS. But amid all the hype, how can investors and developers separate the winners from the losers? In a new report, Enverus Intelligence Research (EIR) proposes a comprehensive framework to identify winning strategies at the international, regional and project levels. Asset quality, innovation ecosystems and supportive partners form the Carbon Management Trifecta and are critical drivers behind successful development and execution.
Figure 1 ranks 16 announced carbon storage projects across Louisiana and Appalachia using a key asset quality metric: carbon capture and storage breakevens. Projects sitting toward the bottom left corner screen more favorably than those in the upper right. EIR believe that asset quality drives meaningful differentiation but isn’t enough to guarantee success. For instance, landowner opposition to Navigator, Summit and Wolf CO2 pipelines in the Midwest and Class VI permitting delays in Louisiana and Texas demonstrate the importance of access to supportive partners and innovation ecosystems along the source-to-sink value chain.
Date Published: 05/11/2023
CO2 containment risk has become one of the most popular topics among EIR’s clients evaluating CCUS projects. Operators need to understand and evaluate subsurface features that could trigger CO2 migration and containment losses as well as introduce additional safety, reputational and financial risks. These considerations are also important aspects of the Class VI application process for permanent CO2 sequestration.
In addition to taking inventory of the number of penetrations surrounding a potential injection site, project developers must grade wellbore risk and develop appropriate mitigation plans. As EIR shows in Figure, not all wells pose the same containment risk and the highest risk comes from older deviated wells in hot reservoirs near faults. Among projects targeting the Oligocene-Miocene sands in Louisiana, as an example, EIR observes a range of operator strategies: some have strategically placed their sites away from existing penetrations while others will need to develop extensive mitigation plans to manage the leakage potential.
Date Published: 06/08/2023
As CCUS ascents to the peak of the hype curve, it’s essential to understand both the subsurface risks as they relate to CO2 plume containment and the above-ground risks. When EIR thinks about these risks, various elements need to be considered. Urban areas and critical habitats have historically been challenging to navigate in terms of developing drilling programs, thus these regions screen as the most difficult to develop injection programs across. In addition, complications to well construction, seismic survey acquisition and pipeline infrastructure development can be tied to natural environmental features such as the presence of canopy, siting a project across a floodplain or wetlands, and developing a project along a significant slope.
Figure 1 represents these surface considerations in a heat map format, with the urban area and critical habitat data points carrying more weight as inputs to the overall surface risk factor. The major population centers in southern Louisiana, including New Orleans and Baton Rouge, jump off the page as challenging areas for sequestration project development. Outside of these hot spots, surface risk varies because of fluctuating natural features. This screening mechanism paired with both subsurface reservoir modeling and risk profiling can be key tools to find preferable locations for CCUS project development.
Date Published: 06/22/2023
No single technology will be a “silver bullet” for meeting global carbon emissions targets – a diverse mix of technologies will be needed to achieve these ambitious goals. What will the future technology mix look like? That will depend on the pace of innovation and subsequent cost improvements, for each respective technology.
Date Published: 06/29/2023
CCUS has gathered impressive momentum over the past two years as companies seek to exploit the technology’s economic and environmental benefits. In the U.S., the number of Class VI well permit applications for permanent geological CO2 storage surged by 40, or 800%, between May 2021 and May 2023, owing largely to enhancements to the 45Q tax credit. Despite the rise, the EPA and company websites provide limited transparency on proposed injection well locations.
The EIR team leveraged additional disclosure available through a variety of data sources to add geographic coordinates to the 45 active, pending and withdrawn Class VI applications (Figure 1). Thirty, or 67%, of project geographic coordinates are known while the remaining 15 are inferred using public disclosure. This information is critical to competitor intelligence, activity screening and infrastructure buildout workflows for project developers, service providers and investors active in the space.
Date Published: 04/13/2023
The pace of electric vehicle adoption is hastening around the world, with China set to surpass 30% of new sales in 2023. This week the EPA announced its plan to significantly increase regulation on tailpipe emissions, so much so that it would require between 54%-60% of new vehicles sold in the U.S. to be electric by 2030 and 64%-67% by 2032. This new regulation shifts away from MPG standards and targets total GHG emissions. Exceeding President Joe Biden’s goal of 50% adoption by 2030, it is slightly more aggressive than EIR’s view on U.S. EV adoption prior to the regulation change. According to EIR’s analysis, the adoption curve required by the EPA would displace ~0.8 MMbbl/d of U.S. oil demand in 2030 and 1.1 MMbbl/d by 2032, which is 50 Mbbl/d and 80 Mbbl/d higher than their estimates, respectively. See EIR’s recent report for our estimates of the effects of global EV adoption on fuel consumption.
Figure 1 describes EIR’s view for EV adoption across five key regions that represent over 80% of global gasoline demand today. Critical to meeting that level of demand, the supply of copper and lithium needs to grow significantly over the next decade. Key areas of investment to support the transition of the personal transportation industry include onshore battery manufacturing (including component production), charging infrastructure and securing critical mineral supply chains. To learn more, EIR’s latest EV report focuses specifically on critical mineral demand, battery production, battery technology and infrastructure.
Date Published: 05/04/2023
Anyone who thinks spending time at a public charging station is a blocker to buying an electric vehicle might want to consider the numbers behind EV and internal combustion engine (ICE) vehicle refueling times. The answer is that it really depends on your use case and primarily these two questions:
Figure breaks down the math on annual fueling times between the various alternatives. Differences in battery chemistry impact charge times as well as weather-dependent range. Most drivers take less than one trip per year outside the range of modern EVs and will actually save time spent at public fueling stations with an EV over an ICE. “Weekend warriors” and “road trippers” will most likely realize the effects of range limitations the most as their time spent at public charging stations could be longer. They would benefit most from high nickel chemistries that increase energy density and vehicle range.
Date Published: 05/25/2023
Energy operators and investors are increasingly exploring energy transition technologies in response to decarbonization pressure and improving incentives. While some technologies like hydro and solar power are well established, with understood market potential and economic cases, others like CCUS, direct lithium extraction (DLE) and green hydrogen remain highly speculative. To better visualize where each technology sits along its commercialization journey, Enverus Intelligence Research created a hype curve to benchmark popular technologies (Figure 1).
Despite being in the early stages of commercial development, project developers and investors are cautiously exploring DLE and green hydrogen to better gauge their viability before jumping in fully. Other technologies further down the curve like CCUS and long-term battery storage enjoy greater enthusiasm. However, the limited number of operational projects hinders a comprehensive assessment of the investment risks and returns.
As projects progress and outcomes become more evident, these technologies are likely to experience a decline in hype and face the realities of their limitations. This stage, known as the “trough of disillusionment,” is seen when technology weaknesses are acknowledged, much like with electric vehicles today. Many investors and project developers may abandon hope in this trough and leave the industry. But if the remaining players continue to work through issues, then realistic market sizing can take place, which leads to the “slope of enlightenment” and eventually the “plateau of productivity.” During these phases, technologies have matured enough for investors to understand their economic viability, capabilities and future trajectory. Nonetheless, there may still be unpredictability.
Date Published: 04/20/2023
California used to be a golden state for solar power producers, but recent changes in the market pose challenges for a technology expected to be a critical part of the state’s drive to meet its emissions targets. Depending on timing of generation and prevailing system demand, capture price – the average electricity price a renewable project receives for its power – can be higher or lower than the average daily power price. Solar generates power during the day when there is typically more demand, which often means producers can sell to the grid at a premium. Or at least this used to be the case.
Figure 1 shows the erosion of the solar capture price in the California ISO (CAISO) over the past one, three and five years. With solar now accounting for over a quarter of in-state generation, net system load has been drastically reduced between 8 am – 6 pm when solar is producing. As a result of this increased solar penetration, solar projects in CAISO now receive a capture price discount which has widened from -$13/MWh to -$27/MWh over the past five years.
While this is bad news for uncontracted standalone solar projects, it could be a boon for projects with co-located battery storage. These assets could charge with discounted power during the day, then discharge in the evening and take advantage of shifted peak pricing. Economics aside, these flexible resources will be critical in maintaining system reliability as renewable penetration increases to meet state-mandated goals.
Date Published: 04/27/2023
In last week’s issue of Energy Transition Today, EIR discussed the significant drop in solar capture prices in California over the past five years. This decline presents a valuable opportunity for solar projects to utilize co-located battery storage, charging them with affordable solar power during daylight hours and discharging the stored energy in the evening to capitalize on higher peak pricing. From co-located battery storage to electric vehicles, EIR sees rising demand for battery production and battery metals like lithium, and by 2035 EIR anticipates lithium demand to increase by 350,000 tonnes from 2019 levels.
Currently, 95% of the global lithium supply is mined in just four countries – Australia, Chile, China and Argentina. The U.S. only contributes 1%, illustrating the need to secure local production as demand increases. Recent government policy changes offer hope, with the Defense Production Act allocating up to $1 billion per year to boost domestic mineral development and the Inflation Reduction Act introducing a 10% critical minerals tax credit on mining and refining.
However, bringing new mines online can take decades and evaporative salars have geographical limitations due to their need for extremely dry environments. This is where direct lithium extraction (DLE) comes into play. Currently being tested for commercial viability, DLE has the potential to extract lithium from large volumes of low-concentration lithium brines. If successful, DLE could unlock almost limitless domestic lithium production, either from dedicated brine resources or from the approximately 3 billion barrels of oilfield wastewater produced monthly in North America.
Figure shows the potential for lithium extraction and revenue from wastewater for five operators in the Delaware Basin. With a total of 29,000 tonnes/year, generating $600 million in additional revenue at a $20,000/tonne spot price, the implications are clear. If DLE proves successful, it could not only meet domestic lithium demands but also generate significant revenue in the process.
Date Published: 05/18/2023
To meet California’s aggressive clean energy targets, the California Independent System Operator (CAISO) interconnection queue has seen a massive influx in projects. In 2019, the total queued capacity in CAISO more than doubled compared to the previous year. This will only get worse as a result of the recently passed Inflation Reduction Act. However, the growing queue has been met with significant headwinds such as process delays and grid limitations resulting in only a small portion of the total queued capacity being built out each year. To help forecast what will be developed, EIR created a machine-learning model that predicts the probability of success for projects in the queue based on a collection of key variables.
Figure 1 shows our model’s probabilistic breakdown of the top developers by total queued project capacity in CAISO. A higher percentage of dark green represents a larger probability of those projects being built on time. While several developers look to be positioned to bring on a great deal of capacity to the grid on paper, EIR’s model reveals that many of these pending projects are far from being completed. Their model predicts approximately 50% of queued projects will reach completion in 2023 and about 30% in 2024.
Check out EIR’s deep dive on the California power system here, where they explore the impact of government policy, changes in load growth, price volatility and project economics. For other topics, click the link at the bottom to find out more about our Energy Transition Research offering.
Date Published: 06/01/2023
As part of its agenda to revive American manufacturing and enhance energy security, the Biden administration is actively promoting the offshore wind industry. Its goal is to deploy 30 GW of offshore wind by 2030. Current planned capacity across the U.S. adds up to 37 GW by 2030 and 41 GW by 2032, with the average size of the projects increasing from 52 MW in 2023 to 2,000 MW in 2032. About 75% of this planned capacity is concentrated in the North Atlantic region (Figure). However, according to EIR’s analysis, offshore wind might not be the most cost-effective generation technology for the New York power system. Their study suggests that 20 GW of onshore wind and 15 GW of solar could more economically fulfill the state’s clean power objectives. Nonetheless, the limited land availability near New York City might be the driving factor behind the state’s mandate to install 9 GW of offshore wind capacity. Their parcels database indicates there is sufficient land in New York City and vicinity areas to accommodate only 5.4 GW of onshore wind capacity, with 57% of it located in Suffolk County. This forces New Yorkers to find renewable energy sources offshore, regardless of the increased cost. In contrast, California’s progress with offshore wind is primarily motivated by the absence of inland wind resources rather than land availability.
Date Published: 06/22/2023
No single technology will be a “silver bullet” for meeting global carbon emissions targets – a diverse mix of technologies will be needed to achieve these ambitious goals. What will the future technology mix look like? That will depend on the pace of innovation and subsequent cost improvements, for each respective technology.
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