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MASSIVE GEOTHERMAL PROJECT IN NEVIS: Nevis, the smaller of two Caribbean islands that make up the nation of St. Kitts and Nevis in the Leeward Island chain, has no street lamps, no major airport, and is just 36 total square miles around—roughly half the size of D.C.
In several years, Nevis aims to produce the cheapest, cleanest electricity in the region through a massive geothermal energy reservoir located beneath its surface. Experts say it has the potential to produce more than 1,000 megawatts of geothermal power—far exceeding local demand for the island of about 12,000 people, which stands at a national total of just 10 MW.
Momentum for the project began last fall, after the Caribbean Development Bank (CDB) announced a $17 million grant to Nevis to help develop the site. As of last month, more than 100 companies had submitted bids for the contract. Officials said they plan to pick a developer within six months, and expect drilling will begin no later than six months after that.
The geothermal concentration in Nevis is considered “among the best in the world,” officials from the Nevis Electric Company Limited (NEVLEC) said at a recent town hall meeting.
That’s due to a rare confluence of factors: The hot water reservoirs eyed by Nevis are easy to access–at depths of about 1-1.5 kilometers compared to other geothermal sites, which are more commonly located around 4-5 kilometers. The area is also highly permeable, allowing for a strong brine-seawater concentration. (Brine often contains other important materials, such as lithium, making it an attractive resource for other secondary uses before the water is cooled and re-injected.)
NEVLEC general manager Albert Gordon told residents at a public event last fall that the project will allow St. Kitts and Nevis to achieve several key objectives that will be transformational to its economy and its clean energy goals. Among them:
- Securing cheap electricity. Nevis, which imports 97% of its energy and was thus subject to major price hikes following Russia’s invasion of Ukraine last year, has been hit hard by market volatility. This will have the dual benefit of ending its reliance on outside sources while also helping to meet emissions reduction targets, Gordon said.
- Supplying energy to other islands. The project already calls for building out interconnection lines to send geothermal power to St. Kitts, as the two islands share a government. But Gordon said developers are also looking to build out interconnectors to other islands as well—changing its status as a net energy importer to a net exporter.
- Producing so-called “green molecules.” This includes green hydrogen, which can be produced by electrolysis powered by geothermal energy.
What’s next: The Nevis Electric Company Limited (NEVLEC), which is helping oversee the project and funding allocation, said it will begin adding power in stages, ultimately reaching 100 MW by 2030.
A growing trend: Nevis is one of several nations that have moved to embrace geothermal projects in recent years as a reliable, renewable energy source.
Countries such as Kenya, Iceland, and Turkey have all taken advantage of their unique geographic landscapes in recent years, seeking to harness geothermal energy to diversify their energy mix.
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TREASURY ISSUES BIG GUIDANCE FOR CLEAN ENERGY BONUS CREDIT: Companies seeking out the Inflation Reduction Act’s domestic content bonus for solar projects must utilize photovoltaic cells that are manufactured in the U.S. in order to get the bonus under new guidance the Treasury Department published this morning.
The IRA’s renewable electricity production and investment tax credits provide for a 10% bonus where domestic manufacturing requirements for steel, iron, or manufactured components are met. Treasury’s guidance covers several different facility and technology types, from utility-scale solar to onshore wind and battery storage projects.
Where Treasury draws the line on PV cells was a particularly big question because of how much cell capacity is located in China and other countries and how little currently located in the U.S.
Where the line is: Treasury’s guidance states: “A Manufactured Product Component is considered to be of U.S. origin if it is manufactured in the United States, regardless of the origin of its subcomponents.”
The guidance places cells, solar glass, and mounting frames within that category of manufactured product components whose origin must be the U.S. under the bonus’s terms.
There was some question as to how strictly the department would implement the requirement for manufactured components — whether, for example, it would classify cells as subcomponents whose origin doesn’t matter, something that could have allowed a project using Chinese-origin cells inside a U.S.-made solar panel to be eligible for the bonus.
Who it advantages: Domestic cell manufacturers, of which there are currently few but more coming.
First Solar is effectively the only company domestically manufacturing cells at scale, but 3Sun, Hanwha QCells, and Solfab have each announced domestic expansion plans.
NYC PENSION FIRMS SUED FOR SELLING BILLIONS IN FOSSIL FUEL HOLDINGS: Three New York City pension funds were sued this week for allegedly breaching their fiduciary duty by divesting billions of dollars in fossil fuel assets.
Plaintiffs, all municipal employees, filed their complaint yesterday in New York state court. They argued that the New York City Employees’ Retirement System, the Teachers’ Retirement System, and the Board of Education Retirement System acted unlawfully and violated their obligations to participants when they agreed to divest from fossil fuel holdings in 2021.
They also alleged the decision was a “misguided and ineffectual gesture to address climate change,” made without “regard for whether those assets would produce a superior return for the plans.”
The lawsuit comes as a growing number of Republican-led states have moved to pass anti-ESG legislation, including some who have restricted doing business with firms that use ESG factors when making investment decisions.
New York City Comptroller Brad Lander, who oversees the city’s pension plans, has long urged fund managers, including BlackRock, to implement more aggressive policies to limit oil and gas financing. Read more on the lawsuit here.
SPR REFILL BEGINNING IN JUNE? Secretary Jennifer Granholm said yesterday at a House Energy and Commerce Committee hearing that the Energy Department could begin purchasing oil to refill the Strategic Petroleum Reserve as early as June, after the completion of a 26 million-barrel congressionally mandated sale.
“And it’s at that point where we will flip the switch and then seek to purchase” oil to refill the stockpile, she said.
Oil prices have declined in recent weeks amid concerns over the U.S. economy and lower Chinese manufacturing demand. The White House had pledged to begin refiling the SPR when U.S. oil futures benchmarks fell to around $67-$72 per barrel.
As recently as March, Granholm had sounded pessimistic about beginning the refill this year, drawing some frustration from outsiders.
MOMENTUM BEHIND A DEBT CEILING DEAL WITH PERMITTING: Lawmakers say the bipartisan push for permitting reform could be resolved in a deal to raise the debt ceiling.
The White House and congressional Democrats have demanded raising the debt ceiling without conditions and accused Republicans of holding the nation’s credit line hostage by demanding that President Joe Biden negotiate around the Limit, Save, Grow Act, which included much of HR 1, the GOP’s energy and permitting package.
Sen. Joe Manchin, a leading voice on permitting reform who has also said the White House should more readily negotiate with Republicans on the debt ceiling, said he would be for a deal that includes permitting reform.
“Wherever we can get permitting reform, I’ll put it, you know, I want it to be anywhere it can go … I think it can stand alone by itself. It can be attached to something,” Manchin told reporters this week. “I just want to make sure that we get a good bill that solves the problem.”
Republican Rep. Garret Graves said it’s “better than 50/50” that a debt ceiling deal includes permitting reform.
On permitting, there are still some key differences to be worked out. House Republicans’ HR 1 left out substantial reforms for electric transmission, which is priority no. 1 for rank-and-file Democrats, and GOP members have opposed the main mechanisms that Democrats have floated for speeding transmission, mainly expanding FERC authority over siting and cost allocation.
Republican proposals, meanwhile, are quite favorable to fossil energy, against which many Democrats have been outspoken.
DOW SELECTS TEXAS SITE FOR SMR BUILD: Dow and X-energy announced plans to construct a four-reactor plant using the advanced nuclear company’s SMR design at Dow’s Seadrift Operations manufacturing site on the Gulf Coast.
Dow will utilize power and steam from the nuclear plant to support operations at the site, where the company manufactures materials for food packaging, footwear, and other products.
The companies will next prepare and submit a construction permit application to the Nuclear Regulatory Commission with the intention of beginning construction on the project in 2026.
EUROPE’S BNP PARIBAS TO STOP FINANCING NEW OIL AND GAS: Europe’s second largest bank pledged yesterday to end new financing dedicated to the development of new oil and gas fields, joining British multinational bank HSBC in tightening its finance policies against new fossil fuels in pursuit of net zero.
BNP Paribas said it will no longer provide any financing dedicated to the development of new oil and gas fields “regardless of the financing methods” and detailed plans to restrict financing of oil exploration and production by 80% by 2030.
The bank said its policies were informed by the International Energy Agency’s famed Net Zero Emissions by 2050 scenario, which is frequently quoted by opponents of oil and gas for its position that no new oil and gas fields can be developed if the world is to meet the Paris agreement targets.
HSBC announced implementation of a similar policy in December, leading the state of Texas under Comptroller Glenn Hegar to blacklist the company for engaging in a “boycott” of fossil fuels.
Major U.S. banks and fund managers have each set decarbonization targets but remain considerably less aggressive in their financing policies compared to European competitors, often defending decisions to continue oil and gas financing to keep energy prices low in the face of criticism from some shareholders and outside groups.
CLIMATE PROTESTORS DISRUPT KLOBUCHAR BOOK TALK: Protestors with the anti-fossil fuel group Climate Defiance disrupted a one-on-one conversation between Sen. Amy Klobuchar and Dana Bash about the Minnesota lawmaker’s new book, The Joy of Politics, resulting in Klobuchar leaving the stage.
The group posted a clip of the incident late yesterday, which showed the protesters walking on stage and chanting while holding a sign reading, “Amy, which side are you on?”
The Rundown
Wall Street Journal Energy stocks are in the doldrums after last year’s big rally
