News round-up, May 31, 2023
Yesterday we reflected on the following: Tuesday's chaos reflections... Is the current state of war is out of control?
The protracted conflict of attrition that both superpowers have been pursuing has proven to be unsuccessful.
The phrase "an eye for an eye, and a tooth for a tooth" is a well-known principle of justice that dates back to ancient times. It suggests that the punishment for a wrongdoing should be proportional to the harm caused by the offense. This concept has been debated and interpreted in various ways throughout history, but it remains a fundamental principle in many legal systems around the world.
The adage "An eye for an eye, and a tooth for a tooth" has its roots in the Code of Hammurabi, a legal code inscribed in the Akkadian language during the reign of King Hammurabi of Babylon between 1792 and 1750 BC. This expression is referenced in the Bible, more precisely in Matthew 5:38.
The military operations conducted by both superpowers, as evidenced by the recent missile strikes launched by Russia on the Ukrainian capital of Kiev and the utilization of drones by Ukraine to target Moscow, indicate that the protracted conflict that both superpowers have been pursuing has not yielded the desired outcome of attrition. The fundamental principle of checks and balances has been eroded, resulting in a feeling of hopelessness and an illogical approach to justice, whereby each action is met with an equivalent and opposing reaction. It is imperative to tackle these concerns and reinstate equilibrium and impartiality in our political structures.
In the context of retributive justice, Mahatma Gandhi famously stated, "An eye for an eye makes the whole world blind," a statement that remains pertinent in contemporary times. The pursuit of vengeance serves to sustain a culture of violence and devastation, resulting in an unceasing pattern of anguish and affliction. Instead, it is imperative that we endeavor to cultivate forgiveness and understanding as a means of attaining enduring peace and harmony in our global community. It is imperative to acknowledge that the experience of anger and resentment can impede our capacity to empathize with others, thereby limiting our ability to understand and relate to their perspectives. By cultivating compassion and empathy, it is possible to break away from this cycle and strive towards a more promising future that benefits all individuals. Let us reflect upon the of Gandhi and opt for the course of forgiveness and comprehension, even when confronted with challenging circumstances.
The topic of food inflation in Europe was addressed yesterday in a comprehensive article published by The New York Times.
Why Are Food Prices So High in Europe?A United Nations index of global food commodity prices, such as wheat, meat and vegetable oil, peaked in March 2022, immediately after Russia’s invasion of Ukraine, which is one of the largest grain producers. The war disrupted grain and oil production in the region and had global impact, too, worsening food crises in parts of East Africa and the Middle East.
This discourse pertains to the continuous drone and missile assaults carried out against non-combatants in Russia and Ukraine. The far-reaching consequences of the ongoing war have exceeded the initial predictions, highlighting the urgent need for a prompt resolution to the conflict in order to restore a state of peace.
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NOW EXCLUSIVE WSJ: Ukraine and Allies Plan Peace Summit Without Russia…
Kyiv has strong European backing for a gathering before NATO meeting in July
Zelensky's peace plan aims to restore Ukraine's control, release prisoners of war, and prosecute war crimes. The proposal suggests addressing nuclear safety and food security, both allegedly jeopardized by Russia's occupation of a nuclear power plant and invasion.
BY BOJAN PANCEVSKI, LAURENCE NORMAN AND JAMES MARSON, MAY 30, 2023Why Are Food Prices So High in Europe?
Agricultural and energy costs are falling, but basic items remain stubbornly expensive for consumers.
NYT By Eshe Nelson, Reporting from London, TodayUS solar, storage builders dash west in major test for grids…
Rising solar and wind penetration increases the demand for storage and most new solar applications include batteries. Combined, solar and storage accounted for over 80% of new applications.
Reuters By Neil Ford, May 25, 2023Texas battery rush: Oil state's power woes fuel energy storage boom
To increase reliability, Texas lawmakers this week approved increased subsidies for natural gas power facilities. However, the legislation also includes clauses that, according to business associations, could promote investment in battery storage.
REUTERS By Nichola Groom and Laila Kearney, May 31, 2023The social media president who ‘cleansed’ the judiciary and implemented mass incarceration
El Salvador run by ‘the world’s coolest dictator’
Technolibertarians see El Salvador as paradise, but Central America’s smallest state locks up more people than anywhere else on earth and its young president, Nayib Bukele, is ever more authoritarian.
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The AES Corporation President Andrés Gluski, Dominican Republic Minister of Industry and Commerce Victor Bisonó, and Rolando González-Bunster, CEO of InterEnergy Group, spoke at the Latin American Cities Conferences panel on "Facilitating Sustainable Investment in Strategic Sectors" on April 12 in Santo Domingo, Dominican Republic.How can strategic investment achieve both economic growth and social progress?… What is the role of renewable energy and battery storage in achieving the goals of the low-carbon economy?…
Image: President Volodymyr Zelensky of Ukraine/Editing by Germán & CoNOW EXCLUSIVE WSJ: Ukraine and Allies Plan Peace Summit Without Russia…
Kyiv has strong European backing for a gathering before NATO meeting in July
Zelensky's peace plan aims to restore Ukraine's control, release prisoners of war, and prosecute war crimes. The proposal suggests addressing nuclear safety and food security, both allegedly jeopardized by Russia's occupation of a nuclear power plant and invasion.
BY BOJAN PANCEVSKI, LAURENCE NORMAN AND JAMES MARSON, MAY 30, 2023Ukrainian President Volodymyr Zelensky’s top adviser told The Wall Street Journal on Tuesday that Ukraine and its allies are planning a summit of global leaders that would exclude Russia, aimed at ending the war on Ukraine’s terms. Photo: The Wall Street Journal
KYIV, Ukraine—Ukraine and its allies are planning a summit of global leaders that would exclude Russia, aimed at garnering support for Kyiv’s terms for ending the war, according to a senior Ukrainian presidential adviser and European diplomats.
Plans for a gathering, while preliminary, have strong support from European leaders including French President Emmanuel Macron who are lobbying for participation by countries that have sided with Russia or declined to take a position on the war.
“We require a unified plan of the responsible civilized world that really wants to live in peace,” said Andriy Yermak, Ukrainian President Volodymyr Zelensky’s chief of staff. Yermak told The Wall Street Journal that direct negotiations with Russia weren’t possible as long as its troops remain in the country. Ukraine won’t compromise on its territorial integrity, he said.
European officials say they are working with Kyiv to recraft Ukraine’s 10-point peace plan in ways that will make it more acceptable to other global powers such as India, Brazil, Saudi Arabia and China.
“The process is not possible without the whole world, including the leaders of the global south,” said Yermak, who is Zelensky’s top adviser.
Kyiv has made a concerted effort in recent months to engage with countries such as China, Brazil and India. Ukraine is ready to talk with all countries and hear their opinions, Yermak said, including representatives of China and Brazil, who visited this month.
Zelensky’s 10-point peace plan calls for restoring Ukraine’s control over its territory, returning prisoners of war and prosecuting war crimes. It also proposes addressing nuclear safety, which it says is compromised by Russia’s occupation of a nuclear power plant, and food security, by protecting grain exports that are hampered by Russia’s invasion.
President Biden and other top leaders from the North Atlantic Treaty Organization would be invited for the meeting, which Western diplomats hope can take place shortly before NATO’s annual summit that starts July 11. That gathering, in Vilnius, Lithuania, will focus on military support for Ukraine and Kyiv’s future relationship with the organization.
Zelensky early this year asked Macron to help him with international outreach to leaders such as China’s Xi Jinping, according to European diplomats. The talks later matured into plans to organize a conference, the people said. Macron has offered to host the conference in Paris, and Denmark and Sweden have also proposed hosting it, these people said.
No clear list of attendees has been established, but European officials have fanned out to capitals of leading world powers in recent weeks, seeking to bring Brazil, India, China and other non-Western countries on board.
One official involved in the discussions said they were hopeful that Saudi Arabia’s Crown Prince Mohammed bin Salman and Indian Prime Minister Narendra Modi would attend, but they were much less sure about Xi.
Modi has at times expressed his concerns about the war. Xi has met with Russian President Vladimir Putin several times since the war started but took more than a year to call Zelensky. Xi made the call after Macron visited him in Beijing. Chinese officials have repeatedly underscored their partnership with Russia and with Putin personally.
Brazilian President Luiz Inácio Lula da Silva earlier this month sent former Foreign Minister Celso Amorim to Kyiv and Moscow for talks, but he didn’t meet with Zelensky in Japan this month when both attended a Group of Seven summit.
A conference would build on Ukraine’s continuing diplomatic outreach to traditional allies of Russia: Zelensky recently traveled to a summit of the Arab League, while his foreign minister, Dmytro Kuleba, has toured African countries.
The Western effort comes as other countries with far closer ties to Russia have sought to take the lead in diplomatic work to end the conflict. Both Brazil and China have sent peace envoys to Moscow and European capitals for discussions on ending the war. Neither country has condemned Russia’s invasion of Ukraine and both have advocated a quick cease-fire, which would leave Russia controlling swaths of Ukraine, for now.
The peace meeting would seek to place Ukraine and its allies back at the center of that international diplomacy. European officials aim to ensure that future talks take Kyiv’s plan as the diplomatic reference point.
“No Russians but everybody else will be welcomed,” a senior European diplomat said of summit planning.
The timing of the conference ahead of the NATO meeting would send a signal to the rest of the world that while Europe and the U.S. will keep supporting Ukraine with arms, they are also seeking diplomatic solutions to a conflict whose economic spillovers have hurt much of the developing world. Western countries have come under fire from rivals including China and Brazil for sending arms to Ukraine, which those countries say is fueling the conflict.
The idea for the conference was initially hatched in a conversation between Macron and Zelensky in Paris in February, European diplomats said, where the French leader pressed his Ukrainian counterpart to accept that there would eventually need to be peace talks with the Kremlin.
Macron raised the issue with Xi during a recent visit to Beijing. The idea was also floated at this month’s meeting of leaders from the Group of Seven advanced democracies conference in Japan, according to U.S. and Ukrainian officials. Zelensky also attended that meeting, as did the leaders of India, Brazil and Indonesia.
On Tuesday, Zelensky spoke with German Chancellor Olaf Scholz. A German statement said the two leaders would stay in close contact “with a view to mobilizing global support for a peace solution.”
Senior Ukrainian officials have repeatedly said they would continue their fight against Russia unless Moscow is prepared to engage with its peace plan, which rejects a temporary cease-fire and calls for Russian forces to be withdrawn before talks start.
Russia has said it is open to peace talks but on the condition that Ukraine effectively recognize the territories it has annexed. U.S. officials have said recently that they believe the likelihood for meaningful diplomacy before the end of the year is low.
Image: Germán & CoCooperate with objective and ethical thinking…
Why Are Food Prices So High in Europe?
Source: Britain’s Office for National Statistics, Italy’s Industry Ministry and Germany’s Federal Statistical Office By Rebecca LiebermanAgricultural and energy costs are falling, but basic items remain stubbornly expensive for consumers.
NYT By Eshe Nelson, Reporting from London, TodayIt is the most basic of staple food items: sliced white bread. In Britain, the average price of a loaf was 28 percent higher in April, at 1.39 pounds, or $1.72, than it was a year earlier.
In Italy, the price of spaghetti and other pasta, a fixture of the Italian diet, has risen nearly 17 percent from the year before. In Germany, the European Union’s largest economy, cheese prices are nearly 40 percent higher than a year ago, and potatoes cost 14 percent more.
Throughout the European Union, consumer food prices were on average nearly 17 percent higher in April than a year earlier, a slight slowdown from the previous month, which set the fastest pace of growth in over two and a half decades. The situation is worse in Britain than in its Western European neighbors: Food and nonalcoholic drink prices were 19 percent higher, the quickest pace of annual food inflation in more than 45 years. By comparison, the annual rate of U.S. food inflation was 7.7 percent.
The percent increase in staple food prices in the E.U. over the last year
Data as of April 2023
Source: Eurostat By Rebecca LiebermanPersistent food inflation is squeezing low-income households and troubling European politicians. (In Italy, the government held a meeting this month to discuss soaring pasta prices.)
At the same time, the major costs that go into making food products, including fuel, wheat and other agricultural commodities, have been falling in international markets for much of the past year — raising questions about why food prices for consumers remain so high in Europe. And with rising labor costs and the possibility of profiteering, food prices are unlikely to come down anytime soon. More broadly, rising prices could also put pressure on central banks to keep interest rates high, potentially restraining economic growth.
What is driving up food prices?
Behind the sticker price for a loaf of bread includes the costs for not only key ingredients but also processing, packaging, transport, wages, storage and company markups.
A United Nations index of global food commodity prices, such as wheat, meat and vegetable oil, peaked in March 2022, immediately after Russia’s invasion of Ukraine, which is one of the largest grain producers. The war disrupted grain and oil production in the region and had global impact, too, worsening food crises in parts of East Africa and the Middle East.
But the worst was avoided, in part because of a deal to export grain from Ukraine. European wheat prices have declined about 40 percent since last May. Global vegetable oil prices are down about 50 percent. But there is still a ways to go: The United Nations’ food price index was 34 percent higher in April than its 2019 average.
Sources: Food and Agriculture Organization of the United Nations, Eurostat/ By Karl RussellAside from commodity prices, Europe has experienced particularly harsh increases in costs along the food supply chain.
Energy prices soared because the war forced Europe to rapidly replace Russian gas with new supplies, pushing up the costs of food production, transport and storage.
Though wholesale energy prices have fallen back down recently, retailers warn there’s a long lag — perhaps up to a year — before consumers will see the benefits of that because energy contracts were made months before, most likely reflecting those higher prices.
And the tight labor markets in Europe with high job vacancy rates and low levels of unemployment are forcing employers, including food companies, to push up wages to attract workers. This in turn drives up costs for businesses, including in the food sector.
Is profiteering keeping prices high?
Suspicions are growing among consumers, trade unions and some economists that inflation could be kept needlessly high by companies raising prices above their costs to protect profit margins. The European Central Bank said that at the end of last year, corporate profits were contributing to domestic inflation as much as wage growth, but it did not say if any industries had made excessive profits.
Economists at Allianz, the German insurer and asset manager, estimate that 10 to 20 percent of food inflation in Europe can be attributed to profiteering. “There is part of the food price inflation that we see which is not explainable, easily,” said Ludovic Subran, the chief economist at Allianz.
But the lack of detailed data about corporate profits and supply chains has caused a rift in economic opinions.
Some economists and food retailers have pointed fingers at big global food producers, which have sustained double-digit profit margins while raising prices. In April, the Swiss giant Nestlé said it expected its profit margin this year to be about the same as it was last year, about 17 percent, while it reported raising prices almost 10 percent in the first quarter.
Even taking into account expenses like transport and accounting for pricing lags from farms to shelves, Mr. Subran said he would have expected food inflation to come down by now.
In Britain, some economists are telling a different story. Michael Saunders, an economist at Oxford Economics and former rate-setter at the Bank of England, said in a note to clients in May that “greedflation” was not the culprit. Most of the increase in inflation reflects the higher cost of energy and other commodities, he said.
Rather than rising, total profits for nonfinancial companies in Britain, excluding the oil and gas industry, have fallen over the past year, he said.
Britain’s competition regulator also said that it hadn’t seen evidence of competition concerns in the grocery sector, but that it was stepping up its investigation into “cost of living pressures.”
Have food prices peaked?
Despite well-publicized cuts to milk prices in Britain, food prices in general are unlikely to go down in the near future.
Instead, policymakers are closely watching for a slowdown in the rate of increases.
There are tentative signs that the pace of food inflation — the double-digit increase in annual prices — has reached its pinnacle. In April, the rate fell in the European Union for the first time in two years.
Sources: U.K. Office for National Statistics; EurostatBy Karl RussellBut the slowdown from here is likely to be gradual.
“It appears to be taking longer for food price pressures to work their way through the system this time than we had expected,” Andrew Bailey, the governor of the Bank of England, said this month.
Across the continent, some governments are intervening by capping prices on food essentials, rather than waiting for the economic debates about corporate profiteering to play out. In France, the government is pushing an “anti-inflation quarter,” asking food retailers to cut prices on some products until June. But the finance minister, Bruno Le Maire, said this month that he wanted food producers to contribute more to the effort, warning they could face tax penalties to recover any margins unfairly made at the expense of consumers if they refuse to return to negotiations.
These efforts may help some shoppers, but on the whole there is little to comfort Europeans. Food prices are unlikely to decline — it’s likely only that the pace of increases will slow later this year.
Image: REUTERS/Bridget BennettUS solar, storage builders dash west in major test for grids
Rising solar and wind penetration increases the demand for storage and most new solar applications include batteries. Combined, solar and storage accounted for over 80% of new applications.
Reuters By Neil Ford, May 25, 2023The latest U.S. grid connection (interconnection) data highlights the soaring demand for renewable energy projects as federal and state authorities race towards decarbonisation goals.
Annual grid connection applications hiked by 40% in 2022 to over 700 GW as demand for solar and storage projects soared, the Lawrence Berkeley National Laboratory (Berkeley Lab) said in its annual grid connection report.
In an emerging trend, the West region outside California’s CAISO network saw the fastest growth as project applications jumped 306 GW to leave 597 GW of capacity in the queue. The MISO market in Central U.S. now has the second-largest queue, at 334 GW, surpassing California's CAISO grid and the PJM network in the East.
The rise in applications in the West and MISO outweighed a drop in new applications in CAISO and PJM after the grid operators shelved new applications to tackle a backlog of projects.
CHART: Power capacity in U.S. grid connection queuesSource: Berkeley Lab, April 2023The Biden administration's Inflation Reduction Act has boosted the economics of renewable energy nationwide, offering tax credits for solar and wind projects and for the first time, stand-alone energy storage.
Some developers have turned their attention to the West while CAISO and PJM reduce their backlogs, but the West also offers strong solar and wind resources along with good land availability and growing power demand is combining with rising renewable energy targets as states and utilities look to decarbonise their power networks.
California, Oregon, Washington, Nevada, Colorado and New Mexico have raised state renewable portfolio standards (RPS) or set out 100% clean energy targets over the last few years, Aaron Vander Vorst, Head of Growth Strategy and transmission at operator Enel North America, told Reuters Events. A large international developer, Enel is developing solar, wind and storage projects across the West.
Utilities such as Bonneville Power Administration (BPA), Arizona Public Service (APS) and PacifiCorp have set decarbonization targets and are issuing requests for proposals for renewable energy that are driving demand, Joseph Rand, Energy Policy Researcher at Lawrence Berkeley Lab, said. These targets will continue to support demand going forward, he said.
The regional utilities manage grid connections in the non-ISO West and the surge in applications will severely test their ability to process applications efficiently and avoid withdrawals that disrupt other projects in the queue.
Nationwide, grid connection delays are growing, Berkeley Lab warned in its report. Much of the capacity will not be built and a growing number of developers are withdrawing applications at a later stage, it said.
Power needs
Across the U.S., 350 GW of solar projects and 202 GW of storage entered grid connection queues last year, the data from Berkeley Lab shows.
Rising solar and wind penetration increases the demand for storage and most new solar applications include batteries. Combined, solar and storage accounted for over 80% of new applications.
In some regions, rising population levels and growing economic activity is supporting demand for renewable energy. In the Salt River Project (SRP) service area in central Arizona, rising power demand combined with a push to reduce carbon emissions is driving up grid connection applications, SRP Director of Resource Planning Grant Smedley told Reuters Events.
SRP predicts peak electricity demand will grow by 1.2 GW between 2023 and 2025, a rise of 16%, due to population growth around the city of Phoenix. SRP is a not-for-profit organization that provides power to 2 million people.
Some of the new projects in the West lie on federal land, where the Biden administration is looking to accelerate deployment. The Interior Department aims to permit 25 GW of renewable energy on federal lands by 2025 and by March 2023 it had approved 8.2 GW of projects, mostly solar.
Developers may also be attracted by lower deposit requirements from some of the utility-owned transmission operators, Vander Vorst said.
"Any transmission company still following [the Federal Energy Regulatory Commission’s] original tariff rules will have lower deposit requirements than regions which have reformed their rules to discourage high volumes of [grid connection] requests," he noted.
California's power demand is set to hike on the back of ambitious climate objectives. Some developers are looking to export into CAISO but transmission capacity is now largely occupied and there are additional regulatory barriers to cross networks, Vander Vorst said.
Enel is among a group of stakeholders advocating a regional transmission operator (RTO) that spans the whole of the West, including California.
A Western RTO would “reduce barriers to effectively sharing power across the region” and encourage more proactive and cost-effective expansion of the transmission system, Vander Vorst said. A reform bill to create a regional RTO has been tabled in the California legislature but it requires approval by lawmakers and it will take years for any reforms to be fully implemented.
Growing queues
As applications surge across the U.S., the average time from connection request to plant operations rose to around five years in 2022, Berkeley Lab said.
The time from connection request to connection approval varied widely across the non-ISO West, but the average was in line with the national average at around three years, the data showed.
CHART: U.S. grid connection approval times, by marketIR = Interconnection Request IA = Interconnection Approval Source: Berkeley Lab, April 2023Longer timelines increase project costs. Grid connection costs and project withdrawals are highest in congested grids such as the expansive PJM network, where costs for active projects in the queue have grown eightfold since 2019, Berkeley Lab said in a separate study published in January.
Reforms to application processing are critical to reduce queues going forward. Southwest Power Pool (SPP) is leading efforts to reduce approval times by assessing projects in groups, and this could soon be rolled out by other network operators under new rules proposed by the FERC.
Developers need access to grid connection data to assess project risks and FERC is also considering imposing a two-tier process to filter out speculative requests. Developers would gain access to preliminary data before filing a formal grid connection request.
Arizona’s SRP has already found that the ‘first come, first served’ grid connection process has led to a "multitude of speculative [grid connection] requests," lengthening the timeline required to conduct grid connection studies, Smedley said.
This is creating a feedback loop where developers often submit speculative grid connection requests to get prospective projects in the queue in an attempt to meet potential future timelines, he said.
An engineer checks an inverter next to battery banks at GlidePath's Byrd Ranch energy storage facility in Sweeny, Texas, U.S., May 23, 2023. REUTERS/Adrees LatifTexas battery rush: Oil state's power woes fuel energy storage boom
To increase reliability, Texas lawmakers this week approved increased subsidies for natural gas power facilities. However, the legislation also includes clauses that, according to business associations, could promote investment in battery storage.
REUTERS By Nichola Groom and Laila Kearney, May 31, 2023May 31 (Reuters) - BlackRock, Korea's SK, Switzerland's UBS and other companies are chasing an investment boom in battery storage plants in Texas, lured by the prospect of earning double-digit returns from the power grid problems plaguing the state, according to project owners, developers and suppliers.
Projects coming online are generating returns of around 20%, compared with single digit returns for solar and wind projects, according to Rhett Bennett, CEO of Black Mountain Energy Storage, one of the top developers in the state.
"Resolving grid issues with utility-scale energy storage is probably the hottest thing out there,” he said.
The rapid expansion of battery storage could help prevent a repeat of the February 2021 ice storm and grid collapse which killed 246 people and left millions of Texans without power for days.
The battery rush also puts the Republican-controlled state at the forefront of President Joe Biden's push to expand renewable energy use.
Reuters drew on previously unreported data and interviewed more than a dozen executives from private equity firms, utility companies and energy storage providers involved in some of the biggest battery storage deals for this report. They described a rush to take advantage of the high returns before they erode.
Power prices in Texas can swing from highs of about $90 per megawatt hour (MWh) on a normal summer day to nearly $3,000 per MWh when demand surges on a day with less wind power, according to a simulation by the federal government's U.S. Energy Information Administration.
That volatility, a product of demand and higher reliance on intermittent wind and solar energy, has fueled a rush to install battery plants that store electricity when it is cheap and abundant and sell when supplies tighten and prices soar.
Texas last year accounted for 31% of new U.S. grid-scale energy storage, according to energy research firm Wood Mackenzie, second only to California which has had a state mandate for battery development for a decade.
While declining, Texas’s share of U.S. grid-scale energy storage capacity will stay the second largest in the country, next only to California where battery development has been state-supported for years.
LEADER IN ENERGY STORAGE
And Texas is expected to account for nearly a quarter of the U.S. grid-scale storage market over the next five years, according to Wood Mackenzie projections shared with Reuters.
Developers and energy traders said locations offering the highest returns -- in strapped areas of the grid -- will become increasingly scarce as more storage comes online and electricity prices stabilize.
Texas lawmakers this week voted to provide new subsidies for natural gas power plants in a bid to shore up reliability. But the legislation also contains provisions that industry groups said could encourage investment in battery storage.
Amid the battery rush, BlackRock acquired developer Jupiter Power from private equity firm EnCap Investments late last year. Korea's SK E&S acquired Key Capture Energy from Vision Ridge Partners in 2021 and UBS bought five Texas projects from Black Mountain last year for a combined 700 megawatts (MW) of energy storage. None of the sales' prices were disclosed.
SK E&S said its acquisition of Key Capture was part of a strategy to invest in U.S. grid resiliency.
"SK E&S views energy storage solutions in Texas and across the U.S. as a core technology that supports a new energy infrastructure system to ensure American homes and businesses have affordable power," the company said in a statement.
UBS and BlackRock declined to comment.
Installed generating capacity in energy storage is forecast by the government to rise over 10 times by 2050 from 2023 as potential investors benefit from new tax credit for the sector under the Inflation Reduction Act of 2022.
U.S. energy storage companies attracted $5.5 billion in investment last year, according to Mercom Capital Group. The U.S. is projected to install 65 gigawatts (GW) of grid storage over the next five years, 15 times the 4 GW added last year, according to Wood Mackenzie, buoyed by a 30% tax credit for energy storage in Biden's Inflation Reduction Act (IRA).
The Electric Reliability Council of Texas (ERCOT), which operates the grid that serves most of the state, has 3.2 GW of energy storage capacity, according to its own data.
The authority said in a statement that more storage was in development. It has pending requests to connect to the grid from plants offering more than 96 GW in storage, according to ERCOT data. ERCOT declined an interview request.
'CLOAK AND DAGGER'
"It's cheaper to build there, the revenue is higher, and the problems are real," said Andrew Waranch, president of Spearmint Energy, which acquired about 1 GW of Texas projects in the last year.
While some investors have focused on specific locations with maximum volatility, more than 80% of the revenue comes from the Ancillary Services Market, which seeks to stabilize power supply across the grid, according to David Miller, vice president of business development at Gridmatic, which uses artificial intelligence to optimize battery use.
Miller said he expects ancillary market prices to "collapse" as more battery storage comes online.
Average energy storage revenue already fell about 18% last year, according to a Gridmatic analysis.
Waranch said battery storage plants coming online in 2025 could take up to eight years to break even compared with four or less for plants that come online in 2023.
The urgency has helped fuel a rush to install projects that can get faster regulatory clearance.
Stem Inc (STEM.N) and other developers said they are focusing on small projects of under 10 MW because they face fewer regulatory requirements.
The diminishing returns have also intensified competition for sites in areas with the wildest wholesale power price fluctuations, industry executives said.
"We want to get maximum volatility," said American Enerpower Chairman Dick Lewis, who scours Texas for plots of land near constrained parts of the grid to develop battery plants. "Placement is very important."
So is timing, said Andrew Tang, vice president of energy storage and optimization at Finland's Wartsila, which has supplied about a third of the Texas battery market.
"There's a little bit of cloak and dagger secrecy," he said. "If they think they've seen a trading opportunity that exists in the marketplace, they don't want to openly brag about it because someone else will jump in and therefore get rid of the arbitrage opportunity," he said.
Chris McKissack, CEO of storage developer GlidePath, said that batteries will likely remain a good bet for a long time -- even if Texas is seeking to bolster traditional forms of energy like natural gas.
"If no new generation is built and all you've got is old generation and load growth, you've got even more volatility," McKissack said. And that, he said, could lead to more opportunity for storage.
Punishment: MS-13 and Barrio 18 gang members arrive at the new Terrorist Confinement Centre in Tecoluca, El Salvador, 25 February 2023/ Press Secretary of the Presidency of El Salvador · Handout · Anadolu/The photograph has undergone a process of black and white conversion and refocusing, carried out by Germán & Co.The social media president who ‘cleansed’ the judiciary and implemented mass incarceration
El Salvador run by ‘the world’s coolest dictator’
Technolibertarians see El Salvador as paradise, but Central America’s smallest state locks up more people than anywhere else on earth and its young president, Nayib Bukele, is ever more authoritarian.
Le Monde Diplomatique by Anne-Dominique Correa, TODAYAgroup of tourists in baseball caps and colourful Hawaiian shorts wandered the sandy alleys of El Zonte, a surf spot an hour from the capital, San Salvador. They spoke English with American, Australian and German accents. They used the smartest new smartphones to pay for coconuts and pupusas (thick tortillas filled with cheese and beans) with Bitcoin using a QR code. Then, with exotic cocktails in hand, they took selfies as the sun went down, marvelling at tiny hatchling turtles crawling clumsily down the beach toward the sea.
El Zonte has been experimenting with Bitcoin for two years, earning it the nickname ‘Bitcoin Beach.’ In June 2021 El Salvador’s President Nayib Bukele declared it legal tender, a world first, though Bitcoin lacks some key properties of a currency (1). These foreign visitors had made a special trip to El Zonte during the Adopting Bitcoin conference held in San Salvador in mid-November 2022. Some had not bought a ticket home yet. ‘I’m thinking of moving here,’ said Jesse Shrader, co-founder of Amboss, a US startup. ‘With the collapse of FTX [the second largest cryptocurrency platform, on 11 November], the US may start regulating. There’s more freedom here.’
Since adopting Bitcoin, El Salvador has become the destination of choice for technolibertarians, who see this decentralised asset as laying the foundations for their utopia. ‘Many tech-savvy people, content creators, influencers and digital nomads have moved here,’ said Jeremy, who served in the US military and recently settled in El Salvador (he requested anonymity). Soon after arriving, he set up a business to help members of the new diaspora meet administrative requirements. ‘Most come from countries like Canada, New Zealand, Australia, the US, Belgium, the Netherlands or Denmark,’ he said at his apartment in an upscale neighbourhood of San Salvador. ‘These are countries where people that lived there thought that they were living in a more liberal democracy. But after the restrictions around the pandemic, they realised probably for the first time how powerful and restrictive the state was in their day-to-day life… They immediately began peeking over the fence to see if the grass was a little bit greener somewhere else.’
‘Bitcoin City’
Bukele, a member of tech-savvy Generation Y, is fulfilling all their fantasies. In November 2021 he announced ‘Bitcoin City’, which will be built at the foot of the Conchagua volcano in the east of the country. ‘When Alexander the Great conquered the world, he created his Alexandrias,’ he announced from the podium that he had mounted to AC/DC’s You Shook Me All Night Long. ‘For Bitcoin to spread worldwide, we must build the first [Bitcoin] Alexandria here in El Salvador.’ Construction costs will be funded by issuing $1bn in crypto-backed bonds: ‘volcano bonds.’ Crypto-mining activities will be powered by geothermal energy from the volcano. VAT is the only tax that will be levied. ‘A heaven for freedom,’ Jeremy reckoned.
For now, however, only Bitcoin enthusiasts are truly benefiting from this paradise. Beyond El Zonte, the country seems more like a huge prison. On 26 March 2022, following the apparent breakdown of a truce between El Salvador’s warring gangs and the government, the country experienced its bloodiest day in two decades: over 60 people were killed by the MS-13 and Barrio 18 gangs. The next day, Bukele declared a state of emergency. Since then, police have patrolled the streets and entire towns have been cordoned off by the army.
More than 60,000 people have been imprisoned, meaning El Salvador has the highest incarceration rate in the world. According to World Prison Brief, using UN data, El Salvador currently holds 1,086 people per 100,000 inhabitants in prison. An article in La Prensa Gráfica, El Salvador’s biggest newspaper, drawing on data from the Supreme Court of Justice (CSJ), suggests an even higher rate of 1,220 detainees per 100,000. To deal with this exploding prison population, the government opened a hastily built ‘terrorist confinement centre’ in February for an additional 40,000 prisoners.
So is Bukele’s El Salvador symbolised by a futuristic city a stone’s throw from a prison? ‘Bukele’s outer shell is painted in very bright, fresh, trendy colours,’ says opposition member of parliament Claudia Ortiz of the Vamos (Let’s Go) party. ‘But it hides an authoritarian core that recalls our recent history.’ From 1980 to 1992, a civil war that was characterised by violence perpetrated by the armed forces claimed around 75,000 lives. A further 8,000 disappeared.
When he was elected in February 2019, Bukele embodied hope of renewal. ‘The country can finally turn the page on the postwar period and embrace the future,’ he declared on election night, after winning 53% of the vote in the first round under the banner of the conservative Grand Alliance for National Unity (GANA). At 37 he had broken away from the bipartisanship of the rightwing Nationalist Republican Alliance (ARENA) and the leftwing Farabundo Martí National Liberation Front (FMLN), which had been in power since the end of the civil war but had failed to eradicate poverty and violence.
The world, the new world, is no longer in this General Assembly, but in the place where this photo will go. Believe me, many more people will see this selfie than will hear this speechNayib Bukele
Although Bukele had risen to power within the ranks of the FMLN, in particular as mayor of San Salvador (2015-19), the press portrayed him as an outsider (The New York Times, 3 February 2019), an ‘anti-system candidate’ (La Croix, 2 February 2019) and even ‘a new Macron’ (Le Soir, 5 February 2019). Seduced by his tech entrepreneur appearance, his youth and his ‘flair for social media,’ the Washington Post hailed his ‘non-ideological’ position and ‘refreshing’ ideas (5 February 2019).
But sometimes the media bubble has to burst. ‘We’ve never experienced so many democratic rollbacks’ since the peace accords of 1992, says Ortiz. As soon as he took office, Bukele fired FMLN-affiliated civil servants via Twitter. Then, on 8 February 2020, he marched into the Legislative Assembly with a police and military escort to force opposition lawmakers, then still in the majority, to approve a $109m loan to fund his security plans. The Legislative Assembly may have been saved that day through divine intervention; after seeming to pray, Bukele left the chamber and went to greet the crowd outside. ‘God said to me: patience, patience, patience,’ he told them. ‘We’ll get rid of [opposition politicians] democratically’ (2).
A few months later, he did: on 28 February 2021 his new party Nuevas Ideas (New Ideas), in alliance with GANA, won an absolute parliamentary majority, enabling him to steamroller all obstacles. On 1 May 2021 Bukele ‘cleansed’ the judiciary (3). The Legislative Assembly removed the judges from the CSJ’s constitutional chamber, which had stopped him using the army to arrest people for breaching the pandemic lockdown, and dismissed the attorney general. Then, on 27 September 2021, the assembly passed a law forcing a third of judges and prosecutors to retire. ‘There’s no longer independent justice,’ said Juan Antonio Durán, one of the judges who opposed this decision. He claims he has been intimidated by the government.
‘Assaults on democracy are common’
Since Bukele declared war on the gangs, ‘these assaults on democracy have become common,’ says Ortiz, one of the few lawmakers to vote against the tenth renewal of the state of emergency this January. According to the NGO Cristosal, which has recorded 4,071 complaints of abuse of power since 26 March, thousands of innocent people have been detained. ‘Most arrests are arbitrary. There’s been no prior investigation or arrest warrant,’ according to Abrego Verdugo, director of the NGO’s strategic litigation programme. According to the testimonies they’ve collected, having a tattoo (a sign of gang connections) or a criminal record, living in a slum run by gangs, or simply an anonymous tip-off from a neighbour can get someone arrested. This wave of arrests has coincided with an unusual increase in the number of disappearances.
In San Salvador, detainees’ families keep vigil outside prisons and government buildings, hoping for news of loved ones. Marta, who was waiting with her 15-year-old daughter, asked to remain anonymous for fear of reprisals. Wearing a mask and hoodie, Marta stood by the fence round the building of the prosecutor’s office, staring at the ground. Her 22-year-old son was arrested on 28 May last year while on his daily run transporting fruit and vegetables to vendors in his village of San Vicente, about 100km from the capital. Like most detainees, he was accused of being a gang member and is being held in Izalco prison, 60km west of San Salvador.
His mother suspects the arrest was due to a vendetta. ‘My son isn’t a bad boy,’ she insists. When the youngest of her four daughters was raped by a pandillero (gang member) a few years ago, Marta pressed charges and the perpetrator was imprisoned. Now she’s convinced he denounced her son in return for a reduced sentence. But even if she can prove this, her son’s fate is uncertain. The overwhelmed justice system is mishandling cases. ‘Sometimes public defenders deal with over 300 cases and have just five minutes to make a statement,’ says Verdugo. ‘Hearings happen en masse. The largest judged 600 prisoners in one go.’ Marta’s son’s court-appointed lawyer had scheduled a meeting with her today, but didn’t show up. ‘Sometimes he comes. Sometimes he doesn’t.’ As for her son, ‘we don’t even know if he’s alive or dead.’
‘In a war there are always innocent victims and collateral damage,’ Salvadoran vice-president Félix Ulloa told Prensa Gráfica in July 2022. Meanwhile, Bukele appears fixated on the homicide rate. If it goes down, he claims a success. ‘We’re about to conclude the safest month in our history, in the safest year of our history,’ he boasted on Twitter on 31 December, announcing 2022’s 50% drop in homicides (495) compared to the previous year (1,147) (4). He’s even threatened to make prison conditions still harsher. ‘If prisoners provoke a crime spike, we’ll withdraw food from prisons,’ he announced on Twitter in April 2022. On 1 November, the traditional Day of the Dead, Bukele forced inmates to take hammers to the graves of former gang members. Anyone criticising such measures is accused of defending the gangs.
Highest approval rating
Despite all this, Bukele’s popularity rating remains sky-high. According to the latest Gallup poll (October 2022), he enjoys 86% support, the highest presidential approval rating in Latin America. ‘I’m the coolest dictator in the whole world,’ he joked in September 2021 (5), then added this description to his Twitter bio. In the past, Salvadoran presidents were relatively unknown, but Bukele is seen as an inspiration abroad. In Chile, rightwing parliamentarian Gaspar Rivas declared himself ‘the new Bukele’ when he presented a bill to toughen anti-crime measures in August 2022 (6). In Ecuador in September 2022 the mayor of Guayaquil, Cynthia Viteri, asked President Guillermo Lasso to copy Bukele’s policy to tackle crime. Following Bukele’s lead, Honduras’ president Xiomara Castro declared a state of emergency last November to wage a ‘war against gang extortion’ (7).
What explains Bukele’s popularity? ‘The government successfully sells perceptions,’ says Oscar Ortiz, who was a guerrilla before becoming vice-president of El Salvador under President Sánchez Cerén (FMLN, 2014-19). Aside from the reduction in recorded violence, Bukele has not solved the country’s main problems: El Salvador will have the lowest growth rate in Central America in 2023 (1.6%). Furthermore, extreme poverty rose from 4.6% to 7.8% between 2019 and 2021, and half the population is going hungry (8).
But Bukele is a master of marketing. Before entering politics, he ran a family advertising business, Obermet, which helped organise FMLN campaigns. As president, he has applied his expertise to government propaganda, flooding YouTube with slick videos and bombarding Twitter with viral hashtags. Bukele is not shy about creating a buzz, often putting himself centre-stage. In September 2019 he made headlines by taking a selfie on the podium of the UN General Assembly before his maiden speech. ‘The world, the new world, is no longer in this General Assembly, but in the place where this photo will go,’ he said. ‘Believe me, many more people will see this selfie than will hear this speech’ (9). He was right: the photo went viral worldwide.
‘According to our research, it takes Bukele 12 hours to get a subject trending on social media, while social movements need 501 hours,’ says Amparo Marroquín, a communications studies researcher at the Central American University (UCA). ‘When we want to talk about unjustified arrests, his huge PR machine crushes us.’
However, the Salvadoran president rarely exposes himself to press scrutiny. No member of his party or government responded to my interview requests. ‘Bukele’s like a brand that needs to be protected,’ said Florencia Vilanova, the Salvadoran ambassador to Germany, showing a delegation of German Bitcoiners round El Zonte during the Adopting Bitcoin conference. Bukele prefers to promote that brand to influencers or YouTubers, who rarely ask tough questions. On 5 March 2021, for example, he gave a lengthy interview to Juan Bertheau and Luisito Comunica, whose YouTube channel has more subscribers than the population of El Salvador.
The government’s image obsession appears to orientate its politics. Its new party, Nuevas Ideas, seems like an empty shell: it declares no principles in its statutes, nor has it set out a political programme. ‘Once you take away the spectacle, the fireworks, you realise this government’s not changing anything in the country,’ says Ricardo Castañeda, an economist at the Central American Institute of Fiscal Studies (ICEFI). ‘The adoption of Bitcoin is an excellent illustration of this,’ he added: a measure bound to fail.
On its launch in June 2021 Bukele argued that Bitcoin would promote financial inclusion for non-banked Salvadorans (70% of the population) and lower the cost of money transfers from the Salvadoran diaspora in the US (23% of GDP in 2021). Nearly two years later, there’s little sign of these benefits. In the capital, almost no businesses accept cryptocurrency payments and only 2% of transfers from the diaspora use it. Now, due to the fall in Bitcoin’s value, public funds that the government held in the cryptocurrency (an unverifiable amount of $107m according to Nayibtracker.com) have lost more than half their original value. ‘You might as well entrust the country’s economic policy to a casino,’ says Castañeda.
In an interview with Tucker Carlson on Fox News last November, President Bukele acknowledged that adopting Bitcoin amounted to a massive rebranding exercise. But El Salvador isn’t a consumer brand: so how long will the illusion last?
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