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YOU NEED ENERGY TO MAKE ENERGY: The sector that Europe is trusting with its energy future — green technology — is itself being crushed under high energy prices, putting at risk the campaign to build a clean energy supply chain.

Exorbitant electricity prices, driven by high natural gas prices and unplanned power plant outages, are crippling some manufacturers that make solar panels and battery cells, leading them to cut or consider cutting production.

The high prices also pose a threat to planned projects that have yet to secure financing or otherwise come online, including the 35 gigawatts of currently planned solar manufacturing capacity, where rising costs make doing business uneconomical.

The volatile price outlook means an estimated 35 gigawatts of solar photovoltaic manufacturing and more than 2,000 gigawatt-hours of battery cell manufacturing capacity could be nixed without a major dent in prices, according to research from Rystad Energy.

Looking closer: In the U.K., startup battery manufacturer Britishvolt recently announced another delay to its production timeline, pushing it back another six months beyond an already delayed end-of-2024 target. The company is seeing “ballooning energy costs on the back of geopolitical uncertainties,” a spokesperson said, and production is now expected to begin in mid-2025.

To the northeast, power prices are up by a factor of six in Norway, where the solar PV manufacturing industry is pondering shuttering factories for the rest of the year to cope, according to Rystad. Manufacturers in France and Germany have also shuttered or reduced production because of higher power prices.

It’s a massive challenge for Europe, which like the United States intends to build up its own green energy manufacturing sector and reduce reliance on Chinese imports, said Audun Martinsen, the Oslo-based head of energy service research for Rystad Energy.

“The problem is that the remedy to help cure and basically get down prices is actually going to destroy the cure itself,” he told Jeremy, “because these manufacturers … they don’t want to basically invest in these facilities because of these higher prices at the moment.”

The price crisis could remain acute for at least another 12 to 24 months, Martinsen said.

Of course, governments are scrambling to intervene in the gas and power markets to help consumers, including factories, cope with prices.

But for prospective manufacturing plants, the evolving situation will likely remain a challenge even where they can secure financing.

“The time it takes to develop these plants is still less than the time expected for these power prices to stay high,” Martinsen said, “meaning that even though you get funding, it’s always going to be quite hard to understand exactly what will be the operational costs for those plants.”

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Jeremy Beaman (@jeremywbeaman) and Breanne Deppisch (@breanne_dep). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

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BIDEN AND DEMOCRATS RAMP UP ANTI-SAUDI ARABIA RHETORIC: White House national security spokesman John Kirby said today that President Joe Biden is “reevaluating” the U.S.-Saudi relationship following last week’s OPEC+ oil production cut announcement, which was seen in Washington as a sign that Riyadh had chosen to align itself with Russian interests over the U.S.

Biden is willing to work with Congress as it “rethinks what that relationship ought to look like going forward,” Kirby said on CNN. "And I think he's going to be willing to start to have those conversations right away."

Other Democrats are calling for changes: Senate Foreign Relations Chairman Bob Menendez of New Jersey called on Biden yesterday to “immediately freeze all aspects” of U.S.-Saudi relations, including halting most arms sales, as he accused the kingdom of helping “underwrite” Russia’ war in Ukraine through the production cuts.

“There simply is no room to play both sides of this conflict — either you support the rest of the free world in trying to stop a war criminal from violently wiping ... an entire country off of the map, or you support him,” he said.

And Sen. Dick Durbin of Illinois argued that Saudi Arabia has “never” been a trustworthy U.S. partner, ticking through a long list of human rights abuses carried out by the kingdom.

“From unanswered questions about 9/11, the brutal murder of journalist Jamal Khashoggi, and the exporting of extremism, to dubious jailing of peaceful dissidents and conspiring with Vladimir Putin to punish the U.S. with higher oil prices, the Saudi royal family has never been a trustworthy ally of our nation,” Durbin said. “It’s time for our foreign policy to imagine a world without this alliance with these royal backstabbers.”

The White House has a range of options: One option would be throwing its weight behind the No Oil Producing and Exporting Cartels Act, or NOPEC—a long-stalled bill that would allow the U.S. government to sue OPEC and OPEC+ producers for violating antitrust laws and trying to control oil production.

Senate Majority Leader Chuck Schumer said the chamber is considering several legislative responses to the kingdom, including NOPEC, which was approved 17-4 by the Senate Judiciary Committee in May.

Expect more tonight… Biden will sit tonight for a rare one-on-one interview with CNN’s Jake Tapper.

UKRAINE HALTS ELECTRICITY EXPORTS AFTER DAMAGE TO GRID: Ukraine’s energy ministry announced it has halted all electricity exports to other European countries beginning today after Russia targeted Ukraine's power grid in its latest round of missile strikes, disrupting supply and causing partial outages to at least 15 regions.

It was Russia’s largest attack against Ukraine’s grid since the start of the war, officials said, and coincided with a string of other attacks Russia waged on the country’s energy infrastructure. “Russia is destroying our energy system, killing the very possibility of exporting electricity from Ukraine,” Ukraine’s energy minister, German Galushchenko, said in a statement. “The enemy’s goal is to make it difficult to reconnect electricity supplies from other sources,” he added.

Galushchenko urged residents to reduce consumption during peak hours as officials continue to make necessary repairs to the grid.

SWEDEN SAYS IT WON’T SHARE NORD STREAM INVESTIGATION INFO WITH RUSSIA: Swedish Prime Minister Magdalena Andersson said her country will not share any findings from its investigation of the Nord Stream 1 and 2 explosions with Russia, steadfastly denying demands for information and participation from both the Kremlin and Russian state-owned gas giant, Gazprom.

"In Sweden, preliminary investigations are confidential, and this is of course also true in this case," Andersson told reporters.

However, she said that since the explosions took place in international waters and their crime scene is now lifted, Russia is free to carry out its own probe.

The Swedish Security Service, which investigated the blasts alongside Denmark, said last week that it had found “extensive” damage to the twin gas pipelines, and had retrieved some material from the site for analysis. The evidence recovered "has strengthened the suspicions of gross sabotage," authorities said at the time.

GM TO ENTER COMPETITION FOR ENERGY STORAGE AND MANAGEMENT: General Motors is launching a new business unit, “GM Energy,” that will offer a range of electricity storage and energy management tools for homes and businesses to help optimize EV purchases, and create tools to help expand sustainable business options and expand grid resiliency.

GM’s vice president of EV growth operations, Travis Hester, told CNBC in an interview that the new unit’s offerings will include battery packs, EV chargers, solar panels, and cloud-based software that will help optimize the products for different customers, ranging from residential to commercial.

Commercial operations are already underway for GM Energy, and come amid growing concerns about U.S. power grid reliability. “If you have a sudden unexpected power outage, then you can use your vehicle or your stationary storage box to be able to power your home or small business,” he said. The batteries can also be fed back into a region’s power grid during a heat wave or times of high demand.

Hester said GM Energy has already signed multiple partnerships that will help deliver products and integrate new offerings into the power grid. It is also working with PG&E on a the pilot test of a “bi-directional” EV charger, which would allow it to power a home in the event of a blackout.

The GM Energy unit will not be the first of its kind, however: It will be competing with Tesla, which also offers energy storage options, as well as Ford, which has plans to launch a similar unit of its own.

But they’ll still be dividing up a pretty large pie. Hester told CNBC that the total addressable market of products and services GM Energy is targeting is between $125 billion and $250 billion.

LNG FREIGHT RATE RISES TO NEW RECORD: The cost of chartering an LNG tanker in the Atlantic hit a new record today — four times higher than the same day last year — as Europe competes for more cargoes to stand in for the dearth of Russian pipeline gas.

Rates rose to $374,000 per day, according to Spark Commodities. By contrast, the rate on Oct. 11 of last year was near $91,000 per day, while a year before, it was $65,000 per day.

More trouble for New England? The record freight rate has implications for New England, which imports LNG during winter to supplement supplies and has to compete against European buyers.

The Rundown

Wall Street Journal In Puerto Rico’s troubled energy system, McKinsey gets paid by both government and vendors

Washington Post A California city’s water supply is expected to run out in two months

New York Times That reusable Trader Joe’s bag? It’s rescuing an Indian industry

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Calendar

THURSDAY | OCTOBER 13

10:00 a.m. The United States Energy Association (USEA) will hold a virtual discussion on challenges to the reliability of U.S. power grids, including challenges posed by transmission constraints or various types of energy that supply them. Learn more and register here.