Enverus Intelligence® Research

Questions around the relationship of data centers to energy demand are very quickly etching themselves onto the minds of industry and technology participants alike. Recent analysis from Enverus Intelligence Research forecasting Lower 48 and regional data center demand highlights some of the complexities of finding ideal traits such as connectivity to fiber networks, reliability, and less critically, affordability of power supply. • We find a growth floor reminiscent of the pre-AI deployment era, with the primary constraint being reliable power capacity. • Industry faces challenges with regulated utilities unable to guarantee the necessary scale and reliability of power supply. • Hyperscale tech giants like Amazon.com, Microsoft and Alphabet's Google are investing in geothermal and advanced nuclear industries for carbon-free baseload electricity, while underutilized gas-fired and nuclear plants offer deployment opportunities. Keep up to date with our latest thoughts and analysis on the most challenging problems facing the energy industry by subscribing to Energy Transition Today. (https://lnkd.in/gWdkUpTS) #energytransition #datacenters #artificialintelligence #energydemand

Among all the backlash and negative sentiment around carbon dioxide pipelines in the U.S. Midwest, Tallgrass Energy’s subsidiary, Trailblazer Pipeline Company (Trailblazer), stands above its CO2 pipeline cohort in achieving positive public approval in its recent agreement with Bold Alliance. Tallgrass announced earlier last week that it has developed a Community Benefits Agreement (CBA) with Bold Alliance in regards to its Trailblazer CO2 pipeline conversion project, which has received endorsements from 11 statewide organizations in Nebraska. As part of the agreement, Tallgrass has pledged $1.1 million dollars, with $500,000 in donations to non-profit organizations, $600,000 in training and an on-going commitment to equipping first responders to respond to emergency CO2 events as well as yearly public safety notifications to residents near the pipeline ROW. In addition, Tallgrass introduced a unique landowner payment structure which allows landowners to receive yearly royalties based on the length of pipeline on their land as well as the flowrate of the CO2 through the pipeline in any given year. Tallgrass has also agreed to return easements to landowners upon decommissioning of the line which gives the landowners the power to remove the pipeline from the property if desired. This agreement between Tallgrass and Bold Alliance is a major breakthrough in the public perception of CO2 pipeline projects and should be used by future developers as a benchmark for how to handle community engagement early on in its planning process.

Renewable fuel uptake has surged in California in recent years, contributing to a 141% increase in the California Low Carbon Fuel Standard (LCFS) credit bank surplus, and resulting in a drop in credit prices from ~$185/tonne to $75/tonne from 2019 through 2023 (Figure 1). • Renewable diesel, renewable natural gas/biomethane and electric vehicles dominated in 3Q23 with 81% of credits. • Fuel volumes surged by 233%, 62% and 130% since 1Q19, while corresponding credits increased by 166%, 674% and 206%. • Concerns arise that the program's success might hinder investments in emerging clean fuel technologies, jeopardizing long-term emission reduction goals. • Enverus Intelligence Research forecasts LCFS credit prices with an R2 value of 0.98, which will be crucial for navigating market dynamics under the California Air Resouces Board's latest scoping plan. Keep up to date with our latest thoughts and analysis on the most challenging problems facing the energy industry by subscribing to Energy Transition Today. (https://lnkd.in/gWdkUpTS) #energytransition #fuelstandard #renewablefuel #LCFS

San Joaquin Renewables (SJR) has withdrawn its Class VI application with the EPA for their California CCS project citing a lack of surface, mineral and pore space rights around its project area. The SJR project plans to build a new facility to convert waste biomass from local orchards into about 80,000 gallons of renewable natural gas (RNG). This process would create about 0.44 mtpa of CO2 emissions that would be captured and stored. There is no definitive ruling from California on pore space ownership, but case law demonstrates the state recognizes pore space belongs to the surface owner. Based on information within SJR's Class VI application, the project’s property is only about 10% of the approximate 1,000-acre area of review (AOR). The AOR contains about a dozen different landowners including vineyards and fruit farms as well as the local wastewater treatment facility. Pushback or lack of cooperation from any of these landowners could have resulted in this withdrawal. This is the second Class VI application withdrawal in California, with Clean Energy Systems pulling the plug on their Mendota carbon negative energy project in early 2022, after the EPA raised concerns that the application was “substantially incomplete”. It is possible SJR will re-submit their application if they are able to secure pore space rights near the project, or they could look to move CO2 injection off-site where the right to inject CO2 is attainable.

The integration of more than 9 GW of renewable capacity in Texas in 2023 has increased price volatility in the energy market, leading to a significant rise in energy storage capacity with 2.7 GW of new installations. Enverus Intelligence Research finds that the profitability of energy storage assets is influenced more by operating strategies such as energy arbitrage and regulation up than by battery size (Figure 1), with continued renewable integration expected to further strengthen the business case for energy storage focusing on arbitrage opportunities. • The profitability of assets in the Texas energy storage sector can be attributed to three key factors: battery size, operating strategy and location. • Assets focusing on energy arbitrage opportunities tend to exhibit higher profitability, while those with more capacity dedicated to specific reserve services show lower profitability. • Continued integration of renewables is anticipated to bolster the business case for energy storage assets, particularly those leveraging arbitrage opportunities. Keep up to date with our latest thoughts and analysis on the most challenging problems facing the energy industry by subscribing to Energy Transition Today. (https://lnkd.in/gWdkUpTS) #energytransition #renewables #energystorage #renewableintegration

The impact of artificial intelligence (AI) and associated data centers on energy consumption is a significant concern for the power sector. The unique nature of AI presents challenges unlike those seen before, potentially ending 15 years of near-flat power consumption in the U.S. Some key uncertainties include: • How technological efficiency gains will offset load growth. • The necessity for faster power supply growth with generative AI. • Suitable energy technologies to meet this demand. • The location and configuration of these facilities and the need for cooperation among various stakeholders. Rapid technological innovation and collaboration between federal bodies, regulators, AI companies, and energy suppliers are essential for the rapid deployment of these facilities. While gas-fired generators are readily available, achieving zero emissions and triple redundancy may require accelerated development of advanced baseload supply solutions such as nuclear and geothermal. Keep up to date with our latest thoughts and analysis on the most challenging problems facing the energy industry by subscribing to Energy Transition Today. (https://lnkd.in/gWdkUpTS) #energytransition #datacenters #artificalintelligence #powerdemand (TeleGeography Submarine Cable Map used under license CC BY-SA 4.0, https://lnkd.in/gcqacBW)