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Good morning and welcome back to Energy Source, coming to you from New York.

US energy secretary Jennifer Granholm played down concerns regarding the Joe Biden administration’s pause on permits for new liquefied natural gas terminals in a wide-ranging interview at the National Press Club in Washington yesterday.

“We are the largest exporter of natural gas in the world, and we will continue to be the largest exporter,” Granholm said. “[The pause] is not going to impact any relationship that we have with our allies or their ability to access energy.”

The remarks come as the Biden administration faces backlash against its decision to pause permits. Last week, the Republican-led House of Representatives passed a bill that would undo this freeze. The Democrat-controlled Senate has yet to approve the legislation.

Elsewhere, the US Ninth Circuit Court of Appeals struck down a moratorium on coal leasing on federal lands yesterday in a setback for environmentalists, and the Supreme Court heard oral arguments in a potentially consequential case over the Environmental Protection Agency’s “good neighbour” policy finalised last year, which addresses interstate pollution.

Today’s newsletter looks at one of the largest US solar factories starting production this month, less than two years after the passage of Biden’s landmark climate law. The factory, a joint venture between renewable giants Invenergy and Longi, has sparked concerns from some local residents over its Chinese ties, but it’s also causing shifts in attitudes towards clean energy and blue-collar jobs.

We end with a quick dive into the projected slowdown in US oil production growth.

Thanks for reading,

Amanda

Chinese-backed solar factory highlights Biden’s clean energy conundrums

This week, one of the largest US solar panel factories began production in Pataskala, a rural town on the outskirts of Columbus, Ohio, the state capital.

The $600mn factory, known as Illuminate USA, is a joint venture between two of the biggest players in clean energy: Invenergy, the largest private US renewables developer, and China-based Longi, the world’s largest solar panel manufacturer.

The factory is one of dozens of clean energy manufacturing projects being built across the country and serves as an important case study on how Biden’s landmark climate law, the Inflation Reduction Act, is transforming small towns in an election year.

“It’s a catalytic project for Pataskala,” said Alexis Fitzsimmons, executive director of Grow Licking County, the local economic development organisation. “Those are good-paying manufacturing jobs that are going to increase the wealth of our citizens in our region.”

The IRA included lucrative tax credits to rapidly decarbonise the country’s economy while building out a domestic manufacturing base for clean technologies to reduce reliance on China, the world’s dominant producer. Kurt Wagner, chief financial officer of Illuminate USA, said the tax credits were “an important financial component” for the project.

Illuminate USA is located in the county of Licking, which voted for former president Donald Trump in 2016 and 2020. Licking is on the frontline of the White House’s strategic supply chain initiatives, with Intel planning to build semiconductor factories worth $20bn in the county. That has helped drive unemployment to a record low. 

But the factory’s ties to a Chinese company have sparked concerns among some residents, who accuse the Illuminate USA project of serving as a warehouse for the Chinese Communist party. Longi, meanwhile, has warned the west that their countries risk slowing down the energy transition if they restrict Chinese companies from their supply chains. My story last week has more on the opposition and what it tells us about the Chinese conundrum facing the US energy transition.

Another important theme is how the project is reshaping attitudes towards clean energy and manufacturing in the local community. At full production, Illuminate USA will employ more than 1,000 workers, marking the largest manufacturing project in Pataskala to date.

“I’m much more aware now of how much we’ve not been looking at or utilising renewable energy,” said Patrick Killoran, a production line operator at Illuminate USA. Killoran earns 45 per cent more making solar panels than at his previous manufacturing job and would like to purchase solar panels for his future home.

John Berry, president of Central Ohio Technical College, said the factory marks a “golden moment” for trade professions. A “significant amount” of students with bachelor degrees have returned for a technical education, he added.

“There is an understanding that this is a new era of manufacturing,” Berry told Energy Source. “These are long-term stable careers that can really change the lives of students and their families.”

Column chart of Solar installations and forecasts by segment (GW) showing US solar deployment set for new records

But whether these jobs can help shore up more support for Biden is less clear. More Americans trust Trump to handle the economy, according to the most recent FT-Michigan Ross survey. A poll last summer by the Washington Post and the University of Maryland found the majority of voters were not aware of the IRA.

The US is at an inflection point for solar, which is expected to be the leading source of growth in the country’s electric power sector through 2025. At the same time, solar manufacturers are facing a global reckoning as a glut in panels spurred by overproduction in China threatens their viability — a situation the US is relatively insulated from because of subsidies in the IRA.

Former Trump officials have told the FT that he will gut the climate law if elected president in November, a scenario the solar industry has warned would be “devastating”.

“The IRA is essentially 100 per cent of the reason why we are talking about solar manufacturing today,” said Pol Lezcano, an analyst at BloombergNEF. “Some of these factories will be cost competitive but only after subsidies.”

Illuminate USA and its workers aren’t worried about a potential change in the administration. Wagner said the company “will deal with the challenge” if the tax credits went away.

Killoran, the production line operator, doesn’t see his job tied to Biden’s policies and plans to vote for Trump in November.

“I think [Biden] is ruining this country at a rapid pace,” he said. “The manufacturing aspect, I think Trump would be a better one to have.”

US oil production snapshot

Growth in US onshore oil production is set for a slowdown. A new outlook from Wood Mackenzie expects oil production in the lower forty-eight states to grow by 270,000 barrels a day in 2024, down from 900,000 b/d last year, and the lowest growth rate since 2016, excluding Covid-19 pandemic years. The deceleration comes as inflation, private consolidation and declining rig count hamper supply.

Wood Mackenzie’s forecast for 2024 is higher than the outlook from the US Energy Information Administration, which expects oil production in the lower forty-eight states to grow by 110,000 b/d this year and 360,000 b/d in 2025. Despite slower growth, US oil output, which sits at a historic high, is still set for new heights.

But the slowdown in US production growth removes some of the pressure from Opec+ producers to cut production to buoy prices, said Ann-Louise Hittle, vice-president of oil markets at Wood Mackenzie.

“The slower US growth rate in oil production could be a price supportive factor as Wood Mackenzie expects strong oil demand growth,” Hittle said. The consultancy expects Brent, the global benchmark, to average $85.90 a barrel for 2024.

Column chart of Lower 48 oil production growth, mb/d showing US onshore oil production growth set to decelerate

Job Moves

  • Ørsted nominated Lene Skole and Andrew Brown to serve as chair and deputy chair, respectively, of its board of directors.

  • Avangrid appointed Justin Lagasse as chief financial officer and senior vice-president. Lagasse has been serving as interim CFO since November following the departure of Patricia Cosgel.

  • EnCore Energy appointed Shona Wilson as chief financial officer. Wilson joins the US uranium developer from electricity analytics firm kWantix.

  • SunPower appointed Tom Werner as executive chair of its board. Werner previously served as the residential solar company’s chief executive.

Power Points


Energy Source is written and edited by Jamie Smyth, Myles McCormick, Amanda Chu and Tom Wilson, with support from the FT’s global team of reporters. Reach us at energy.source@ft.com and follow us on X at @FTEnergy. Catch up on past editions of the newsletter here.

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