Portugal just ran on 100% renewables for six days in a row

Excerpt.  Link to full article: https://www.canarymedia.com/articles/clean-energy/portugal-just-ran...

For nearly a week, the country of 10 million met customer needs with wind, hydro and solar — a test run for operating the grid without fossil fuels.

 

By Julian Spector  15 November 2023 canarymedia.com

One recent autumn afternoon, I watched the Atlantic gusts collide with the cliffs that rise above Nazaré, Portugal. Rain pelted down, and the world-renowned swells rose into walls of water that even the most death-defying surfers reach only via Jet Ski. For me, this looked like a rained-out, late-season beach getaway, but for the sliver of Iberia that is Portugal, it looked like a bright future. That weekend, the nation of 10 million ran on nothing but wind, solar and hydropower. 

As it turned out, those rainy, blustery days were just a warmup. Portugal produced more than enough renewable power to serve all its customers for six straight days, from October 31 to November 6.

“The gas plants were there, waiting to dispatch energy, should it be needed. It was not, because the wind was blowing; it was raining a lot,” said Hugo Costa, who oversees Portugal for EDP Renewables, the renewables arm of the state utility, which was privatized in 2012. ​“And we were producing with a positive impact to the consumers because the prices have dropped dramatically, almost to zero.”

To hit Paris Agreement climate goals by 2050, nations need to run their grids without carbon emissions not just for three or six days, but year-round. A handful of countries already do this, thanks to generous endowments of hydropower, largely developed well before the climate crisis drove investment decisions for power plants. Others score highly on carbon-free power thanks to big fleets of nuclear plants.

Portugal falls into a different, more relatable bucket: It started its decarbonization journey with some legacy hydropower, but no nuclear capacity nor plans to build any. That meant it had to figure out how to cut fossil fuel use by maximizing new renewables.

How did Portugal make this happen? It committed to building renewables early and often, pledging a 2050 deadline for net-zero carbon emissions in 2016, several years before the European Union as a whole found the conviction to take that step. Portugal’s last coal plants shut down in 2022, leaving (imported) fossil gas as the backstop for on-demand power.

“The key conclusion, in my opinion, is that it shows that the Portuguese grid is prepared for very high shares of renewable electricity and for its expected variation: We were able to manage both the sharp increase of hydro and wind production, and also the return to a lower share of renewables, when natural-gas power plants were requested again to supply some of the country’s demand,” said Miguel Prado, who covers Portugal’s energy sector for Expresso newspaper.

The task ahead for Portugal’s grid decarbonization is to reduce and ultimately eliminate the number of hours when the country needs to burn gas to keep the lights on. Leaders want gas generation, which made up 21% of electricity consumption from January through October, to end completely by 2040.

To reach its climate goals, Portugal has focused on diversification of renewable resources; instead of depending primarily on wind, water or sun, it blends each into the portfolio and finds ways to make them more complementary. The country’s power companies are now chasing major additional offshore wind opportunities, expanding solar installations and repowering older onshore wind projects to get more out of the best locations.

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I don't think that owners of modest mineral rights need to be concerned with the rapid pace of European renewables adoption and efforts to be more energy efficient.  There is little in their power to do about the prospects of a falling European LNG market.  As the next wave of US LNG export facilities are under construction or racing to get to Final Investment Decisions (FID), owners of significant Haynesville Shale mineral rights need to follow these developments closely and consider a plan to liquidate some of their mineral assets.  If US LNG export capacity becomes over built while European demand is falling, this has the potential to depress prices for the foreseeable future.  Europe is by far the largest LNG market for US natural gas and there doesn't appear to be prospects of significant demand increase in other markets. 

Falling natural gas prices will not only have a negative impact on royalty income, it is likely to cause investors to be less aggressive in offers to buy Haynesville Shale mineral rights.  While offers to buy mineral rights have been surprising resilient in 2023 with depressed monthly natural gas prices, a declining outlook for 2024 prices may well result in lower offers if not fewer buyers in the new year.  I expect the price of natural gas to remain cyclical but the peak price periods may be lower and shorter.  Those that own large mineral interests may need to ask themselves, how many prime opportunities for advantageous sale prices remain?  For those who decide to sell, I'd like to see them take advantage of the price peaks, not selling in the price valleys.  Now is a good time for stake holders to consider a liquidation strategy based on a long term market outlook.

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