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The Biden administration is out with a new memo that anticipates getting to 40% solar energy in the US by 2035. That might not be in time to settle out this whole thing about catastrophic climate change, but it should put the nation on track to meet the President’s ambitious goal for decarbonizing the nation’s power generation profile. Of course, the devil is in the details, and the big question is whether or not certain elected officials will get with the planet-saving program.

Getting To 40% Solar Energy By 2035

The new memo comes from the US Department of Energy under the title, “Investing in a Clean Energy Future: Solar Energy Research, Deployment, and Workforce Priorities,” which hints at the problem. The impacts of catastrophic climate change are already nipping at the heels of the Earth, and it will take a swift, massive redirection of economic assets to turn the ship around.

The memo cautions that keeping the nation’s existing fleet of nuclear power plants afloat is a key piece of the puzzle, alongside wind power, carbon capture, and something called “clean” hydrogen, which is not necessarily the same as green hydrogen (more on that in a sec).

However, the memo underscores the critical importance of the solar energy factor.

“Solar is the fastest-growing source of new electricity generation in the nation – growing 4,000 percent over the past decade – and will play an important role in reaching the administration’s goals,” the Energy Department enthuses.

“Large-scale decarbonization of the electricity sector could move solar from 3 percent of generation today to over 40 percent by 2035,” they add.

And now, for the bad news. The Energy Department cites a yet-to-be published analysis by the National Renewable Energy Laboratory, which calculates that “solar deployment would need to accelerate to three to four times faster than its current rate by 2030,” if the power sector is to be decarbonized by 2035.

“Meeting these goals will require billions in investment and market opportunities through 2050 across clean energy generation, energy storage, electricity delivery, and operations and maintenance – including in low-income and community solar,” the Energy Department explains.

If you caught that thing about “market opportunities,” that’s where state and federal legislation comes into play. Right now the US is a patchwork of solar-loving and solar un-loving jurisdictions. That will have to change if a swift energy transition is to be orchestrated.

Why 40% Solar Energy By 2035 Is Possible

Despite the challenges, the clean power transition is already inevitable. The massive drought in the western US has exposed the shortcomings of over-reliance on power generation technology that relies on water, including hydropower as well as coal, gas, and nuclear energy. The US grid needs to diversify as well as decarbonize while keeping a close eye on the energy-water nexus.

Solar energy is not necessarily a water-free technology, partly due to the need for keeping solar panels free of dust and debris. However, low-water and waterless cleaning technologies are already at hand.

The Energy Department also cites resiliency as a key factor favoring solar power:

“Solar deployed at scale, when combined with energy storage, can make America’s energy supply more resilient, particularly from power disruptions in the event of manmade and natural threats.  Smaller-scale solar, as part of microgrids or hybrid plants, can drive greater local self-sufficiency and  community-level resilience. Solar with storage solutions can already provide hours of backup power for individual buildings and, in the future, could provide days of backup power and even seasonal stored power. This storage option can help manage the grid, prevent outages, and even restart the grid after a power outage.”

Potholes On The Road To 40%

As for the details, the road to 40% solar energy by 20305 is not going to be a smooth ride.

For example, the memo advocates for continuing to provide tax credits for clean power investment and production, pointing out that they “have been successful tools in helping to expand solar and wind energy generation” by cutting the cost of investing in clean power.

Unfortunately, the production tax credit is set to die at the end of this year, and the investment tax credit will follow it to the grave shortly thereafter unless certain members of Congress (you know who you are) get their act together.

The memo also brings up the need for new electricity transmission lines to transmit all that new solar energy, which is a super duper touchy subject. Anybody remember Clean Line Energy? The company’s ambitious plans for a new network of clean power lines in the US fell to pieces after a few years due to local opposition and state-based legislative roadblocks.

On the plus side, some of those pieces are still clinging to life. Other signs of new transmission line activity have been springing up in recent years, though some of that is occurring in Texas, which has already sunk its hooks deep into new clean power transmission lines.

The Energy Department memo advocates for tax incentives for transmission projects as well as energy storage, but those pesky opponents could halt or delay projects for years to come.

The Once & Future Energy King Is The US

The memo is on more solid ground in the area of innovation and manufacturing, pointing out that “the solar industry has its roots in America, and a key part of lowering the costs of solar involves investing in technology innovation, manufacturing, and the solar supply chain.”

“U.S. research and development has helped lower manufacturing costs, increase efficiency and performance, and improve reliability of solar technologies,” they add.

US innovators are still driving the global market, even though the nation lost its pole position in the solar manufacturing race long ago. According to the Energy Department, its funding stream has supported almost half of worldwide solar cell efficiency records over the past 35 years, in addition to playing a key role in the global concentrating solar power industry.

Not specifically mentioned in the memo is the agency’s long term love affair with perovskite solar cell technology, but it does reference the related field of thin film solar as a means of re-domesticating the solar cell industry, which is important because that would avoid overseas labor issues as well as supply chain issues.

More Solar Power For Everybody

The memo also points out that the solar market in the US is far from saturated. Aside from the potential for growth in the field of luxury and market-rate housing, there is a vast untapped reservoir of potential growth in the low- and moderate-income areas.

“Low- and moderate- income Americans are less likely to adopt solar due to issues like lack of access to financing, which perpetuates energy inequalities and leads to lower overall levels of solar deployment,” DOE explains, adding that “Access to credit is a key barrier to solar adoption for low- and moderate-income households; almost 90 percent of 2018 solar adopters have either prime or super-prime credit scores.”

Addressing the root causes of structural racism in the US would help solve some of that problem, but in the meantime the Energy Department has been doing some of the heavy lifting by promoting the community solar model.

Community solar projects are designed to provide all ratepayers with access to affordable solar power, regardless of whether or not they rent or own property, or what their tax status is (looking at you, non-profits), and if their property can support its own solar panels.

The Energy Department began a concerted effort to promote community solar during the Obama administration. So far the effort has survived the Trump administration and the COVID-19 pandemic, but most of the activity is currently centered in just four states.

On the plus side, the memo notes that some activity is beginning to bubble up in 35 other states and the District of Columbia, indicating the potential for a renewed push. The memo explains that “green banks and other financing mechanisms that invest in community solar can help families and businesses gain access to zero-carbon solar” would help things along, hinting that state and federal legislators still need to get on board with the plan.

What About Green Hydrogen & Solar Energy?

As for “clean” hydrogen, don’t be fooled. Hydrogen is ubiquitous throughout the industrial economy, from fuel to fertilizer, pharmaceuticals, and processed foods. The problem is that almost the entire global supply of hydrogen comes from fossil natural gas, along with a smattering of coal, and no matter which way you turn it, hydrogen is not going away anytime soon.

Fossil energy stakeholders have proposed slapping carbon capture systems onto hydrogen production and calling it “clean,” which would be super funny except when you’re staring into the void of a massive global catastrophe.

The alternative would be to extract hydrogen from other sources, and that is already beginning to happen. For example, interest is coalescing around the use of offshore wind farms to generate electricity for electrolysis systems, which extract hydrogen from water.

A similar feat can be accomplished with onshore wind farms or solar arrays. The missing piece is political will, but keep an eye on that newly recharged bipartisan energy storage caucus in Congress for some movement in that direction.

Follow me on Twitter: @TinaMCasey.

Image (screenshot): Solar energy memo via US Department of Energy.

 

 
 

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Texas data center expansion raises blackout risk during extreme winter weather

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Texas data center expansion raises blackout risk during extreme winter weather

A worker repairs a power line in Austin, Texas, U.S., on Wednesday, Feb. 18, 2021.

Thomas Ryan Allison | Bloomberg | Getty Images

The rapid expansion of data centers in Texas is driving electricity demand higher during the winter, compounding the risk of supply shortfalls that could lead to blackouts during freezing temperatures.

The Lone Star state is attracting a huge amount of data center requests, driven by its abundant renewable energy and natural gas resources as well as its business friendly environment. OpenAI, for example, is developing its flagship Stargate campus in Abilene, about 150 miles west of Dallas-Forth Worth. The campus could require up to 1.2 gigawatts of power, the equivalent of a large nuclear plant.

The North American Electric Relibaility Corporation warned this week that data centers’ round-the-clock energy consumption will make it more difficult to sustain sufficient electricity supply under extreme demand conditions during freezing temperatures like catastropic Winter Storm Uri in 2021.

“Strong load growth from new data centers and other large industrial end users is driving higher winter electricity demand forecasts and contributing to continued risk of supply shortfalls,” NERC said of Texas in an analysis published Tuesday. Texas faces elevated risk during extreme winter weather, but the state’s grid is reliable during normal peak demand, NERC said.

During Uri, demand spiked for home heating in response to the freezing temperatures at the same time power plants failed in large numbers due to the same weather. Texas grid operator ERCOT ordered 20 gigawatts of rolling blackouts to prevent the system from collapsing, according to a Federal Energy Regulatory Commission report. The majority of the power plants went offline ran on natural gas.

It was the “largest manually controlled load shedding event in U.S. history” resulting 4.5 million people losing power for several days. At least 210 people died during the storm. Most of the fatalities were connected to the outages and included cases of hypothermia, carbon monoxide poisoning, and medical conditions exacerbated by freezing termperatures, according to FERC.

Data center requests surge

If all of those projects were actually built, they would be equivalent to the average annual power consumption of nearly 154 million homes in Texas, according to a CNBC analysis based on 2024 household electricity data. But the Lone Star state only has a population of about 30 million people.

Beth Garza, a former head of ERCOT’s watchdog, said she is very skeptical these projects will all get built, describing the scale of the numbers as “crazy big.” More than half the projects have not submitted planning studies, according to ERCOT.

“There’s not enough stuff to serve that much load on the equipment side or the consumption side,” said Garza, who served as director of ERCOT’s Independent Market Monitor from 2014 through 2019. “There’s just so much stuff in the world to make those kinds of numbers work.”

Phantom data centers are showing up in grid connection requests across the U.S. as developers shop the same projects around to mutliple jurisdictions, said John Moura, the director of NERC’s reliability assessments. This makes it difficult for utilities to forecast future demand conditions.

OpenAI CFO Sarah Friar: 'More compute, more revenue' in response to concern on Oracle, Nvidia deals

Reliability at risk

The projects that ERCOT has approved to actually connect to the grid is much smaller at 7.5 gigawatts, but this is still a subsantial amount of new demand. By comparison, the six county region in southeastern Pennsylvania that includes Philadelphia, with a population of 1.7 million people, had a peak demand of about 8.6 gigwatts in 2024, according to the state utility board.

Texas’ supply and demand balance can become tight during winter and potentially fall into deficit. The state has 92.6 gigawatts of available resources and peak demand in an extreme Uri-like scenario could reach about 85.3 gigawatts, according to NERC.

But avalaible power could fall to around 69.7 gigawatts in extreme winter weather, leaving a supply deficit of more than 15 gigawatts. This is due to typical power plant maintainence and forced plant outages as well as reductions in power capacity due to winter conditions.

“What’s important to understand is the tightness we’re seeing,” Moura said. NERC’s winter assessment only included data center facilities that have reached certain milestones to filter out speculative projects, he said.

“I can’t stress enough how much of a monumental change this is for the electric industry,” Moura said of the data center requests. One solution is for data centers to show flexibility in their electricity consumption to help keep demand and supply in balance during extreme winter scenarios, he said.

In the case of Uri, natural gas plants made up 58% of all the unplanned outages in Texas, according to FERC. Freezing tempartures reduced gas production, led to challenges delivering fuel and problems transmitting electricity as power lines fell.

Texas has adopted rules to harden natural gas infrastructure for extreme winters in the wake of the storm.

When gas plants go out in such a large way, solar and battery storage also face challenges, according to NERC. Peak demand in winter is in the early morning hours when sunlight is lower and batteries may not have had enough time recharge, Moura said.

With data centers running around the clock, “maintaining sufficient battery state of charge will become increasingly challenging for extended periods of high loads, such as a severe multi-day storm like Winter Storm Uri,” NERC said in its analysis.

“Power shortfalls and rolling outages really could happen in the next few years in certain regions” of the U.S. as demand from facilities like data centers outstrips supply, said Rob Gramlich, president of power consulting firm Grid Strategies. “Those are unacceptable to everybody in the United States.”

Garza said she’s confident that the reliable demand from data centers will bring new supply. “Plants love that kind of of opportunity,” she said. “My expectation is that then attracts additional private capital investment to meet those supply needs.”

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Activist Ananym Capital sees upside if Baker Hughes spins off its oilfield services business

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Activist Ananym Capital sees upside if Baker Hughes spins off its oilfield services business

Company: Baker Hughes (BKR)

Business: Baker Hughes is an energy technology company with a portfolio of technologies and services that span the energy and industrial value chain. The company operates in two segments: oilfield services and equipment and industrial and energy technology. The OFSE segment provides products and services for onshore and offshore oilfield operations across the lifecycle of a well, ranging from exploration, appraisal, and development, to production, rejuvenation, and decommissioning. OFSE is organized into four product lines: well construction; completions, intervention and seasurements; production solutions and subsea and surface pressure systems. The IET segment provides technology solutions and services for mechanical-drive, compression and power-generation applications across the energy industry, including oil and gas, liquefied natural gas operations, downstream refining and petrochemical markets, as well as lower carbon solutions to broader energy and industrial sectors.

Stock Market Value: $47.84 billion ($48.48 per share)

Activist: Ananym Capital Management

Ownership: n/a

Average Cost: n/a

Activist Commentary: Ananym Capital Management is a New York-based activist investment firm which launched on Sept. 3, 2024, and is run by Charlie Penner (a former partner at JANA Partners and head of shareholder activism at Engine No. 1) and Alex Silver (a former partner and investment committee member at P2 Capital Partners). Ananym looks for high quality but undervalued companies, regardless of industry. They would prefer to work amicably with their portfolio companies but are willing to resort to a proxy fight as a last resort. According to their most recent 13F filing, they manage $260 million across 10 positions.

What’s happening

On Oct. 21, Ananym Capital announced that they have taken a position in Baker Hughes and are calling on the company to spin out its oilfield services and equipment business, arguing such a step could help push up the stock price by at least 60%.

Behind the scenes

Baker Hughes is a leading provider of energy and industrial technology services. The company was formed through the 2017 merger of legacy Baker Hughes and GE Oil & Gas, combining best-in-class intellectual property shared by GE spinoff assets and the technical expertise from both organizations.

The company operates through two primary segments: industrial and energy technologies and oilfield services and Equipment. The IET unit (55% of projected 2025 revenue and 60% of projected 2025 EBITDA) is a long-cycle industrial and energy business focused on gas technology equipment, including turbines and compressors, and aftermarket services, including new energy applications. The OFSE unit (45%/40%) is a short-cycle oilfield equipment and production services business with an end-to-end portfolio of oilfield services and equipment for well construction and production.

Management has built up a strong track record of effective execution, and that success has been reflected in the share price, with the company delivering strong returns of 28.26%, 75.29% and 232.98% over the past 1-, 3- and 5-year periods, respectively.

Within IET, the company has taken advantage of its leading position in LNG, in which Baker now has 95% global footprint for the turbomachinery required in plant construction, a market that is expected to grow at a 10% compound annual growth rate through 2030.

Additionally, the company has a strong position in power generation, as Baker is one of few original equipment manufacturers supplying smaller-scale turbines and complete behind-the-meter power solutions. These offerings have allowed the company to play a pivotal role in helping to address rapidly growing data center demand, as its data center orders have gone from $0 to $550 million in just two quarters. As such, management is heavily investing in this opportunity — developing larger-scale power systems to support mega-data center deployments.

Furthermore, Baker’s pending acquisition of Chart Industries is expected to further strengthen IET’s position in power, LNG, and industrials. As a result, IET is approaching a 20% EBITDA margin, with further margin expansion expected as the business mix continues to shift toward aftermarket services, which generate long-term recurring revenue streams supported by contracts exceeding 10 years and margins of 35% or more.

For OFSE, management has taken steps to meaningfully improve the segment’s earnings mix and reduce its cyclical commodity exposure. This includes exiting or downsizing non-core ventures and low-margin product lines, such as its surface pressure control joint venture with Cactus; prioritizing the Middle East and international markets (now 75% of OFSE revenue), which are less correlated to commodity prices; and implementing strong pricing discipline and cost cutting measures by enforcing minimum margin thresholds on new contracts, consolidating product lines and simplifying reporting. However, despite these efforts, OFSE remains highly subject to commodity volatility, affecting both the segment’s performance and the company’s overall valuation.

Currently valued at about 9x EBITDA, Baker trades more closely with oilfield services peers (6–7x EBITDA), than its industrial and energy technology peers (16–18x), despite IET being the majority of the company’s revenue and EBITDA. An implied sum-of-the-parts multiple for Baker would put the company at approximately 13x.

It is for this reason that Ananym has launched a campaign at Baker calling for the company to either continue growing IET relative to OFSE or to pursue a sale or spin of OFSE.

Ananym believes that a potential separation could result in an about 51% immediate upside through realizing Baker’s sum of parts valuation, even when assuming $100 million dis-synergies from separation. Moreover, this upside does not reflect much of the potential long-term growth tailwinds and margin expansion expected from these ongoing operational initiatives — value drivers that shareholders should also be better positioned to realize through such a move.

Founded in September 2024, this is Ananym’s third public activist campaign. Knowing Charlie Penner and Alex Silver as we do, we would expect them to strive to work amicably with management to create value for shareholders. As such, they have already expressed full confidence in management to choose the optimal path forward, and the company’s strong operational track record fully supports that confidence.

Moreover, on Oct. 6, the company announced a review of its capital allocation, business, cost structure, and operations.

With all signs pointing towards alignment between the two parties, we do not expect that they will insist on, or even ask for, board representation or continue to engage in much more of a public campaign. Rather, we expect them to work amicably with Baker behind the scenes to unlock meaningful shareholder value. However, this cooperative approach should not be confused for weakness, as they are fiduciaries to their own investors and will do whatever is necessary to create value at their portfolio companies. Thus, should management fail to act decisively, Ananym could quickly shift to a more assertive stance.

Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist investments.

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First Solar opens a Louisiana factory that’s 11 Superdomes big

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First Solar opens a Louisiana factory that’s 11 Superdomes big

First Solar just cut the ribbon on a huge new factory in Iberia Parish, Louisiana, and it dwarfs the New Orleans Superdome. The company’s $1.1 billion, fully vertically integrated facility spans 2.4 million square feet, or about 11 times the size of the stadium’s main arena.

The factory began production quietly in July, a few months ahead of schedule, and employs more than 700 people. First Solar expects that number to hit 826 by the end of the year. Once it’s fully online, the site will add 3.5 GW of annual manufacturing capacity. That brings the company’s total US footprint to 14 GW in 2026 and 17.7 GW in 2027, when its newly announced South Carolina plant is anticipated to come online.

The Louisiana plant produces First Solar’s Series 7 modules using US-made materials — glass from Illinois and Ohio, and steel from Mississippi, which is fabricated into backrails in Louisiana.

The new factory leans heavily on AI, from computer vision that spots defects on the line to deep learning tools that help technicians make real‑time adjustments.

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Louisiana Governor Jeff Landry says the investment is already a win for the region, bringing in “hundreds of good-paying jobs and new opportunities for Louisiana workers and businesses.” A new economic impact analysis from the University of Louisiana at Lafayette projects that the factory will boost Iberia Parish’s GDP by 4.4% in its first full year at capacity. The average manufacturing compensation package comes in at around $90,000, more than triple the parish’s per capita income.

First Solar CEO Mark Widmar framed the new facility as a major step for US clean energy manufacturing: “By competitively producing energy technology in America with American materials, while creating American jobs, we’re demonstrating that US reindustrialization isn’t just a thesis, it’s an operating reality.”

This site joins what’s already the largest solar manufacturing and R&D footprint in the Western Hemisphere: three factories in Ohio, one in Alabama, and R&D centers in Ohio and California. Just last week, First Solar announced a new production line in Gaffney, South Carolina, to onshore more Series 6 module work. By the end of 2026, the company expects to directly employ more than 5,500 people across the US.

Read more: First Solar pours $330M into a new South Carolina solar factory


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