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By Clyde Russell, Asia Commodities and Energy Columnist

Hello Power Up readers!

The world is still grappling with the aftershocks from Russia’s invasion of Ukraine, even as the actual conflict deteriorates into a bloody stalemate. One of the impacts has been cripplingly high electricity and energy prices for much of Western Europe, but it seems Spain and Portugal may have found the answer.

Today’s top headlines:

• Energy-hungry Europe to brighten profits at US solar equipment makers
• US crude, fuel stockpiles fall as imports drop – EIA
• Europe gas supply looking good this winter, Equinor CEO says

That’s an electrical substation with high-voltage power near Weselitz, Germany. REUTERS/Lisi Niesner

The Russian invasion of Ukraine has hammered Europe’s industrial sectors by sending power costs soaring, with output of chemicals, paper, crude steel and aluminium all slumping, writes Energy Transition Columnist Gavin Maguire.

There is also little relief in sight, with forward power prices in the industrial hubs of Germany, France and Poland indicating power costs will remain well above historical averages and still prone to steep rallies.

However, power prices in Spain and Portugal, the countries forming the region of Iberia are expected to remain stable and substantially lower, given these countries rely less on Russian natural gas.

Not for the faint of heart – China Southern Power Grid workers inspecting power cables connecting transmission towers in Dongguan, Guangdong province, China. (File Photo)

China is aiming to avoid a repeat of electricity outages that plagued the country last year by introducing more flexible power transmission arrangements into its national grid, according to government officials.

In response to decreased output from hydropower plants, authorities have “rationally optimised” power transmission between provinces to send more power to the country’s drought-stricken southwest, Guan Peng of the National Development and Reform Commission told a press conference on Wednesday.

China is stockpiling a lot more right now. (Graphic by Clyde Russell)

China added 2.1 million barrels per day (bpd) of crude oil to inventories in June, the most in three years as it gorged on cheap Russian crude.

So far this year the world’s largest crude importer has added almost 1 million bpd to storage tanks, a move that gives it flexibility to draw on stockpiles in the second half should the oil market tighten and prices rise, as expected by many analysts including the IEA and OPEC.

Oil Spills! 

It hasn’t been a great week for oil safety, with spills in Canada and Mexico.

Canada’s Imperial Oil spilled crude into a process-water lagoon at its Mahihkan plant in northern Alberta, contaminating a flock of geese, according to regulators.

It was a small spill of only about six barrels, but it comes after two other incidents involving the oil sands producer.

Mexico’s Pemex has acknowledged an oil spill in the Gulf of Mexico, but has sought to downplay the event, saying it was quickly fixed and less serious than academics had calculated.

“I never said that there wasn’t a leak, there was.”

Pemex CEO Octavio Romero, speaking at a media conference, attempting to explain that the spill was smaller than suggested and completely fixed.

Germany will have to import up to 70% of its hydrogen demand in the future if Europe’s largest economy is to become climate-neutral by 2045, according to an updated government strategy document.

Germany is seeking to expand reliance on hydrogen as a future energy source to cut greenhouse emissions for highly polluting industrial sectors that cannot be electrified such as steel and chemicals and cut dependency on imported fossil fuel.

But even with doubling the country’s domestic electrolysis capacity target for 2030 to at least 10 gigawatts (GW), Germany will need to import around 50% to 70% of its hydrogen demand, forecast at 95 to 130 TWh in 2030, the strategy showed.

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