Solar Surpasses Coal in China’s Overall Capacity

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THE TOP FIVE

1. New U.S. strikes on Iran spike oil prices

Oil prices surged north of $90 per barrel Tuesday as the United States exchanged fire with Iran amid the ongoing fight to control the Strait of Hormuz. West Texas Intermediate, the U.S. benchmark, rose nearly 2% to $91.74 per barrel. Europe’s Brent crude measure closed less than 2% higher at just below $97. Murban crude, the yardstick for oil out of Abu Dhabi, soared nearly 8% to over $106 per barrel. In a post on Truth Social, President Donald Trump said he was “not trying to force Iran to the bargaining table.” Rather, “I couldn’t care less if they sign a worthless, to them, agreement,” he continued. “I like our position now much better, with almost total control of the Hormuz Strait, and their economy totally collapsing.” Referring to the U.S. military as the “American terrorists,” the Tasnim News Agency, a semi-official outlet associated with Iran’s Islamic Revolutionary Guard Corps, reported that Tehran “had previously warned and promised” that “the Iranian armed forces will respond decisively and extensively to any aggression against our country’s territory and interests.”

Meanwhile, the Group of 20 — the club of 18 rich economies, plus the European Union and African Union — concluded its latest meeting with a joint statement that affirmed the necessity of central bank independence, called out energy affordability in the age of AI, and admonished “non-market economies” with “excessive and persistent external surpluses” that distort the global market. China didn't like that, U.S. Treasury Secretary Scott Bessent told CNBC, issuing a dissent.

2. Solar surpasses coal in China’s overall power capacity

If the sun were blasting onto all the solar panels in China all at once, the overall electricity output would top that of every one of the country’s coal plants firing at the same time. It’s a major milestone, Bloomberg reported, highlighting just how extensively Beijing has glazed its fields, foothills, and urban rooftops with photovoltaic panels in recent years. But the achievement comes with an asterisk. “No matter how you feel about solar or coal as an energy source, CAPACITY is not ENERGY,” energy analyst Nicholas Birkhead wrote in a post on X. “These solar capacity numbers way overstate the energy mix, which is what matters! I really wish we’d all just publish capacity numbers after they’re adjusted for capacity factor.” In other words: As significant as this seems, China is still burning a whole lot of coal more frequently than the midday sun is shining.

Last year, upward of $440 billion flowed into solar worldwide, while $540 billion went to upstream oil drilling. It’s a sign, according to a new report from McKinsey, that “markets are financing both fossil fuels and low-carbon energy simultaneously” and that “the system is not replacing one fuel type with another but rather building them in parallel.” Moving forward, the consultancy cautioned, policymakers and planners need to assess not just the cheapest available options for new generation but what best supports the performance of the entire energy system. Just look at what Ontario did when deciding to move forward with what’s expected to be North America’s first small modular reactors. Instead of looking at the upfront cost of the generating assets alone, the province-owned Ontario Power Generation considered the whole cost of transmission and backup generation that would have come in the fine print of choosing wind turbines over nuclear reactors. The example, as my colleague Matthew Zeitlin wrote, highlights the problems with levelized cost of energy, the widely used measure of the overnight costs of building new generation assets: “Everyone’s favorite energy metric is wrong.”

3. California’s wildfire insurance reforms stall out

A long-awaited California bill covering state policy on wildfires, insurance, and utilities collapsed in the state legislature Tuesday. The proposal, called Senate Bill 492, had been the product of intense negotiations between legislative leaders and Governor Gavin Newsom. The deal was released on Saturday and included provisions to speed up payouts to victims of fires and nibbled around the edges of the vast payouts California utilities are forced to make to insurers when their equipment sparks a blaze. The legislators fractured because it failed to address the core issue of California’s strict rules around wildfire liability and insurance, where insurers can sue utilities to recover damages when, for example, a transformer or power line ignites dried brush. Instead, the deal would have tweaked the system, making it harder for insurers to sell claims to investors, pushing out payouts to victims faster, and limiting utility executive bonuses when their companies’ equipment causes a fire. These payouts can drag utilities into bankruptcy, as happened with Pacific Gas & Electric in 2019 following a series of wildfires, and end up elevating electricity rates. “The only solution is to return to fix the entire problem, not part of it,” Newsom said in a statement to Politico.

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4. Google inks a major geothermal deal with Fervo

Fervo Energy’s stock soared nearly 30% on Tuesday after the next-generation geothermal giant announced its biggest deal yet, to sell nearly 400 megawatts of electricity to Google. When Fervo starts up its Cape Station project in southwestern Utah sometime in 2028, the facility will become the world’s largest enhanced geothermal plant. In enhanced geothermal plants, the underground heat harnessed for power production comes from artificial wells drilled with fracking technology rather than naturally forming subterranean reservoirs of hot water. If Houston-based Fervo can bring down the cost of its drilling, the technology could enable construction of geothermal power stations in vastly more locations than the industry previously believed possible. “Even though right now we don’t have clarity yet on how this will serve a data center … we know that it will be a foundational building block of power generation for a data center presence in Utah,” Lucia Tian, Google’s director of advanced energy technologies, told The Wall Street Journal, which broke news of the deal.

Next-generation nuclear startups, meanwhile, are facing a looming challenge over plutonium. The material, which doesn’t occur naturally, was largely produced in the 20th century for weapons production. Now, however, developers of novel kinds of reactors are angling to use some of the world’s 571 metric tons of stockpiled plutonium for energy production. In a feature on the topic published this week, the Financial Times outlined the split between countries such as the U.S., which I told you in May was giving out plutonium to startups, and the United Kingdom, which opted to bury its material. “It’s like a car that runs on diamonds. Plutonium reserves are about the same size as diamonds around the world, which gives you an idea of how rare this precious element is,” a French official told the newspaper.

5. Energy Department throws money at space solar

Solar panels mounted on a satellite shown at a trade show last year in Barcelona.Joan Cros/NurPhoto via Getty Images

The Department of Energy is pumping $12 million into developing and manufacturing technology for solar panels that can be used in space. In keeping with the Trump administration’s skeptical position on the weather limits of wind and solar, the agency pointed out that, “unlike terrestrial solar energy systems, which are subject to regulate interruption by weather and the Earth’s rotation, space PV can deliver near-constant power.” The funding is aimed at projects that will enhance the durability and cost of solar cells for space and develop manufacturing methods that can provide “innovative, high-volume” processes for mass production. “The next frontier for solar PV power generation is in space,” Audrey Robertson, the assistant secretary of energy, said in a statement. “As demand for space-grade PV skyrockets, this investment will establish American leadership in next-generation, space-based PV, bolster our national security, and enhance our economic competitiveness.”

THE KICKER

Investors are putting big G’s behind VPPs. Virtual power plants promise to ease stress on grids and direct power that might otherwise have been wasted toward all the new demand coming online. Amid the scramble to supply power to data centers, money is flowing into companies that can harness those distributed assets. On Tuesday, the VPP software maker Light announced a $46 million Series A. That same day, the British distributed energy giant Octopus Energy closed its deal to buy a majority stake in the VPP provider Uplight.