That Friday feeling
Pexapark podcast, Iberian blackout culture war, US-Ukraine mineral deal, trade war thaw
Hi folks,
I am knee-deep in a complex new TTF data investigation that I had hoped to publish this week.
The research is taking longer than anticipated, so instead of rushing out a half-finished piece I thought I would share a brief update on a few other things on my radar. Normal service resumes next week.
1. The Pexapark podcast
I had the pleasure of appearing on the Pexapark Podcast to discuss the shifting role of natural gas in Europe’s energy transition with Pexapark co-founder Luca Pedretti.
The conversation (recorded before the Iberian blackout) covers themes that will be familiar to regular Energy Flux readers:
Gas as a price anchor & flexibility provider in EU power markets
Thermal capture rates & day-ahead price trends
Macroeconomic outlook & narrowing US LNG margins
Check out the full interview here:
I was bowled over by the way that Luca described Energy Flux in a LinkedIn post yesterday:
“I’ve been a follower of Seb Kennedy — not only because of the high-quality, clear-headed takes he shares on gas markets, but also because I admire what he’s built.
“Seb turned the aspirations of so many writers and analysts into reality — building a premium newsletter based on deep, independent analysis that actually has impact.
“Personally, I believe this kind of journalism and analysis is a real enrichment to traditional intelligence — independent, sharp voices that cut through the noise. And all of it enabled by a relatively affordable subscription. You can make a difference by signing up to his newsletter — check it out.”
Endorsements don’t come any better than that! 🤩
2. Iberian blackout = information whitewash
No doubt your feed has been inundated with good, bad and ugly takes on the Iberian blackout. Monday’s spectacular grid failure in Spain and Portugal was seized upon by fossil fuel-adjacent energy bores and culture warriors keen to blame Spain’s embrace of renewables for the incident before all of the facts were known.
While the original trigger event is yet to be identified, it seems that a lack of grid-forming inverters contributed in some way to the Spanish grid operator’s inability to prevent an anomalous loss of generation from triggering a cascading failure and system-wide outage.
Grid forming inverters can create their own voltage and frequency, allowing them to operate independently and provide stability during outages; whereas grid following inverters synchronise with the existing grid and depend on it for stability.
I don’t have data to hand on the number or type of grid forming/following inverters installed on the Iberian power system. But it stands to reason that replacing thermal power generation with solar, wind and batteries equipped only with grid following inverters would be a recipe for disaster.
If that shortcoming is ultimately identified as a main point of failure leading up the Iberian blackout, then there are some simple engineering lessons to be learned from this incident. Namely, install more grid-forming inverters alongside renewables and battery storage.
This conclusion from Andrew Thompson of The Brattle Group sums it up nicely:
“Power systems have failed before and they will again since it’s impossible to predict and plan for every contingency and, even if we could, it would be prohibitively expensive to do so. It’s clear however that we can’t operate the power systems of the future the way we have in the past when heavily dependent on thermal generation. This does not mean that renewable-based systems are less reliable, rather that new approaches to reliability and resiliency are needed.”
3. Trump caves to seal Ukraine mineral deal
US president Donald Trump finally has something to crow about: the long-mooted US-Ukraine ‘mineral deal’ has finally been signed by both sides, but only after some major concessions from the White House.
The text of the Reconstruction Investment Fund agreement is vastly different from the frankly abusive deal pushed by the Trump administration back in February, which Ukrainian president Volodymyr Zelensky wisely resisted. As a result, Kiev extracted numerous concessions.
On a rhetorical level, the US government is using far more conciliatory language. Washington acknowledged Ukraine’s voluntary relinquishment of its nuclear weapons in the 1994 Budapest Memorandum, and the obvious fact that Russia — not Ukraine — is the aggressor in this conflict.
On a financial level, Ukraine is no longer on the hook to repay past US military aid. The fund will encompass only new financial contributions in the form of foreign investments to develop Ukraine’s mineral deposits, or the provision of much-needed US air defence systems and other military kit to Ukraine.
On a material level, Ukraine retains all ownership and sovereignty over its territorial natural resources. Energy gets only a brief mention, although mineral licences for oil and gas extraction rights are expected to be awarded to American companies.
Significantly, the deal does not preclude Ukraine’s accession to the European Union.
Either Trump is getting desperate for a foreign policy result, or Zelensky been reading Art of the Deal.
Whether the mineral deal actually comes to pass is another matter entirely, of course. Russia continues to bombard Ukrainian towns and villages and shows no signs of movement towards anything resembling a ceasefire…
4. Trade war thaw?
Sticking with the theme of reality catching up with Trump, is the US-China trade war starting to thaw?
That might be over-egging it, but Washington has apparently offered to hold talks with Beijing over Trump’s crippling tariffs. The Chinese side is mulling the offer.
US Treasury Secretary Scott Bessent said: “I am confident that the Chinese will want to reach a deal… First, we need to de-escalate, and then… we will start focusing on a larger trade deal.”
Trump has tacitly acknowledged that his tariffs could drive up prices and destock shelves. He said American kids might “have two dolls instead of 30” because toys “will cost a couple bucks more than they would normally”.
More significantly, China has reportedly waived a reciprocal 125% tariffs on imports of US ethane, a key feedstock for petrochemical production. Some pharmaceutical, aerospace and semiconductor products were also granted tariff exemptions last week, as Beijing draws up a ‘whitelist’ of exempted products.
I’ve been saying for a while now that the trade war will end with a face-saving ‘deal’ designed to mask an obvious climbdown from this mutually destructive madness. It’s only a matter of time.
That’s all for now. I have endless reams of Excel data to plough through. I’ll be back in your inbox early next week.
Seb
More from Energy Flux:
🎧 Fickle trade war takes its toll on LNG demand
The US-China trade war has rewritten the macroeconomic outlook for 2025, and with it the global demand picture for liquefied natural gas (LNG).
Chaos theory
HOT TAKE: Trump’s impossible energy trade demands are a fractal of infinite contradictions
Great summary of Spain's blackout. We Spaniards tend to be more visceral and less pragmatic. First we look for culprits, even under rocks, and then we tend to relax and forget that we have to get to work to avoid it in the future. I belonged to a Commission of Experts between 2017 and 2018 to recommend to the government of that time what could be done to make the energy transition as good as possible. The government changed in June 2018, and the one that came in did not pay a damn bit of attention to our final report —of more than 500 pages—delivered only two months before. Some of the recommendations in that report, if implemented, would have undoubtedly prevented the blackout from occurring.
Translated with DeepL.com (free version)
I've been listening for over three years now to people saying that Ukraine cannot withstand Russia's invasion for much longer and that Ukraine is just a US proxy. Evidence doesn't seem to bear either of these things out.