Energy

As the confetti settled on last week’s blockbuster jobs number, the fizz and pop have given way to some murmurings that the Bureau of Labour statistics are not quite what they seem and that manipulation around ‘seasonal adjustments’ gave the number some glitter that may distort the reality somewhat. Anyway, time will tell, but for now the jobs market remains hot, hot, hot. All eyes, then, on subsequent revisions. Also popping confetti bombs this week, at least in the eyes of shareholders, were the oil majors, serving up record profits and bumper pay-outs, met – as usual – with catcalls and whistles from the mainstream media. BP also took the somewhat bold move, given the current political mood, to pare its ambition in cutting emissions, stepping back from previous eye-catching targets. Targets that, one assumes, were clearly unachievable. Such a move comes on the back of massive losses reported by the major operators involved in sticking up wind turbines. Siemens Gamesa lost near on a whopping $1bn, in the last quarter. Problems abound. Given the variability of direction and speed, the equipment is put under massive pressure, and all too often, something snaps. Failure rates are up, triggering higher warranty provisions. And order books are drying up. The company reported a massive drop in onshore orders, and didn’t receive a single order for offshore turbines. It’s not as if costs are going up either. It’s not just Siemens Gamesa. The renewable energy business of GE lost over $2bn in 2022 and jobs are being slashed. High profile projects, like one off New Hampshire, are being abandoned as the cost of materials and debt climbs ever higher. Duke Energy lost $1,3bn on the sale of its renewable unit, and Dominion took a $1.5bn hit on a solar unit. Hard yards all round. Switching gears it’s noteworthy that Cameco, the gorilla of the uranium space, reported some tidy results this week and signed a record number of contracts  with the CEO talking of “the best fundamentals we have ever seen for nuclear fuel”. There was one whopper with Ukraine’s Energoatom, which was the company’s biggest. Ever. So when you read that Japan is not only restarting and extending its nuclear reactor fleet, but also building new reactors in old shutdown plants with the goal – as part of a green transformation – of boosting nuclear from 4% to 22% of their power mix; you can see how those fundamentals for Cameco et al, are lining up. Energy, and energy security, is likely the defining theme of the coming decade.