2024-09-19 06:01

LITTLETON, Colorado, Sept 19 (Reuters) - New nuclear power plants in Georgia have helped flip the state's power mix so that electricity from clean energy sources has exceeded fossil fuel electricity output for the first time. Georgia's higher nuclear generation has in turn helped to slash the carbon intensity of power generation within the Southern Services power system, which produces electricity and power for most of Georgia, Alabama and parts of Mississippi. The generation mix reversal and drop in power emissions demonstrate the impact that an expanded nuclear fleet can have on energy systems, despite the substantial cost overruns and construction delays that beset the Georgia reactors. LONG TIME COMING The Vogtle Electric Generating Plant in Waynesboro, Georgia is the largest nuclear plant in the United States, with a power generating capacity of 4,536 megawatts (MW). The first two reactor units entered production in the late 1980's, and between 2012 and 2022 generated around 27% of Georgia's electricity, according to data from Ember. Since the beginning of 2023, that nuclear generation share has climbed to 30% thanks to the start-up of the final two reactors at the Vogtle site. Preliminary construction on the final two reactors - Vogtle 3 and Vogtle 4 - began in 2009, and were originally slated to cost around $14 billion, according to a Vogtle Construction Monitoring report. However, a series of development delays and massive cost overruns meant the final reactors only entered production within the last 18 months, nearly 15 years after project commencement. The final bill for units 3 and 4 was over $35 billion, according to a report titled Plant Vogtle: The True Cost of Nuclear Power in the U.S., issued this year by a group of Georgia consumer advocates. The report's authors claim that the final cost of electricity generated by the Vogtle reactors will be $10,784 per kilowatt hour (KWh), which would make it "the most expensive electricity in the world." In contrast, electricity produced from wind farms, solar projects and natural gas-fired plants ranges from $1,000 to $1,500 per KWh, the report added. UP AND RUNNING Leaving the cost issue aside, the impact of the now fully operational Vogtle plant is starting to become apparent. From 2018 through 2022, the Vogtle site generated an average of 2,813 gigawatt hours (GWh) of electricity a month for the state of Georgia, around 27% of total state electricity supplies according to Ember. Since Vogtle 3 started operations in April 2023, that generation total rose to an average of around 3,500 GWh a month, and climbed to over 4,600 GWh in May 2024, when Vogtle 4 first started operating. CHANGING MIX The sharply higher production from nuclear reactors has impacted Georgia's electricity mix in several key ways. Firstly, the share of generation from nuclear reactors jumped to 37% in May - a full 10 percentage point above the long-term average - as the Vogtle 4 plant came online. Secondly, the state's overall electricity generation total climbed to new highs as more nuclear generation was added to the output from other sources. During the January to May period, Georgia's total electricity generation was 55,634 GWh, which was a record for that period and marked a 12.3% jump from the same months in 2023, Ember data shows. Thirdly, the higher level of nuclear generation also boosted Georgia's total clean electricity output levels, which exceeded generation from the state's fossil fuel assets during March, April and May of this year for the first time on record. Clean power's share of the Georgia generation mix was a record 47% for the January to May period, and compares to 41.5% during the same months a year ago. Sustained output from Vogtle 3 and 4 over the remainder of 2024 could help push the clean power share of the overall mix closer to 50%. WIDER IMPACT Vogtle's full ramp-up was also evident farther afield, with the carbon intensity of power production of the Southern Company Services power system dropping by 14% so far in 2024 from 2023's average levels. Roughly 427 grams of carbon dioxide were discharged by the Southern power system for every kilowatt hour of electricity generated so far in 2024, according to Electricitymaps.com. That carbon intensity compares to 440 grams of CO2/KWh in 2023, and 467 g/CO2/KWh in 2022. For Georgia's power consumers, the steep reduction in emissions per unit of electricity, along with higher overall electricity supplies, are a favourable outcome of the completion of the Vogtle site. And over the longer term, rising quantities of clean power may become a more significant aspect of the energy sector than the final cost of any particular generation asset. The opinions expressed here are those of the author, a columnist for Reuters. Sign up here. https://www.reuters.com/business/energy/georgias-new-nuclear-plants-drive-us-power-sector-clean-up-maguire-2024-09-19/

2024-09-19 05:38

MOSCOW, Sept 19 (Reuters) - Russia has introduced a state of emergency in its Siberian region of Krasnoyarsk due to heavy rains that damaged local crops, TASS news agency quoted Sergei Ponomarenko, First Vice Governor of Krasnoyarsk region, as saying on Thursday. "The preliminary volume of affected crops is more than 17,000 hectares, the estimated size of damage is more than 280 million roubles," the official said. Earlier in September, another Siberian region - Tomsk - declared a state of emergency for the farm sector because of weather damage to crops. Russian Agriculture Minister Oksana Lut said last week the country still can export about 60 million metric tons of grain this year, with the official grain harvest forecast at 132 million tons despite bad weather that had hit many producing areas. Sign up here. https://www.reuters.com/world/europe/russias-krasnoyarsk-region-declares-emergency-bad-weather-hits-crops-2024-09-19/

2024-09-19 05:10

BRUSSELS, Sept 19 (Reuters) - The EU's ombudsman has launched an inquiry into the Commission's emergency amendments to the bloc's agriculture subsidies in response to major farmers' protests across Europe early this year, the EU body and ClientEarth said on Thursday. Environmental law charity ClientEarth said it, along with BirdLife, had raised "serious concerns" about the fast changes made to 386 billion euros ($429 billion) in farming subsidies for the 2023-2027 period. The two NGOs filed a complaint to the ombudsman in July, saying the watering down of environmental protections was "a threat to the future of farming". Further, they claimed the Commission was in breach of its own laws by failing to carry out a climate assessment before pushing through the changes. ClientEarth said it was seeking a "finding of maladministration". The ombudsman launched an inquiry in August and on Monday sent a list of questions to the Commission. The Commission has until Dec. 16 to respond. The ombudsman does not have enforcement powers. ($1 = 0.8999 euros) Sign up here. https://www.reuters.com/world/europe/eu-ombudsman-launches-inquiry-into-legality-changes-farming-subsidies-2024-09-19/

2024-09-19 05:05

Muted initial market reaction gives way to sharper moves Small-cap stocks up sharply Bond yields spike NEW YORK, Sept 19 (Reuters) - An initial muted market reaction following the Federal Reserve’s first rate cut in four years gave way to a surge in U.S. stocks as uncertainty ebbed and investors digested the implications of easing monetary policy. The S&P 500 was up 1.7% on Thursday, hitting a fresh intraday high. The rally was a sharp contrast to the day before, when the benchmark index closed down 0.3% following a 50-basis-point rate cut from the Fed. Treasury yields, which move inversely to bond prices, continued to rise. The Fed meeting had been seen as a potentially pivotal event for markets, with rates futures gyrating hours before the event as traders recalibrated bets on how big the initial rate cut would be. Some of that uncertainty has been removed, now that the first rate cut is in the books and the central bank has assured markets that the jumbo-sized reduction was an insurance measure to safeguard the economy and not an emergency response to recent labor market weakness. That leaves investors to focus on metrics such as corporate earnings growth, which has been solid this year, said Michael Purves, CEO of Tallbacken Capital Advisors. "If stocks are rallying, it’s more about the fact that the Fed meeting is behind us," Purves said. With monetary policy less restrictive, investors may also be factoring in better chances of an economic soft landing, where the Fed is able to cool inflation without badly hurting growth, said Ed Yardeni, founder of Yardeni Research. "Now that the Fed is stimulating the economy, the hard-landing crowd should disperse," Yardeni said in a Thursday morning report. Lower rates are likely to benefit smaller, highly leveraged companies that rely on cheaper debt as well as economically sensitive-value stocks, Yardeni said. The rally that had pushed the S&P 500 up 18.5% this year through Wednesday will likely broaden from the cluster of big tech names that have led the gains, he added. The small-cap focused Russell 2000 index (.RUT) , opens new tab was up 1.8% on Thursday after finishing about flat in the previous session. Strategists at Societe Generale echoed that view. They recommended clients buy stocks in the consumer discretionary and consumer staples sectors, expecting them to receive a boost as falling mortgage rates and further declines in oil prices benefit spending. "The clearest trade is the change in leadership for U.S. equities that favors a broadening of performance," they wrote. Stocks could be supported in the near-term as a swing from a hard-landing outlook to a soft-landing view prompts defensively positioned investors to “grab-and-chase” upside in stocks, Nomura strategist Charlie McElligott said in a note. Historically, equities tend to respond well to falling rates as long as a recession is avoided, according to data from Keith Lerner, co-chief investment officer at Truist Advisory Services, which showed the S&P 500 higher a year after the first cut in four out of six Fed easing cycles since 1989. That does not exclude the possibility of volatility in the shorter term, however, as the Fed decision ripples through markets. "The coming hours could prove dangerous ... with traders exposed to sudden riptides as rate expectations are reinforced in other economies," said Karl Schamotta, chief market strategist at payments company Corpay, commenting on foreign-exchange markets. The dollar was little-changed against a basket of currencies on Thursday, hovering near its lowest level in about a year. Investors were also looking ahead to Friday, when the quarterly expiration of stock options, stock index options and futures - totaling some $5.1 trillion in notional terms, according to SpotGamma - ramps up the risk for volatility in equities as traders adjust their positions. MUTED REACTION Stock options had priced a roughly 1.1% swing, up or down, for the S&P 500 (.SPX) , opens new tab on Wednesday, according to options analytics service ORATS. Instead, the index snapped a seven-day winning streak to finish down 0.29%. Big gains in stocks and a slide in the dollar in the days ahead of the Fed meeting may have led to the underwhelming reaction, said Sonu Varghese, global macro strategist at Carson Group. "It's a very silly cliche, 'buy the rumor, sell the news', but that's kind of what happened," said Matt Diczok, head of fixed income strategy at Merrill and Bank of America Private Bank. Treasury yields, which rise when bond prices fall, kept climbing on Thursday, taking the benchmark 10-year yield to 3.75%. The move was exacerbated by weekly jobs data showing continued strength in the labor market. With the Fed meeting in the rear-view mirror, "attention will once again shift toward the incoming data to further refine the macro narrative," BMO Capital Markets rates strategists wrote. Sign up here. https://www.reuters.com/markets/us/fed-outsized-rate-cut-draws-muted-reaction-calm-may-not-last-2024-09-19/

2024-09-19 05:03

Fed's 50 basis point cut aims to prevent economic slowdown Investors question if Fed's action is timely to avoid recession Market expectations diverge from Fed's interest rate projections NEW YORK, Sept 19 (Reuters) - One of the most consequential Federal Reserve meetings in recent history has put investors’ focus squarely on one question: whether the central bank has kicked off its rate cutting cycle in time to keep the economy from slowing too rapidly. The Fed delivered a 50 basis point rate cut on Wednesday - lowering borrowing costs for the first time in more than four years - and assured investors the jumbo-sized reduction was a measure to safeguard a resilient economy, rather than an emergency response to recent weakness in the labor market. Bets on the size of the rate cut swung in the days before the meeting and were near an even split on Wednesday morning. The degree to which Powell's outlook pans out is likely to be a key factor in the trajectory of stocks and bonds for the remainder of 2024. Prospects of a “soft landing,” where the Fed brings down inflation without pushing the economy into recession, have lifted stocks and bonds this year, though signs of a softening labor market have fueled worries that the Fed may be too late in acting to shore up growth. "Right now, it looks as if the market is going to pause to digest what was to many a surprise,” said Eric Beyrich, co-CIO of investment advisory firm Sound Income Strategies. “There will still be people thinking, ‘wow, If the Fed cuts big like that, what do they see that we’re not seeing that suggests the economy will get worse?’” Market reaction on Wednesday was relatively subdued as stocks, Treasuries and the dollar retraced initial, post-decision rallies. The S&P 500 (.SPX) , opens new tab ended down 0.3%, after rising as much as 1% during the session. The index is up nearly 18% this year and stands near a record high. In comments following the decision, Powell called the move a "recalibration" to account for the sharp decline in inflation since last year and said the central bank wanted to stay ahead of any potential weakening in the jobs market. Some investors were skeptical of that sunny view. “Despite what Chair Powell is saying in the press conference, a 50 basis point move does indicate that there is concern that they are behind the curve,” said Josh Emanuel, chief investment officer at Wilshire. Emanuel said he was already overweight bonds coming into the meeting, favoring investment-grade credit over riskier high-yield bonds ahead of an expected deterioration in the economy. Many others, however, believed the rate cuts were a positive development for the market and would buoy the economy. "I think that this dramatically increases the odds of the Fed being able to stick the landing, which ultimately will be bullish for risk assets," said Jeff Schulze, head of economic and market strategy at ClearBridge Investments. Indeed, stocks have performed well , opens new tab following rate cuts - as long as the economy stayed out of recession. The S&P 500 has posted an average 14% gain in the six months following the first reduction of a rate-cutting cycle, when the Fed cut in a non-recessionary period, data from Evercore ISI going back to 1970 showed. That compares to a 4% decline in that period after the initial cut when the economy is in a recession. Rick Rieder, chief investment officer for global fixed income at BlackRock, said investors may have overreacted to recent labor markets reports that had come in weaker than expected. Other data, such as gross domestic product growth estimates, continued to show a resilient economy. "I think the markets got ahead of themselves again in terms of interpreting that data was very soft," he said. "Chair Powell said it's a solid economy, and it is." LONG-TERM ADJUSTMENTS Fed officials updated their views on interest rates from their latest June projections, but while they now anticipate deeper cuts, those rate forecasts remained above market expectations of a more accommodative central bank. The Fed said it expects the Fed funds rate - currently in the 4.75% to 5% range - at 3.4% by the end of next year, while rates traders are betting on about 2.9%. Also, the Fed's endpoint for rate cuts reflected a slight upgrade, to 2.9% from 2.8%. The outlook gap may have sparked a reversal in Treasury markets, sparking a selloff in longer-term Treasuries on Wednesday. The benchmark 10-year Treasury yield, which moves inversely to bond prices, stands at around 3.73 after touching its lowest level since mid-2023 earlier this week. "In terms of the pace at which cuts were priced in, I think this is a right reaction," said John Madziyire, head of U.S. Treasuries and TIPS at Vanguard, who was betting on long-term yields moving higher. Others were looking even further out, with some pointing to the outcome of the U.S. presidential election as potentially complicating the path for rate cuts going forward. "If trade wars were to ensue under a Trump presidency, that could be negative for fixed income," said Andrzej Skiba, head of U.S. fixed income for RBC Global Asset Management. "That would be inflationary and limit the Fed's ability to cut rates" Sign up here. https://www.reuters.com/markets/after-jumbo-fed-rate-cut-market-hopes-ride-us-soft-landing-2024-09-19/

2024-09-19 04:59

MUMBAI, Sept 19 (Reuters) - The Indian rupee rose to its strongest level in over six weeks on Thursday after the Federal Reserve kicked off policy easing with a 50-basis-point rate cut, but traders expect importer dollar bids to limit the currency's immediate gains. The rupee was at 83.66 against the U.S. dollar as of 10:20 a.m. IST, up 0.1% compared to its close at 83.75 in the previous session. The local currency touched a peak of 83.6650 in early trade, its highest since Aug. 1. The dollar index initially fell to its year-to-date low after the Fed's rate cut verdict on Wednesday but rebounded to last quote at 101, supported by Chair Jerome Powell's comments that he does not see a risk of recession in the U.S. The rupee was aided by "broad-based" dollar selling interest on Thursday, but the currency is unlikely to gain above 83.65, a foreign exchange salesperson at a private bank said. "Importers will be quite willing (to buy dollars) at these levels," the salesperson added. Asian currencies were mixed on the day, with the offshore Chinese yuan gaining nearly 0.2% while the Malaysian ringgit and Korean won declined. The U.S. central bank also updated its projections to show that its benchmark interest rate would fall by another half a percentage point by the end of this year, a full percentage point next year, and half a percentage point in 2026. Following the Fed's cut, "all eyes will be on the Reserve Bank of India's (RBI) response and whether the rupee can maintain its upward trajectory," Amit Pabari, managing director at FX advisory firm CR Forex, said. Traders expect the RBI to curtail sharp gains in the currency by absorbing dollar inflows in a bid to build its foreign exchange reserves and preserve the competitiveness of Indian exports. Sign up here. https://www.reuters.com/markets/currencies/rupee-rises-six-week-high-after-fed-rate-cut-importer-dollar-bids-pick-up-2024-09-19/