Daily Update: October 12, 2023 – S&P Global

On February 28, 2022, S&P Global completed its merger with IHS Markit, the next step in delivering data, technology and expertise that accelerates progress.
As great as last year was for our company, in many ways 2022 is shaping up to be even better. In February, we closed a transformative merger with IHS Markit. We believe combining our two companies will create substantial long-term value for all our stakeholders.
The S&P Global Foundation is about much more than philanthropy—we are about making a difference by finding and developing essential connections between the knowledge- and skill-driven work of S&P Global and the needs of society.
Technological improvements supporting scalability, permissioned networks and privacy may address the main inhibitors to the adoption of public permissionless blockchains by financial institutions, with several regulators and official bodies experimenting with the technology.
Artificial intelligence offers many benefits to companies in terms of automation, risk management and efficiency gains, but it needs to be employed carefully to mitigate potential challenges, especially when dealing with small datasets.
Many governments around the world have been making progress mobilizing public and private capital to accelerate the energy transition, with significant money inflows into projects in recent years. These inflows are necessary to meet the tripling of funding needs for low-carbon projects across sectors by 2030 to meet 2050 net-zero goals.
Daily Update: October 12, 2023
Is space heat electrification taking off in the US?
Global residential energy storage shipments declined for first time in Q2 2023
As Scope 2 targets loom, car industry looks at PPAs to secure green power
Sustainability at sea: Port performance and emissions
Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy.

Solar Power’s Global Growth Contends With Rising Cost, US-China Trade Tensions
The rise of solar power is facing potential challenges as developers contend with increasing costs, US-China trade tensions and the risk that US power prices may slump amid a supply boom. Europe also has a glut of new solar panels.
Developers are feeling the squeeze because inflation and higher interest rates are crimping project margins. China also restricted exports of gallium and germanium, which are used in making photovoltaic panels, from Aug. 1. Such upheavals will complicate the shift to carbon-free power sources in the US, which could otherwise soon surpass 50% of total capacity from about 40% currently. 
“Emerging challenges — some of which US green energy developers have little control over — could slow momentum,” according to an S&P Global Market Intelligence report.
Still, the government is seeking to curb the industry’s reliance on overseas supplies for renewable energy developments through measures including the Inflation Reduction Act. More than $70 billion of new clean energy manufacturing investments have been announced in the US since the act was signed into law in August 2022, according to Canary Media data cited by S&P Global Market Intelligence. The boom means that domestic capacity at the module node will exceed demand by 2025, S&P Global Commodity Insights said.
Another challenge for the US renewables industry is a potential collapse in wholesale power prices if new supplies flood the market. Solar and wind generation companies could bid very low prices due to minimal variable costs or even accept loss-making rates to receive production tax credits.
“Renewables are destroying the very market they will be most relying on,” according to an S&P Global Commodity Insights note. “Revenue from competitive markets will decline as prices drop.” Such merchant risks tend be overdiscounted by developers, the note said.
Elsewhere in the world, developers in Europe could potentially benefit from a glut of solar panels after a jump in imports from China outpaced demand. The oversupply is mainly related to supplies for residential, commercial and industrial projects rather than utility-sized solar farms. Still, it’s a buyer’s market, and the trend could squeeze European panel-makers.
Emerging markets are also becoming increasingly important for the solar industry. Saudi Arabia is working on the 2.6-GW Al Shuaibah solar plant, the kingdom’s largest renewable energy project. The project is moving forward after securing 8.3 billion riyals, or $2.2 billion, of financing. The country’s National Infrastructure Fund has provided 1.7 billion riyals, marking the first time it has backed a project sponsored by oil giant Saudi Aramco.
Saudi Arabia is using tenders to add more renewable capacity to its power grid and reach net-zero by 2060. The strategy reflects the wider use of competitive tenders across the Middle East and Africa as a way of accelerating the implementation of large-scale wind and solar projects. Competitive tenders provide a common framework that can mitigate risks associated with some less developed local markets and stakeholders in the sector, according to S&P Global Commodity Insights.
Today is Thursday, October 12, 2023, and here is today’s essential intelligence.
Written by Neil Denslow.

Listen: Ep. 41: Larry Summers on Inflation, Surviving Cancer & The Social Network

Ex-U.S. Treasury Secretary Larry Summers and S&P Global Ratings’ Global Chief Economist Paul Gruenwald join host Joe Cass on this episode of Fixed Income in 15. Discussion spans the rise and fall of inflation, working with U.S. Presidents, how to create an economic narrative and Larry’s experience being diagnosed with and surviving cancer.
—Listen and subscribe to Fixed Income in 15, a podcast from S&P Global Ratings

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A Primer On Ireland’s RMBS Market

This Irish residential mortgage-backed securities (RMBS) primer provides a comprehensive guide to the fundamentals and risks of the market, including an overview of both the Irish residential housing and home loan markets. S&P Global Ratings compares the performance of prime and reperforming RMBS transactions and compare the market with the Irish covered bond market.
—Read the report from S&P Global Ratings

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OPEC+ Sep Output Up 330,000 B/D As Nigeria, Iran Balance Russia-Saudi Cuts: Platts Survey

OPEC+ crude oil production increased 330,000 b/d in September, the second successive monthly jump, as output hikes in Nigeria, Iran and Kazakhstan balanced out ongoing cuts by Saudi Arabia and Russia, the latest Platts survey by S&P Global Commodity Insights has found. The Saudi-Russia led alliance pumped 40.85 million b/d on average in September, with the 13 OPEC members producing 230,000 b/d more month on month, compared to a 100,000 b/d collective increase from the coalition’s non-OPEC countries.
—Read the article from S&P Global Commodity Insights

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Carbon Credits Buyers Outperforming Peers In Climate Action: Study

Corporates that are active buyers of carbon offsets are reducing their emissions faster than peers, leading on key climate transparency, ambition and action efforts, according to a new report released Oct. 10. A new study by Forest Trends’ Ecosystem Marketplace showed that participation in the voluntary carbon market is a signal that a company is likely already addressing climate change in its direct operations and throughout the value chains.
—Read the article from S&P Global Commodity Insights

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Kazakhstan’s Oil Supply Reshaping: Is There A Viable Alternative To The CPC Pipeline?

In 2022, Kazakhstan produced 84.2 million tons of oil and exported 64.3 million tons. Of this export volume, 52 million tons were transported through the Caspian Pipeline Consortium (CPC), and 8.4 million tons went through the Atyrau-Samara pipeline. Additionally, smaller export quantities were sent via the Kazakhstan-China pipeline system, maritime routes across the Caspian Sea and a railway route to Uzbekistan. However, these alternative routes accounted for relatively low export volumes.
—Read the article from S&P Global Commodity Insights

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Artificial Intelligence And Alternative Data In Credit Scoring And Credit Risk Surveillance

Artificial intelligence offers many benefits to companies in terms of automation, risk management and efficiency gains, but it needs to be employed carefully to mitigate potential challenges, especially when dealing with small datasets. The use of artificial intelligence, and machine learning techniques in particular, is very promising in the field of credit scoring and modern portfolio surveillance, where it can help with detailed analysis and interpretation of large datasets.
—Read our latest report from the S&P Global Research Council

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