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| Thursday Aug 22, 2024 | |
| For all the talk during the spring and leading up to the summer about ERCOT’s vaunted load growth and fears about the potential for serious market tightness, what has actually played out over the past several months has been mostly benign. Even over the past few days as ERCOT has flirted with new record highs in net load, the price impact was underwhelming: daily average real-time prices peaked at a little over $200, the highest so far this summer by a significant margin. This is shown clearly on the figure below, which compares daily average North Hub real-time prices for the summer months (June to September) in 2023 (top pane) and 2024 (bottom pane), with the monthly average price marked by a reference line. In June 2024, the average price was ... » read more | |
| Wednesday Aug 21, 2024 | |
| We were starting to sound like a broken record this spring writing about the CAISO battery fleet breaking records for dispatch. At the start of 2024, the fleet had discharged less than 5.5 GW at one time. In Q2 of 2024, the fleet really started to ramp up as midday prices were extremely low and arbitrage opportunities were high. The record for dispatch was broken eight times in three months. July was a bit of a dry spell for record-breaking. We’ve written recently about some of the reasons why it hasn’t been the greatest environment for the CAISO fleet (check out the article ‘The Timing of It All’). However, last week broke the spell and the record for the CAISO fleet’s dispatch now stands at 8.3 GW, reflecting not only the conditions of that day, but also ... » read more | |
| Tuesday Aug 20, 2024 | |
| As summer draws to a close, the energy industry is shifting focus from the high-demand summer season to the upcoming shoulder season, particularly in anticipation of nuclear outages. These outages, necessary for routine maintenance and refueling of nuclear plants, occur every 18 to 24 months and are typically scheduled during periods of lower demand, such as fall and spring (the shoulder months). This shift requires other energy sources, primarily natural gas, to compensate for the temporary loss of nuclear power, making it crucial to understand the implications for power burns this fall. To forecast what lies ahead for fall 2024, historical data on nuclear outages is essential. Given the 18 and 24-month cycles, a look back at the outages from six years ago, particularly fall 2018 ... » read more | |
| Monday Aug 19, 2024 | |
| This August has brough a stretch of cool weather to the West, a welcome break from a record-breaking July. The below figure shows how recent temperatures in the Pacific region compare with the historical norm. Due to a shifting baseline, we use the five-year daily average to set normal values. The rightmost cells represent the most recent forecast values. We sit now in the middle of a sustained run of lower-than-average temperatures, the longest continuous stretch since the end of May. When we reflect on how this summer has played out it is obvious that the unprecedented heat has not been matched by wholesale electricity markets which have held below past years, even in some of the hottest stretches. So, if extreme heat has not produced extreme prices, what has been the result of cool ... » read more | |
| Friday Aug 16, 2024 | |
| One metric that we wind up looking at a lot in our work is capture ratio—that is, the generation-weighted value of a power-producing resource over some time period, relative to the simple average power price over that same time period. If a generator is routinely outputting energy when the price is higher than average, its capture ratio will be greater than 100%; if its generation is skewed more towards intervals with lower-than-average prices, its capture ratio will be less than 100%. A really common application of capture ratio is to contextualize the dollars-per-megawatt-hour value of a solar or wind resource. In prior writing, we’ve gone in-depth on solar and wind capture ratios and the impact that increasing RE buildout has on those resources’ value. But in this ... » read more | |
| Thursday Aug 15, 2024 | |
| A little over one week ago, gas prices were finally able to halt a swift and extended period of sharp decline that began during the second week of June. After climbing to a high for the year-to-date of $3.17 back on June 11th, the Henry Hub September 2024 contract for the end of the summer plunged all the way down below $2 by the start of August, bottoming out on the 5th at a price of $1.94. This was the second major slide in summer prices this calendar year, the first coming back in January and February as it became clear the winter was not providing enough cold weather to whittle down the storage surpluses in place across the country heading into 2024. As the winter progressed, the sinking prices sank low enough to signal production facilities to stop or slow ... » read more | |
| Wednesday Aug 14, 2024 | |
| In many of our previous reports, we’ve discussed the different environments for batteries attempting to capture real-time arbitrage and how this timing impacts potential revenue. Batteries don’t like when both their charging and discharging hours have a marginal megawatt in the natural gas stack. Instead, they prefer days when prices are low and sometimes even negative in the midday while evening hours are much higher, increasing batteries’ spread. This past spring was ripe for the midday marginal cost to not only drop below the natural gas marginal megawatt, but slice through $0.00 given renewable curtailments that were needed to balance. Once that occurred, we saw some midday hours within SP15 drop down to -$90 as the price or RECs took it there. In a previous ... » read more | |
| Tuesday Aug 13, 2024 | |
| The summer of 2024 commenced with Alberta's natural gas storage caverns well-stocked, a direct result of a mild winter that saw minimal withdrawals. This surplus provided a strong foundation as the region moved into the warmer months, allowing for consistent and substantial injections of gas. In June 2024, Alberta maintained an injection rate of 1 Bcf/day, aligning with the injection trends observed over the past two years. This steady build-up reflects a proactive approach to bolstering reserves in anticipation of the upcoming winter, ensuring a robust supply cushion. Figure 1 | Alberta Natural Gas Storage Inventory The injection momentum experienced a slowdown in July, influenced by factors such as the widespread wildfires impacting Alberta and British Columbia. These challenges ... » read more | |
| Monday Aug 12, 2024 | |
| The summer months are filled with family vacations, baseball games and in the case of 2024 the Olympic Games in Paris, France. All three of these can make the summer months exciting whereas the power curtailment risk tends to take a back seat to the higher demand tied to warmer temperatures and a renewable wind profile that is more like a “V” shape instead of higher volume in the midday. The shift in the hourly wind profile is something that we discuss each spring as the summer months are right around the corner. Figure 1 | SPP Cumulative Curtailments – Year on Year The graph in Figure 1 displays the cumulative curtailment volume for the SPP market where the blue line represents 2024 while the orange line is associated to 2023 while the red line is ... » read more | |
| Friday Aug 9, 2024 | |
| ERCOT’s summer started out with some warmer temperatures across the entire South Central region while July delivered a hurricane from the south and some stints of modest temperatures that ultimately kept the net load numbers in check. As we moved into August, the wind output faded to start the month but is now trying to start its move back up to a level that is more common for the middle of the third quarter. Figure 1 | ERCOT Key Market Fundamental Components – Hourly The ERCOT grid also has an abundant amount of solar generation hitting the grid these days as the month of July saw new record highs come into play twice and it would have been more if it were not for the cloud cover that came with Storm Beryl. All components mentioned are on display in the figure above ... » read more | |