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| Friday May 7, 2021 | |
| ERCOT forward pricing has always been a 'tale of two curves'. As anyone who tracks the ERCOT market knows, forward prices in the prompt year or two are based on expectations of marginal cost combined and scarcity. After the first couple of years, the forward curve rapidly declines, often reaching low levels in the out years. Figure 1 depicts the forward ERCOT North Peak (blue) and Off Peak (orange) curves as of January of each year. That is, the top pane shows forward curves as of January 2018 where the y-axis shows price in $ per MWh and the x-axis shows future years, the next pane shows curves as of January 2019, and so on. The pattern is consistent. The front of the curve is high and the back of the curve is much lower, regardless of the overall price level. The front of the ... » read more | |
| Thursday May 6, 2021 | |
| Since the start of the year, the market conditions in California have been such that the Diablo Canyon Unit 2 facility was sitting on the sidelines most of Q1 and then the refueling period occurred as we rolled into Q2-2021 as well as the fact that the lack of hydro generation was being formed by Mother Nature. Both of these took what we know as baseload energy off the grid that was essentially a price taker when it comes to putting megawatts on the grid each and every hour. The nuclear output is pretty consistent at 1.15 GWa while the hydro hourly profile has flexibility where the midday period is the low point while the evening ramp kicks into the highest gear the operators have as they try to capture the higher priced hours as the sun is setting. Figure 1 | ... » read more | |
| Wednesday May 5, 2021 | |
| Mexico is hot again, both literally and figuratively. Daily exports to Mexico have been repeatedly topping 6 Bcfd, lifting month-to-date levels about 0.9 Bcfd above last year, including many recent days of new record highs. With another early-season heat wave currently hitting the country, chances exist for another round of record-breaking border flows. In addition to the Mexican summer – the country’s peak gas demand season – approaching, there are a handful of structural influences that will contribute to driving year-on-year export growth. This is putting Mexico back atop the list of big market discussions this summer, a notable return from the past couple of years when interest in Mexico seemed to taper. Political changes in the country ... » read more | |
| Tuesday May 4, 2021 | |
| It was just over a year ago when the world was hit with a pandemic which caused the shut down of society. You could no longer go to a restaurant or the movies or even to work. The economy ground to a standstill as most were forced to survive at home. This drop in economic activity was most evident in the electric demand. Control area loads fell by as much as 15% in major cities. But that is starting to end. Florida, Texas and parts of the Midwest are opening and you can see the gains reflected back in the Lower 48 power loads during the month of April 2021 compared to the same time period in 2020. It should be noted that the graphs in Figures 1 & 2 have an y-axis that is negative and descending from top to bottom as it is the best way to illustrate the consumption of ... » read more | |
| Monday May 3, 2021 | |
| A few weeks ago, the EnergyGPS webinar titled 'The Magical Mid-c' covered some of the key components that make the Pacific Northwest a one of a kind market with its own contributing components. The one key component that sticks out is the hydro system as Mother Nature reshuffles her cards each year sometime around October, puts her initial fingerprints on it prior the New Year. Once we roll the calendar, the magic begins as February and March have the most volatility when it comes to the snow water equivalent percentage of normal levels. Stated another way, these two months can swing a Water Year from having huge snowpack levels to that of almost nothing at different elevations throughout. The first quarter also guides us in to the areas that carry the snowpack as it ... » read more | |
| Friday Apr 30, 2021 | |
| A key measure in an energy analyst’s toolbox for thinking about price and renewable curtailments is net load. Net load is a measure designed to capture the leftover demand needing to be satisfied after deducting the output from renewable resources such as wind, solar and soon to be batteries. Generally speaking, the lower the net load numbers the higher likelihood of lower prices. Over the years, we have discussed in-depth the levels to which real-time prices end up settling in negative territory as the net load numbers are locked in at at its lowest level (must run units have to stay on to support the grid) and there is too much renewable output; hence curtailments are in order. The standard net load definition takes an hourly power demand profile less ... » read more | |
| Thursday Apr 29, 2021 | |
| At times, it is hard to believe we are already at the end of April as it seems like it was yesterday that we were celebrating the New Year by sitting in our living rooms watching a movie or some sort of virtual celebration putting the chaotic 2020 calendar year behind us. Under this scenario, it seems like time is flying by with no time to look in the rearview mirror. When it comes to the electricity markets, there is one region that feels like things are moving at warp speed but at the same time it has been talked about so much here at EnergyGPS, in the news and capturing the attention of the press that time seems to be standing still or going nowhere. In fact, there are times the movie Groundhog Day comes to mind as we wake up, look at the market fundamentals and take ... » read more | |
| Wednesday Apr 28, 2021 | |
| The prospects for U.S. LNG exports to global markets is showing no signs of letting up. European inventories continue to draw down later in the season than typical, pulling already record-low inventories down further. Asian demand has been on a tear as Pacific Rim economies emerge from COVID and several nations struggle with non-gas-fired generation issues. When you throw in the fact that other global LNG suppliers that the U.S. normally competes with are facing challenges, the US market is showing no signs of slowing. European gas storage inventories – having already dropped to multi-year lows back in late February - continued drawing down until just a few days ago. As can be seen in the chart below, it is not typical to see withdraws this late in the ... » read more | |
| Tuesday Apr 27, 2021 | |
| In October of 2015 SoCal Gas suffered one of the worst catastrophe's in natural gas history when their largest storage cavern, Aliso Canyon, ruptured. It took four months to fix the leak allowing 4 BCF of natural gas to be vented to the surrounding community. Since then all the natural gas storage caverns in the state have been subject to rigorous testing and enhancements to ensure safety for the citizens in the region. Despite the cavern getting a clean bill of health, the California Public Utilities Commission has limited the use of the cavern to only reliability events and knocked down the total working capacity of the facility. This was done in order to minimize the use of the cavern despite its role in providing reliable supply to the customers in Southern California. On May 9 SoCal ... » read more | |
| Monday Apr 26, 2021 | |
| From the beginning of October through the 4th of July, the Pacific Northwest hydro season takes on its full cycle of excitement as Mother Nature delivers something different each year. The fall is typically filled with conversation of if the season is going to be a La Nina or El Nino type of year. This is similar to the likes of Groundhog day where the loving creature comes out to see if its shadow can be seen and if so, the winter is expected to be extended for another six or so weeks. If there was no shadow in play, the winter is expected to come to an end earlier than normal, in the case of the ceremony of 2021, Punxsutawney Phil saw its shadow which has led to the 'colder' weather pattern seen in the Midwest, Ohio Valley and Northeast throughout April ... » read more | |