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Wednesday Apr 3, 2019   
When you think of California, the beaches, Hollywood, Disneyland and Alcatraz all come to mind.  If you have ever visited the state, rented a car and drove through Los Angeles or San Diego on I-5 during rush hour, you quickly have images of congested highways and horns honking as you figure out which exit to take.  If you have the pleasure of talking to a local commuter and hear the drive time stories, you really understand how bad the congestion can get at times. Figure 1 | California's Congested Highways   The congestion image above is a good visualization of what it is like on any given day inside the Golden State.  it also gives you a visualization of what the CAISO power grid looks like when there is to much energy pointed down a transmission line and ... » read more
Tuesday Apr 2, 2019   
The Lower 48 storage deficit gets a lot of attention. This week's EIA inventory report will likely post an end of season number of 1.08 TCF which will be a five year low for gas storage. But just to the north of the United States they are feeling their own woes. Just like the United States they have seen their own boon in natural gas production. But thanks to build outs in oil sands processing and natural gas fired generation the increase in demand has kept pace with the production increases. After a number of years fighting pipeline maintenance and a recent cold end to this winter season Canada's storage inventory has dropped to a five year low. Alberta inventory is down to just 204 BCF and the Dawn cavern in Ontario is down to 25 BCF. The two caverns have 587 BCF of capacity ... » read more
Monday Apr 1, 2019   
We are entering the time of year when the California renewable output starts to climb as the weather moves from the winter overcast skies to that of sunny and daytime highs in the low 90's.  If you believe in the 2 GW capacity increase per year (tied to the Renewable Procurement Standard - RPS) and the fact that the CAISO grid has seen the grid peak out at 10.8 GW already we will be looking at a 12.GW peak output sometime in Q2-2019. Figure 1 | CAISO Solar Breakdown - Monthly The top pane in Figure 1 calculates the month capacity factor (CF) for the utility-scaled solar generation within the CAISO footprint.  The bottom pane represents the two parts of the CF with the line representing the cumulative peak generation (potential - actual plus curtailed) while the bars represent ... » read more
Friday Mar 29, 2019   
With the end of March this weekend, the 2018-19 winter strip is going to be in the books and all eyes will be on summer 2019.  As it stands right now, we will be entering the injection season at the 1.1 TCF storage level across the Lower 48.  The utility storage operators will be doing the math from the current levels they are at to where they want to be come late October and start to march toward that goal by the middle of April and keep it going through the summer.  Th merchant storage operators will be accessing what Mother Nature has in store for the Lower 48 this upcoming Q3 (July-Sept) as the power demand level will be a key driver to the overall power burns on the grid. Figure 1 | Lower 48 Daily Power Burns The graph above depicts the daily power burns across the ... » read more
Thursday Mar 28, 2019   
I recently came across a report that stated PJM coal capacity was in danger of being retired in favor of wind and solar. The article had some great charts and an interesting analysis on the economics of wind and solar. However, the article downplayed the lack of reliability of the renewable fuel mix. To their credit, they did mention that coal was able to be dispatched unlike renewable resources but did not go much further than that. While it was a fairly interesting read, I don’t quite think that coal is going to be giving up much ground to renewable resources in the near future. Figure 1 | Energy Innovation’s Coal vs Renewables Cost Perhaps the most important factor is that wind and solar are intermittent resources. Both of these Renewables cannot be easily controlled in ... » read more
Wednesday Mar 27, 2019   
After four years of drought-like water conditions in California, 2017 proved to be one of the wettest precipitation years on record.  If you recall, the California Water Year started out relatively slow, only to be hit with an onslaught of precipitation in December 2016 which then led to a late winter/early spring weather pattern that created snow water content levels never seen before in the Northern Sierra Mountains and along the coastal areas along Highway 101.  In fact, it was shortly after the New Year when a mudslide off the highway move the earth and collapsed the Pfeiffer Canyon bridge on the old highway near Big Sur. Figure 1 | Pfeiffer Canyon Bridge Crack due to Mudslide - Feb 2017 As you can see in the figure above, the movement of Mother Earth wreaks havoc on the ... » read more
Tuesday Mar 26, 2019   
Starting last Friday March 22nd, Cheniere has taken two trains down at the Sabine pass liquefaction terminal for seasonal maintenance. With two of the liquefaction trains out of service, Sendouts at the location have dropped from 4 to 2.5 BCF/d forcing the rest of the Gulf pipeline and storage complex to accommodate the excess volume on the system. Storage injections have stepped higher at many salt caverns. The facility is expected to be out of service through the first week of April. During that time we expect the Henry Hub cash pricing to remain under the prompt futures contract. Figure 1 | Sabine Pass Sendouts A push back of 1.5 BCF of natural gas has a big impact on the pricing dynamics along the Gulf Coast. Cash prices have been weighed down accordingly as ... » read more
Monday Mar 25, 2019   
The saying, 'the rubber meets the road' is a point where an abstract idea is tested out in practice.  In the case of the natural gas sector, the idea is tied to power burns and how they were impacted by the big run up in the prompt month back in November 2018.  As we moved through the winter strip, several indicators are out there showing that market participants made it a choice to hedge their natural gas power plant consumption with other facilities such as coal units across the country.  When you tied this in with the fact that the December weather came in above normal, the forward natural gas curve moved off the highs seen on November 14th, 2018. Figure 1 | Prompt Month Natural Gas Settles - Daily As we started the New Year, Mother Nature saw some volatility in ... » read more
Friday Mar 22, 2019   
Recognizing the need to address the increasing number of new electricity resources coming on line as a result of state-driven procurement mandates, PJM has pushed for changes to mitigate against monopsony or “demand side” market power that can have a depressive effect on clearing prices in its capacity market auctions.  Figure 1 | Unlike FERC, Brutus Nailed His Deadline PJM’s Capacity Reform proposal (Docket Nos. EL16-49/18-1314) filed in October 2018 proposed revisions to its Minimum Offer Price Rule (MOPR) so that "subsidy free" offers would be required on all new resources built (or repowered) as a result of state mandates. State mandated resources may include the familiar “green” resources of demand response, wind, and solar.  They can also ... » read more
Thursday Mar 21, 2019   
As I reached for my jacket earlier this week, I quickly checked my phone only to realize that I wouldn’t be needing it as the weather forecast said highs would reach into the 60s. The burden of my heavy jacket was finally lifted from my shoulders with the warm sunny weather managing to stick around. However, the Pacific Northwest appears to be the last region to finally see the seasonal shift. Along the East Coast, temperatures already made their way back to normal earlier this month as the latest cold front dissipated. With the warm spring weather finally on the board, demand for electricity declined giving some leeway to generation. Facilities are now taking this opportunity to perform maintenance with demand likely to remain on the lower end of the spectrum. In PJM, total outages ... » read more
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