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Wednesday Jan 23, 2019   
Growing up as a kid, I remember the commercials for Kellogg's Rice Krispies as the three individuals with their chef's hats on were running around grabbing a bowl, some toasted oats and pouring milk over the top of them to listen to the noise of snap, crackle and pop. Figure 1 | Kellogg's Rice Krispies Cereal This is the same exact noise I tend to hear these days in ERCOT as the wind generation capacity has 'snapped' upwards since the start of November.  The 'crackle' that can be heard is that of the 17.0 GWa across the 24 hour strip eating away at the power load profile to where a weekday net load number is nearly cut in half as the massive wind output rules the grid. Figure 2 | ERCOT Net Load Profile - Hourly The red line represents the power load hourly profile while the light ... » read more
Tuesday Jan 22, 2019   
If you saw the some of the energy news over the weekend you might be surprised to see the front February futures contract off 21 cents to $3.27 as you walk in the door to your office. After all the forecast added quite a few heating degree days to this week and there was a major pipeline rupture. The combination of the two will significantly tighten the natural gas supply demand balancing. But there is one quality of this market that continues to point towards excess supply. It is the shape of the natural gas curve. Throughout much of December the warm conditions allowed salt storage caverns the opportunity to recover much of their year on year inventory deficit. As the weather flipped from warm back to cold, almost all of the price movement was on the last two months of the winter ... » read more
Monday Jan 21, 2019   
As anticipated, Mother Nature is bringing her A game when it comes to dropping colder weather on most of the Lower 48.  The pattern actually started last week along the West Coast as both the Pacific Northwest and California saw below normal temperatures.  From a precipitation standpoint, the two regions were quite different as the former was relatively dry early on while the latter was overcast and wet.  The Portland type weather in Southern California did not bode well for the solar output on the grid as the peak MW dropped down to the 2 GW level for a couple of days. Figure 1 | CAISO Solar Generation - Hourly Profile On the 16th, the cloud cover saw hints of blue sky as the  peak shifted up to the 4.7 GW level before dropping back down to 2.8 GW.  Once ... » read more
Friday Jan 18, 2019   
Close on the heels of year-end "best of" lists, the news media and trend-followers issue their New Year predictions.  According to the tech and energy pundits I regularly follow, 2019 will be the year of the intelligent virtual assistants both for consumer electronics generally (Brian X Chen, “Devices That Will Invade Your Life in 2019 (and What’s Overhyped)”, NY Times, 1/3/2019) and particularly in the green tech space ("Hyped Stories, Underplayed Trends and Breakthroughs of 2018", The Interchange (podcast) 12/20/2018, at 25:00.)  The message conveyed? “Any energy brand that does not have voice-activated strategy in 2019 will be left behind.” Figure 1 | Alexa......l   The numbers that bolster these claims are, indeed, compelling: approximately ... » read more
Thursday Jan 17, 2019   
The winter started off with a bang as temperatures dropped in November giving a warning shot to the market. The cold weather caused gas markets to rally with storage levels below 5 year minimums. Last week we covered how the increase in gas prices drove gas to coal switching throughout PJM. Temperatures subsequently warmed up throughout December and early January shifting the fuel mix back towards gas. However, there appears to be an abrupt change in the near future with temperatures once again shifting below normal. Taking a look at Figure 1, cool air will drop down from Canada at the end of the week with the Dakotas moving below average. This will continue to push into the country throughout the weekend with the entire Eastern half of the US dropping significantly below normal. The cool ... » read more
Wednesday Jan 16, 2019   
The government shutdown continues as we are in the 4th week where the division of party views seems to be at a stand still while many government workers are still coming to work only to bank their hours in hopes that business gets back to normal and checks get written and the bills need to be paid.  Figure 1 | US Government Shutdown Speaking of bills getting paid, this week started out with Pacific Gas and Electric (PGAE) filing a motion of intent to proceed with bankruptcy.  Such news, moved the value of their stock from the $17 level down to just over $8.00.  As of last night, the news continues to sink in as many are figuring out ripple effect and how each individual company associated to the power and gas utility is exposed.  The stock price for PGAE is currently ... » read more
Tuesday Jan 15, 2019   
It has been a long time since we have had the opportunity to talk about heating load across the Lower 48. The climate has been in an El Nino pattern since the beginning of December which has kept the demand well below normal. But over the weekend the models confirmed a big change in the outlook. Over the next two weeks the total heating degree days will jump from 28 to 36 which will be the highest we have seen this winter. The surprise change in the outlook caught the market off guard yesterday forcing shorts to run for the hills. By the end of the day the market jumped 49 cents to $3.59. The exchange limit up is 50 cents. Figure 1 | Lower 48 Heating Degree Days, Climatology and Forecast From this week until next the daily ResCom demand is expected to jump from 35 to 47 BCF per day. » read more
Monday Jan 14, 2019   
Over the years, the Western Markets have been one of the most volatile across all of North America.  On the power side, we have the largest hydro system in the Lower 48 as well as a state (California) that started pushing their Renewable Portfolio Standard (RPS) a few years back and have recently seen a burst in the solar penetration.  This penetration is not only tied to the utility-scaled projects implemented by developers across the country but also the behind-the-meter integration of solar panels on residential and commercial entities across the state.  Since the sun only shines during specific hours during the day, this leads to a net load profile that has both a morning and evening ramp profile that makes it harder to balance.  Or stated another way, the new ... » read more
Friday Jan 11, 2019   
To be 14 years old again, what a blast!!  As I picked up my son from school, he asked if we could go to Taco Bell and get an 'Arctic Blast' drink as he was thirsty and it sounded good.  I was like, "what the heck is an Arctic Blast?"  He described it to me as a somewhat healthy drink that would quench his thirst after a hard day at school and it only cost $1.00 during 'Happy Hour" times, which we were currently in.  After a couple of iterations of back and forth conversations, he convinced me to take a shot at this so called 'Arctic Blast'.   Figure 1 | Taco Bell Arctic Blast  As we pulled up to the drive-through machine, the menu was plastered with so many combination offerings as well as the Happy Hour promotion of your choice of an 'Arctic Blast' for ... » read more
Thursday Jan 10, 2019   
While I was out on a walk through the park, I noticed smoke billowing out of a chimney in the distance. I couldn’t help but think of how coal generation had ramped earlier this winter and wondered if this was still the case. As I reached my computer the following day, started to look at the coal to gas ratio and noticed that it had plummeted drastically from the end of 2018. Zooming in on the PJM market, I noticed the two fuels had dropped from the nearly equal levels at the end of 2018. Natural gas had returned as the primary fossil fuel in the market. First, I took a look at the levels of thermal generation throughout the region. Demand from the thermal stack appeared to be higher in November and December of 2018. Could it possibly be the next tier of coal was needed to meet the ... » read more
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