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Thursday Jan 3, 2019   
In contrast to 2017-2018, temperatures remained mild over the winter holiday this year. Additionally, the surge in gas prices earlier has reverted back towards normal driving down fuel costs. These factors kept prices down throughout the Northeast causing efficient generators with cheap fuel costs to remain on the margin. However, the weather cooled back down as the holiday season came to a close. The lower temperatures drove up demand which acted synergistically as offices opened back up for business. Taking a look at figure 1, the cool down appears to be transient with temperatures only sticking below average for the day. This was Mother Nature’s way of giving a splash of cold water in the face in order to wake the market back up after the holiday. Figure 1 | Temperatures in ... » read more
Wednesday Jan 2, 2019   
As I kept an eye on the natural gas forward curve over the holidays, the lyrics from Soul II Soul's 'Back to Life' was stuck in my head.  The opening lines go like this: ' Back to life, back to reality,back to life, back to reality,back to life, back to reality,back to the here and now yeah' Starting in November, the forward natural gas curve caught a bid as colder weather was settling in across North America, the Lower 48 storage deficit was still well below 2017 levels and the power burn component was still riding a 4-5 BCF/d delta consumption rate as the gas to coal switching seemed to be inelastic as outages were still in play and the simple fact that coal retirements/new natural gas builds were still impacting the baseload demand for electricity.  The combination of ... » read more
Monday Dec 31, 2018   
If you look back on the electricity and natural gas market, every year has some sort of story tied to it as Mother Nature has a say in what happens from a demand standpoint when it comes to both heating and cooling demand across all of North America.  Over the past decade, we have seen the migration of production move inland as fracking in the Marcellus and South Central regions moved to the forefront of conversation the past 3-4 years.  On the power side, everyone has endured the Renewable conversations tied to wind and solar.  When this narrative all started, the eyes were on the State of California as their Renewable Portfolio Standard (RPS) took center stage.   Figure 1 | Lower 48 - Renewable Standards by State - February 2017 By February 2017, 29 states ... » read more
Friday Dec 28, 2018   
As the year comes to a close, it’s a good time to take a look at how the renewable fleet has grown over the last several years. There are a lot of sources of renewable data including EIA, industry groups, individual balancing authorities, state sources, and others. There are different sources for utility scale versus behind the meter. It can take quite a bit of work to stitch these various data sources together to get a total view of renewables. Our favorite (although not complete) source of renewable data comes from hourly dispatch data published by each RTO/ISO (hereafter, referred to as RTOs). All of the RTOs publish a set of hourly data for either wind, solar, or both. The hourly data enables a great deal of analysis since the renewable production data can be combined with ... » read more
Thursday Dec 27, 2018   
The Winter Reliability Program made its way out the door with winter 2017-2018 being the last season the program would be in place. This was replaced by Pay for Performance which contains significantly different mechanisms to provide grid reliability. With the new regime going into effect June 1st, generators have already begun to reflect a shift in oil reserves. Pay for Performance aims to incentivize generation during energy shortages. The program goes into effect on a system wide basis when the ISO begins to dip into ten minute reserves. As this happens, generators are then judged based on fulfillment of their capacity supply obligation which has already been allocated. Facilities that are short during this period are penalized using a $2000 per MWh payment rate which is then ... » read more
Wednesday Dec 26, 2018   
Last year at this time, I had the pleasure of walking along the boardwalk overlooking the Mediterranean Sea in Blanes, Spain.  The small town is about an hour north of Barcelona by train and like every small town near the water, the destination of the walk was to see the castle that was at the point of the cove overlooking the city and the water.  I remember walking back down the winding streets that took us back to the plaza area and checking my phone to see the what the weather looked like back in the states.  That is when I realized how lucky I was to be halfway across the world enjoying the local food, wind and beer as the temperatures looked pretty darn cold across most of North America. Figure 1 | Blanes, Spain Boardwalk As it turns out, the weather pattern ... » read more
Friday Dec 21, 2018   
As we are all experts at energy market fundamentals and analysis at Energy GPS, we consider it fun, on occasion, to apply our analytical skills to other commodity markets. With the Holiday season upon us, we thought we’d take a peek at a venerable Holiday commodity: the Christmas tree. Figure 1 | Made In Oregon Christmas trees are iconic in the US. Approximately 95 million U.S. households (75% of all U.S. households) display a Christmas tree. What piqued our interest in this market is its bullish prices in recent years. Prices for natural trees increased about 30% from 2015-2017 and appear to be holding steady for 2018 (Figure 2).  (Figure 2 sources include USDA, National Christmas Tree Association, and Square.) Figure 2 | U.S. Sales and Prices of Natural Christmas ... » read more
Thursday Dec 20, 2018   
As I relished the fact that I had finished my Christmas shopping and found just the right gift for everyone, the realization struck me that the year was finally coming to a close and 2019 just around the corner. Just then a howling noise was heard as a gust of wind struck, blowing the receipt I was holding out of my hand.  This led to a chase of a piece of paper down the street, with the help of many around me the receipt was back in good hands while the wind continued to blow. Returning to work the next day, I started to look ahead at what the next year might hold for generation across the ConUS with a focus on the four most prevalent technologies that are being developed; which are Natural Gas Combustion Turbines, Solar, Wind and Combined Cycle units.  Knowing that combined ... » read more
Wednesday Dec 19, 2018   
If the end of November and the first half of December is any indication of what is in store for 2019, we will be in for several ups and downs within the natural gas market as the supply/demand balance tries to find a home for the marginal molecule.  On cold days, the gas molecule is in high demand as rescom is essentially a price taker whereas industrial is a close second given that the majority of the facilities are tied to operations within the energy space or have a high breakeven point.  That leaves power burns as the lone component that will turn off given the appropriate price signal.  What we learned in November is the old price levels are long gone during a winter month when rescom demand is strong and coal retirements/outages are prevalent.  This led to ... » read more
Tuesday Dec 18, 2018   
For the better part of six years the story in natural gas has been the build out in the production space with the advent and implementation of shale technology. In the eternal words of Reggie Jackson it was the "straw that stirred the drink". Over the past month, the natural gas community is not so concerned with how much is being taken out of the ground. The focus has turned to demand at a time when natural gas production has started to drop back from historical highs. Since the middle of October the total Lower 48 volumes have fallen by 2 BCF per day. Even more alarming is the fact that this occurred while the December futures raced up from $3.20 to $4.84. A portion of this issue can be pointed to pipeline and processing issues, but the question remains why we are not overachieving ... » read more
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