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Monday Apr 2, 2018   
Last Monday, as seen here, we spoke to the growing electricity needs of cryptocurrency miners.  They have flocked to the Pacific Northwest, seeking electricity rates in the $.2-.4/KWh range ($20-40/MWh), with a focus on the public utility districts (PUD) in the region whose primary source of electrons is hydro generation.  While the early to the game miners have been able to connect their server farms to a whole host of different PUD's, most of the utility districts have put a halt on supplying additional cryptocurrency load out of fear that incremental interconnections may require expensive transmission system upgrades to their grid, for which there is no guarantee that the miners will stick around long enough pay (substantial uncertainty on the duration of the ... » read more
Friday Mar 30, 2018   
March is almost in the books and April is right around the corner and with the new month the west will be experiencing some changes in the energy space.  The first big change is the CAISO Energy Imbalance Market (EIM) is going to get two new participants; they are PowerEx and Idaho Power.  Over the past couple of months, both parties have been testing their systems to get ready for the April 1st start date.  The key element to any participant joining is how much transmission capacity are they going to be bringing to the table.  This is important to the CAISO operators as it will allow more excess renewable generation to leave their footprint and find a home elsewhere.  As it stands right now, the known capacity for PowerEx is anywhere from 150-250 MW on ... » read more
Thursday Mar 29, 2018   
The push for lower carbon emissions across the world led Alberta, Canada to increase its carbon tax by 50% this year, which now sits at $30 per metric ton. The province currently produces 40% of emissions in the entire country of Canada, caused in part by the oil and gas industry. Over time the power sector will go through significant changes that reduce their contribution to this figure. Carbon emissions will undoubtedly decrease, but the changes will also ripple throughout the AESO market. The public simply does not want coal, and a $30/MT tax ensures that the AESO moves on from said fuel supply. All coal units will be decommissioned by 2030 to match the carbon standards put in place. While that is still a long ways away, things don’t look too bright for coal, especially when ... » read more
Wednesday Mar 28, 2018   
The spring season can be a tricky time for power markets as systems attempt to balance the natural decline in load and the uptick in maintenance.  Every spring means something difference to each region as no two Q2s are ever the alike.  In the west traders are actively monitoring the hydro system as the timing and magnitude of the snow melt can swing a massive amount of MWs between months.  Moving east slightly, ERCOT and MISO are monitoring their wind as strong winds heading into April can lead to reliability issues as falling load are unable to use all the electrons, while the grid needs to keep dispatchable resources online for contingency and regulating reserves.  This is of course all subject to the weather which can also shift wildly ... » read more
Tuesday Mar 27, 2018   
Major League Baseball is set to start up for the 2018 season on Thursday of this week. Baseball for many fans marks the start of spring but this year many parts of the country including the Midwest will have to deal with winter conditions in order to cheer on their teams. The Detroit Tigers, Cincinnati Reds, and Pittsburgh Pirates all  start home stands in conditions that will look more like February. While this is not good for baseball fans and attendance numbers it is very good for regional utilities. Space heating is expected to continue well above last years levels which will be additive to earnings.  Figure 1 | Detroit Temperature Highs, Lows and Averages for February and March 2018 Dominion is the largest gas utility in the Marcellus region. Figure 2 shows how the ... » read more
Monday Mar 26, 2018   
Every time I open an industry publication it feels like I am reading something about cryptocurrency miners seeking electricity supply sources in the Pacific Northwest.  Public Utility Districts (PUD) in Northern Wasco, Chelan, Grand, and Douglas counties, as well as many others have been inundated with requests for service in their respective regions.  The reason for the the increased requests as you know is the combination of skyrocketing cryptocurrency prices and the PUD's $.02-.04/KWh electricity rates (the nationwide average is more than $.10/KWh) combine to create quite an attractive spread for potential miners.  Many of the PUD's have started to put the kibosh on the run on their electrons, with a concern that they are selling their surplus to customers (miners) that ... » read more
Friday Mar 23, 2018   
I really like the SPP market. In terms of centralized markets, it’s still the new kid on the block. It began operating a real-time imbalance market in 2007. It didn’t implement an integrated day-ahead, real-time, and ancillary service market until 2014. The market is comprised almost entirely of vertically integrated utilities. There is little merchant generation in the market. There is little direct access or retail competition. The market footprint is comprised entirely of “red” states.  You wouldn’t consider this region a bastion of progressive thinking. The individual states have no or relatively low renewable portfolio standards. Despite that, between 2014 and 2017 installed wind capacity has more than doubled from about 8,000 MW to more than ... » read more
Thursday Mar 22, 2018   
In a previous newsletter, we took a look at how the wind penetration within SPP was impacting the overall generation stack as well as curtailments on the grid.  In today's newsletter we dive into the neighboring Independent System Operator (ISO), known as MISO, to see how the wind penetration is impacting its respective supply stack. In order to fully understand what is happening on the grid when wind generation ramps up, it is important to know the location and composition of the supply stack in each ISO.  For example, MISO has the majority of its wind output in the northern region, which is dependent more on coal for baseload power. In SPP, the southern portion of the footprint has the majority of wind (Oklahoma and parts of Texas). The good news is that is right in the center ... » read more
Wednesday Mar 21, 2018   
The northeast celebrated its first day of spring (3/20) prepping for yet another winter storm as a low pressure system barrels up the coast bringing snow and high wind.  This will be the 4th "Nor'easter" to hit the region in about three weeks as March has turned out to be a brutal end to an otherwise mild winter.   Figure 1 | Satellite Image of the First Three March Nor'easters  The storm system is expected to form over the Outer Banks by Wednesday morning and begin tracking towards the Northeast.  The system will hit DC first and move its way up to Philadelphia by Wednesday afternoon.  The storm is expected to drop a foot of snow over Philadelphia which would the the largest Spring snowfall the city has seen in over 100 years. The snow ... » read more
Tuesday Mar 20, 2018   
Over the past ten years we have seen a litany of pipeline projects in the Northeast designed to reverse the flow of natural gas that typically flowed from the Gulf. Transco, Texas Eastern, Tennessee Gas Pipeline, Columbia and Texas Gas Pipeline have all reversed course with the growth of Marcellus and Utica production. Earlier this month, that flow had jumped all the way out to 7.4 BCF per day that is moving from the production basins down to the Gulf. But since that point, the volume has continually slid lower as a number of factors have weighed on the transport economics.  After seeing a mild month of January, the Northeast and Midwest have flipped around to the cold side providing well above normal space heating in the Northeast. Dominion LDC load is averaging .3 BCF above the ... » read more
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