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| Friday Sep 14, 2018 | |
| The most interesting part of economics for me is shining light on subtle and sometimes unintended-second order effects of a change in policy or incentive structure. The Tax Cuts and Jobs Act of 2017 dramatically lowered corporate tax rates with the highest rates dropping from 35% to 21%. A second order impact of the lower tax rates has been an increase in the price that tax-equity-financed wind projects which receive production tax credits are willing to sell their output into the short term markets. This newsletter tracks the impacts that changing tax rates have on wind generation offer prices in the ERCOT market. Before we get to the current unintended consequence, let’s trace this story back a few iterations to the first unintended consequence. The story goes like this. » read more | |
| Thursday Sep 13, 2018 | |
| Summer is finally making its way out the door with temperatures dropping below the 90 degree mark in many parts of the country. While parts of the Midwest and Northeast continue to have above average temperatures, normals are moving into a more comfortable range. As load declines, maintenance outages in PJM have ramped up. Looking at Figure 1, we can see that outages nearly doubled across the PJM footprint as soon as the heatwave from last week moved out of the region. Figure 1 | PJM Generation Total Outages Looking further out, planned outages remain in line with previous years. Average temperatures will continue to cool as we reach the shoulder season which should put very few degree days on the board during October. As a result, the over all power load profile should shift ... » read more | |
| Wednesday Sep 12, 2018 | |
| A couple of years ago, my wife got tickets for the James Taylor/Carol King concert in the Moda Center, here in Portland. I was not sure what to expect as it was not Country music and the start time was after my bedtime since I get up at 3:15 am to start my writing for the day. As we parked the car and started walking to the venue, it was apparent this was going to be a show with a bunch of loyal fans as many has t-shirts with either one or the other performers on the back as if they have been following them on the most recent tour. I turned to my wife and said, will I even know any of the songs that the duo will be singing. She looked at me and said, you will know 'Sweet Baby Jane', 'Country Roads', 'You've Got a Friend' and 'Carolina In My ... » read more | |
| Tuesday Sep 11, 2018 | |
| Hurricane Florence is now a category 4 storm (potentially category 5) with sustained winds over 140 miles per hour. The National Hurricane Center has the path of the storm westbound with a likely landing point right into the Carolina shore. If this lands at a category 4/5 hurricane, it will be the most damaging storm to ever make landfall on the Carolina coast. Damage to homes and businesses will be catastrophic and it will take a long time to recover. This should cause destruction to the energy infrastructure up and down the Southeast Coast. But based on the current estimates from the NHC, the impacts will continue be felt much farther inland. It is likely that the resting place of the remnants will move right over West Virginia which is the heart of the Marcellus natural gas production ... » read more | |
| Monday Sep 10, 2018 | |
| With the evolution of cable television , there is a specific station that covers the weather across the world which include hurricanes, earthquakes, tornados and winter storms that move across North America. This station is know as the Weather Channel. Figure 1 | The Weather Channels I get excited this time of year as my version of the Weather Channel is up and running, it is known as the NFL Ticket package as part of my Direct TV service. Yes, the number one reason to get the 'Ticket' is tied to my obsession to watch/record all the Green Bay Packer games throughout the season. Over the years, I have found myself flipping through all the games to get a lay of the land when it comes to the weather across the Lower 48. I find it very ... » read more | |
| Friday Sep 7, 2018 | |
| In February 2018 NRG announced the sale of NRG’s yieldco and renewable business to Global Infrastructure Partners (GIP). According to stories published in February, the deal would include: (1) NRG Energy’s controlling stake and 46% economic interest in NRG Yield with an operational portfolio of more than 5.1 GW, (2) NRG’s O&M business which serves 2.4 GW of renewable projects, and (3) project pipeline capacity (and associated development team) of more than 6.4 GW. The deal closed at the end of August with the new entity called Clearway Energy (side note, I’m not a fan of this name, but I do like the Wayne’s World variations such as Way Clear! or Clear … Wayyyyy!!!!) The purchase price was reported as $1.375 billion in cash. The vast majority of the ... » read more | |
| Thursday Sep 6, 2018 | |
| While the holiday weekend came as a welcome reprieve here in Portland with comfortable temperatures sticking around the low 70s, the same cannot be said for the Midwest, Ohio Valley and Eastern part of the country. Shifting our gaze to the Northeast, the region was already being enveloped by yet another heat wave as daytime highs made their way into the 90's. ISONE was hit the hardest as complications in the generation stack forced the RTO to declare an Energy Emergency Alert with a Power Watch later being implemented. Taking a closer look, we can see what drove these actions by the grid operator and the steps it took for grid reliability. The heat wave arrived full force in Boston on Labor Day driving temperatures up to 94 degrees. This caused load throughout the grid to look more like a ... » read more | |
| Wednesday Sep 5, 2018 | |
| Tropical Storm Gordon is the first to hit landfall this year. The storm landed on the Mississippi coast last night at 65-70 mph and moved steadily to the Northwest. The market has not been too concerned about disruptions to Gulf supply. That is because the production in the region has dropped by more than half in the past five years to just 2.5 BCF of offshore volume. Most of that production resides west of the current storm path. By the time the storm makes it northward to the Haynesville shale feature the winds look to die down to 30-40 mph. As a precautionary measure, platforms started to get evacuated ahead of the Labor Day weekend. Transco, Destin and Sonat Piplines have seen a .32 BCF cut in onshore flows since late last week. Figure 1 | Gulf Production from ... » read more | |
| Tuesday Sep 4, 2018 | |
| The 'Dog Days of Summer' are behind us as August rolled off and September is off to a 'Laborious' start. Out West there is a storm brewing that we discussed on our latest EnergyGPS Gold Package Newsletter Article titled, 'Now There are Two'. The storm is tied to the current SoCal and PGAE storage levels and what could be in storage over the next two months and as we head into winter. Ever since the Aliso Canyon leak and the reduced transport capacity into the SoCal Gas's system, SoCal Citygate has become the most volatile trading hub in the cash market. If you recall, it was back in July (24th) when we saw the cash hub price trade just under $40.00 coming out of a weekend full of Low OFO critical notice postings. This was the heart of summer with ... » read more | |
| Friday Aug 31, 2018 | |
| Last week Lawrence Berkeley National Labs published its 2017 Wind Technologies Market Report. I look forward to reading this publication each year. It is chock full of interesting graphs and data covering everything from turbine costs, geographic distribution of turbine manufacturing, length of turbine blades, capacity factors, installation trends, and market pricing. Based almost entirely on publicly available data, it is an impressive and comprehensive tome. There were two images in the report that particularly caught my attention. The first showed what wind actual wind production was worth in each market in 2017. Figure 1 below shows these results. Figure 1 | 2017 Wholesale Revenue for Wind in Different Markets LBNL Note: Price comparisons shown are far from perfect – see full ... » read more | |