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Wednesday Apr 28, 2021   
The prospects for U.S. LNG exports to global markets is showing no signs of letting up.  European inventories continue to draw down later in the season than typical, pulling already record-low inventories down further.  Asian demand has been on a tear as Pacific Rim economies emerge from COVID and several nations struggle with non-gas-fired generation issues.  When you throw in the fact that other global LNG suppliers that the U.S. normally competes with are facing challenges, the US market is showing no signs of slowing. European gas storage inventories – having already dropped to multi-year lows back in late February - continued drawing down until just a few days ago.  As can be seen in the chart below, it is not typical to see withdraws this late in the ... » read more
Tuesday Apr 27, 2021   
In October of 2015 SoCal Gas suffered one of the worst catastrophe's in natural gas history when their largest storage cavern, Aliso Canyon, ruptured. It took four months to fix the leak allowing 4 BCF of natural gas to be vented to the surrounding community. Since then all the natural gas storage caverns in the state have been subject to rigorous testing and enhancements to ensure safety for the citizens in the region. Despite the cavern getting a clean bill of health, the California Public Utilities Commission has limited the use of the cavern to only reliability events and knocked down the total working capacity of the facility. This was done in order to minimize the use of the cavern despite its role in providing reliable supply to the customers in Southern California. On May 9 SoCal ... » read more
Monday Apr 26, 2021   
From the beginning of October through the 4th of July, the Pacific Northwest hydro season takes on its full cycle of excitement as Mother Nature delivers something different each year.  The fall is typically filled with conversation of if the season is going to be a La Nina or El Nino type of year.  This is similar to the likes of Groundhog day where the loving creature comes out to see if its shadow can be seen and if so, the winter is expected to be extended for another six or so weeks.   If there was no shadow in play, the winter is expected to come to an end earlier than normal, in the case of the ceremony of 2021, Punxsutawney Phil saw its shadow which has led to the 'colder' weather pattern seen in the Midwest, Ohio Valley and Northeast throughout April ... » read more
Friday Apr 23, 2021   
Prior to 2021, prices in ERCOT had hit the $9000/MWh mark during only a handful of intervals, all within August 2019. It was the talk of the office while it was going on, and it still affects how we look at that summer and scarcity events that might happen in the future. It seemed hugely eventful until February 2021 blew it out of the water—followed by another price cap event not even two months later. We have written about the February and April events extensively in previous articles/special reports as part of Newsletter Packages.  We have also written about the new, lower price cap as it pertains to the upcoming summer now that all the $9,000 chips have been placed into the center of the table.  Here is a quick summary: ERCOT implements an adder to prices (the ORDC ... » read more
Thursday Apr 22, 2021   
What a difference a year makes as it seems like so long ago when the entire world was being shut down as the pandemic concerns raged like a wildfire that was out of control.  It was a time that saw school close, businesses shutdown and employees transition quickly from their normal morning commute listening to their favorite soundtrack or local radio station to that of cleaning out a coat closet or basement storage area to have what has now become the permanent home office.  The times were somewhat scary as well as the unknown of what lied ahead was present throughout.  As we continue to work towards a recovery, the other thing that is not lost on us who live in the Pacific Northwest is just how cold and wet it was last year during the start of the pandemic.  I recall ... » read more
Wednesday Apr 21, 2021   
Last week, specifically April 13th, ERCOT conditions caught the market off-guard as the real-time prices skyrocketed to the new regulated cap of $2,000/MWh.  The event was a function of the trifecta components known as outages, under-scheduling of load and over-forecasting of renewables in the form of wind generation.  The outage numbers were strong as the fallout from the February winter storm still has unit's offline along with planned maintenance to the likes of the South Point nuclear facility.  Under-scheduling of load always makes the grid shorter than expectation and with a warmer weather forecast; the grid was on a heightened alert scenario where ERCOT was calling for the evening peak power load to be quite strong. Mother Nature decided to sprinkle a little more ... » read more
Tuesday Apr 20, 2021   
This week has a lot in common with the events of this past February. During that fateful cold snap Texas experienced one of the biggest grid outages on record as temperatures dove well below the freezing mark. While the cold had a big impact on the heating load one of the other qualities was the amplification of the jet stream. By flipping from an east to west flow across the continent to a highly amplified state, it caused the wind direction through much of the installed wind farms to become less effective. Combined ERCOT and SPP wind output fell from 25 to 10 GWa for the second week of that month. That drop off in renewables put more pressure on the grid thermal commit to balance the record electric demand.   Figure 1 | WSI Forecast Map for April 20 This week is seeing the ... » read more
Monday Apr 19, 2021   
A drought is caused by drier than normal conditions that eventually lead to water supply problems.  In the West, there are three regions that get our attention each year with the Pacific Northwest being the major system that everyone has eyes on as early as November and December of the previous year as Mother Nature can deliver snowpack accumulation or set the tone for what would be consider a low water year if temperatures are above normal and the only precipitation is rainfall.  California is the second region that gets the attention of market participants as it only takes three big storms to change the course of a water year.  Just like the Pacific Northwest, the flipside of a trifecta winner is when Mother Nature only delivers a single storm and if the pattern persists ... » read more
Friday Apr 16, 2021   
The good researchers at Lawrence Berkeley National Labs (LBNL) have put out an excellent piece of research quantifying the reduction in power sector CO2 emissions from 2005 through 2020: “Halfway to Zero: Progress towards a Carbon-Free Power Sector” with Ryan Wiser listed as the lead author is worth a read. All of the figures used in this blog come from the LBNL report. https://eta-publications.lbl.gov/sites/default/files/halfway_to_zero_report.pdf In typical LBNL form, this work is rigorous and detailed. Here’s the punchline, the US Energy Information Administration’s 2005 Annual Energy Outlook projected 2020 CO2 emissions from power supply of 3,008 MMT. Direct power sector CO2 emissions were 1,450 MMT. This is 52% lower than projected level and 40% lower than ... » read more
Thursday Apr 15, 2021   
Daytime temperatures in ERCOT shifted up this week, and ultimately drove the power demand to new heights for this time of year.  If there is one thing that continues to stand out from the February cold snap, it is the fact that residents of Texas consume a considerable amount of electricity and that seems to be the trend compared to the forecast the past few days. On Tuesday the 13th, real time loads came in much higher than expected were compounded by wind coming in well below schedule and low solar output. ERCOT briefly called for energy conservation from the public on the 13th and issued watches related to its Physical Responsive Capability, but avoided declaring an emergency or shedding load. Still, this week’s warm weather has caused significant real time pricing activity ... » read more
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