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| Thursday Aug 15, 2024 | |
| A little over one week ago, gas prices were finally able to halt a swift and extended period of sharp decline that began during the second week of June. After climbing to a high for the year-to-date of $3.17 back on June 11th, the Henry Hub September 2024 contract for the end of the summer plunged all the way down below $2 by the start of August, bottoming out on the 5th at a price of $1.94. This was the second major slide in summer prices this calendar year, the first coming back in January and February as it became clear the winter was not providing enough cold weather to whittle down the storage surpluses in place across the country heading into 2024. As the winter progressed, the sinking prices sank low enough to signal production facilities to stop or slow ... » read more | |
| Wednesday Aug 14, 2024 | |
| In many of our previous reports, we’ve discussed the different environments for batteries attempting to capture real-time arbitrage and how this timing impacts potential revenue. Batteries don’t like when both their charging and discharging hours have a marginal megawatt in the natural gas stack. Instead, they prefer days when prices are low and sometimes even negative in the midday while evening hours are much higher, increasing batteries’ spread. This past spring was ripe for the midday marginal cost to not only drop below the natural gas marginal megawatt, but slice through $0.00 given renewable curtailments that were needed to balance. Once that occurred, we saw some midday hours within SP15 drop down to -$90 as the price or RECs took it there. In a previous ... » read more | |
| Tuesday Aug 13, 2024 | |
| The summer of 2024 commenced with Alberta's natural gas storage caverns well-stocked, a direct result of a mild winter that saw minimal withdrawals. This surplus provided a strong foundation as the region moved into the warmer months, allowing for consistent and substantial injections of gas. In June 2024, Alberta maintained an injection rate of 1 Bcf/day, aligning with the injection trends observed over the past two years. This steady build-up reflects a proactive approach to bolstering reserves in anticipation of the upcoming winter, ensuring a robust supply cushion. Figure 1 | Alberta Natural Gas Storage Inventory The injection momentum experienced a slowdown in July, influenced by factors such as the widespread wildfires impacting Alberta and British Columbia. These challenges ... » read more | |
| Monday Aug 12, 2024 | |
| The summer months are filled with family vacations, baseball games and in the case of 2024 the Olympic Games in Paris, France. All three of these can make the summer months exciting whereas the power curtailment risk tends to take a back seat to the higher demand tied to warmer temperatures and a renewable wind profile that is more like a “V” shape instead of higher volume in the midday. The shift in the hourly wind profile is something that we discuss each spring as the summer months are right around the corner. Figure 1 | SPP Cumulative Curtailments – Year on Year The graph in Figure 1 displays the cumulative curtailment volume for the SPP market where the blue line represents 2024 while the orange line is associated to 2023 while the red line is ... » read more | |
| Friday Aug 9, 2024 | |
| ERCOT’s summer started out with some warmer temperatures across the entire South Central region while July delivered a hurricane from the south and some stints of modest temperatures that ultimately kept the net load numbers in check. As we moved into August, the wind output faded to start the month but is now trying to start its move back up to a level that is more common for the middle of the third quarter. Figure 1 | ERCOT Key Market Fundamental Components – Hourly The ERCOT grid also has an abundant amount of solar generation hitting the grid these days as the month of July saw new record highs come into play twice and it would have been more if it were not for the cloud cover that came with Storm Beryl. All components mentioned are on display in the figure above ... » read more | |
| Thursday Aug 8, 2024 | |
| With July now on the books the summer is in full swing, and Mother Nature picked and chose where to deliver blistering summer heat versus where to keep temperatures relatively cool, all playing out in the load numbers for the various markets across the country. Some regions such as PJM, already in the conversation for structural demand growth leading up to the summer, were hit hard, where elsewhere numbers fizzled, such as ERCOT in Texas. One area that was hit with some good summer heat was California. July also marked a first for CASIO in 2024, as this was the first month since the start of the year that posted a month-over-month decrease in solar output, as the rapid expansion appears to have settled down within the ISO for now. The figure below plots average ... » read more | |
| Wednesday Aug 7, 2024 | |
| Back in December 2021, we first tackled the question of how much natural gas the CAISO battery fleet was displacing. We wrote a special report titled ‘Batteries Just a Drop in Gas Burn Bucket’ and declared it was safe to hit the snooze button on the issue for a few more years. The capacity of the CAISO fleet was only 2.6 GW and peak discharge from the fleet was less than a gigawatt on the average evening. Our best estimate for gas displaced by batteries then was around 0.01 BCF a day. Flash forward to July 2023, we checked in again in a special report titled ‘CAISO Batteries’ Impact on Power Burns’. By this point, the fleet’s capacity had almost doubled and the peak evening discharge for an average evening had more than tripled. Still, the impact on gas ... » read more | |
| Tuesday Aug 6, 2024 | |
| Last week we published a blog titled “New York’s 70 by 30 Reality” where we discussed the lack of progress towards the state’s clean energy goals. The states on the left coast have similar ambitious clean energy goals. How are they faring compared to New York? California and Washington both have renewable portfolio standards as well as carbon programs that require emission reductions. California requires 60% RPS and 48% emission reduction (relative to 1990) by 2030; 100% clean energy by 2045. Washington State requires 100% greenhouse gas neutral and 45% emission reduction (relative to 1990) by 2030 and 100% RPS and 95% emission reduction by 2050. Oregon requires an 80% reduction in emissions by 2030 and 100% by 2040. The amount ... » read more | |
| Monday Aug 5, 2024 | |
| Monday’s CAISO auction results were a little glimpse from the past as SP15 settled $31.66 over that of NP15 across the heavy load hours while the light load remained somewhat tight settling in at a $1.26 premium. This type of clear was common a few summers ago when the SoCal natural gas space was dealing with restricted storage capacity tied to Aliso Canyon’s rules and regulation all the while the transport capacity tethered to the El Paso Pipeline was lowered due to rehauling specific segments tied to disruptions in prior years. Figure 1 | CAISO Day-Ahead Marginal Congestion Component (MCC) - Hourly Since both issues have been addressed with the CPUC ruling allowing more molecules into Aliso Canyon and El Paso Pipeline’s urgency to build a more robust ... » read more | |
| Friday Aug 2, 2024 | |
| The transition from July to August has come with some heat across the Midwest and Northeast while ERCOT/SPP has seen a drop in their respective wind output. The former is driving up the power demand numbers while the latter is expanding the net load volume by taking away the most volatile renewable resource from the supply stack. Figure 1 | ERCOT Net Load Profile – Hourly The impact to the natural gas grid is simple, the power burn numbers are moving up with the past three days sitting over 50 BCF/d with a high of 53.8 BCF on Thursday. These are the highest numbers of the summer, but it has not been enough to get the natural gas spot prices and/or near-term forward months to move up. In fact, with the EIA Weekly Storage number presenting an injection during the ... » read more | |