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Wednesday Apr 27, 2022   
At Energy GPS we spend a good amount of time providing insight and detail around renewables curtailments in markets like ERCOT and CAISO.  In short, these markets have experienced such tremendous growth of wind and solar resources that there are now periods within days where these renewables can overwhelm the grid when there is not enough demand to consume the electrons, forcing the ISOs to increasingly curtail delivery of wind and solar power to the grid.  An aspect of all of this we have been discussing in reports is the impact that ERCOT curtailments can have on prices.  Specifically: the role that the renewables growth and curtailments scenarios have had in creating and exacerbating intra-ERCOT zonal price hub dislocations.  In ERCOT, the name of the game is ... » read more
Tuesday Apr 26, 2022   
The spring is typically outage season. It is a time of low gas and power demand which enables equipment operators the opportunity to take assets out of service to perform routine maintenance. This year has been one of the most robust nuclear refuel seasons on record peaking out at 24 GWa during the first week of April. But now as the hemisphere makes its turn to cooling degree accumulations the outage season is set to end. In the next three weeks 20 GWa of nuclear capacity is scheduled to return back to the grid. Approximately 8 GWa of that total will be in the Midwest and Mid Atlantic. Another 7 GWa will return in the Gulf and Southeast. The return of nuclear generation to the grid will be welcome for the natural gas balancing which will struggle to close the year on year inventory ... » read more
Monday Apr 25, 2022   
Sending a price signal in the marketplace is essential for balancing the energy grid in the real-time marketplace.  The days of shifting in/out of the coal and natural gas stack to solve such a problem seem to be long gone with the introduction of renewable energy over the past 15 years.  CAISO has been the front-runner in the arena of negative settles during certain blocks of hours due to its renewable energy policy that mandates a certain percentage of supply be met with wind, solar and now batteries. Figure 1 | CAISO Curtailment Breakdown - Hourly Most of the negative prices can be seen during the middle of the day as the solar penetration creates a real issue for the grid operators as they cannot find a home for all the energy that is being produced.  The action that ... » read more
Friday Apr 22, 2022   
The Pacific Northwest has been witnessing ‘polar-opposite’ conditions this April (2022) compared to the previous year when drought-like conditions were present all the while the heat dome conditions were forming.  For those of us who reside in the region, the long-lived snowstorm and chilly conditions crossed over with the budding flowers (tulips) in everyone’s yard. When the white stuff finally melted, Mother Nature was not finished as she has been delivering below normal temperatures that have had an impact on the overall hourly power demand profile.  This type of demand coincides with the new hydro fish spill requirements that continue to tighten the system to a point that the regional market participants have to claw back the megawatts that once were being ... » read more
Thursday Apr 21, 2022   
The 2022 water year in California started off looking promising with several storms in November and December delivering healthy precipitation to Northern California, with a late December dumping of snow brought the state’s snow water equivalent (SWE) to well above normal levels, as shown by the blue line in the figure below.  The most important period for California hydro is the period from January to February, as most of the total snowpack is accumulated during those months.  The first three months of the 2022 calendar year were a disappointment as they developed, with the lowest precipitation levels ever recorded for the state.  The amount of snow remained virtually unchanged from the 1st of the year until two thirds of the way through March as the precipitation was ... » read more
Wednesday Apr 20, 2022   
The hits keep coming.  The latest shockwave to global energy markets emanating from Russia’s invasion of Ukraine is hitting the coal market as the European Commission stepped up to ban imports of the Russian-sourced fuel.  Such a decision supports the European coal futures, which translates to an inherent rise in U.S. coal pricing.  As we move forward, the global construct will continue to have an impact on the overall coal-to-gas switching inelasticity that started to appear last summer when it became apparent that coal fundamentals were changing.  Earlier this month, the European Commission agreed to impose a block-wide ban on imports of Russian-sourced coal.  The EU imports roughly 44 million tonnes of coal from Russia, which accounts for nearly 50% of EU ... » read more
Tuesday Apr 19, 2022   
It was only a little over two months ago where the prompt NYMEX settled at $3.94. Many at the time were calling for an end to winter with a smooth transition to the spring injection season. It was only a few days later that the weather forecast turned cooler initiating an unprecedented run on the NYMEX futures. As of last nights close the prompt contract has appreciated nearly $4 to $7.82. But this run up was not just a product of cooler weather forecasts. Natural gas supply/demand balances have been a running problem since last fall when futures were last above $6. During that moment there was no appreciable increase in natural gas production. That sent the signal that if the gas demand continued to increase as anticipated that there would be a large shortfall of natural gas storage ... » read more
Monday Apr 18, 2022   
I usually describe centralized, LMP-based electricity markets in the US as mature and stable from a policy perspective. FERC order 2000, which was released in 1999, encouraged transmission-owning utilities to join RTOs and set minimum standards for those RTOs. Over the ensuing decade or so, we saw a few things happen: (1) centralized markets that had been zonal such as ERCOT and CAISO, shifted to nodal dispatch and pricing, and (2) markets such as SPP and MISO went from real-time balancing markets to full, day-ahead and real-time nodal RTOs. While there are still nuances and differences in the market rules, for the most part the concept of the LMP has been settled policy. This is in sharp contrast to capacity markets or resource adequacy obligations where there are large differences in ... » read more
Thursday Apr 14, 2022   
The weather in the Pacific Northwest has been anything but normal this week with mother nature delivering cold temperatures and buckets of precipitation across the region, including the latest snowfall ever recorded during the spring in our own home city of Portland, Oregon this past Monday, April 11th.  The unseasonal cold has tightened up conditions across the Northwest this week as the demand profile looks more like what we would expect in January or February rather than mid-way through April.  Another change has exacerbated the impact to the grid, namely the implementation of spring fish spill operations in the PNW Hydro system.  Figure 1 | Spring Flowers or Winter Snow in Portland, OR? Each April the eight projects on the Lower Snake and Lower Columbia portions of the ... » read more
Wednesday Apr 13, 2022   
It has been a wild April for ERCOT.  New record highs for hourly wind generation and loads are being set with a near-constant parade of weather patterns featuring the warmest April temperatures in ERCOT history, followed by big swings to cold.  The changing weather patterns have also been influencing the shape of the daily wind profiles.   Typically, when a market increases wind output, that creates the potential for a larger downside delta when the winds stop blowing.  This in turn can often be a trigger of price volatility.  But this April, ERCOT's wind fade outs have come during light load and midday hours.  Per the latter, ERCOT being the beneficiary of robust growth in solar, the price spikes associated with wind dropouts this month are less severe ... » read more
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