Menu
Featured Articles
| Friday Oct 8, 2021 | |
| We’ve written a lot about wind hedges in ERCOT over the last several years. Together with ReSurety we published the paper the “P99 Hedge That Wasn’t” back in 2017 highlighting the challenges and issues with the fixed quantity wind hedges in Texas. While many people were becoming increasingly concerned with the mismatch between as-generated and fixed-quantity commitments, Winter Storm Uri put a nail in the coffin of that structure. It appears to be largely un-financeable and for good reason. The main challenge with that structure is the wind project is selling something that it doesn’t actually own. Turns out that’s a bit of a problem. In the second quarter of this year we wrote a premium article and an associated blog proposing a new structure for ... » read more | |
| Thursday Oct 7, 2021 | |
| SPP is a market that does not get the love as the likes of PJM, ERCOT and CAISO usually take over the conversations around coal to gas switching, price cap volatility and how a renewable portfolio standard (RPS) impacts the market. We tend to forget that SPP is the leader when it comes to the volume of wind compared to the power demand on the grid. Yes, ERCOT has the most wind capacity within the Lower 48 and California has its solar and battery technology, but SPP is a market that has a lot going on when it comes to volatility with all the wind. For example, over the past few years the wind growth has paved the way for what we deem as renewable curtailments as the grid’s transmission lines are not able to find a home for such megawatts within a given ... » read more | |
| Wednesday Oct 6, 2021 | |
| European and Asian gas prices have been on an absolute, record-breaking tear this summer with a significant acceleration in the past couple of weeks. Throughout the summer and over recent weeks, we have been putting out frequent flashes to subscribers of EGPS' LNG market reports on the variety of factors conspiring to keep pushing European and Asian gas prices higher. Just when it seems prices can't go higher, some new piece of news breaks on a near-weekly basis to keep the momentum alive. Last winter kicked off the action. Temperatures across Europe and Asia where the coldest they've been in decades. Changes in both market's power stacks along with carbon/climate goals contributed to higher gas consumption rates than have ever before been seen. In Europe ... » read more | |
| Tuesday Oct 5, 2021 | |
| With all the news swirling around Southern California regarding increasing the pressure on the L4000 portion of the SoCal Gas system and setting up a date in early November 2021 with the CPUC to determine the level of natural gas that can be injected into Aliso Canyon prior to the heart of winter had the market turning the clock back to what once was prior to the El Paso pipeline rupture in the middle of August 2021. The graph below is a representation of the November-March 2022 future basis strip for delivery into the SoCal Border and Citygate markets. As you can clearly see, the straight drop down took the entire premium that was built into the hubs back out as the sediment in the market is that everyone act in accordance with system reliability. The shift down is the ... » read more | |
| Monday Oct 4, 2021 | |
| Volatility is the word tied to the energy space these days as the European market is fast approaching its winter season with a pretty good deficit when it comes to the amount of natural gas in the ground and an energy sector that has been reeling over the past few months. The North America market fundamentals are closely tied to such volatility as LNG exports are a mainstay in the overall supply/demand picture. Throw in the simple fact that the US production levels have not been responding to the uptick in the overall price movement and we are seeing our own volatility in the Nymex forward curve. Figure 1 | Nymex Prompt Month Daily Settle The graph above illustrates the prompt month Nymex settle on a daily basis over the past two years with the blue line representing the ... » read more | |
| Friday Oct 1, 2021 | |
| Back in June, we wrote about the impact that Winter Storm Uri was having on fixed quantity wind hedges: iced-over projects were on the hook to deliver their contracted quantity despite the weather, and with no way to generate the only option was to buy from the market at the $9,000/MWh prices. This resulted in existing projects scrambling to unwind or restructure their hedges and exposed the risks inherent in the fixed quantity hedge structure. We proposed an alternative hedge structure and quantified the associated risks and values. In short, we proposed a settlement on a monthly quantity (rather than 12x24) where the floating price would be equal to the average of the bottom 80%-90% of prices during the month. A wind project does not own a fixed quantity of generation due to the highly ... » read more | |
| Thursday Sep 30, 2021 | |
| Here at EnergyGPS, we spend a lot of time slicing and dicing the data related to energy prices within the CAISO market as there are a lot of moving parts that driver the daily results. Once of the reasons as of late is due to the influx of renewable battery capacity that has showed up throughout 2021. This is not the first time the renewable sector has been tied to the CAISO pricing impact as the solar penetration is tethered to what is now known as the ‘Duck Curve’. The avenue we use to distribute such insight is via the EnergyGPS West Power Market Fundamentals Offering as well as the growing eCommerce Newsletter Packages (Gold, Platinum and Platinum Renewables). Within each, subscribers have been regularly receiving reports and articles dissecting the ... » read more | |
| Wednesday Sep 29, 2021 | |
| Autumn is a beautiful time of year in Mexico. The season kicked off a couple weeks back with Independence Day. After that, every corner of the country kicks off celebrations to commemorate agricultural harvests. Then, towards the back end of October and start of November, festivities and remembrances for loved ones ramp up around Dia de los Santos and Dia de los Muertos. Amid this all, weather transitions from the heat of summer into a temperate phase while the tropical storm season winds down. Figure 1 | "Ofrendas" are altars setup around the end of October to commemorate and celebrate the lives of loved ones deceased. They're erected and visible in homes, stores, and public spaces. For energy markets, the seasonal change of climate means less power ... » read more | |
| Tuesday Sep 28, 2021 | |
| Yesterday's move up in the winter natural gas futures has taken the strip to new highs at $5.73. Concerns about meeting demand needs for this winter continue to drive the price higher and we have no expectation that the buying will stop any time soon. One of the biggest problems is the ongoing hangover from last winter. When the deep freeze hit Texas back in February it exposed just how fragile the delivery system for natural gas is under adverse weather conditions. For years the demand side of the equation took it for granted that the Lone Star State had the physical capabilities to meet all needs. But with the robust demand growth and recent slide in production volumes in the wake of the COVID pandemic the entire region is struggling to secure gas deliveries for the winter heating ... » read more | |
| Monday Sep 27, 2021 | |
| The Alberta power market saw its price action shift up again last week throughout the midday and into the evening ramp on moderate net load. The chart below illustrates just how much the hourly settle shifted as the peak for the 23rd came in just under $480.00, which helped push the daily average up to $173.00. Figure 1 | Alberta Price and Transmission Summary – Hourly The one thing that is noticeable once again is the lack of transmission response given the higher price action as the BC flows did not move off the floor while MT flows were not much better. Sask flows did respond but it was not enough to make a material difference. This is due to the simple fact that there is a planned maintenance between the 18th and 25th, whcih is right in the wheelhouse of the ... » read more | |
View more [
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37 38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
164
165
166
167
168
169
170
171
172
173
174
175
176
177
178
179
180
181
182
183
184
185
186
187
188
189
190
191
192
193
194
195
196
197
198
]