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| Monday May 23, 2022 | |
| Over the past couple of years, the pandemic has changed the how we view the world as the days of talking on an office telephone has been replaced with some sort of headset that connects to one’s home computer and some communication application such as Zoom, Skype or the popular Microsoft Teams. The communication change comes in handy as many still can work from home and it is a nice way to bring the presence of team members to the forefront all the while some dreamy background is on display as we all still figure out a way to fight through the changes that are now present in everyday life. Speaking of changes to the everyday life, many individuals are feeling the brunt of the cost of gasoline as they need to fill up their tanks as they must commute to their jobs a few days a ... » read more | |
| Friday May 20, 2022 | |
| The past month has been a tale of volatility in ERCOT. Since April 20, we have released no fewer than five ERCOT Market Flashes detailing the swings that the market has taken due to a variety of factors—renewables that are growing tremendously year-on-year, the new ORDC rule changes introducing higher pricing at lower net load levels, and extreme tightness stemming from sudden unit outages. To take a look at some of the major events of the last 30 days, we’ll briefly pick out some of the highlights from each of the five ERCOT market flashes we’ve published recently. Wind Giving Way to Solar in ERCOT Curtailments On April 20, we discussed the increasing amounts of renewable curtailments in ERCOT this year compared to prior years. Of course, renewable curtailments ... » read more | |
| Thursday May 19, 2022 | |
| The transition from winter to spring in Texas over the past several weeks has brought the first glimpses of how ERCOT will respond to summerlike heat in its borders. As recently as the afternoon of last Friday, May 13, real-time prices at ERCOT’s Houston Hub climbed over $5,000. One pattern that has become apparent over the past month-and-a-half is that a significant amount of separation has grown in place between ERCOT’s price hubs. While Houston is firmly in place as ERCOT’s highest-priced region, the West Hub price has routinely been the lowest—and by a large amount, with the North and South Hubs sitting in-between. Looking over the past seven days in the figure below, on the days when prices rise in Houston, the West Hub often fails to ... » read more | |
| Wednesday May 18, 2022 | |
| As we turn the corner and work through the back half of May 2022, there are a couple of common themes that seem to be arising across the country. The first is the simple fact that the summer forecasts are calling for above normal temperatures across the Midwest, East and South Central all the while the inner West will be scorching hot while the Pacific Ocean coastal region might be saved for the second straight year. The second is the simple fact that the natural gas environment continues to try and find the price point that will either stimulate the production needed to balance or find a level that might trigger some demand reduction. The former is typically much easier than the latter, but the past few years have taught us nothing is normal anymore. Therefore, we ... » read more | |
| Tuesday May 17, 2022 | |
| There have been several energy related catastrophes over the past decade that have put pressure on the storage balancing in the state of California. The loss of San Onofre Nuclear Generating Station, The Aliso Canyon Storage Cavern rupture and the loss of L3000 and L4000 import pipelines into the SoCal Gas system are the main culprits in the saga. With the renewable push from wind, solar and now batteries and the recovery tied to the transport capacity over the past few years, the SoCal Gas system is as healthy as it has ever been. Unlike most caverns across North America, which are facing a large year on year inventory deficit, SoCal Gas has a large surplus that started with the CPUC granting the right to add an additional 7.2 BCF of storage capacity to the Aliso Canyon facility last ... » read more | |
| Monday May 16, 2022 | |
| This past weekend, I had the pleasure of traveling down to rural Iowa for my father-in-law’s celebration of life ceremony. Many who new good ole Marv Wente, he always had a story to tell either about fishing, the farm or selling sweet corn at the intersection of two state highways for years. My conversations with him were plentiful over the years as he would come out to visit and we would sit on the computer looking up the yield numbers, soil content and other attributes to the seeds he sold to his clients. It was quite the learning experience as the science behind developing crops continued to evolve. Figure 1 | Iowa Corn Growing Since Marv grew up on ‘the farm’ and sold seed corn at the local feed mill for years, he was aware of the ins/outs when it came ... » read more | |
| Friday May 13, 2022 | |
| I love reviewing the Energy GPS monthly renewables report. In one concise report I can check on how well the renewable fleet is doing through US electricity markets. The report has all of the key indicators such as maximum production for wind and solar, average production, curtailment, market pricing, and more. At a quick glance it is easy for me to track trends, see which regions are going with the flow, and which regions are bucking the trend. For example, the wind-weighted price in ERCOT North for April 2022 was $46, compared to $15 in April 2020 and $31 in April 2021. Wind values in ERCOT West were about $30 per MWh for April 2022 which is up about $6 per MWh from last year. Solar value in ERCOT continues to enjoy a premium to wind, coming in at $61 per MWh in April, but that premium ... » read more | |
| Thursday May 12, 2022 | |
| Despite the continued weather pattern in the Pacific Northwest keeping temperatures throughout the region approximately 10 degrees lower than what is normal for this time of year, the start of this week has shown some movement in the conditions for the hydro system that have been relatively stagnant over the past several weeks. The weekend marked the scheduled end date for the Drum Gate maintenance work at Grand Coulee and the first evidence that refill operations have commenced at the project. The reservoir elevation has been increased five feet since last Friday with 30-70 kcfs of inflow reserved for replenishing the pool. Figure 1 | Forebay Elevation at Grand Coulee (Feet) At the same time the last few days have seen some significant increases in flows along the ... » read more | |
| Wednesday May 11, 2022 | |
| It is really hot in Texas with no signs of letting up. The heat is exemplifying several major market themes in ERCOT that we have been discussing in depth with clients in the wake of last winter’s Storm Uri, and more so in the past several months in the run up to the summer market. The heat is making a stark display of ERCOT’s stunning structural load growth, stout renewables generation increases, challenging transmission environment, and precarious reserve margins that have compelled new pricing structures to yield heightened volatility. All of this is on display front-and-center this week and – given weather forecasts – will remain so for (at least) the next couple of weeks ahead. As we have shared in this report and in much greater detail in ... » read more | |
| Tuesday May 10, 2022 | |
| The EIA Weekly Natural Gas Storage Report continues to be the benchmark for monitoring the nations in ground supply. Each Thursday the market hangs its hat on the change driving prices based on the performance or underperformance of the posting versus the consensus estimate. Often the devil is in the details. Current inventory now stands at 1.57 TCF as per the latest report. That is now a 382 BCF to last year which is out from 347 BCF at the beginning of April. The lack of progress has been disappointing and is a big reason why the NYMEX futures climbed from $4.60 in the middle of March to $8.78 last week. But if you dig just under the surface of the inventory report a different story is starting to emerge. Figure 1 | EIA NG Inventory for 2018 - 2022 The Weekly ... » read more | |
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