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Friday Dec 10, 2021   
By Tim Belden For many years Energy GPS has been supporting corporate buyers of renewable energy to navigate the often tumultuous and sometimes frothy waters of wholesale electricity markets. In the 2015 to 2018 time period, a chunk of this work entailed explaining to corporate off-takers why their VPPA settlements were negative and re-calibrating expectations for the future. Of course, early deals were done back in the days of jacked-up forward curves and buyers who probably didn’t ask the hard questions. In particular, the forward curves underpinning their expectations were often based on much higher natural gas prices (not to mention renewable “capture rates” or “shape values” that were too high). As natural gas prices languished for many years, the ... » read more
Thursday Dec 9, 2021   
SPP seems to be at the forefront of having too much renewable generation or the simple fact that their transmission infrastructure is not up to par given the influx of wind output over the years.  At the end of the day, either component results in the simple fact that renewable wind curtailments exist and in recent months has an upward trajectory that is a bit concerning. Figure 1 | SPP Curtailments – Year on Year Comparison This is evident in the graph above as it represents the manual and re-dispatch curtailments within SPP. Since SPP is tied to mostly wind generation, the graph is represented of the renewable resource as the main component.  The illustration is simple, it is a comparison of the curtailments year on year starting in 2018.  We reset the volume ... » read more
Wednesday Dec 8, 2021   
While most North American gas price hubs are still waiting for weather to drive some pricing action, western markets are getting winter underway.  The Sumas market in the Pacific Northwest, in particular, has been ramping up in recent days and could see some more gains ahead.  The brutal flooding thrashing British Columbia has created yet another restriction of gas flows southward into Sumas at the same time that Sumas demand is rising.  The spot cash prices there have risen by about 20% from the start of the month on the confluence of some seasonal cold plus upstream supply constraints and intra-market power fundamentals. Figure 1 | Sumas spot cash fixed and basis prices, gas winter-to-date. Over the past couple of weeks, seasonal cold has finally moved into the Pacific ... » read more
Tuesday Dec 7, 2021   
The story for the first six weeks of the winter natural gas withdrawal season has been the lack of heating load across the continent. The month of November averaged only 27 BCF per day which was 2 BCF per day below estimates. The first half of December is expected to average only 31 BCF per day which is 5.5 BCF per day below estimates. The concern was not only the lack of actual space heating demand but the impression from the weather models that the pattern would have staying power through the end of the month. Without December ResCom demand the storage complex would have ample supply through the end of winter. Since the last week of October the Q1 has fallen from $6.06 to only $3.60. Figure 1 | Lower 48 Heating Degree Days - Actual, Forecasted and Climatology But over the past two days ... » read more
Monday Dec 6, 2021   
The Pacific Northwest has gone from moderate temperatures last week to that of a nice chill up and down I-5, specifically Seattle and Portland.  The fluctuation in temperatures will continue this week with the next day or two holding just above the freezing level when it comes to the overnight temperatures whereas the latter part of the week is calling for the potential of lower level snow due to some areas down into the upper 20’s with daytime highs in the lower 40’s.  This will be the first real cold temperature pattern of the winter, which has started out with the atmospheric river system wreaking havoc on the area just north of Seattle and in the lower southwest corner of British Columbia. Figure 1 | Flooding – Vancouver, BC area in late November 2021 The ... » read more
Friday Dec 3, 2021   
The duck curve in CAISO is a well-talked-about phenomenon: during the middle of the day, as solar comes online, it makes a dent in the net load (net load is defined as load minus wind and solar), and the size of the dent has grown over time as more solar has been installed. Plotting several years’ worth of net load data on a single chart results in a distinctive duck shape: Figure 1: CAISO average net load by year from 2013-2020. Credit CAISO, via https://thehub.agl.com.au/articles/2020/03/explainer-the-duck-curve. This has always been a phenomenon unique to the CAISO. However, ERCOT has built out solar at a rapid pace over this past year, and the same sort of shape has begun to show up occasionally in ERCOT net loads. Figure 2: ERCOT average wind and solar generation by month ... » read more
Thursday Dec 2, 2021   
Over the past few days, ERCOT has delivered some price spikes come the real-time market’s morning and evening ramp block of hours.  You can clearly see from the graph below that we are not talking near capacity levels by any means but the simple fact that both intraday real-time periods mentioned are outpacing that of the day-ahead is noteworthy. Figure 1 | ERCOT North Real-Time vs. Day-Ahead Price and Power Demand Profiles – Hourly The top pane represents the North zone hourly day-ahead (blue) vs. that of the real-time hourly settles (orange).  You can see that the jump up in price started to show up during the evening ramp on the 28th and escalated on the 29th only to fall back in line with the day-ahead over the past couple of days with both markets giving the ... » read more
Wednesday Dec 1, 2021   
“I can guarantee the lights will stay on…” Texas Governor Greg Abbott made that statement to an Austin radio station last week.  The comment was in response to a report issued by FERC and the North American Electric Reliability Council (NERC) warning that ERCOT is still at risk of substantial blackouts this winter should intense winter conditions return. Figure 1 | Texas Governor Abbott, who recently issued a guarantee there will not be power outages this winter due to cold-weather events as seen last winter and previous winters.  Image via Houston Chronicle. The crux of the FERC/NERC report was that a hefty chunk of last February’s power and gas system outages could have been avoided if generation owners and pipeliners had implemented previous ... » read more
Tuesday Nov 30, 2021   
A month ago we sent a blog about the recent approval of the California Public Utilities Commission to increase the capacity at the beleaguered Aliso Canyon natural gas storage facility just north of Los Angeles from 34 to 41 BCF. This was done in the aftermath of one of a a recent reliability study that concluded that the SoCal Gas system was inadequately supplied through the peak demand days of winter. SoCal Gas could easily run into curtailment problems if a one in fifty year event showed up in Southern California like it did in Texas last February. After three week of injections this month the cavern has finally met the mandated inventory increase just as we turn the calendar page into December. While this is all intended to provide reliable service on the ... » read more
Monday Nov 29, 2021   
The latest models are continuing the warm pattern across most of the West and Rockies with normal conditions throughout the East and Midwest. In the WSI commentary they are cautioning that the persistence of the pattern suggests warmer risks ahead as the Alaskan ridge is likely to shift. Until some polar air can build north of the border the East has nothing to build on for colder conditions. The area with the biggest change since last week is the South Central which has now wavered back to above normal through the middle of December.   Figure 1 | HDD Changes from Wednesday to Sunday Nov 28 Due to the warm conditions and drop off in wind for this week the SPP and ERCOT combined net load is going to post near 45 GWa. That is approximately 8 GWa higher than last week which ... » read more
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