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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
Monday May 9, 2022   
The CAISO battery fleet took a bit of a hit a few months ago when the Moss Landing facilities saw fires breakout to which the full operations came to a standstill.  Since that time, a new facility has sync’d to the grid to which provides roughly 184 MW.  The goal for the fire-ridden megawatts is to have them available by the third quarter per Vistra’s quarterly report highlights this past week.  Between now and then, the renewable sector continues to hit roadblocks tied to supply chain shortages of which was mentioned in the CAISO market briefing this past Friday.  At the end of the day, CAISO is starting to lay the foundation for a very stressful summer period if it gets hot within the LA Basin as the lack of new capacity and a hydro situation that is ... » read more
Friday May 6, 2022   
Since they occurred on January 1 of this year, we have released two special reports detailing the effects of ERCOT’s ORDC rule changes. These changes were made as a result of the price action during Winter Storm Uri, and have the broad effect of causing more, lower price spikes than have been previously observed in ERCOT. We have already seen this playing out in 2022, as the ERCOT hub prices have experienced significant price spikes despite higher-than-historical levels of reserves. However, post-Uri is not the only time that ERCOT has made significant changes to the ORDC calculations. The following chart shows the way that several primary inputs[1] to the ORDC calculation have changed over time: Figure 1 | Historical ORDC Rule Changes Working from the bottom up, the first item is ... » read more
Thursday May 5, 2022   
It’s now 3 weeks since the start of the current cold weather marathon rolled into the Pacific Northwest, pushing temperatures to well below normal and pushing demand in the region up to the point where Mid-C began trading over the California hubs, reducing (and even reversing) flows on the interties down to CAISO.  Both the hydro system and the natural gas ecosystem in the Northwest have not been able to keep up with the demand enough to ease the tightness, with multiple gas generators on the Northwest Pipeline going offline during the past week and an extended delay to the usual pattern of spring melt and increased runoff into the rivers that normally see hydro generation ramping up swiftly in the last week of April.  We’ve been discussing the conditions in the ... » read more
Wednesday May 4, 2022   
Over the years, changes in the Mexican gas and power markets have created emergent opportunities for U.S. gas exports.  However, as summer approaches, there are indications that the annual trend of increased exports to Mexico may take a pause this summer.  In a flash last week to subscribers of Energy GPS' Mexico reports, we walked through some of the factors that are lining up to potentially cause exports to Mexico to come in flat to last summer, if not possibly lower.  One is an increase in Mexican domestic gas production, while the other is the economic headwinds that could keep Mexican demand in check. (It is important to note that we are looking at summer-on-summer comparisons.  In a shorter-term window, exports to Mexico rise in the summertime relative to the ... » read more
Tuesday May 3, 2022   
One of the major storylines in the natural gas industry this year has been the ongoing natural gas storage deficit in the United States. Since last November the year on year inventory has maintained a .4 TCF differential. If that gap is not closed it will extrapolate to a 3.1 TCF end of October storage balance prior to the start of next winter. A inventory deficit at that level would be dangerously low given the record levels of consumption in all sectors of the balancing equation. Production has been on the hook for fixing this problem but Lower 48 receipts have lagged expectations as E&P firms have focused on shareholder value instead of growth. But there is one area that looks promising for the rest of summer. Imports from Canada have moved to near all time ... » read more
Monday May 2, 2022   
The weekends in California are full of relaxation on the beach or some sort of outdoor activity this time of the year.   The excitement to the activities is tied to the sun being out to which lends itself to plenty of solar output hitting the CAISO grid from both a behind-the-meter and utility-scaled facility perspective.  Over the years we have discussed the impact of the increased solar capacity driving the need for flex ramping capabilities and new technologies such as utility-scaled batteries strategically placed so that the existing transmission grid can be used.  Figure 1 | CAISO Solar Generation During the Middle of the Day The graph above is an hourly heat rate and generation comparison (x-axis) between April 30th and May 1st where the former is represented by ... » read more
Friday Apr 29, 2022   
The evolution of the ERCOT market post Storm-URI continues to be on the forefront of everyone's mind now that April will soon be in the books and May/June are right around the corner to which the true summer months are going to be upon us rather quickly.  This is the period of time that the Lone Star State moves away from it's little dip in the power demand profile and renewable curtailments and starts to focus on where the marginal megawatt sits as the crossover point moves upward and to the right.  This is where ERCOT's Operating Reserve Demand Curve (ORDC) revamped calculations come into play. Earlier in the week, we published a special report (part of the Platinum Package), titled 'ERCOT's ORDC Calculation', that explains the magnitude of impact that the new ORDC rules might ... » read more
Thursday Apr 28, 2022   
The renewable portfolio throughout Texas continues to grow as both solar and battery technology has joined the ranks of wind within the past couple of years.  The topic is pertinent as the problem starts to become what does the grid do with an influx of solar generation during the midday all while the wind output is hefty and power demand is closer to the daily low point during the shoulder season.  Our recent Newsletter Special Report, titled “ERCOT’s Hybrid Renewable Curtailment Model” walks through the details of how ERCOT’s renewable landscape is evolving as well as how we see thing progressing as we move into the summer. The most recent curtailment data from ERCOT (March 2022) is indicating the problem at hand with a rise in the rate of curtailments ... » read more
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
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