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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
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
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