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Thursday Dec 27, 2018   
The Winter Reliability Program made its way out the door with winter 2017-2018 being the last season the program would be in place. This was replaced by Pay for Performance which contains significantly different mechanisms to provide grid reliability. With the new regime going into effect June 1st, generators have already begun to reflect a shift in oil reserves. Pay for Performance aims to incentivize generation during energy shortages. The program goes into effect on a system wide basis when the ISO begins to dip into ten minute reserves. As this happens, generators are then judged based on fulfillment of their capacity supply obligation which has already been allocated. Facilities that are short during this period are penalized using a $2000 per MWh payment rate which is then ... » read more
Wednesday Dec 26, 2018   
Last year at this time, I had the pleasure of walking along the boardwalk overlooking the Mediterranean Sea in Blanes, Spain.  The small town is about an hour north of Barcelona by train and like every small town near the water, the destination of the walk was to see the castle that was at the point of the cove overlooking the city and the water.  I remember walking back down the winding streets that took us back to the plaza area and checking my phone to see the what the weather looked like back in the states.  That is when I realized how lucky I was to be halfway across the world enjoying the local food, wind and beer as the temperatures looked pretty darn cold across most of North America. Figure 1 | Blanes, Spain Boardwalk As it turns out, the weather pattern ... » read more
Friday Dec 21, 2018   
As we are all experts at energy market fundamentals and analysis at Energy GPS, we consider it fun, on occasion, to apply our analytical skills to other commodity markets. With the Holiday season upon us, we thought we’d take a peek at a venerable Holiday commodity: the Christmas tree. Figure 1 | Made In Oregon Christmas trees are iconic in the US. Approximately 95 million U.S. households (75% of all U.S. households) display a Christmas tree. What piqued our interest in this market is its bullish prices in recent years. Prices for natural trees increased about 30% from 2015-2017 and appear to be holding steady for 2018 (Figure 2).  (Figure 2 sources include USDA, National Christmas Tree Association, and Square.) Figure 2 | U.S. Sales and Prices of Natural Christmas ... » read more
Thursday Dec 20, 2018   
As I relished the fact that I had finished my Christmas shopping and found just the right gift for everyone, the realization struck me that the year was finally coming to a close and 2019 just around the corner. Just then a howling noise was heard as a gust of wind struck, blowing the receipt I was holding out of my hand.  This led to a chase of a piece of paper down the street, with the help of many around me the receipt was back in good hands while the wind continued to blow. Returning to work the next day, I started to look ahead at what the next year might hold for generation across the ConUS with a focus on the four most prevalent technologies that are being developed; which are Natural Gas Combustion Turbines, Solar, Wind and Combined Cycle units.  Knowing that combined ... » read more
Wednesday Dec 19, 2018   
If the end of November and the first half of December is any indication of what is in store for 2019, we will be in for several ups and downs within the natural gas market as the supply/demand balance tries to find a home for the marginal molecule.  On cold days, the gas molecule is in high demand as rescom is essentially a price taker whereas industrial is a close second given that the majority of the facilities are tied to operations within the energy space or have a high breakeven point.  That leaves power burns as the lone component that will turn off given the appropriate price signal.  What we learned in November is the old price levels are long gone during a winter month when rescom demand is strong and coal retirements/outages are prevalent.  This led to ... » read more
Tuesday Dec 18, 2018   
For the better part of six years the story in natural gas has been the build out in the production space with the advent and implementation of shale technology. In the eternal words of Reggie Jackson it was the "straw that stirred the drink". Over the past month, the natural gas community is not so concerned with how much is being taken out of the ground. The focus has turned to demand at a time when natural gas production has started to drop back from historical highs. Since the middle of October the total Lower 48 volumes have fallen by 2 BCF per day. Even more alarming is the fact that this occurred while the December futures raced up from $3.20 to $4.84. A portion of this issue can be pointed to pipeline and processing issues, but the question remains why we are not overachieving ... » read more
Monday Dec 17, 2018   
If some of you have not heard, I am a die-hard Cheesehead and the Green Bay Packers are the team I root for the most.  Over the years, I have been privileged to witness a two Super Bowl Championships along which goes back to the days when Brett Favre and Reggie White were the leaders of the team to the passing of the torch to Aaron Rodgers.  This is usually a time when the Packer fan starts to look at the standings to see if they will be able to win the division to get a home game and a potential bye in the Wildcard round.  The past two years have been far from bracket gazing as the Packers did not make the playoffs in the 2017-18 season.  This off-season, the expectations ran high during training camp as a healthy Aaron Rodgers was in the cards and our defense ... » read more
Friday Dec 14, 2018   
California has been building new solar facilities at a record pace. In 2017 we saw the first large scale solar curtailment in the CAISO. Developers, project owners, and buyers were all concerned that the “new normal” would include significant curtailment. There was a palpable fear that curtailment would increase materially as California’s renewable penetration rate increased. EnergyGPS published a detailed report in May 2017 analyzing the CAISO solar curtailments. The news was not good. Relative to 2016, curtailment – especially solar curtailment – was up considerably from 2016. April of 2017 experienced almost 85 GWh of combined solar and wind curtailment in the CAISO. March of 2017 was right behind that value with about 80 GWh of curtailment. At least in ... » read more
Thursday Dec 13, 2018   
Since the start of December, the weather pattern has delivered some below normal temperatures across the country.  In the Pacific Northwest, Portland has been no different as last week saw the daytime highs stick around the 40 degree mark while the overnight lows were below the freezing level in many places.  This lent itself to seeing your breathe in the early morning hours as you opened the door to get a gauge of how cold it really was outside.  When I opened the door this week, I braced myself for the impact of the cold /wet gush of air the presented itself last week only to be greeted with a nice warm feel as the overnight temperatures have been in the upper 40's.  As I sipped on my morning coffee,  I took a look at the latest WSI weather patterns which told ... » read more
Wednesday Dec 12, 2018   
We have discussed the wind penetration across the county in many of our daily blogs as well as Newsletter Articles and/or our Platinum Package Monthly Reports.  In the case of ERCOT, they have become the front-runner when it comes to the installed capacity within a given footprint.  This has led to some interesting days as some hours have over 50% of their power load served by wind.  It was not that long ago where the coal and natural gas fired generation was battling it out for supremacy of who will be needed to produce the power to balance the electrical grid in question. Figure 1 | ERCOT Net Load Breakdown - Hourly With the coal retirements in play and the ERCOT wind capacity over 17 GW, the times have changed and it is not more evident than what is happening as we ... » read more
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