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Thursday Mar 31, 2016   
Heading into April there are multiple factors that will tighten power markets across the Northeastern United States. In previous newsletters we have discussed two bullish factors that are expected to impact the natural gas markets beginning in April. The first of which is the end of withdrawal requirements at numerous storage facilities across the country.  Once the requirements are lifted storage operators will have increased flexibility to inject gas, bringing more buyers to the market.  The increased demand will tighten the cash to prompt month spread for ... » read more
Wednesday Mar 30, 2016   
Move over Earth, Wind and Fire, there is a new band touring the state of California called Solar, Hydro, Imports and Wind.  The band was formed a couple of years ago and the rendition of 'Shining Star' and 'That's the Way of the World' really took off.  They made a big splash this year by adding the 4th member to the band (Hydro).  So far this year, they have had three number one songs on the Billboard's top 50 songs, they are called the 'The Duck's Belly', 'No need for Natural Gas' and 'Windy Days Ahead'.  If you get a chance you have to go ... » read more
Tuesday Mar 29, 2016   
Back in 2007 when Henry Hub natural gas prices were $7.00 per MMBTU, a decision was made at the Tennessee Valley Authority to go ahead and complete the construction of the Watts Bar 2 nuclear power plant. Construction on the plant was originally started in 1972 and suspended in 1986 when the energy infrastructure in the United States was considered overbuilt. When TVA approved the completion of the 1150 MW plant in 2007 the cost was expected to be 2.5 billion dollars. After the Fukushima disaster in Japan, the NRC mandated that TVA make significant safety enhancements ... » read more
Monday Mar 28, 2016   
Now is a good time to be a retail electricity buyer – especially a long term buyer. Double especially a long term buyer of renewable power. The long term wholesale power curve has dropped with natural gas over the last 24 months. The busbar cost of renewables has also dropped. With the extension of both the wind and solar tax credits the next few years look like an excellent time for retail buyers to layer in some purchases. And that is exactly what we are seeing happening in the markets these days. A simple web search turns up a litany of renewable purchases ... » read more
Thursday Mar 24, 2016   
Coming out of an abnormally cold weekend in the East, load lingered for the first couple days this week with US peak demand topping 370 GWs on Monday.  Figure 1| US Peak Electricity Demand - GWs Despite the strong demand on Monday and Tuesday Power burns across the country fell in comparison to the previous week.  Figure 2| Total US Power Burns - BCF  The five BCF downturn in powerburns between last Thursday and this Wednesday is rather drastic considering peak load was nearly flat between the two days. Digging a little deeper we can see the shifting ... » read more
Wednesday Mar 23, 2016   
While a lot of discussion has taken place about Aliso Canyon. and the lack of storage space for the summer injection season. Eyes have to turn to PG&E storage because they also have a storage capacity issue. When Aliso Canyon storage went down with a well leak issue around the facility, Socal Gas was mandated to withdraw gas from the cavern. That extra gas combined with a moderate winter and an abundance of wind and solar (renewable) energy kept PG&E system inventory high for all of the first quarter of this year. In Figure 1 below, you can see where PG&E ... » read more
Tuesday Mar 22, 2016   
Over the past couple of years, the term 'Duck Curve' has been thrown around the when discussing the solar penetration in the CAISO market.  This is where, the middle of the day solar profile ramps up and knocks out thermal generation and the implied heat rate shifts down.  When this occurs it leaves the morning and evening ramp hours exposed to quick ramping/more expensive units to balance the grid.  As a result, the morning ramp hours are somewhere between the middle of the day belly and the higher priced evening ramp hours. Figure 1 | Example of Duck ... » read more
Monday Mar 21, 2016   
Coming out of the weekend, the CAISO DA clears for today came in quite a bit lower than expectations, especially in SP15 where the heavy load cleared $17.67 or a 7.90 implied heat rate.  NP15 came in $4.03 higher as some nomogram and Paci congestion constrained the flows S to N on Path 15 and N to S on the Paci line.  Looking at the data, a couple of things stood out. First, the overall load was moderate as Southern California is looking at high temperatures in the low/mid 70's. Figure 1 | Burbank Temperatures - Actual and Forecast Second, virtual supply ... » read more
Friday Mar 18, 2016   
Since the beginning of the month the Algonquin cash basis a ticked downward as load came off and temperatures rose in New England. Algonquin Citygates is considered one of, if not the, premium priced hubs for natural gas in the country as the strong demand and relatively low capacity can drive large and volatile price spreads.  Typically we see Algonquin Citygates price above Henry hub, however since March 8th the basis has been negative with Algonquin gas settling near $1. Figure 1 | Algonquin Citygates Cash Prices vs Henry Hub March 2016 - ... » read more
Thursday Mar 17, 2016   
Survive and Advance It’s tournament time people! Time to sit back and enjoy the dance which will unfold in front of our eyes over the next few weeks. As I sit here writing this newsletter I’m watching the ESPN “30 for 30” story about the North Carolina State 1983 championship team coached by Jim Valvano. Sports create wonderful storylines, and this NC State team represents one of the best. NC State had to win nine straight do-or-die games starting with the ACC tournament on their way to the NCAA championship. They beat Virginia with ... » read more
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