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Tuesday Apr 14, 2020   
Am I the only one who thinks its bizarre that the United States government is conspiring with Russia, Saudi Arabia, and other members of the OPEC cartel to lift oil prices? Is this not a clear case of market manipulation? Imagine if Exxon, Shell, and BP got together to control prices? Wouldn’t the Department of Justice be all over their case? Wouldn’t Congress open investigations into the matter? Figure 1 Lead Headline of the Wall Stret Journal Online - 4/12/2020 Leaving aside the philosophical/ethical/legal question about whether the US government should take an active role in manipulating oil prices, I’m interested in the underlying question of whether higher oil prices are good for the United States? The first time that high oil prices hit my radar screen was in the ... » read more
Monday Apr 13, 2020   
Back in the middle of March, I struggled with the fact that Easter Sunday was not until April 12th as it seemed so late.  With everything going on these days, the festivities tied to Easter have fallen to the wayside as the stay-in-place orders keep everyone from getting dressed up, going to church, having brunch with friends/family and kids running around the yard looking for Easter eggs.  I thought it would only be fitting for Monday's Newsletter Blog to tie in its own Easter Egg Hunt and see what we found. Figure 1 | Easter Egg Hunt - 2020 The first egg we found was hidden under the clouds of Southern California.  This past week, the southern portion of the state saw overacast skies and several days with precipitation.  This is pretty adnormal for this ... » read more
Friday Apr 10, 2020   
There is no place in the west where resource adequacy concerns are more complicated and more ripe than the Pacific Northwest (PNW). With Oregon and Washington closing coal plants within their borders and limiting the purchase other coal-fired resources, pending shortages are well advertised. To make matters even more challenging, the largest supply source in the PNW is an intermittent resource known as hydro. While there is a material amount of storage on the hydro system, there isn’t sufficient storage to bail the region out of a prolonged dry spell. EnergyGPS wanted to find out more about the underlying conditions during times of scarcity or oversupply. We turned to BPA’s published data on load and generation, which we have back to 2007 and includes wind, hydro, and thermal ... » read more
Thursday Apr 9, 2020   
Yesterday we detailed how the ERCOT market was facing a huge uptick in it's peak net load profile as temperatures were going to be well above normal and the wind generation saw its forecast show a big dip down during the middle of the afternoon hours.  The combination of the two was enough to push the net load up to the 47.6 GW level compared to the 41.8 level the prior day and 31.8 GW on Monday.  The ERCOT day-ahead auction results reacted to the higher peak load by clearing around $300 for an hour or two during the later afternoon hours. Figure 1 | ERCOT Day-Ahead Net Load and North Zone Hourly Breakdown Come real-time, the hourly auction clears for the North Zone matched that of the day-ahead with a slight shift by an hour (later).  Things could have been far worse when ... » read more
Wednesday Apr 8, 2020   
Summer-like weather is in the cards for today throughout the Lone Star State and with that comes higher power demand and lower wind generation.  In our most recent Newsletter Article, titled Another Round, we detailed how each of these components would interact with each other to create a pinch point in the later afternoon block of hours.  Looking at the ERCOT day-ahead auction results, things are playing out as expected as the heavy load period averaged just under $100 across all key regions while the natural gas price for Houston Shipchannel continues to be well below the $2.00 mark.  The combination of the two, put the implied heat rate for each zone up around the 54 point level. Figure 1 | ERCOT Day-Ahead Auction Breakdown Taking a look at the actual scheduled load and ... » read more
Tuesday Apr 7, 2020   
Energy markets have been hit with a double edged sword over the past month and a half. The spread of COVID19 has bled out global demand. At the same time, the untimely falling out of the OPEC production agreement has pushing more supply out to the world. Oil prices have been cut in half. The WTI price per barrel has dropped from $53 to $26 per barrel and unless some supply agreement can develop there is little hope of a recovery in the near future thanks to the ongoing lock down mandates. As a result, the ethanol industry has been hit with the same fate. The United States produces 16 billion gallons of ethanol per year (44 million gallons per day), 20% of which gets exported to overseas markets. That production is used as a fuel additive to in the refining process as a way of ... » read more
Monday Apr 6, 2020   
With all that is going on in the world, we decided to set up a Google Hangouts video conference with our friends in Barcelona, Spain. The good news is they are doing alright during the time of stay-in-place mandates by the country's government officials along with the ruling party of Catalonia.  They live on the top floor of a 25 story building where they have a terrace that is big by European standards and is their sanctuary throughout the day as the means of walking around the city are forbidden unless you are heading to the grocery store or butcher shop to buy food.  They said that the mandate is for families to go to the store once over a period of ten days and when they go there can only be five people inside at one time.  You can now call the local grocery and place ... » read more
Friday Apr 3, 2020   
For those of us fortunate enough to  not be impacted health- or employment-wise by the COVID-19 crisis, it was a week to be very grateful for what we have.  To the people on the front line of this crisis, from heath care workers to the many workers providing essential service, EnergyGPS sends out heartfelt appreciation.  And, as this week ends, EnergyGPS also wants to give a shout out to the employees of the electric power grid--especially those that still report out to the plants, operations centers, and distribution lines—for making the grid hum without notice during this crisis.     With these positive thoughts in mind, we wanted to circle back to a recent energy policy decision that will significantly impact the California power grid in a ... » read more
Thursday Apr 2, 2020   
During any election, the news stations use the words 'swing state' as the ballots are being counted and the individuals running for office are all on pins and needles.  The reference is to any state that can go either way hence the political party member who wins the votes is one step closer to winning the overall election.  When it comes to the electricity sector, the swing states are Oregon, Washington, California, Texas and Oklahoma/Kanasas/Nebraska as they have the biggest influx of renewable resources such as hydro, solar and wind.  Prior to the integration of wind and solar, the Pacific Northwest was probably the most volatile true power supply stack as Mother Nature could deliver enough precipitation to push the hydro generation to heights beyond any power demand ... » read more
Wednesday Apr 1, 2020   
What a start to a new month, ERCOT's wind is expected to average over 16.7 GWa across the 24 hour period on Wednesday, April 1st.  If I would have written this type of information in the newsletter blog, say 10 years ago, you would have most likely attributed it to a funny April Fools joke as gas induced market was very protective of its own turf.  How times have changed as ERCOT continues to be the leader when it comes to installed capacity across all of North America. Figure 1 | ERCOT Daily Supply/Demand Breakout Table - Daily If you have been following the ERCOT market as of late, the grid saw above normal temperatures last week that shifted the overall power demand profile higher while the hourly wind generation profile saw the mid-afternoon period drop down to less ... » read more
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