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Thursday Apr 7, 2022   
Over the next week the weather in Texas looks to undergo some swings that will bring about some changes in market outcomes.  We have written in the past about an inflection point in ERCOT for periods when total thermal demand in the region falls below 9-10 GW in a give hour or series of hours.  This is a sort of threshold below which we observe curtailments rise rapidly rather than displacing more thermal generation.  It also coincides with prices at the ERCOT West Hub dropping to $0 or below, a phenomenon that has become more and more pronounced over the past couple years.  Over the next several days ERCOT is seeing colder weather move into the region starting today, dropping average temperatures by about 10 degrees compared to Wednesday and reducing the load in the ... » read more
Wednesday Apr 6, 2022   
AECO has begun posting its first injections of the season.  Even though provincial production is surging to record highs, the province’s structural demand growth trends and strong exports are enough to keep the pace of injection so far well below typical levels for this time of year.  This could end up having serious implications for AECO as the storage inventory headed into refill season is already at record lows. The first net injection showed up on March 31 with 32 MMcf of gas.  Since then, there has been 830 MMcf put back into the ground.  However, that is a fraction of the 1.17 Bcf that had been injected during the same week last year.  Furthermore, in several (though not all) previous years, AECO had been able to start injecting gas earlier in ... » read more
Tuesday Apr 5, 2022   
The winter withdrawal season has passed and now it is time to focus on the seasonal ramp up in cooling degree days into the peak of summer. Natural gas demand is going to shift its dominance in space heating to power burns from electric generation. This is an appropriate time to look at the year on year changes in electric generation demand across the Lower 48. In Figure 1 we have posted the aggregate net load for the Lower 48. That is the actual load throughout the country minus the total solar, wind and nuclear output. It provides an approximation of the thermal commit needed on the grid for meeting the demand. Over the past two months the power burns have maintained year on year gains in demand. Compared to last year the total burns are posting 1-3 BCF per day higher than 2021. But the ... » read more
Monday Apr 4, 2022   
Now that spring break is behind us for most and a late Easter is still a couple of weekends away, the Pacific Northwest power sector has both an early April storm to deal with along with the mandatory fish spill that started on the Lower Snake River basin and will take hold on the Lower Columbia dams on the 10th.  Both provide elements to the grid that creates volatility in the price action as the market fundamentals around both wind and hydro generation are shifting around as we speak. Starting with the early April storm pattern, the first one started to present itself late Sunday and is expected to run through all of Monday and into Tuesday morning.  It will bring massive winds and precipitation in the form of snowfall at the middle and higher elevations and rainfall in/around ... » read more
Friday Apr 1, 2022   
By Tim Belden The work at Energy GPS primarily involves analyzing US and Canadian electricity and natural gas markets and the assets the operate therein. Historically, these markets have been largely de-linked from the rest of the world. You can’t transmit electricity across the ocean. Natural gas can move across the oceans in the form of LNG, but the size of the import/export capacity is small, albeit growing, relative to the size of the North American natural gas market. This stands in sharp contrast to oil which is truly an international market because oil can be easily transported around the globe. Because of these physical features, international events have historically had limited impact on the markets that we live and breathe. Not only have E&G markets been insulated ... » read more
Thursday Mar 31, 2022   
The image in the figure below should be a familiar picture for most in the energy space.  It is a depiction of the so-called “duck curve”—showing how the expansion of solar capacity in CAISO has altered the typical daily profile for net load.  The renewable growth in California caused the electricity demand in the area to be stretched in two directions: first, net load has been pulled down during the midday hours as the plentiful sunshine available most days is enough to satisfy most—if not all--of the load present in the system, thus stretching the “belly” of the duck downwards towards zero.  This has played out in a big way as midday oversupply is a way of life in the Golden State with daily curtailments of solar generation growing ... » read more
Wednesday Mar 30, 2022   
This March wraps up with power loads in ERCOT posting their highest daily flat averages in history, yet, this was not because temperatures were remarkable.  Instead, this March continued to display the voracity of structural load growth in ERCOT.  As April rolls in, it is instructive to look at how ERCOT's structural loads have shifted as a harbinger for how April load may behave. Figure 1 | ERCOT's daily flat average power loads this March were greater than any March in history. It is not simple enough to attribute this March's strong power loads to weather.  Throughout the ERCOT market, the average temperatures this past March were pretty much right in line with historic averages. Figure 2 | March daily average temperatures in major ERCOT cities by year. This ... » read more
Tuesday Mar 29, 2022   
The end of winter is upon us as the calendar turns to April on Friday. Not only is this the start of a new quarter on the calendar but the start of the natural gas injection season. The refill season has been contractually defined by the storage operators for decades as the seven-month period between April and the end of October where caverns shift operations from withdrawals to injections allowing inventory to build prior to the following winter. It is a crucial time for the rebuilding of stocks during the ‘low demand’ period of the year for the purpose of meeting reliability concerns. In the old days, the equation was as simple as supply was outpacing demand as the proliferation of new shale production was front and center, especially in the Northeast ... » read more
Monday Mar 28, 2022   
During spring break, the goal for individuals and/or families living in the northern portion of the country to find their way to a sunnier area such as San Diego, Mexico, Desert Southwest or take their flights to the Hawaiian Islands where the tropical weather and sunsets are to die for this time of year.   If you live in the warmer weather climate, the target looks more like the slopes of Colorado or Utah as the snowcap mountains are in the line of site.  Figure 1 | Spring Break Destinations If you live in Portland/Seattle and traveled to a destination mentioned above, your weekend return was met with overcast but warm weather both Saturday and Sunday with very little precipitation.  Down in Southern California, the weekend was more like Pacific Northwest weather as ... » read more
Friday Mar 25, 2022   
A couple of days ago, we published an article about the sustained high price spike that occurred rather unexpectedly in the CAISO. It was unexpected due to the fact that the current weather is temperate, demand is low, and conditions on the grid in general aren’t conducive to the kind of scarcity that we might expect to see in, say, August. But a number of factors aligned, including forecast error, generator outages, and a transmission constraint on the Paci line. Since the transmission constraints are likely to show up again in the near future, let’s take a look at what’s going on. First, some background information. The Pacific AC Intertie (Paci) connects the CAISO and the Pacific Northwest. The following chart shows some typical “days in the life” of the ... » read more
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