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Wednesday Mar 3, 2021   
authored by Rick Margolin Despite years of resistance I have recently caved in to the advice of my wife and friends whose advice I trust.  I started wearing slimmer fitting jeans.  It is not my native habitat.  I resisted out of concern that such garments would really limit my movement and freedom.  But I was wrong (thanks in large part to the interlacing of spandex into the denim fibres).  I have been able to reclaim a few style points and am no longer worried that the tightness will dangerously impede my movement. These are the thoughts that came to mind this week when checking in on the LNG market.  Spreads to ship U.S. LNG to European and Asian markets this summer have been tightening like a pair of skinny jeans in recent weeks, but are far from risking ... » read more
Tuesday Mar 2, 2021   
Now that the Lower 48 is on the downside of the seasonal heating degree day curve it is time to do maintenance on the energy infrastructure. Pipelines, storage facilities, transmission and generation will all start outages in order to keep the equipment in order for the summer cooling season. In the past week nuclear outages across the Lower 48 have climbed from 5 to 10 GWa in what is expected to be a robust and prolonged refuel period. Last year due to COVID lockdowns, many elective maintenance issues were stalled in an effort to preserve public health. In the coming weeks look for total NRC outages to climb to 20 GWa.   Figure 1 | NRC Outages for 2016 - 2021 The Southeast and West are typically the regions that ramp up outages first during a maintenance season as mild ... » read more
Monday Mar 1, 2021   
It has been over a week since Mother Nature put an end to the extreme cold weather pattern that swept deep into Lone Star State.  The fallout is quite extreme as many load serving entities are now seeing the their meter readings, key members of each company is sitting in front of the hearing committee members and telling their stories to which the narrative is consistent across the board on the electical front and ERCOT Board Members are resigning from their post.  These three do not stop ERCOT from doing their daily duties of balancing the grid from a day-ahead scheduling and real-time settlement standpoint.  Figure 1 | ERCOT Real-Time Breakout - Hourly The chart above details the ERCOT real-time key components and what the grid has been dealing with over the past ... » read more
Friday Feb 26, 2021   
Lawrence Berkeley National Laboratory (LBL) recently published a report examining the effects of solar deployment in the U.S. With results for not only the seven ISOs, but also for ten non-ISO utilities in the west and southeast, "Solar-to-Grid: Trends in System Impacts, Reliability, and Market Value in the United States" is a comprehensive examination of solar energy and resulting market outcomes. The analysis of the southeastern utilities is particularly interesting as data from that region tends to be sparse. It’s unfortunate that no analysis of the northwest was included, as the report lacks only that to cover the entirety of the continental states. However, this is overall a good, comprehensive report that provides a lot of detail without getting bogged down in the weeds. While ... » read more
Thursday Feb 25, 2021   
It has been less than a week since Mother Nature was putting her final stamp on the South Central weather pattern that turned the regional natural gas and electricity markets upside down.  The indicators of such an event were in the 15-day forecast as we started the month but nobody was equating it to one of the coldest events to every hit the region.  As we got closer to the long President's Day weekend (13th-15th), the electricity market was putting a premium on that Monday/Tuesday time period as nobody wanted to be caught short per se.  The natural gas market caught wind of such prices in the middle of February along with West Texas oil producers starting to show some concern for their respective wells as the colder weather was low enough to cause what is known as ... » read more
Wednesday Feb 24, 2021   
Lost amid the cataclysmic shock inflicted on the Texas and South Central energy markets last week were the record-setting bouts of volatility that have hit Canadian power and gas markets this month.   Thankfully, what happened in Canada did not result in power outages with lethal consequences, but - within the context of the energy world - the Canadian events were noteworthy.  They provided graphic demonstrations of the structural shifts the markets have been undergoing and the exaggerative effect cold weather can have.  Because weather forecasts gave solid indication cold was approaching, we were able to get ahead of these events and put forecasts out indicating records were about to be broken. At Energy GPS we provide dashboards that give real-time snapshots of B.C. » read more
Tuesday Feb 23, 2021   
Last week provided the biggest price shock in the history of the natural gas market as daily indices in Oklahoma and Texas ran up from $2.75 to $500 in a moments notice. Coming out of the long weekend and the South Central fully entrenched in a polar vortex situation, the cash price jumped up to a staggering $1,000 at OGT while the Texas trading points were starving for molecules as reserve capacity dropped to zero across the majority of intrastate pipelines. The factors that led to the dire situation were your typical freeze-offs at the wellheads as well as the actual pipeline pressure to the gas-fired power plant at dangerously low levels when heating demand tied to electricity pushed the numbers well above anything we see during the hottest of summer days. Usually constraints ... » read more
Monday Feb 22, 2021   
How Much is Enough Reliability? By Tim Belden How much reliability should consumers be required to buy? The question is rarely presented in that way, but that’s the central issue surrounding ERCOT’s unique market structure and the horrific blackouts from last week. For a moment, let’s turn the clock back a few decades to frame up the issue. Electricity deregulation (re-regulation, really) was part of a trend that included the airlines (Airline Deregulation Act of 1978), oil and gasoline (1981), telephone service (AT&T breakup mandated in 1982), the Natural Gas Wellhead Decontrol Act of 1989, and the FERC Order 636 which unbundled pipeline service in 1992. Competition in electricity generation first started with PURPA in 1978. This enabled “Qualifying ... » read more
Friday Feb 19, 2021   
By Tim Belden The electricity industry will forever remember this past week. Risk wonks will be analyzing the ERCOT price action and debating how to incorporate this risk into modeling. The governor and other elected officials will demand explanations and push for change. Policy wonks have always loved to debate the merits of ERCOT’s unique market structure, and the debate will continue with even more vigor moving forward. I’ve always had respect for ERCOT’s market structure. It is a cohesive set of policies which are designed to provide generators with strong, appropriate, hourly price signals while honoring the state’s objective of not creating stranded costs via capacity payments. Is it the best market structure in North America? Were the supply shortfalls and ... » read more
Thursday Feb 18, 2021   
This week we have noticed a number of articles about who is to blame for the energy crisis unfolding in Texas. Most of these articles are polarizing and do not take into account a full picture of the problem. There is a semblance of nuance that is missing in the dialogue. We will take the high road and assume that most of the commenters do not have a full understanding of how complicated it is to deliver energy from a source to a sink or from a well head to a furnace. But this is not stopping the flood of misinformation. These are the top ten excuses hitting the press in the past 24 hours for the balancing issues in Texas: Frozen Wind Turbines Fossil Fuel Reliance The independence of the ERCOT grid Market manipulation Market Price Caps Democrats Republicans Capitalism Oil Companies Under ... » read more
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