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Friday Apr 16, 2021   
The good researchers at Lawrence Berkeley National Labs (LBNL) have put out an excellent piece of research quantifying the reduction in power sector CO2 emissions from 2005 through 2020: “Halfway to Zero: Progress towards a Carbon-Free Power Sector” with Ryan Wiser listed as the lead author is worth a read. All of the figures used in this blog come from the LBNL report. In typical LBNL form, this work is rigorous and detailed. Here’s the punchline, the US Energy Information Administration’s 2005 Annual Energy Outlook projected 2020 CO2 emissions from power supply of 3,008 MMT. Direct power sector CO2 emissions were 1,450 MMT. This is 52% lower than projected level and 40% lower than ... » read more
Thursday Apr 15, 2021   
Daytime temperatures in ERCOT shifted up this week, and ultimately drove the power demand to new heights for this time of year.  If there is one thing that continues to stand out from the February cold snap, it is the fact that residents of Texas consume a considerable amount of electricity and that seems to be the trend compared to the forecast the past few days. On Tuesday the 13th, real time loads came in much higher than expected were compounded by wind coming in well below schedule and low solar output. ERCOT briefly called for energy conservation from the public on the 13th and issued watches related to its Physical Responsive Capability, but avoided declaring an emergency or shedding load. Still, this week’s warm weather has caused significant real time pricing activity ... » read more
Wednesday Apr 14, 2021   
Power burns are a key component to the overall natural gas supply/demand balance and over the years, we have seen the transition from a peer regression model analysis tied to temperature to that of trying to figure out the overall wind generation throughout a given day and how much sunshine will be showing up in certain part of the country.  The other attribute that goes with the power burn component is the regulatory/policy aspect as the push for a carbon free market continues down the path of being pursued worldwide.  Within the Lower 48, California has spearheaded the fully integrated model when it comes to carbon-based initiatives starting with their Renewable Portfolio Standard (RPS) mandate and extending it with a carbon policy a few years back.  Mandates on the ... » read more
Tuesday Apr 13, 2021   
This spring was expected to be different. The economic recovery from last years COVID lock downs was expected to push power burn totals above last years levels and provide a base for higher natural gas prices through the summer. But it is not turning out that way. It is not just one factor but many that are leading to the under performance of power burns. Since February the total has posted steadily below the comparisons to last year and 2019 despite the fact that the economy throughout the country is rebounding. And this is the single biggest factor as to why the NYMEX continuous contract has dropped off from $2.84 to $2.55 since the beginning of March. Figure 1 | Lower 48 Power Burns Every region of the country outside of the Rockies is showing a power burn deficit to last year. In the ... » read more
Monday Apr 12, 2021   
The Pacific Northwest is in full fish spill mode now that April 10th has come and gone, which means that the hydro system is diverting water that once flowed through the turbines at the facilities on the Lower Snake and Columbia to that of the spillway for the little ones migrating to the ocean waters. Figure 1 | Fish Spill Portion of the Pacific Northwest Hydro System During this time of year, there are several moving components that have an impact the overall hydro supply output during the month of April.  We discussed some of these in the Platinum Package special report published at the end of March 2021 called Pacific Northwest Hydro 2021. On a more routine basis, we dive into the details as part of the EnergyGPS Pacific Northwest Hydro Package that we offer to clients, where we ... » read more
Friday Apr 9, 2021   
When Winter Storm Uri pummeled Texas in February, many generators stopped performing on their contracts for physical delivery and claimed force majeure. Many wind projects with fixed quantity hedges with banks played the force majeure card as their blades froze due to the cold temperatures. Of course, the banks and the power marketers on the other side of those trades likely didn’t see it that way. In general, those entities purchase “firm LD power” and they expect delivery else they will replace the energy and charge the seller liquidated damages (“LDs”). The billion dollar question (literally) is whether the high demand, unit outages, and curtailment of load that directly resulted from Winter Storm Uri qualifies as a force majeure event. I’ve been ... » read more
Thursday Apr 8, 2021   
There is a little time before the summer heat is upon us in Texas but ERCOT is working its way through the first real warm period of the spring as temperatures in Houston are projected to hit 86 degrees later today then hold with daytime highs in the low 80's over the weekend.  Dallas and Austin are not too far behind when it comes to the influx of Mother Nature's warmer weather fairy dust sprinkled over the Lone Star State.  The warmer weather does not equate to sunny skies throughout as some areas of the ERCOT's footprint will be dealing with cloud cover over the next 48 hours.  Figure 1 | Texas Temperature Forecast - Daily Average by City Similar situations in the past created a transition from moderate power demand to that of big increases during the later ... » read more
Wednesday Apr 7, 2021   
Exports to Mexico in the past several days have posted a precipitous drop as maintenance season gets underway.  Volumes should post a typical seasonal recovery as Mexican power burns rise to support cooling loads during the summer months.  However, summer burns will continue to be inhibited by COVID; Mexico has been one of the world’s hardest hit countries by the pandemic.  The longer-term outlook is fuzzy, too: the recent years’ trend of increasing U.S. exports to Mexico will be challenged by the country’s efforts to meet more of its energy needs with domestically produced sources.  In just a matter of days, exports to Mexico have swung by nearly 1.2 Bcfd, going from 6.1 Bcfd on March 31 to a low of just 4.97 Bcfd this past weekend.  The last ... » read more
Tuesday Apr 6, 2021   
The Lower 48 natural gas balancing still has some seasonal heating load in the mix for the next few days. But by the end of the week the total ResCom demand is expected to fall from the present 21 BCF per day down to 14 BCF per day. This drop off will accelerate the storage refill injections all over the continent. Presently the EIA is reporting 1.76 TCF of inventory in the caverns across the United States. Based on current supply/demand fundamentals the end of October inventory is expected to post near 3.65 TCF. That is within the range of normal and is considered adequate for a normal winter heating season.  Figure 1 | Lower 48 ResCom Demand Cash prices have remained resilient this Spring in the wake of the Texas Energy event in February. At its height Henry Hub cash posted $23 ... » read more
Monday Apr 5, 2021   
There is a saying that goes like this, "don't cry over spilled milk", which means do not spend time worrying about things of the past that cannot be changed.  This holds true in the Pacific Northwest this time of year as the first week of April has the Lower Snake river system starting their mandated fish spill requirements.  Such spill happens every year like clockwork where the only thing that is in question is tied to the volume that moves away from the turbines and onto the spillway. Figure 1 | Hydro Facility Spillway The fish vs. economics has been a constant discuss in the Pacific Northwest for decades where the old-school technical management team (TMT) meetings were held in downtown Portland the USACE building where the fish agency representatives were seated along side ... » read more
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