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Thursday Aug 29, 2019   
As I drove home yesterday, it seemed the AC in my car was not quite enough to ward off the hot weather we have been having recently in Portland. With temperatures in the shade holding in the 90s, going outdoors has been more of an exercise in finding water than the usual hiking that I enjoy. After taking a look at the weather in the Northeast, I couldn’t help but feel a pang of jealousy. Over the last couple weeks, the summer heat has given way to cooler weather with temperatures dropping into a comfortable range. With few cooling degree days throughout the region, power demand also declined shifting the marginal unit towards efficient generation with what appears to be an early start to the shoulder season. Figure 1 | Major Northeast Hub Day Ahead LMPs Just taking a look at the ... » read more
Wednesday Aug 28, 2019   
The month of August has been quite interesting to say the least in the power sector.  First, the weather across North America has been somewhat mild in West, Midwest and Northeast as the power demand across each region has left the grid with not much excitement.  The second item is tied to the renewable landscape as California continues to lead the way when it comes to both utility-scaled and behind the meter solar generation.  The former is a massive number that has the CAISO grid operators needing to find the flex ramping capability needed to balance the system.  The latter continues to hold down the overall net load numbers in a way that diminishes any load growth happening within the Golden State.  Transitioning to the wind generation fleet, both SPP and ... » read more
Tuesday Aug 27, 2019   
Over the weekend the National Hurricane Center started tracking TS Dorian just east of Puerto Rico. All of the models have this feature strengthening over the next three days before it enters the Florida Straits. The market reacted Monday morning by moving the prompt month through calendar 2020 up 7 cents. This price move was one of the strongest price moves we have seen this summer but part of the problem is that this strength is not likely a result of the developing storm. The current storm track, as we see it, is bearish for supply/demand balancing because of the disruption to liquefaction demand.  Figure 1 | NHC Dorian Track The path of TS Dorian has shifted overnight to the north missing the Dominican Republic. This will keep it out of harms way and allow it to strengthen prior ... » read more
Monday Aug 26, 2019   
Over the past few years, there has been a lot of discussion around the LNG markets and facilities going up across the United States as companies try to capture the arbitrage opportunities between the less expensive natural gas and the demand for such fuel in other parts of the world.  Prior to 2017, the Lower 48 had some smaller import/export terminals, but it was not until Sabine came into play that the anchor was set for some massive grid changes in the foreseeable future. Fast forward to the current status of LNG and what we see are five facilities making up the fleet we track on a daily basis.  The most recent facility coming online is that of Cameron as it is noming around .300 BCF/d.  If you look at Sabine's month to date August-2019 average it sits around 2.6 BCF/d ... » read more
Friday Aug 23, 2019   
ERCOT has understandably been the focus over the past two weeks, as low wind and high load resulted in prices reaching the $9,000/MWh cap on two different days. However, as much as high prices make headlines, ERCOT has also seen plenty of low and negative prices in the past couple years – and these low prices drove the generation retirements that, in turn led to the tight reserve margins and recent extreme pricing. Low prices in ERCOT are attributed to a combination of cheap gas and the 22 GW of zero marginal cost wind capacity. On days when the wind is strong and demand is light, there’s almost no need for thermal units to be online and market clearing pries are accordingly low. Over the next several years, even more wind capacity is expected to hit the grid. This additional ... » read more
Thursday Aug 22, 2019   
As concerns about global warming continue to escalate, RTOs across the country continue to look towards Renewables in order to supply the grid of the future. Among the most ambitious of these is the New York ISO. With the support of Governor Cuomo, the state pledged to bring 100% carbon free electricity by 2040. However, many changes will be needed in the coming years if the state is going to hit this goal. As of now, the grid is mainly supplied by natural gas with Renewables taking a backseat. However, exploring the interconnection queue, a large portion of solar and wind appear to be just around the pike. Figure 1 | Governor Cuomo and Al Gore Announce the Investment in Offshore Wind Source: Los Angeles Times Taking a look at cumulative total capacity of renewable projects in the ... » read more
Wednesday Aug 21, 2019   
Over the past few weeks, we have written about the ERCOT real-time market prices exploding up to the cap number and how the day-ahead auction results try to get in front of things as the later afternoon hours spike up as buyers come to the table.  We also have discussed how both the wind and load deviations, come real-time, can have a major impact to the real-time prices as the system operators are scrambling to balance the system.   Figure 1 below is the illustration we turn to to get a handle of the ERCOT day-ahead vs. real-time breakdown.  The top pane is tied to the North Zone hourly auction clears while the  Figure 1 | ERCOT Market Breakdown - Hourly The second pane represents the load deviation on an hourly basis while the next two panes touch on the wind ... » read more
Tuesday Aug 20, 2019   
At the start of this month the market experienced two events which, if taken individually, would have had a big effect on the Gulf supply demand balances. But instead of causing a disruption, the events largely cancelled each other out on the impact. First, Texas Eastern suffered another rupture, its third in three years, which dropped southbound transport flows from the Northeast to the Gulf from 1.7 BCF to zero. Under normal circumstances, that event would have caused the Gulf balancing to draw from storage to meet the power burn needs through the peak of summer. But it did not play out that way.   Figure 1 | Southbound Flows on TETCO for 2018-2019 At the same time, Cheniere's Sabine Pass LNG facility initiated a seasonal outage on two of its five liquefaction trains. The ... » read more
Monday Aug 19, 2019   
After a volatile last couple of weeks in Texas, the ERCOT real-time market took a bit of a break as the 5 minute ticks did not show any red coloration on the map nodal postings.  In fact, when you look at the both the day-ahead and real-time hourly auction clears, neither one of them showed much promise on Saturday and Sunday as the middle of the day could only muster a mere $700 and $550 peak hourly settle for the day while the real-time clears came in much, much lower. Figure 1 | ERCOT Real-Time vs Day-Ahead Hourly Settle - Houston Zone The light dotted line represents the Houston day-ahead hourly prices while the solid blue line is what transpired in the real-time market.  As you can see, Monday's day-ahead auction was not going to go without some speculation to the middle ... » read more
Friday Aug 16, 2019   
Yes indeed, folks, it finally happened. The weather got hot in Texas, demand leapt, and prices rocked. I say "finally" because ERCOT eschews capacity payments and has specifically designed its real time energy market to create high prices during times of scarcity. Despite what most electricity planners would consider extremely low reserve margins over the last several years, the ERCOT real time price just wasn't able to rise to the $9,000 cap that the ERCOT market is designed to create. Figure 1 | ERCOT Real-Time vs. Day-Ahead Hourly Price settles - North Zone The analogy that I use for the ERCOT market is the classic "marbles in the urn" stats problem. The vast majority of the marbles in the ERCOT urn are in the $20's per MWh, but there are also some $4,000, $5,000, up to $9,000 per MWh ... » read more
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