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| Monday Jun 21, 2021 | |
| As the month of June starts its final third and the first days of summer are upon us the power and natural gas markets have quite exciting throughout the spring with the West region presented with early heat, the South Central mostly tied up in overcast skies with plenty of rain off the Gulf of Mexico but showed a spurt of heat last week to push ERCOT's power demand to record June levels. The Midwest and Northeast have been taking on all types of weather the past few weeks with some colder temperatures with precipitation only to get a few days of above normal temperatures. The natural gas landscape has been saddled with issues tied to the TETCO pipeline thus taking the market fundamentals to reform themselves as less gas can make it down to the Gulf of Mexico region. The ... » read more | |
| Friday Jun 18, 2021 | |
| Back in May, we wrote about ERCOT’s 'Tale of Two Curves' comparing the front and back of the curve and the different drivers of each. Now, in June, there are some interesting things going on with the Jan-Feb ERCOT Round the Clock contract that we have highlighted in our latest Newsletter Platinum Special Report titled 'ERCOT's Winter Block'. The report highlights how the fact tied to the February winter storm drove up the value of the 2022 referenced months due to scarcity issues that were present. We often compare ERCOT’s scarcity pricing mechanism to marbles in an urn, where every marble represents a price interval. Every month, ERCOT draws about 2900 marbles (one for each 15-minute pricing interval). While most marbles represent normal or even ... » read more | |
| Thursday Jun 17, 2021 | |
| Coming out of the weekend, the weather delivered high temperatures across Texas. Highs of 87 degrees in Austin, 88 in Houston, and 89 degrees in Dallas on Monday were the start of a warming spell that is a sign of things to as we look ahead to the summer months. Load reached its highest levels since mid-February, eclipsing 69.5 GW at it’s peak on both Monday and Tuesday. Figure 1 below plots daily ERCOT HL demand by the daily temperature in Houston during June in the last three years. The three blue points in the shape of triangles represent this Monday and Tuesday, as well as the prior Friday, 6/11. These most recent points show demand increasing over days in 2019 and 2020 with similar temperatures as a possible sign of structural changes to demand in ... » read more | |
| Wednesday Jun 16, 2021 | |
| The summer season's first notable tropical storm system is brewing off the coast of Mexico. Current projections indicate the system poses greater potential for demand destruction than supply-side disruptions. Tropical storm system "Invest 92L" has emerged in the southwestern corner of the Gulf of Mexico (GoM) in Mexico's Bay of Campeche. Forecasters have been progressively increasing the probability of the system becoming a cyclone within the next several days. Yesterday, the National Hurricane Center upped its probability of a cyclone forming within 48 hours from 10% to 40%, and is now giving an 80% chance a cyclone forms sometime in the next five days. Figures 1a and 1b | At left is the location of tropical storm system "Invest 92L" (image via ... » read more | |
| Tuesday Jun 15, 2021 | |
| PG&E, the franchise electric and natural gas utility for Northern California, made news last week when they announced the reclassification of 51 BCF of their natural gas storage from working to base gas. It is the largest reclassification we have ever heard of in the natural gas market history.The decision follows last year's retirement of Los Medanos and Pleasant Valley which were two legacy storage assets on the system. The reclassification effectively takes the working gas capacity on the PG&E system down from 118 to just 52 BCF over the past two years. While the move was unexpected, it was not a total surprise to those who have been following the actions of PG&E over the past decade. The utility have been bit by a series of unfortunate tragedies at San Bruno and ... » read more | |
| Monday Jun 14, 2021 | |
| Over the past few months, the focal point in the renewable energy space has been tied to the battery technology making its way to the grid, starting in California where the integration is key due to the solar penetration over the years. We have discussed how the new capacity is saturating the ancillary service markets and at times trickling into the real-time energy markets (Batteries in CAISO RT Market, where has all the cream gone?) as the midday to evening ramp price delta is present within the market conditions. Some of the contributing factors tied to the price level continue to be the behind the meter and utility-scaled solar generation profile but there is another supply component adding upward pressure and that is the biggest battery on the grid which is better ... » read more | |
| Friday Jun 11, 2021 | |
| This morning before she left for work, my wife poked her head into my home office and said something to me that would have been unthinkable last week: “It’s cold!”. After her declaration, I looked down and realized that I was sitting at my desk wearing a sweatshirt instead of the shorts and t-shirt that was my uniform just a few days prior. This week brought the PNW a brief respite from the summer weather that jumped into high gear at the beginning of June. The cool weather is coming to an end, however, as the entire West is facing another heat wave as we move into next week, with scorching hot temperatures across California, the Desert Southwest, and much of the Rockies. The Pacific Northwest is taking a step back from joining in on the party ... » read more | |
| Thursday Jun 10, 2021 | |
| Over the past couple of years, the newest renewable technology to enter the conversation has been battery storage as the penetration of wind and/or solar across CAISO, ERCOT and SPP has been plentiful thus causing intraday volatility when it comes to balancing the system. With several gigawatts of thermal generation tied up in the ancillary service sector of the grid and coal retiring in the South Central, each grid has been looking for the technology to save the day. In the West, California still has the old-fashioned resource of hydro generation that is baked into the equation via the transmission lines from the Pacific Northwest as well as that of in-state facilities. Since the California hydro system is much smaller and the transmission capacity is limited and the ... » read more | |
| Wednesday Jun 9, 2021 | |
| The results of last weekend's Mexican congressional elections were watched closely by the energy sector. While only time will tell, the outcome was moderately bullish for energy trade between the U.S. and Mexico. Mexico’s president’s effort to rollback the nation’s recent energy reforms was dealt a blow this weekend when congressional elections revoked his party’s super-majority. As a result, future efforts by the president to re-nationalize energy assets and market control will now be substantially more difficult, if not impossible. In the immediate term, this would be regarded bullish U.S. natural gas exports to Mexico on the assumption that no new roadblocks to the country’s transition to a natural gas-fired power sector will not be ... » read more | |
| Tuesday Jun 8, 2021 | |
| Over the past ten years big strides have been made to move the production volume out of the Marcellus and Utica out of the region to consumption areas in the Gulf, Midwest and East Coast. New pipelines like Nexus and Rover have been completed. Compression on Tennessee gas Pipeline, Columbia, TETCO and Transco have been reversed allowing volume to move down to the Gulf Coast region. These regions receiving the gas have now become dependent on the Northeast for this supply. The pipelines each carry an enormous amount of gas, most over 2 BCF per day, which puts a large amount of risk in the hands of just a few assets. When disruptions happen it causes ripples as the receipt and delivery points both have to adjust to the large changes. Sometimes the changes in pipeline flows are forced ... » read more | |