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MARKET TREND ANALYSIS

Weekly Energy Market Updates by Region - Archive

 

 

 


Issue week: August 1st, 2019  (Wk 31)

 

 

 

POWER MARKETS

 

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WEST The index market has reacted well to the triple-digit temperatures in many areas. Since last Thursday, Day Ahead prices have averaged $35.29/MWh in SP15 and $29.02/MWh in Mid-C. Term prices are start-ing to rebound from the lows of mid-July.

NATURAL GAS 

The EIA reported Thursday morning that, for the week end-ing July 26, U.S. inventories increased by 65 bcf, surpas-sing market expectations of 57-58 bcf. During the same week last year, inventories grew by 31 bcf, and the five-year aver-age increase for the same week is 37 bcf. Total stockpiles now stand at 2,634 bcf.

On Wednesday, position cover-ing amid forecasts of warmer weather helped NYMEX monthly contracts recover from three-year lows and lifted the September contract, which be-came prompt-month on Mon-day, back above $2.20/MMBtu to close at $2.233/MMBtu. However, in response to the storage report, it fell by 3.1 cents on Thursday to settle at $2.202/MMBtu. In fact, prices for all months through January 2021 stumbled.

ERCOT  Over the past week, ATC real-time prices at the North Load Zone have ranged from a low of $20/MWh to a high of nearly $110/MWh on July 31! The ORDC price adder averaged $6.50/MWh for July. Fore-cast high temperatures should be above seasonal averages over the next few days and thus should yield more volatility in spot pricing. Mean-while, natural gas prices continue to wither on the vine but are still well above their historical lows from March 2016. With term heat rates up over the last two weeks, fixed prices are slightly higher out the curve.

 

EAST The on-peak index price in Mass Hub has averaged $35.70/MWh this week. The seasonal heat has put some upward pressure on prices but not as much as the historical average for this time of year. In the for-ward markets, the forward curve has been trading slightly down.

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WEATHER 

Over the 1-to-5-day forecast period, temperatures will be elevated in the western half of the country but below average in the South Central states, which could experience thunderstorms.

Both coasts should be warm during the 6-to-10-day forecast period. In contrast, the Midwest should expect a cooling trend.

Cool air flowing into the northern U.S. from Canada should lower temperatures below average in the Great
Plains and Great Lakes regions in the 11-to-15-day forecast period.

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COAL GONE WITH THE WIND IN TEXAS

 

The wind power craze in the U.S. keeps gusting and has now definitely blown through Texas. As reported by Vandana Ravikumar in USA TODAY, data released last month by the Electric Reliability Council of Texas show that, for the first time
ever in the Lone Star State, wind has overtaken coal as a source of energy so far in 2019. The pie graph below illustrates that, although combined -cycle gas (Gas -CC) still generates the most electricity in the state at 38%, wind now comes in second at 22%, 1% ahead of coal, whose share of the fuel mix has dropped by 10% over the last two years.


Regarding the shift in state energy policy, Dr. Andrew Swift of the National Wind Institute at Texas Tech University told USA TODAY, "Texas leads the nation in installed wind capacity by a significant amount." Moreover, Dan Cohan of Rice University asserted to the Houston Chronicle, “There is no where else in the world better positioned to operate without coal than Texas is. Wind and solar are easily capable of picking up the slack. ”


Indeed, Texas accounts for more than a fourth of total U.S. wind capacity, but other states and utilities now have the wind at their proverbial backs as well. In addition to the vast queue of prospective wind facilities in the PJM region (noted in this
column back in June), UtilityDive reported last month not only that New York Governor Andrew Cuomo granted two companies offshore wind contracts totaling a record 1,700 MW but also that, over on the West Coast, Portland General Electric is emphasizing wind as the most economically viable option in its plan to add 150 MW of renewables to its portfolio by 2023.


When it comes to wind, it is encouraging that stakeholders are looking both onshore and offshore, for a robust combination of fuel sources is essential for maximum reliability, especially if fossil fuels are no longer welcome. Fortunately, the
technology and economics keep improving to enable more and more renewable - energy facilities to come online. It will be no surprise when coal ultimately disappears from the nation’s energy landscape.

 

 

 

 

 

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