Weekly Energy Market Updates by Region - Archive

Issue week: August 28th, 2020  (Wk 35)

POWER MARKETS

WEST California’s grid looks in better shape but continues to need flexible capacity during the nightly ramp. Imports from Arizona and Nevada have been limited by daily temperature highs hovering around 110 degrees in Phoenix and Las Vegas. Fortunately, the Desert Southwest is projected to cool down by the weekend and should be able to provide SP15 more mega-watts at its disposal to decrease volatility in the nightly ramp. Throughout August, Day Ahead prices have averaged $82.54/MWh and $30.91/MWh in SP15 and Mid-C, respectively.

ERCOT  Aided mainly by the continuing rally in natural gas, term prices climbed slightly this week. Real-time prices have been mostly moderate, aside from a few triple-digit intervals during the super-peak hours. The ORDC adder for the month is still under $10/MWh, well below the average of $46/MWh for last August.

EAST In MISO, the hot weather on Monday cranked demand up to 116.8 GW, a new peak for the year to date. Over in PJM, today’s demand appears similarly on track to place in the top five peaks of the year. However, despite some of the highest temperatures of the year, prices have remained stable across all regional ISOs, both DA and RT prints averaging in the $20s/MWh.

NUCLEAR POWER FACING THE NUCLEAR OPTION

Amid the well documented decline of coal over the last decade, nuclear might have seemed the ideal candidate to pick up the slack in meeting U.S. electric-ity needs. Indeed, the chart below shows that nine of the 10 largest generating plants (in terms of net generation) in 2019 were nuclear facilities. Unfortunately, after months of negative news stories involving nuclear power plants—including the revelation of $1.1 billion in subsidies to two plants in Ohio stemming from bribes to the state speaker of the house—nuclear could actually be the next domino to fall in the ever changing dynamics of U.S. energy production. Nuclear power has always had to perform a delicate political balancing act. For example, the environmental benefits of its low carbon emissions have not managed to dispel persistent concerns over how to dispose of nuclear waste or fears of nuclear accidents warranted by high-profile disasters such as the infamous 2011 Fukushima Daiichi disaster in Japan. In addition, Exelon has been lobbying for legislation to grant its nuclear assets zero-emissions credits worth hundreds of millions of dollars. The company maintains that, without the credits, lack of profitability would force the closure of three of its nuclear plants (two of which, the Braidwood and Byron sites in Illinois, are on that top 10 list for 2019). However, as long as renewable-energy credits are the only way to keep certain nuclear plants economically viable, they may not last much longer, for they likely will not overcome the loss of political capital for the sector from blemishes such as those recent bribery scandals. The recent struggles with rolling blackouts in California reveal the danger of taking more and more methods of electricity generation off the grid. Nonetheless, more nuclear plants are currently scheduled or at risk to be decommissioned than are planned to be activated. If nuclear power becomes truly a thing of the past, some other form of dispatchable generation, such as natural gas, will be needed to balance the grid. Prices could fluctuate wildly in response, but, whatever happens, customers can be sure that Calpine Energy Solutions will help them achieve the best outcome for their businesses.