Weekly Energy Market Updates by Region - Archive

Issue week: November 12th, 2020  (Wk 46)

POWER MARKETS

WEST Over the past two weeks, temperatures along the West Coast have fallen considerably and raised heating demand while the DC Intertie (which links the Pacif-ic Northwest to Southern California) has remained offline, keeping flexible supply to the Southern California grid down. Consequently, additional natural gas facilities have had to be dispatched in the region, driving up prices there not only for natural gas but also for power. Overall, SP15 has been clearing around $16.50/MWh higher than Mid-C over the course of November.

ERCOT  Term prices have been mixed out the curve as term gas prices have intertwined with heat rates with little impact. This week’s main event was the volatili-ty in the real-time market. A combination of the recent heat and the idling of several generating units for seasonal maintenance has caused prices to settle at nearly $400/MWh for several super-peak hours, mainly in the Houston and South Load Zones. In turn, the MTD average in those zones has climbed into the mid-$30s/MWh, and the ORDC scarcity adder for November is now averaging $1.50/MWh, well above the averages for previous Novembers.

EAST Warmer weather has softened prices this week. In ISO-NE, they have dropped by almost $30/MWh from last week as both DA and RT are averaging around $15/MWh. PJM’s NI Hub has followed suit, DA and RT there also averaging $15/MWh. Over in NYISO, Hudson Valley is averaging $13/MWh for DA and $11/MWh for RT.

STIGMA FACING ENERGY INDUSTRY ENDURES

The energy industry has made great strides over the last 15 years to improve its standing in the ongoing conversation on cli-mate change. Unfortunately, all of its progress has not significant-ly altered its perception as a top offender in carbon emissions.
As coal has lost much of its dominance in electricity generation to renewables and natural gas, the industry’s carbon dioxide (CO2) emissions have steadily declined since 2005. The graph below from the Energy Information Administration shows the extent of its decrease in emissions relative to three other main economic sectors. In fact, its reduction in 2019 alone was the greatest of the four. In light of the constant debate over timing of the transi-tion from fossil fuels amid the incessant need to balance cutting CO2 emissions with maintaining reliability of the electric grid, the undeniable improvement is clearly cause for celebration.

Nonetheless, the simplistic understanding by a large segment of the general public of how electricity is generated was always go-ing to keep the power industry an easy scapegoat, and the truth is that it remains the second-greatest source of carbon emis-sions, just below transportation. Moreover, if the U.S. begins to return to normal next year, the energy sector’s emissions will surely increase, magnifying the pressure to accelerate the move to renewables. Although that likely increase will probably be an aberration, large-scale energy consumers should continue to plan to meet the challenges associated with the coming renewable mandate, especially if it is realized at the federal level. Fortunate-ly, Calpine Energy Solutions offers customers many options to aid the adjustment.