Weekly Energy Market Updates by Region - Archive




Issue week: April 29th, 2021  (Wk 17)





WESTVolatility surrounding Q3 remains strong as the market has trended higher in response to the NOAA’s prediction of a hot summer. In addition, La Niña conditions in the Pacific Ocean have reduced regional precipitation to decrease the amount of flexible hydro generation available to both the Pacific Northwest and California during the summer. Com-pounding market anxieties, the recent retirements of the Boardman and Centralia (Unit 1) coal-fired power plants in the Pacific Northwest have further decreased the amount of baseload capacity in the region by 1,250 MW, increasing capacity concerns over the past month.

ERCOT  Real-time 7x24 prices have dipped since last week and are averaging in the low $20s/MWh across all zones, thanks to strong wind output over most of the week plus the return of a few thousand MW of capacity from spring outages. With forecasted peak loads around 55,000 MW and approximately 20,000 MW of generating capacity still on outage, real-time prices could see a pickup in volatility toward the middle of next week, although projected wind generation looks healthy enough to keep reserves above 10,000 MW. For-ward prices have risen from last week on the heels of a continuing surge in natural gas prices and another jump in heat rates for this summer. Prices for Bal-21 have increased by more than $2.50/MWh; outer CY strips are up marginally by $0.25-$0.50/MWh.

EAST This week’s averages are practically identical to last week’s, ISO-NE’s Mass Hub, where both Day Ahead and Real Time are averaging about $4/MWh lower, being the lone exception. In PJM’s Dominion zone, strong demand in the middle of the week yielded a Real Time high of $550/MWh. The Real Time average for the week there is $51/MWh.









Although demand for electricity is still expected to be below 2019 levels as the economy continues its slow recovery from COVID, it has exhibited some promising trends beyond mere post-pandemic correction. Indeed, the chart above from the U.S. Energy Information Administration shows that, after a decade of relatively little change in electricity consumption, the re-electrification of America is expected to flourish as usage increases by more than 1,000 billion kilowatt-hours an increase of more than 30%—across all parts of society over the next few decades.

Part of this bullish outlook is due to the new administration’s planned spending on infrastructure, which, among other things, will emphasize a preference for electricity over gasoline in an ambitious remake of transportation in the U.S. President Biden plans to invest heavily to install charging stations throughout the country in preparation for a future with only electric vehicles, reinforcing the growing shift from fossil fuels in other sectors.

As energy demand explodes while the world’s reliance on fossil fuels to provide that energy increasingly gives way to renewables, proper risk management will become only more indispensable. From navigating constantly changing renewable-energy regulations to procuring enough of that more-volatile renewable generation to ensuring that specific energy needs are met amid the increasing demand, Calpine Energy Solutions can help you understand all of the pertinent risks to make the best decision for your company.




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