Weekly Energy Market Updates by Region - Archive




Issue week: May 20th, 2021  (Wk 20)





WEST  As summer quickly approaches, volatility surrounding Q3 2021 remains strong, especially in Mid-C. Now that the Pacific Northwest recorded its driest April and is on pace to log an extremely parched May, projected summer water levels there have plunged to 84% of normal from 96% of normal at the end of February. Moreover, this spring’s warm and dry weather has melted snowpack in the upper elevations much earlier than in previous years, jeopardizing the amount of hydro generation available in late summer and possibly tightening regional supply if this summer is particularly brutal. Together, the current dry conditions and forecasts of a hot summer in the Pacific North-west have driven the forward curve for Q3 in Mid-C to historic highs.

ERCOT  As rain has covered the eastern half of the state for most of this week, real-time 7x24 prices across the entire state have averaged around $20/MWh. Amid forecasts of continuing on-and-off showers over the next several days and pretty strong wind generation next week, real-time price volatility should remain limited for the up-coming week. In the term market, Bal-21 prices have been relatively flat from last week while outer-year CY strips are down by approximately 20 heat rate ticks (roughly $0.50/MWh).

EAST Prices remain in the mid $20s/MWh across the main hubs. Thanks to excessive load due to unseasonable heat this week, Real Time prices have been strong in all NYISO zones except the North zone. Whereas, on average, Real Time is around $3/MWh higher than Day Ahead throughout most of NYISO, Day Ahead is ahead of Real Time by $8/MWh in the North.









As shown in the map above from the National Oceanic and Atmospheric Administration, this summer is projected to be hotter than usual in most of the U.S. Aware of the struggles that the nation’s electric grids will likely encounter during such sweltering weather, the North American Electric Reliability Corporation has warned several regions—including California, Texas, New England, and parts of the Midwest—that they are most at risk of facing energy shortfalls during the summer.

This development is hardly news to some extent. California, for example, is known for its problems with meeting the evening demand peak after the daily drop-off of solar output over the years and is already dealing with another year of less-than-average hydropower. Nonetheless, predicaments such as these demonstrate not only that states are slowly but surely learning to adapt to the new renewable-energy landscape but also how volatile that environment still is.

Further complicating the situation is the continuing rollback of COVID-19 restrictions, which makes the extent of electricity demand recovery hard to predict. In any event, the economy is bound to be much more open this summer than last summer. Indeed, the U.S. Energy Information Administration has predicted that summer electricity consumption should increase by 1.5% from 2020. With the usual summertime increase in demand, energy prices are already poised to rise, but, amid energy supply struggles like those in California, all bets are off. Suffice it to say that companies can reap tremendous benefits by assessing (or reassessing) their energy costs and risk tolerance in advance. Fortunately, Calpine Energy Solutions specializes in exactly that.




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