Weekly Energy Market Updates by Region

Issue week: August 26th, 2021  (Wk 34)

 

POWER MARKETS

 

WEST  Recent below-average temperatures have suppressed Day Ahead prices. Over the past week, they have averaged around $45/MWh and $35/MWh in CAISO and Mid-C, respectively. Although temperatures are expected to rise this weekend, demand is projected to reach only 40 GW, which should lift index prices slightly. The soft cash prices have also pushed down forward prices in all regional trading hubs this week.

ERCOT  Term prices are higher this week, mainly because of rising natural gas prices. Real-time prices for August are averaging in the mid-$30s/MWh in all zones, right on par with the average for last August but well below that of August 2019.

EAST Both Real Time and Day Ahead are averaging in the $50-$60/MWh range across the main trading hubs as hot weather in the Midwest and North-east has elevated both load and prices. In MISO’s Indiana Hub, the Day Ahead average is $51/MWh, $0.60/MWh above Real Time. In contrast, the Day Ahead average of $56/MWh in ISO-NE’s Mass Hub is $4/MWh less than Real Time. Similarly, Day Ahead is averaging $48/MWh, $7/MWh below Real Time, in NYISO’s Hudson Valley. In both ISO-NE and NYISO, Real Time has blown up over the past couple of days. Mass Hub reached $375/MWh, and Hudson Valley actually hit $634/MWh.

NATURAL GAS 

The EIA reported Thursday morning that, for the week ending August 20, U.S. inventories increased by 29 Bcf, more than 25% less than the predicted increase of 40 Bcf. Total stockpiles now stand at 2,847 Bcf, down by 16.5% from a year ago and 6.2% below the five-year average for the same week.

Before the release of the storage report this morning, all active NYMEX futures were already trading higher than yesterday. Afterward, the prompt month of September really took off and never looked back. In the largest one-day increase for that strip, it closed with a preliminary settlement of $4.184/MMBtu, $0.287/MMBtu more than Wednesday’s final.

 

 

CORE RESULTS CAUTION AGAINST COMPLACENCY

As Calpine Energy Solutions’ Capacity Obligation Reduction Effort (CORE) season for 2021 enters the home stretch, the circumstances weighing on the nation’s grids have been something of a mixed bag. The graph below from the U.S. Energy Information Administration shows that, for example, the all-time record for hourly energy demand in the Lower 48 was broken at 720 GWh, a figure especially surprising because, although demand was expected to be fairly revived this year, it remains slightly depressed from COVID. Indeed, generation is not on pace for any sort of monthly or annual record despite that record-breaking hour.

Furthermore, no one part of the season has been especially burdensome. The peak days for capacity obligations so far have been spread throughout the summer. June and July had several days that may end up among the peak-load days for the year, yet temperatures have continued to rise since August 12, indicating potential stress on the energy sector. Because peak days may still be on the horizon, vigilance regarding energy use is still wise. Fortunately, Calpine Energy Solutions is prepared, as always, to send CORE alerts to help so businesses can cut down on their capacity costs for the next planning year.