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MARKET TREND ANALYSIS

Weekly Energy Market Updates by Region


      


Issue week: January 14th, 2021  (Wk 2)

 

POWER MARKETS

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WEST Term prices through the balance of the year continue to increase as the Q3 bid/ask continues to widen, with strong bid interest, in Mid-C and SP15. Hydro generation looks strong so far this year. The recent accumulation of snowpack in the Pacific Northwest should continue for the next few days, and the Northwest River Forecast Center is already forecasting flow through The Dalles Dam for 2021 at 99% of maximum, a 3% increase from the last run.

ERCOT  With the first freezing temperatures of this winter and snow in North and West Texas this week, real-time ATC prices are averaging approximately $8/MWh higher than last week, but the ample reserves still available to meet the morning and afternoon peak loads of more than 55,000 MW have kept that average around only $25/MWh. If temperatures moderate over the next week or so, as forecast, and peak loads settle back in the mid-40,000s MW, real-time price volatility in the near term should be minimal. Meanwhile, fixed term prices continued their retreat as summers traded down again despite a slight increase in the forward NG curve from last week. Peak prices for this summer and next summer were down by $3/MWh and $1.50/MWh, respectively, while outer summers were down to a much lesser extent. As the higher NG prices have somewhat offset the lower summer prices, CY strips ranged from flat to down by $0.50/MWh down the curve.

EAST Prices remain steady but are up slightly from last week with minimal DART spreads. In PJM’s West Hub, Day Ahead is averaging $27/MWh while Real Time is averaging $26/MWh. NYISO’s Hudson Valley is averaging $30/MWh and $31/MWh for Day Ahead and Real Time, respectively. For MISO’s Indiana Hub, the averages are $27/MWh and $28/MWh.

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RENEWABLES HAVE WIND AT THEIR BACK, NEED TO WEAR SHADES

According to the latest projections from the U.S. Energy Information Administration (EIA), the rise of re-newable electricity generation over the past decade is not expected to slow down anytime soon. The graph above from the EIA shows that, in fact, more than two-thirds of new generation infrastructure scheduled to come online this year will be wind and solar (large-scale solar to exceed wind-farm growth for the first time). Moreover, because large battery systems are frequently paired with renewable facilities, battery storage capacity should quadruple over the course of 2021, hopefully expanding the deployment of renewable power at peak times.

Beyond the well documented shift of political winds (no pun intended) toward renewables, their rapidly dropping costs—amid an expected increase in the cost of natural gas over the next couple of years—will only strengthen their appeal. Wind and solar may still be far from equal to natural gas, coal, and, to a lesser extent, nuclear in their dominance of the U.S. power industry right now, but the trend is increasingly clear. With the full support of not only the government but also the private sector, they are poised to carve out a larger and larger market share well into the future.

 

 

 

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