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MARKET TREND ANALYSIS

Weekly Energy Market Updates by Region - Archive

 

 

 


Issue week: April 15th, 2021  (Wk 15)

 

POWER MARKETS

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WESTDriven by unseasonably cold spring weather, which has kept demand high during the morning and nightly ramp, Day Ahead prices have been strong in CAISO and Mid-C this week. The dry conditions have limited the amount of unregulated water flowing through hydro turbines to choke supply as well. In the term market, Q3 2021 has moved up.

ERCOT  Since last week, term prices have risen throughout the curve, buoyed both by surging term natural gas prices and by firming heat rates. Real-time prices have also increased impressively and now average just above $60/MWh for the month to date. Amid unusually warm weather early in the week, the increase in outages of thermal units and underperformance of renewable re-sources due to intermittency have made all of the difference. Moreover, the ORDC adder for the month is now just over $3.50/MWh, well above those of April 2020 and April 2019 ($2.70/MWh and $0.65/MWh, respectively).

EAST Once again, prices are soft. Averages haven’t moved much from last week, and no notable spikes have occurred. DART spreads are next to nothing in PJM’s West Hub and NI Hub and have the greatest magnitude in MISO’s Indiana Hub, where Real Time is higher than Day Ahead by $2/MWh. The trend is similar in NYISO’s Hudson Valley and NYC, where Real Time is a little more than $1/MWh above Day Ahead.

NATURAL GAS 

The EIA reported Thursday morning that, for the week ending April 9, U.S. inventories in-creased by 61 Bcf, again below the market expectations of 67 Bcf. Total stockpiles now stand at 1,845 Bcf, down by 11.6% from a year ago but 0.6% above the five-year average for the same week.

The NYMEX prompt month of May had a preliminary closing price of $2.658/MMBtu, $0.040/MMBtu over Wednesday’s final and $0.132/MMBtu higher than last week’s finish, as of 1:00 p.m. PDT. In the 12-month forward market, basis in SoCal and PG&E is approximately $0.10/MMBtu and $0.05/MMBtu higher, respectively, than at this time last week; the summer months are driving much of that action. Cash prices are also up at both Citygates, SoCal higher than a week ago by $0.40/MMBtu. Amid forecasts of record-challenging heat, the market is filling orders to ensure that participants will be able to satisfy not only normal commercial and industrial needs but also power-generation demand.

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WEATHER 

While temperatures will be be-low average throughout most of the U.S. (and especially low across the Great Plains) during the 1-to-5-day forecast period, heat records will be poised to fall in the Pacific Northwest.

The cooler weather should continue east of the Rockies over the 10-to-15-day forecast period, the Midwest averaging 4-8 degrees below normal. Meanwhile, California and the rest of the western U.S. should be warm.

Seasonal temperatures are expected across the country for the 11-to-15-day forecast period.

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TRANSMISSION NOT TO BE INTERRUPTED

Just as the power generated by a car’s engine is useless without the transmission that sends it to the wheels to make the car go, having reliable electricity generation in the U.S. is pointless without a reliable transmission infrastructure to direct that energy to the consumers who need it. Because of the indispensability of transmission in the nation’s energy scheme, its cost has steadily and unsurprisingly increased. The chart above from the U.S. Energy Information Administration shows that utilities’ spending on transmission has roughly quadrupled over the last two decades.

Among the reasons for the runaway increase in transmission costs are utilities’ struggles to update and maintain their aging equipment. The proliferation of new large-scale solar and wind generation facilities in remote locations has also necessitated the installation of new transmission assets to connect such green-energy sources over great distances to grids throughout the U.S. Accordingly, transmission charges for customers—which depend not only on the proportion of their load to that of their entire zone but also on the prevailing tariff-based price for their region—have progressively risen as well. Although these charges vary from utility to utility, increases have been particularly extreme in some regions in recent years.

Fortunately, Calpine Energy Solutions has developed a new Trans-mission Obligation Reduction Effort (TORE) program, similar to its acclaimed Capacity Obligation Reduction Effort (CORE) program for mitigating its customers’ capacity costs, to help customers alleviate their transmission costs. To learn more about TORE, please contact your Calpine Energy Solutions sales representative.

 

 

 

Previous Weekly Market Reports: Archive

 

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