banner_market_intelligence_1440x441

MARKET TREND ANALYSIS

Weekly Energy Market Updates by Region - Archive

 

 

 


Issue week: April 29th, 2021  (Wk 17)

 

POWER MARKETS

Chart1_Energy_Market_Intelligence_Commercial

 

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.

NATURAL GAS 

The EIA reported Thursday morning that, for the week ending April 23, U.S. inventories increased by 15 Bcf, 50% more than the expected increase of 10 Bcf. Total stockpiles now stand at 1,898 Bcf, down by 13.7% from a year ago and 2.1% below the five-year average for the same week.

Whereas stockpiles grew by a whopping 70 Bcf at this time a year ago, an unusually cold spring in the Midwest and Northeast has heated up demand to rein in this most recent injection, but, as the weather has normalized out east, so should the weekly storage buildups. The NYMEX prompt month of May was already down from yesterday’s final by $0.02/MMBtu and dropped by an additional $0.03/MMBtu after the EIA report. SoCal basis has been strong lately, especially for Q3 2021, as generators expect to rely more on natural gas and less on imports over the summer and fall. SoCal’s next-day cash prices were soft after SoCal called a high OFO. Forward prices have been sturdy but, as the Aliso Canyon Storage facility is expected to go offline soon for maintenance, are expected to soften.

Chart1

Map1

Map2

Chart2


 

WEATHER 

The weather will be warm in most of the country over the 1-to-5-day forecast period, although some rain may fall from the clouds gathering in the North-east.

While conditions should cool down during the 6-to-10-day forecast period along the East Coast and in the Midwest, where temperatures are expected to be as low as the 30s or 40s in Chicago, California and the rest of the West should remain warm.

Seasonable warmth is predicted in the Southeast and along the West Coast for the 11-to-15 day forecast period.

Chart4_Energy_Market_Intelligence_Commercial

 

U.S. POISED TO RENEW LOVE AFFAIR WITH ELECTRICITY

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.

 

 

 

Previous Weekly Market Reports: Archive

 

Disclaimer: This report is for informational purposes only and all actions and judgments taken in response to it are recipient’s sole responsibility. Champion Energy Services does not guaranty its accuracy. This reports is provided ‘as is’. Champion Energy Services makes no expressed or implied representations or warranties of any kind. Except as otherwise indicated in this report, this report shall remain the sole and exclusive property of Champion Energy Services and shall be free from any claim or right, license, title or interest. Champion Energy Services shall not be liable for any direct, indirect, incidental, consequential, special or exemplary damages or lost profit resulting from this report.