Weekly Energy Market Updates by Region

Issue week: November 1 2024 (Wk 44)

 

POWER MARKETS

WEST  Demand has been relatively moderate in this first full week of November as the weather has stayed mild. Consequently, Day Ahead prices for the month to date are averaging $26.34/MWh at Mid-C, $36.72/MWh at NP15, $29.65/MWh at SP15, tracking well under the final averages of roughly $70/MWh, $62/MWh, and $53/MWh, respectively, for November 2023. However, prices can be expected to rise over the course of this month and into December as the usual changes in weather drive the usual surge in demand and hydropower becomes scarcer because of ongoing droughts in the Pacific Northwest.

ERCOT  To the delight of consumers, the average of 7x24 real-time prices has been unimpressive at less than $24/MWh since the start of the month, held in check by unseasonably pleasant weather, growing renewable capacity, and low natural gas prices. Of course, that figure encompasses the higher-risk sundown hours, which have shifted up by an hour to HE18-HE19 with the resumption of Standard Time and averaged around $60/MWh so far. Real-time prices should find some support early next week from a drop in wind output forecasted for one or two days, especially in those sundown hours. In the forward-term market, prices for CY 7x24 strips have climbed by approximately $1/MWh since last week, the biggest move occurring on Wednesday in response to the Presidential election. Strips down the curve remain in the mid-to-upper $40s/MWh, still considerably below where they started this summer.

EAST Day Ahead prices have been lower than Real Time prices in all regions this week, averaging $31.61/MWh in PJM, $29.70/MWh in NYISO, and $36.04/MWh in ISO-NE’s WCMASS against Real Time averages of $33.06/MWh, $31.90/MWh, and $43.70/MWh, respectively. Demand under-clearance in the Day Ahead market, minimal wind generation, and diminished behind-the-meter output due to showers and cloud cover account for that especially large spread of nearly $8/MWh in ISO-NE. The fall outage season now ending and unseasonably mild temperatures persisting, both demand and prices are expected to stay bearish next week.

NATURAL GAS 

The EIA reported Thursday morning that, for the week ending November 1, U.S. inventories found room for another 69 Bcf, slightly more than the assumed injection of 67 Bcf. Total stockpiles now stand at 3,932 Bcf, up by 4.2% from a year ago and 5.8% above the five-year average for the same week.

At the time of this writing, the NYMEX Henry Hub prompt month of December was trading at $2.72/MMBtu, virtually unchanged from the $2.71/MMBtu cited last week. Spot prices in the West have begun the month under those recorded at the same time last November as demand has shrunk with the unusually agreeable weather. Until demand rises as expected with winter on its way, storage surpluses are expected to increase. Over the first week of November, Gas Daily Prices have averaged $1.26/MMBtu at Northwest Sumas, $2.27/MMBtu at PG&E Citygate, and $1.75 at SoCal Citygate.

 

 

 

 

 

 

 

 

 

 

Solar Eclipse by China Need Not Be Total

To counteract China’s circumvention of U.S. tariffs on its solar panels, the U.S. Department of Commerce on October 1 announced aggressive new duties on panels made in China but imported instead from the nearby Southeast Asian nations of Cambodia, Malaysia, Thailand, and Vietnam. Utility Dive’s Diana DiGangi reported last month that the preliminary levies range from approximately 15% on Hanwha Q Cells to almost 300% on four Vietnamese outfits. This action may very well work as intended to discourage U.S. purchasers from buying the Chinese panels in favor of domestic ones. However, as the trade war with China rages on, it may prove only a short-term fix for a much larger and more complex problem: China’s dominance of the global solar-panel supply chain.

This recent development exposes a growing tension in the tradeoff between attaining clean-energy goals both efficiently and quickly on the one hand and cultivating the U.S. solar-energy industry on the other. Although a foreseeable rise in costs and delay in deployment may be an immediate cause for concern in expanding domestic solar-panel production that perpetuates U.S. procrastination, the greatest pain comes from a lack of stateside supply diversification, which forces continued reliance on Chinese panels at the moment. The U.S. thus finds itself in an endless game of "whack-a-mole" where China continuously shifts its operations to side-step sanctions to meet U.S. demand that cannot otherwise be met within its own borders, forcing the U.S. to play catch-up.

Instead of focusing on palliatives such as tariffs, which arguably create only the illusion of a thriving U.S. solar-panel sector, the U.S. needs to rethink its approach by investing in new, resilient supply chains of its own or accelerating the development of alternative clean-energy solutions altogether. Until it does, the U.S. risks not only continuing to bear the consequences of its reactive strategy but also missing a golden opportunity to take the lead in shaping the future of clean-energy technology throughout the world.