Energy Market Intelligence

The largest New England Solar farm located in Farmington, Maine is now online. NextEra financed $110 million to develop the 76.5-megawatt solar farm.  The 300,000-panel solar farm which is expected to last 25 - 40 years is on 500 acres of leased land on Route 2 in the town of Farmington.  The New England College Renewable Partnership (NECRP) which includes five small New England liberal arts colleges, Smith, Amherst, Williams, Hampshire and Bowdoin are buying power, which is the equivalent of powering around 17,000 homes.  According to NECRP, this agreement is the first ever example of a collaborative purchase of solar energy in New England Higher Education, and one of the first such collaborations in the United States.  NECRP also said that the purchase of power from Farmington moves each of the five campuses closer to their climate-action goals, helps each school manage costs by “locking in” the price of electricity for the next 20 years. The project will net the town about $20 million in taxes during the course of the 30-year agreement.  Farmington Solar LLC is a subsidiary of NextEra.

Contrary to popular belief, climate change is not what's driving some U.S. coal-fired power plants to shut down. According to state regulatory filings, dozens of plants nationwide plan to stop burning coal this decade to comply with more stringent federal wastewater guidelines as the industry continues moving away from the planet-warming fossil fuel to make electricity. The Associated Press states that two of Pennsylvania’s largest coal-fired power plants, Keystone and Conemaugh outside Pittsburgh will stop using coal and retire all of their generating units by Dec. 31, 2028. The Environmental Protection Agency wastewater rule requires power plants to clean coal ash and toxic heavy metals such as mercury, arsenic and selenium from plant wastewater before it is dumped into streams and rivers. The rule is expected to affect 75 coal-fired power plants nationwide and at least 26 plants in 14 states said they will stop burning coal. The EPA estimates the rule will reduce the discharge of pollutants into the nation’s waterways by about 386 million pounds annually. states with power plants that plan to stop using coal by 2028 are Arkansas, Georgia, Indiana, Louisiana, Maryland, Michigan, North Carolina, Ohio, Oklahoma, South Carolina, Tennessee, Texas and West Virginia, the Sierra Club data shows.

Winter Storm Uri caused 4.5 million people in Texas to lose power and failures across the region in February 2021.  The Final Report includes 28 formal recommendations that seek to prevent a recurrence of the failures experienced during the February 2021 cold weather event. These recommendations include important revisions to the NERC Reliability Standards surrounding generator winterization and gas-electric coordination. Full report can be found here. 

• 81 percent of freeze-related generating unit outages occurred at temperatures above the units’ stated ambient design temperature.
• 87 percent of unplanned generation outages due to fuel issues were related to natural gas, predominantly related to production and processing issues, while 13 percent involved issues with other fuels such as coal or fuel oil.
• Natural gas fuel supply issues were caused by natural gas production declines, with 43.3 percent of natural gas production declines caused by freezing temperatures and weather, and 21.5 percent caused by midstream, wellhead or gathering facility power losses, which could be attributed either to rolling blackouts or weather-related outages such as downed power lines.

NERC President and Chief Executive Officer Jim Robb said. “The FERC-NERC-Regional Entity Staff Report also highlights the need for substantially better coordination between the natural gas system and the electric system to ensure a reliable supply that nearly 400 million people across North America depend upon to support their way of life.”  

U.S. Henry Hub gas prices closed last Friday $3/MMBtu higher compared to a year ago. The higher natural gas prices can be attributed to several factors such as  exporters sending gas to Europe and Asia and fracking holding off on new drilling.  According to the EIA, the average U.S. household that relies on natural gas for heating will pay 30% more for the fuel this year. Eversource Energy stated that average natural-gas customers in Connecticut can expect to see their bills increase by about 14% this month and an increase by as much as 21% in Massachusetts. James Daly, Eversource’s vice president of energy supply, said “Demand for natural gas and power is increasing substantially over where it was a year ago. We’re seeing a bit of upward pressure on natural gas prices here to respond to the very high demand and the prices in Europe.”  LNG export facilities have been at near maximum capacity with exports hitting a record 19.2 billion cubic feet a day in March, which is about 71% during the pandemic and up about 17% from the pre-pandemic peak. The largest U.S. LNG exporter, Cheniere Energy Inc. set a record for shipments in the third quarter, with 141 LNG cargoes between its two Gulf Coast facilities. However, the biggest natural-gas producers have vowed to keep investments in production growth low such as  EQT Corp. , Chesapeake Energy Corp. , Antero Resources Corp. Antero Chief Executive Paul Rady said, “We’re staying away from growing."

Byron and Dresden nuclear plants which supplied 20% of Illinois’s in-state electricity generation last year will continue operating rather than retire this fall as previously planned. Exelon operates six nuclear power plants including Byron and Dresden. Illinois has more nuclear generating capacity than any other state and nuclear power plants accounts for 58% of Illinois’s in-state electricity generation in 2020. Illinois Senate Bill 2408 (S.B. 2408), signed into law on September 15, 2021 targets the state's goal to 50% clean energy by 2040 and 100% clean energy by 2050.  The law also states that the  remaining fossil-fueled generation plants will reduce carbon emissions in stages starting in 2030 and to be completed by 2045. The EIA states that in 2020, 18% of in-state generation in Illinois came from coal; natural gas-fired plants generated another 14%.

PJM expects to have over 185,000 MW of resources to meet the forecasted peak demand of approximately 133,000 MW. PJM’s all-time winter peak is 143,295 MW, set on Feb. 20, 2015.  PJM President and CEO Manu Asthana said, “Keeping the power flowing under anticipated winter conditions is the core mission for PJM and our member companies. We understand the critical importance that electricity plays in the daily lives of the 65 million people we serve.” PJM performs annually, winter readiness assessments such as data collection on: fuel inventory, supply and delivery characteristics; emissions limitations; and minimum operating temperatures. PJM initiated an analysis that resulted in numerous additional improvements to its winter preparedness, taking in consideration the 2021 February freeze in Texas and the efforts are as follows:

• Incorporating critical-load business rules and expectations into emergency operations procedures to assist transmission owners in identifying and prioritizing electric service for critical facilities in emergencies
• Collecting more information from suppliers about any fuel, environmental or weather-related limitations that could impact winter operations, while also including wind and solar generators in these requests
• Further enhancing information-sharing with the natural gas industry

The EIA anticipates in 2022 that crude will exceed pre-pandemic levels at 99.6 million barrels a day. The International Energy Agency increased its global oil-demand forecasts for this year and the next by 170,000 and 210,000 barrels a day. They also reported that,  “An acute shortage of natural gas, [liquefied natural gas] and coal supplies stemming from the gathering global economic recovery has sparked a precipitous run-up in prices for energy supplies and is triggering a massive switch to oil products and direct crude use for power generation,” as well as  adding that power-generation plants, fertilizer producers, manufacturing operations and refineries are all affected. Bjarne Schieldrop, chief commodities analyst at SEB Markets states, “We have never had a situation like  where oil is extremely cheap [versus gas] so we just don’t have empirical evidence” for how much oil demand may increase. Additional factors such as weak natural-gas inventories for the time of year and low wind levels in Europe have coincided with the post-pandemic economic recovery, coal shortages in China and the possibility of a cold Northern Hemisphere winter to send fossil-fuel prices soaring. IEA Executive Director Fatih Birol said extreme weather events such as Hurricane Ida in the Gulf of Mexico, droughts stymieing hydroelectric power in China and Brazil, and widespread flooding have also contributed to the energy crunch. Birol also added that supply choke points, including pandemic-delayed maintenance work, meant that natural-gas outages are currently 40% higher than average.

General Motors Co. (GM), in partnership with PJM member TimberRock, announced plans last week to utilize the PJM marginal emission rates data to help GM reach 100% renewable energy to power its operations by 2025 – five-years earlier than previously announced. GM Chief Sustainability Officer Kristen Siemen said, “We know climate action is a priority and every company must push itself to decarbonize further and faster. That’s what we are doing by aiming to achieve 100 percent renewable energy five years earlier in the U.S. as we continue to advance on our commitment to lead an all-electric, carbon-neutral future.” The marginal emission rate data stream is publicly available on PJM’s Data Miner tool. The development of this data source was the work of PJM alone, not under any special relationship with GM or TimberRock.

The EIA forecasted that U.S. households will use 30% more natural gas for space heating and will spend an average of $746 on heating this winter (October–March), which is $172, or more than last year. Residential spending on winter natural gas bills is largely determined by the retail price of natural gas and the amount of natural gas consumed. According to the U.S. Census Bureau’s 2019, Natural gas is the primary heating fuel for 48% of U.S. homes. Retail price of natural gas and the amount of natural gas determines residential spending on winter natural gas bills. Higher prices this winter can be attributed to the increase in natural gas prices over the past year, utilities having to raise prices for consumers due to the winter storm in February 2021 which affected most of the country, but particularly Texas and the Midwest. The cold snap forced many utilities to purchase natural gas at spot prices that were higher than anticipated. Utilities were not able to collect enough to cover the cost of the natural gas since retail rates were already set for the respective months which caused a chain of events where many utilities raised prices in subsequent months to make up for the under collection.

The price of U.S. natural-gas futures have been going up when it is supposed to be offseason for demand. Energy has been the best performing sector in the S&P 500 stock index in September. According to Baker Hughes Co, we saw $5 prices in 2014, but there were more than three times as many rigs drilling gas wells as the 100 operating now. There are several reasons for the high prices, such as February’s freeze in Texas, hottest on record and drought out West dried up hydropower production in  June and July, which lead to higher demand for power for air conditioners. Hurricane Ida forced the majority of the  Gulf of Mexico’s gas output offline and more than a third of the Gulf’s gas production remained shut, according to the Bureau of Safety and Environmental Enforcement. Europe also suffered high prices due to hot weather, lackluster wind-power generation and lower imports from Russia. According to Goldman Sachs Group Inc. analyst Samantha Dart, Europe's high prices will force U.S. prices to climb to $17 with no corresponding rise overseas before it becomes uneconomic to ship liquefied shale gas across the Atlantic. Christopher Louney, an analyst with RBC Capital Markets said, challenges in forecasting how high prices could rise lies in the unprecedented ties between the once isolated U.S. market and international prices and higher overseas prices are lifting those in the US.

PJM has received 80 proposals that address onshore and offshore needs that would facilitate New Jersey’s goal of delivering 7,500 MW of offshore wind generation by 2035. PJM’s Regional Transmission Expansion Plan (RTEP) projects are driven by reliability or market-efficiency criteria. The proposals fall into four categories:

• Option 1a: onshore upgrades on existing facilities (45 proposals)
• Option 1b: onshore new transmission connection facilities (22 proposals)
• Option 2: offshore new transmission connection facilities (26 proposals)
• Option 3: offshore network (eight proposals)

“These are just the combinations as supplied by the entities,” Berner said. There may be an opportunity as well for PJM, in concert with the New Jersey Board of Public Utilities (NJBPU), to look at various proposals and determine that some of them might be paired up differently.” According to a guidance document issued by the NJBPU, it is targeting the second half of 2022 for that decision.

According to recent data from the Cambridge Bitcoin Electricity Consumption Index, the United States is now home to over 35% of the world's Bitcoin mining. Countries like China have cracked down Bitcoin mining due to their already large carbon footprint, which used to be the larges bitcoin miner in the world. States like New York, Kentucky, Georgia and Texas are popular for Bitcoin mining.  The growth of Bitcoin mining has companies such as Marathon Digital to purchase a struggling coal-fired power plant. Consumers are worried about blackouts due to the mining in their state, especially with droughts causing more fuel shortages, crisis in Texas and Europe driving prices and supply, but the Bitcoin miners states that it is unlikely. However, reopening coal fired plants is concerning for states with aggressive clean energy initiatives such as New York, which reportedly hosts the highest percentage of Bitcoin miners. 

BP earned in 2019, $650 million in profits and is selling a third of their majority stake to liquify fossil fuel and focus on renewable energy investments. Oil companies have been getting pressure from regulators to invest in cleaner energy and BP Chief Executive Bernard Looney stated that they can "make clean-energy transition much faster than its peers." To decrease BP output by 40% or 1 million barrels per day and increase electricity from renewable sources to 50 gigawatts, they will sell 13% of the company's assets. BP owns 50% of the firm Lightsource in December 2017 for $200 million, which operates solar farms in 15 countries. They also purchased 50% of Norwegian energy giant Equinor (EQNR.OL) in two projects off the U.S. East Coast for about $1 billion. 

PJM participated in Federal Energy Regulatory Commission technical conference, “Energy and Ancillary Service in the Evolving Electricity Sector,” on September 14th. According to Adam Keech, Vice President – Market Design & Economics, “There are no issues more fundamental to good market design than the ones we are talking about today, that we get the incentives in the real-time time frame correct, and we articulate the products clearly." Renewable resources account for nearly all resources that have applied to connect to the grid via PJM’s interconnection queue. “PJM anticipates the power system shifting from one that has historically been predictable and controllable to one that is less so in the future. This rise in uncertainty must be met with flexibility to manage the grid reliably and cost-effectively,” Keech said in testimony submitted to FERC (PDF).

PJM added Marginal Emission Rates to the public information available on its Data Miner tool on September 9th. The emission rates data will correspond with the marginal unit or units representing the locational marginal price of energy according to the the Marginal Emission Rates Primer on the Data Miner page. “It’s important to understand that marginal units do not provide a prediction of what would happen. They only show what has just happened,” according to the primer notes. PJM stakeholders have identified potential uses for Marginal Emission Rates to determine the times each day when electricity use can have the least impact on the environment by drawing on lower-emitting resources.

Vineyard Wind project secures $2.3B from nine international and US based banks. The project is one of the largest clean energy investments in the US and the first US commercial scale offshore wind project. The Vineyard wind project will begin in 2022, 15 miles off the coast of Barnstable, Massachusetts.  It is expected to power 400,000 homes and businesses and reduce carbon emissions by about 1.6 million tons per year. Vineyard Wind CEO Lars T. Pedersen said  “Achieving financial close is the most important of all milestones because today we finally move from talking about offshore wind to delivering offshore wind at scale in the US.”

New York State’s largest municipality, Rochester is expected to launch in early 2022, a community choice aggregation (CCA) program for their 57,000 residents. Customers are automatically enrolled in the program without having to install solar panels or sign a contract. Customers will have the option to opt out at any time without penalty. Rochester Mayor Lovely Warren said “We look forward to adding the community solar program early next year, which will offer guaranteed savings for the community, including many of our more than 23,000 Home Energy Assistance Program (HEAP) households.” The CCA program aligns with New York’s commitment to clean energy of 70% by 2030 and allows customers to select their own power source.

The U.S. could see higher than usual heating bills this fall and winter due to a seven-year high natural gas futures and decrease in supplies. The EIA released on Wednesday Sept. 8 showing a 16% increase from August's projection in Henry Hub Spot price of $4 per million British thermal units in the fourth quarter. Natural gas is the US primary source of energy, which is approximately 34% of all energy consumption according to the EIA in 2020. The increase in prices can be attributed to Hurricane Ida damaging 90% of natural gas output. The U.S. Department of the Interior states that more than 30% of oil production and 40% of gas production are still offline weeks after Ida made landfall. EIA Acting Administrator Steve Nalley added , “Hurricane Ida affected natural gas production at a time when the United States was already experiencing higher natural gas prices due to growth in exports, strong domestic natural gas consumption, and relatively flat natural gas production." Reuters reported more than 17 million barrels of oil have been lost to the market due to Hurricane Ida, and overall U.S. production could drop by as much as 30 million barrels this year. The economy under the Biden administration has slowed down drilling due to anti drilling compared to the Trump administration where natural gas production grew by 10.0 billion cubic feet per day (Bcf/d) in 2018, an 11% increase from 2017. 

Hurricane Ida was recorded as the second most powerful storm behind Hurricane Katrina which destroyed much of the state 16 yrs ago, causing damage and power outages through Louisiana. According to President Archie Chaisson, about 14,000 people in one Louisiana parish are without homes and Hurricane Ida damaged or destroyed 75% of the structures. The storm also caused destruction to the regular supply of oil and other projects in and around the Louisiana region. After the storm made landfall on Aug. 29, the damage to U.S. offshore energy production shut about 79% of the region's offshore oil production and 79 production platforms are unoccupied. Approximately 17.5 million barrels of oil have been lost to the market to date, with shutdowns expected to continue for weeks. According to energy analysts, Ida could reduce total U.S. production by as much as 30 million barrels this year. The state of New York was also impacted heavily from the storm with claims of 50 deaths. Gov. Kathy Hochul said the initial assessment of the damage Ida left behind in New York is estimated as at least $50 million.

On Aug. 27, PJM and its stakeholders shared perspectives on reform for interconnection policy; long-term regional and interregional transmission planning; and transmission modernization. PJM presented data showing most (1,560) of the 1,826 proposed generation resources in PJM’s interconnection queue lie within 100 miles of metropolitan load centers. "The takeaway is that 85% of all future resources are within 100 miles of a load center,” David Souder, Executive Director Planning, said. While renewable resources account for more than 90% of the 135,588 MW actual capacity in PJM’s Interconnection queue, it is estimated that only 35%, or 47,452 MW, of these generation projects are expected to come into service.

Solar panels are the most popular renewable energy as the U.S. and Europe promote clean energy and become less reliant on fossil fuels. However, most of the install panels are created in China are with carbon-dioxide-belching, coal-burning plants in China. According to industry analyst Johannes Bernreuter, Chinese factories supply more than three-quarters of the world’s polysilicon, which is an essential component in most solar panels. Producing a solar panel in China creates around twice as much carbon dioxide compared to if it was being made in Europe, said Fengqi You, professor of energy systems engineering at Cornell University. Alternatives to China’s cheaper polysilicon production are difficult and have harmed U.S. producers, which has shutdown several factories that use power sources with lower carbon emissions than Chinese producers.  “However not all Chinese manufacturers are relying on fossil fuels, Tongwei, the world’s largest producer, has some factories that run on hydropower, but it is still a far cry from the number of coal-burning plants. Large energy buyers can influence supply chains,” said Jen Snook of the Renewable Energy Buyers Alliance, which represents Amazon.com Inc., Salesforce.com Inc. and more than 200 other corporations.

PJM Environmental Information Services, Inc. (PJM-EIS) and the Energy Web Foundation completed the development of a blockchain-based tool for the Generation Attribute Tracking System (GATS). Five PJM subscribers tested the paid subscription and piloted it on the GATS Bulletin Board in the Spring of 2021. The Generation Attribute Tracking System (GATS) is a trading platform designed to meet the needs of buyers and sellers involved in the renewable energy certificate (REC) market - from homeowners, market participants such as utilities, brokers, aggregators, and companies wanting to reduce their carbon emissions. Renewable Energy Certificates (RECs) are issued when one megawatt-hour (MWh) of electricity is generated and delivered to the electricity grid from a renewable energy resource such as solar or wind. 

Florida utility Tampa Electric Co. (TECO) has announced it will retire three coal units and double its solar output within two years. According to Tampa Electric’s CEO, Archie Collins, “We currently have on our system 655 megawatts’ worth of renewable energy, of solar. That’s enough solar power to power 100,000 homes, just to ballpark it, and it represents between 6 and 7% of our total energy sales. So we will be at 14% by the end of 2023, and we are committed to even more beyond that.” The majority of Tampa Electric’s energy comes from natural gas which fuels about 74% of Florida’s electricity net generation in 2019, according to the US Energy Information Administration. The $850 million project scheduled for completion by 2023 includes a plan to replace the 445.5-MW coal-fired unit 1 with a 1,090-MW gas-fired generator known as the Big Bend.

Georgia had enough solar installed to power 312,450 homes and the solar market is projected to grow to 1,924 MegaWatts over the next 5 years in 2020. According to the Solar Energy Industries Association, Georgia went from having virtually no solar industry a decade ago to ranking ninth nationwide in installed solar capacity this year. Mandates in states such as Iowa, California, Colorado, and New York that required utilities to source a certain amount of renewables drove initial build-out of solar and wind power in the U.S. over the past three decades. According to Georgia Power spokesman Jeff Wilson, they have added more than 570 solar projects totaling close to 2,000 megawatts to their energy portfolio in the past decade which serves 2.6 million customers across the state. Solar power has also gained the support of conservative coalitions such as the Conservatives for Clean Energy Georgia and the Atlanta Tea Party Patriots, which are also advocating for the expansion of rooftop solar in the state. However, not all politicians are advocating for solar power, such as Lauren ‘Bubba’ McDonald, Georgia public-service commissioner who stated "I oppose any renewable portfolio standard—it’s not necessary." Commissioner Tim Echols - Georgia Public Service Commission has said, “Don’t come into my office talking about climate change or the environment. Talk about new jobs, talk about low-cost energy, talk about reduction of transmission lines.”

State GoalS

Arizona is committed to 100% zero-emission energy by 2050 with a 45% renewable energy portfolio by 2030. The state also plans to eliminate coal by 2031, which is seven years sooner than previously projected. This is big news since coal-fueled about as much or more of the state's electricity generation as nuclear power until 2018. Arizona's second-largest power plant, Navajo Generating Station, which was the largest coal-fired facility in the state also closed in late 2019.

Vice President of PJM, Ken Seiler stated that the five coastal states have proposed developing more than 20,000 MW of offshore wind, noting that 93% of the 190,000 MW in PJM’s interconnection queue reflects solar, wind, storage, or hybrid resources. All but two of the states in the PJM region have renewable portfolio goals. They vary from places such as Ohio, with a clean energy goal of 8.5% by 2026, to states like Virginia, which is shooting for 100% by 2045–2050. Seiler said, “We’ve basically quadrupled the number of requests and the number of MW being interconnected to our system.” He also expects that the industry will rely more on underground transmission, high voltage direct current (HVDC) systems, smart-valve solutions, carbon-core conductors, and other advanced technology.

According to the Texas Tribune, Texas Gov. Greg Abbott and other state leaders received millions in campaign contributions from energy companies after the state electrical grid collapsed in February during the winter storm. Abbott reportedly brought in $4.6 million from oil, gas, and energy industry leaders including a $1 million campaign donation from the co-founder of a pipeline company that benefited from the February winter failure of $2.4 billion. Lt. Gov. Dan Patrick brought in $1.3 million in total from energy interest groups in 2021, or just over a quarter of his total received contributions in 2021. Abbott signed two bills into law to weatherize local energy grids in June 2021, but they do not require energy companies to take action until 2022. Abbott did not include anything related to fixing the power grid on the agenda of his first special legislative session of 2021, which ends August 6.

Form Energy has developed an innovative low-cost 150-hour battery that can store energy over a multi-day period, removing issues of wind and variability of solar. According to the company, their first commercial product is a “rechargeable iron-air battery capable of delivering electricity for 100 hours at system costs competitive with conventional power plants and at less than 1/10th the cost of lithium-ion.” Form Energy president and chief operating officer Ted Wiley said, “We’ve completed the science, what’s left to do is scale up from lab-scale prototypes to grid-scale power plants. A 300MW “pilot” project for Minnesota-based Great River Energy will be commissioned in 2023 according to Wiley. Air battery is a new technology of about a decade, and other companies such as Zinc8 announced a zinc-air battery system providing 100-plus hours of storage and ESS has an iron-based battery. ESS and Form Energy are backed by billionaires such as Bill Gates and Jeff Bezos.