Energy Market Intelligence

#marketupdate

US Wind Project Secures $2.3B, Community Solar Launch in NY, Gas Prices Hit Seven Year High and Market Intel

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. 

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#marketupdate

Hurricane Ida, PJM Reform Policy, Coal Powered Solar Panels, and Market Intel

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.

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#marketupdate

Blockchain Pilot in PJM, TECO Retiring Coal Units, Solar Boom in GA, and Market Intel

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.”

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marketseries cleanenergy arizona

TRUELight's Clean Energy Market Series: Arizona

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.

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#marketupdate

PJM Expansion, Texas Leaders Received Millions in Campaign Contributions, Iron Air Battery Backed By Billionaires and Market Intel

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.

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The Rise of Battery Energy Storage

With the growth of renewables, the need for energy storage is increasing greatly. Battery storage systems are emerging as one of the key solutions to effectively integrate high shares of solar and wind renewables in power systems globally. Battery storage, or battery energy storage systems (BESS), are devices that enable energy from renewables to be stored and then released when customers need power. This battery storage technology plays a key role in ensuring that homes and businesses can be powered by green energy even when the sun is down, or the wind is not blowing for example.

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#marketupdate

Renewable Energy Rush by Tech Giants, Solar Power Cons, Coal Production Falls, Tesla Helps CA Grid and Market Intel

Amazon has committed to covering its entire company’s activities by 2025 by purchasing 1.5 gigawatts of production capacity from 14 new solar and wind plants around the world. According to the research firm BloombergNEF,  Amazon, Google, Facebook and Microsoft are the top four corporate buyers of publicly disclosed renewable energy purchase agreements which account for 30% or 25.7 gigawatts of the cumulative total from corporations globally. Tech companies are pressured to show investments in renewables as data centers were estimated to account for roughly 1% of global electricity use, according to a 2020 paper in the journal Science. With work from home and the rise of 5G networks, the growing efficiency has not been able to offset rising usage as it was in the past. The demand for PPAs has also increased as these tech companies are looking into the wind and solar project developments.

The most popular renewable energy source, solar, is seeing even more demand with the decline in price, immense support with government subsidies, and big tech companies, but not everyone is seeing its benefits. Environmentalists are pushing back on solar projects who are concerned that the farms will spoil the land and affect the ecosystem. According to Zhengyao Lu from Sweden’s Lund University and Benjamin Smith from Western Sydney University, solar panels convert light into electricity at an average rate of 15% - 20%, and the rest of the heat is released energy back into the environment which could damage the global climate. The study focused on turning the world’s largest desert, the Sahara into a solar farm.

The EIA reported coal production fell to its lowest level since 1965 in 2020 totaling 535 million short tons (MMst) which was a 24% decrease from 706 MMst mined in 2019. The decline of U.S. coal production was largely due to less demand for coal internationally as well as in the U.S. The low price of natural gas especially during the covid pandemic also led to the lower demand for coal. Wyoming has the largest coal producer in the U.S. with 41% of coal production (219 MMst) and the state produced 21% lower in 2020 compared to 2019. West Virginia, which is the second-largest coal producer, had an even larger decline with 28% in 2020 compared to 2019. America’s biggest coal producer, Peabody Energy, owns the North Antelope Rochelle Coal Mine, the largest coal mine in the world, in the Powder River Basin, and according to Forbes “The outlook for the North Antelope Rochelle Mine has been negatively impacted by the accelerated decline of coal-fired electricity generation in the U.S., driven by the reduced utilization of plants and plant retirements, sustained low natural gas pricing, and the increased use of renewable energy sources. These factors have led to the expectation of reduced future sales volumes.”

Tesla is creating a “virtual power plant” which will allow Californian owners of its Powerwall to feed electricity into the power grid during high energy demand. Tesla states, “The California grid operator forecasts a continued need for Californians to support the grid through 2021. Help create the largest distributed battery system in the world and avoid dependence on the least efficient fossil fuel power plants. Opt-in to the Tesla Virtual Power Plant (VPP), and Tesla will dispatch your Powerwall when the grid needs support while continuing to maintain your energy security.” Tesla says it's not making any money out of the program and is a public good program to support the California grid, and there is no compensation for Tesla or customers.

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Community Solar: The Demand for Clean Energy

The demand for renewable energy continues to be on the rise as more people are becoming aware of the energy industry's environmental implications. With this increase in demand, the need for expanding clean energy infrastructure is necessary to meet the renewable energy goals. In the last decade, solar has experienced an average annual growth rate of 42%. According to a report released by Solar Energy Industries Association and Wood Mackenzie, solar installations grew 43% year over year, reaching a record 19.2 gigawatts of new capacity.  Overall, 2020 U.S. solar consumption increased 22% from 2019. With the shift towards renewables, there are now more than 100 gigawatts (GW) of solar capacity installed nationwide, enough to power 18.6 million homes. According to the IEA, most of the solar energy in the U.S. was consumed at a residential level and over 2.8 million U.S. households have already gone solar.

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portfoliomanagement

Top 5 Tips for Effective Portfolio Management

Given the lack of real-time price volatility during peak demand seasons, it is especially important to take into factors impacted by your as-realized contract margins. In our 100+ years of experience executing trades in the wholesale and retail power markets, we have identified some key data points and drivers that should be in the minds of every energy marketer to develop and execute a solid portfolio management strategy.

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#marketupdate

MOPR Update, Heatwave Affects Infrastructure, NRG Retires Power Plants and Market Intel

PJM Board of Managers approved to prohibit and mitigate the exercise of Buyer-Side Market Power (BSMP) through the minimum offer price rule (MOPR) in the wholesale power market. According to Adam Keech, Vice President of market design and economics at PJM, the PJM proposal seeks to mitigate the MOPR in three critical ways: to narrow the scope of the MOPR back where it was originally intended which was aimed at mitigating buyer-side market power; to avoid harming state policies and power providers with self-supply business models, and to make sure the market design is robust and could work well into the future. Calpine, Exelon, Public Service Electric & Gas Company, LS Power, E-Cubed Policy Associates, Independent Market Monitor (IMM), and American Municipal Power (AMP) issued their own proposals to PJM stakeholders. PJM President and CEO Manu Asthana said “this proposal ensures that our capacity market accommodates state policy and self-supply business models, avoids customer costs of double-procurement, addresses attempted exercises of buyer-side market power and creates a sustainable market design by keeping clearing prices consistent with supply and demand fundamentals.” 

A heatwave has prompted excessive heat warnings from the Pacific Northwest to the Northeast, Western Canada, and the East Coast. The extreme conditions have sent future prices to soar early in the season. According to NatGasWeather “what helps make the coming pattern bullish is the likelihood of a hot pattern for the 11- to 15-day period (July 7-12) carrying over to the 16- to 20-day period (July 13-17).” Roadways and energy infrastructure were affected due to the heatwave, including power outages, transmission line voltage reductions, compressor issues, and pipelines. Aegis Hedging Solutions said several compressor stations in Western Canada were offline for periods of time because of the extreme heat. Generators for hydroelectric power have decreased capacity in producing power because of lower lake levels. Power outages in California and western states lead to higher gas prices.

NRG Energy Inc. said it will retire three coal-fired power plants—two in Illinois and one in Delaware—next year after disappointing results in the May 2021 capacity auction for the PJM Interconnection. The clearing price for most of PJM’s service territory dropped to $50/MW-day in the 2022-23 capacity auction, down from $140/MW-day for the unconstrained regional transmission organization region in the 2021-22 capacity auction. PJM said there was a reduction of 8,175 MW of coal generation from the previous auction when accounting for resources committed to fixed resource requirement plans. Christopher Moser, NRG’s executive vice president of operations said the three facilities would be retired in June 2022. 

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