Jul 28, 2021 10:39:59 AM

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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General Market Update

  • The August 2021 NYMEX Henry Hub traded to $3.959/MMBtu, up to $0.30 (+8.2%) from the previous Wednesday. The price of the 12-month strip averaging August 2021 through July 2022 futures contract was up $0.22 (+6.3%) to $3.693/MMBtu.

  • Boston’s Algonquin Citygate price went down $0.27 (-7.6%) to $3.27/MMBtu last Wednesday. Transco Zone 6 NYC price decreased $0.36 (-9.9%) to $3.27/MMBtu. 

  • Pennsylvania’s Eastern Gas South fell $0.08 (-2.6%) to $3.04/MMBtu. Tennessee Zone 4 Marcellus spot price decreased $0.15 (-4.9%) to $2.90/MMBtu.

  • SoCal Citygate price increased $0.34 (+6.8%) to $5.36/MMBtu last Wednesday. The price at Northern California PG&E Citygate rose $1.07 (+16.6%) to $7.52/MMBtu week over week. 

 

Utility Highlight

  • The upcoming Price to Compare for First Energy Potomac Edison in Maryland, Residential No Electric Heat rate class (RSNH) is $0.06572/kWh, in effect from August 1, 2021, to November 30, 2021.

  • Negative Headroom in the POTED – RSNH territory is now present in the shorter period for a contract with 3 and 6-month terms. Headroom of negative $0.02778/kWh is likely for the 3 month period and headroom of negative $0.03194/kWh is likely for the 6 month period; respectively.

  • The current Price to Compare data for First Energy Potomac Edison in Maryland (POTED), General Service Commercial Small (GSCS) is $0.11560/kWh, in effect from August 1, 2021, to November 30, 2021.

  • Headroom is available in the POTED – GSCS market for the shorter period for contracts with 3 and 6-month terms.  Headroom of $0.02694/kWh is likely for the 3 month period and headroom of $0.08923/kWh is likely for the 6 month period; respectively.

Storage

  • For the week ending July 15th, 2021, the EIA reported net injections into the storage of 49 Bcf, which is more than last year’s net injection of 38 Bcf this week last year and more than the 5-year (2016-2020) average net injections of 36 Bcf.

  • Working natural gas in storage totaled 2,678 Bcf, which is 532 Bcf (-16.6%) lower than last year’s working gas totals of 3,210 Bcf at the same time and 178 Bcf (-6.2%) lower than the 5-year average of 2,856 Bcf.  The total working gas is within the five-year historical range.

 

Supply/Demand

  • The average total supply of natural gas fell 0.1% week/week.  Dry natural gas production was higher by 0.1%, while net imports with Canada decreased by 3.0% compared with the previous week. 

  • Total US consumption of natural gas rose by 1.5% since last week.  Natural gas consumption for power generation increased 3.3%, industrial sector consumption decreased 1.0%, residential-commercial consumption decreased 0.2%, and exports to Mexico decreased 2.3% compared to last week.

  • US LNG exports increased week over week, with 21 vessels departing US ports for a combined 76 Bcf.

 

Weather

  • A hot weather pattern for most of the United States is forecast through the 8-14 window starting July 30th.  The start of August 2021 brings a hot weather pattern as the entire United States, besides New York State and the New England States, are forecast for above-normal temperatures. 

  • New York State and the New England States are forecast for below normal temperatures.  The Pacific Northwest states have the highest probability for much above normal temperatures, while The New England States have the highest probability of below normal temperatures.

  • In the 8-14 day window from July 30th through August 5th, the Pacific Northwest, Rocky Mountain States, Midwestern States, Texas, Southern States, and Florida are forecast for below-normal precipitation. 

  • California, Arizona, Great Lakes States, Middle Atlantic States, and the New England States are forecast for normal precipitation.  Nevada, Utah, Colorado, Wyoming, and Michigan are forecast for above-normal precipitation probability.


 

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