Sep 21, 2021 2:14:59 PM

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. 

pexels-pixabay-33062

 

General Market Update

  • The October 2021 NYMEX Henry Hub traded to $5.460/MMBtu, up $0.55 (+11.1%) from the previous Wednesday. The price of the 12-month strip averaging October 2021 through September 2022 futures contract was up $0.35 (+8.1%) to $4.669/MMBtu.
  • Boston’s Algonquin Citygate price went up $0.87 (+21.4%) to $5.45/MMBtu last Wednesday. Transco Zone 6 NYC price increased $0.87 (+20.0%) to $5.23/MMBtu. 
  • Pennsylvania’s Eastern Gas South rose $0.90 (+21.6%) to $5.07/MMBtu. Tennessee Zone 4 Marcellus spot price increased $0.88 (+21.3%) to $5.01/MMBtu.
  • SoCal Citygate price decreased $12.03 (-60.0%) to $8.03/MMBtu last Wednesday. The price at Northern California PG&E Citygate rose $0.79 (+11.9%) to $7.43/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 $0.06531/kWh, in effect from October 1, 2021 to December 31, 2021.
  • Negative Headroom in the POTED – RSNH territory is now present in the shorter periods for contract with 3 and 6 month term.  Headroom of negative $0.04662/kWh is likely for the 3 month period and headroom of negative $0.05475/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 $0.10678/kWh, in effect from October 1, 2021 to December 31, 2021. 
  • Headroom is available in the POTED – GSCS market for the shorter periods for contract with 3 and 6 month term.  Headroom of $0.00607/kWh is likely for the 3 month period and headroom of $0.00339/kWh is likely for the 6 month period; respectively.

Storage

  • For the week ending September 10th, 2021, the EIA reported net injections into storage of 83 Bcf, which is less than last year’s net injection of 86 Bcf this week last year and more than the 5-year (2016-2020) average net injections of 79 Bcf.
  • Working natural gas in storage totaled 3,006 Bcf, which is 595 Bcf (-16.5%) lower than last year’s working gas totals of 3,607 Bcf at the same time and 231 Bcf (-7.1%) lower than the 5-year average of 3,237 Bcf.  Total working gas is within the five-year historical range.

Supply/Demand

  • Average total supply of natural gas rose 1.7% week/week.  Dry natural gas production increased by 1.4%, while net imports with Canada increased by 7.6% compared with the previous week. 
  • Total US consumption of natural gas rose by 2.6% since last week.  Natural gas consumption for power generation increased 3.4%, industrial sector consumption increased 0.8%, residential-commercial consumption increased 4.3% week over week, and exports to Mexico decreased 6.9% compared to last week.
  • US LNG exports decreased week over week, with 16 vessels departing US ports for a combined 56 Bcf.

Weather

  • A hot weather pattern for the United States, besides the West Coast, is forecast to wrap up September in the 8-14 day outlook starting September 28th through October 4th. The end of September 2021 brings a hot weather pattern for much of the USA, as the entire United States, besides the Pacific Coast States and Rocky Mountain States are forecast for above normal temperatures. 
  • The Pacific Coast States and Rocky Mountain States are forecast for normal temperatures.  Nevada is forecast for below normal temperatures.  The New England States have the highest probability for much above normal temperatures. 
  • In the 8-14 day window from September 2th  through October 4th, the Rocky Mountain States, Southwestern States, Midwestern States and non-coastal Southern States are forecast for below normal precipitation. 
  • The Pacific Coast States, New England States, Middle Atlantic States, and Coastal Southern States including Florida are forecast for normal precipitation.  Nowhere in the Continental United States is forecast for above normal precipitation probability.

Questions or Comments?

Let TRUELight provide insightful market data and pricing expertise. 

Contact Us

Article Topics:
#marketupdate