Weekly Power Outlet US - 2024 - Week 50

This week NERC released its Long-Term Reliability Assessment 2024. The best summary comes directly from the executive summary within the report....

In the 2024 LTRA, NERC finds that most of the North American BPS faces mounting resource adequacy challenges over the next 10 years as surging demand growth continues and thermal generators announce plans for retirement. The trends point to critical reliability challenges facing the industry: satisfying escalating energy growth, managing generator retirements, and accelerating resource and transmission development.

For a visual of the above statement, the map below provides a fair amount of alarm bells. Included in the link to the report and is must read, maybe over some eggnog...alcohol optional, but maybe recommended?

Every week we seem to write about the up and down of natural gas and usually we include the EIA stats for the week to give some sort of meaning to the move. With that, here's the obligatory comment....natural gas withdrawal was 125 Bcf which was inside a fairly wide range of estimates that varied from 115 to 147.

This week has seen another big jump in natural gas and the above nor weather really seem to justify it, so what gives? There has been some speculation that this was coming and yesterday it was made official, President-elect Trump made comments that tariffs for the EU could be mitigated if they buy more oil and gas from the US which could help offset the trade deficit between the two. There have been comments that say, it would be hard for the US to actually sell the EU more LNG as most of our export capacity has been sold in forward contracts. That may be, but that doesn't mean some loads can't be bid up in transit as countries try to satisfy the request. We'd be on the side of that might not be a big deal for the market, but it could draw speculative capital and then all bets are off.

As an aside, the below is a snapshot of the article by Stephen Stapcyznki from Bloomberg. Stephen alone is almost worth a Bloomberg news subscription.

During the year we are invited to say a few words at conferences, and it usually involves talking electricity markets with some pontification about the future. We usually have comments, or get questions, on various net-zero goals and such. Our answer is always the same, we don't really pay attention because it's not going to happen. Our background is economics, finance, and years of market experience which means we'd have to look up what kV constitutes a transmission line and such....honestly, just took a second to look up which is proper...kV or KV. But, we do know a little something about economics so when 2035 Net-zero, or any other favorite Net-zero date within the next 50 years comes up, we usually just dismiss because the money never makes sense.

So, for all of those out there that might read the WPO, and have cornered us at the bar and explained how we are wrong, in our very best third grade maturity level, we give you this article.

By the way, if you're buying at the bar, we are willing to be convinced.

The WPO will be off next week as the holiday celebrations with family and friends will be full on. Hopefully all readers are enjoying the season and getting some down time. Happy Holidays!!!

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