Weekly Power Outlet US - 2025 - Week 3

Unless unplugged from any sort of media, it's safe to say everyone is aware of the cold blast heading for the eastern half of the country. ISO alerts have been pinging off on phone apps more frequently than robo calls the last couple of days.

MISO has issued numerous pipeline warnings and, as of this morning, PJM has issued conservative operations for early next week. Given the forecasts, it appears that these warnings might be warranted, but there is a bit of us that thinks there is some 'we aren't getting caught flat footed after Elliot' to these warnings. In any event, stay warm.

As might be expected, natural gas is having an interesting ride this week. The chart below shows the cash market which remains strong on the incoming weather. In a very oversimplified statement, cash is a good indication of what might be bought for tomorrow's power generation, while futures are just that, in the future and used for hedging.

One thing that could be interesting, gas usually is scheduled for pipeline transport on Friday for the weekend. This weekend is a three-day weekend because of the Martin Luther King Holiday. In the past, we've seen some pretty interesting action when scheduling needs to be done over these three-day weekends with some very elevated prices.

Futures markets saw a late day run yesterday as there was a report circulating of more cold weather on the way. It seems this morning that concern has been tempered as the front month (Feb) is trading back around $4 this morning.

This week, EIA storage numbers showed a draw of 258 Bcf which was in line with the 255 Bcf estimate. Interestingly, this now puts storage at 77 Bcf above the fire-year average for this week. Next week's draw could inch us even closer to the five-year average which seemed like a long shot just a few weeks ago. It could make for an interesting remainder of winter.

This week EIA released their 2025 Short Term Energy Outlook as is the first look we get at their 2026 forecast. This report is heavy on oil and distillates, but does cover other topics from electricity to some economic measurements.

For us, we like to skip right to the electricity part of the report. We've pulled a couple interesting charts to review along with the statement on forecasted consumption. Interestingly, the forecasts calls for increased consumption for the next two years which, as pointed out, would be the first three-year consecutive growth period in twenty years. As we've pointed out many times in the WPO...see compute power growth for the reason.

The charts we found most interesting were the change in US generation capacity expected. The forecast calls for most of the increase to come from wind, solar, and battery. We've been skeptical that, if the load forecasts are accurate, meeting those numbers would be accomplished with just renewables. It is worth considering the data doesn't include underutilized current generation so perhaps that's the answer. It will be interesting to see going forward.

Also, of note is the growth of natural gas production over the next two years. Note that for 2025, expectations are for production and import growth of 1.6 Bcf/d and roughly doubling for 2026. 2025 demand (charts in the report) are calling for an increase of 3.2 Bcf/d which even we, being mathematically challenged, can calculate will be a deficit. EIA is calling for 2026 to level out and production and consumption will reach parity. LNG export is given for the reason for consumption growth.

Given the data, EIA is predicting 2025 Henry Hub spot prices should trade between $2.50- $3.90/MMBtu and 2026 between $3.50-$4.40/MMBtu. Part of the lower forecast for 2025 includes the current level of gas in storage. Taking it back to our first paragraph, that might be rewritten after next week.

Electricity consumption. After almost two decades of relatively little change, consumption of electricity grew by 2% in the United States during 2024, and we forecast it will continue growing at that rate in 2025 and 2026. If electricity consumption grows in each of the next two years, it would mark the first three years of consecutive growth since 2005–07, though this result could be affected significantly by weather. The growth in electricity consumption in our forecast is mostly the result of growing power demand in the commercial and industrial sectors.

Finally, every so often we come across some new thesis, lingo, or data sources that are totally foreign to us. This week just such a phrase was introduced. In reading a story about Germany, and their increase in electricity prices and short-term reliance on fossil fuels, we stumbled on something called Dunkelflaute. This is a new one for us so we leave you with....

Dunkelflaute is a phenomenon that can occur in late autumn or during the winter months for several days or weeks due to a decrease in wind and increasingly cloudy skies. 

NOAA WEATHER FORECAST

DAY-AHEAD LMP PRICING & SELECT FUTURES

RTO ATC, PEAK, & OFF-PEAK CALENDAR STRIP

DAILY RTO LOAD PROFILES

COMMODITIES PRICING

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