Weekly Power Outlet US - Week 30

Weekly Power Outlet US - Week 30
Photo by Sam te Kiefte / Unsplash

Hot Hot Hot!, FOMC, Nat Gas Production

Energy Market Update Week #30, brought to you by Acumen.

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Photo by Scott Goodwill / Unsplash

Hot, Hot, Hot! Extreme heat means extreme load. This week ISO emergency messages were popping like a slot machine in a casino. PJM and MISO have issued multiple hot weather and max generation alerts, which basically tells generators to plan on being up and running or called upon per capacity payment agreements. SPP and CAISO had multiple messages ranging from generator alerts to emergency conservation actions watch. So far it looks like the ISOs have made it through the heat, but today could turn into next week's news. PJM is predicting around 156 GW of peak load today which far exceeds last year's peak of 148 GW.

Photo by Nicholas Doherty / Unsplash

This week the FOMC raised the federal funds rate to 5 1/4-1/2. This is now the highest level in 22 years. What does this have to do with electricity? Last week Rhode Island Energy backed out of an offshore wind project that was slated to come online with 400 MW in 2025. Rhode Island Energy indicated that supply chain costs and uncertainty about tax credits were an issue. They also said that higher interest rates have raised the cost of capital and all these concerns have made the project unattractive to the state's ratepayers. From our seat, the first two issues aren't new, but the cost of capital has certainly moved higher over the last 6-9 months with the Fed raising rates. It's hard to imagine this is a standalone problem for just this project.

Rain or shine, it's pumpin' time
Photo by Jeff W / Unsplash

Very rarely will we comment on the oil markets. This week we found the EIAs report on weekly petroleum interesting and poses a question, is this relevant for natural gas? The report looks into the numbers of 40 publicly traded oil companies for capex and cash flow to determine that production could slow.

One of the variables the market has been watching closely on natural gas is the production numbers. In fact, we would argue that storage has taken a backseat, for now, to production when traders and analysts sharpen their pencils for price predictions. There have been some signs of production waning, but the market seems to be agnostic to it for now. Should the call for cash distributions from shareholders and cost of capital increase, this could become a bigger story right quick.

Photo by CHUTTERSNAP / Unsplash

The electrify everything load vs baseload to variable generation doesn't get nearly enough debate or discussion. This week our colleagues put together a blog piece that addresses the EV part of this. It's well worth the read. Managed EV Charging - A Solution for Distribution Utilities (aesi-inc.com)



Red signifies week over week price change down / Green signifies week over week price change up
Forward 12 month strip


Current week daily load plotted with past 3 months daily load


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