Electrify Everything, Natural Gas, Solar Eclipse of CA
Energy Market Update Week 41, brought to you by Acumen.For More Updates Like This, Subscribe Here!
The electrify everything debate isn't new. We've heard about EVs for a handful of years, and more recently heat pumps and the abolition of gas fired appliances. While datacenters and crypto mining have been discussed, the topic of AI has yet to hit the mainstream debate. This week the NYT cited a peer reviewed paper in Joule when making the claim that AI electricity use could equal the amount used annually by a country like Sweden. Within the paper was the chart below that gives a pretty good visual to where we might be heading.
In a presentation we did earlier this summer, we estimated that the world used roughly a California ISO amount of electricity for datacenters in 2022. This would be additional and will quickly move to the top of the concern list regarding electrify everything.
The EIA reported an injection of 84 Bcf into storage vs. an estimate of 91 Bcf for last week. The market seemed to shrug off the shortfall as we had already seen a decent move this week.
Over the weekend, the Baltic-connector marine pipeline that connects Finland to Estonia was damaged in what officials are calling a likely sabotage. Early reports have the timeline to repair the damage into April of 2024. As shown in the chart below, this news sent an already skittish European gas market (see the on/off again Australian LNG strike) higher. While not as drastic of a move, the November contract on Henry Hub moved from $2.95 to $3.40 before settling back near $3.20 in trading today mirroring the Dutch contract.
An interesting gas tidbit, incase the conversation at this weekend's cocktail party slows, North Dakota set a record in gas production for August at 3.3 Bcf/d. The producers flared roughly 4.5% of that production, or .15 Bcf/d. Back in the late 2000-teens when you couldn't pass a pickup truck in the upper Midwest without a "Rockin in the Bakken" bumper sticker, they flared roughly 35% of their production. In late 2020 a target was set for Bakken producers to capture 90% of the gas produced in association with oil production.
Tomorrow an annular eclipse will occur across the southwest part of the US. Ten years ago, the electricity world would have had little reason to care. With the rise of solar, this has been on the radar of the CAISO for months. The timing of the eclipse is in lockstep with the morning load coming online between 8-10am. According to CAISO, if the sky is clear at the peak of the event, they will lose roughly 75% of their solar capacity, or a planned 9,687 MW. For context, this morning the day before, at 830am solar made up 80% of the renewables which were 45% of the total generation stack. That is not an insignificant number, but CAISO has a plan. Interestingly enough, it might not be the lack of sun that is the issue, but rather how quickly it will ramp back up as the eclipse ends.
NOAA WEATHER FORECAST
DAY-AHEAD LMP PRICING & SELECT FUTURES
RTO AROUND THE CLOCK CALENDAR STRIP
DAILY RTO LOAD PROFILES
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