Weekly Power Outlet US - Week 52

A few weeks ago, we quoted from a report from Grid Strategies predicting the electrical load for the US will grow at 4.7% next year. Not to be outdone, PJM released their zonal projections this week. While the report doesn't go into deep commentary, looking at the numbers, PJM is calling for RTO load growth of 2.4% annualized over the next ten years. That works out to roughly a 28 GW for summer peak and 30 GW for winter peak over ten years.

Ironically, we noticed the concept of virtual power plant has gone mainstream. Yesterday morning on CNBC Squawk Box, VPP was introduced with as a possible solution for things like reliability, emissions reduction, lower costs, and helping meet demand. While we like the idea of VPP, especially saying Virtual Power Plant because it sounds cool, given the FERC and PJM forecasts, we'd like to see pen to paper with some numbers showing how demand response, EVs charging, and smart thermostats are going to make up those load numbers.

Roughly a year ago we stated on these pages that we don't make market predictions, we just try to comment on what we see and hear in the markets. Fast forward a year, and we've confirmed why we are better staying out of the prediction game. If a year ago we were forced to make a natural gas, and thus electricity call, we would have had prices much higher thinking it was likely that a repeat of a shortage in Europe would replay much as it did in late 2022. After the LNG armada filling up European storage in late 2022 and a mild 2022-23 winter in Europe, storage has remained relatively high abroad and in the US.

The table below from Gas Infrastructure Europe shows current storage levels. If we add the US at roughly 80% of capacity, it's hard to ignore the argument stating natural gas supplies are sufficient for the rest of the winter.

Ok, now that we've established we aren't making predictions, here is our one for 2024. It's more of a trend prediction than a market or price prognostication. In our view, 2024 will be the year of the transmission discussion. To be fair, we aren't really going out on a limb here as the discussion is well under way. Also, we have no real deep thought-out reasoning on why this will be the trend except for some form of Occom's Razor. Simply put, we've reached the point where transmission upgrades and build out are the answer for a lot of grid reliability questions. If we want to retire baseload generation and replace it with extra intermittent capacity and lower power density, transmission has to be in place to divert and deliver.

NOAA WEATHER FORECAST

DAY-AHEAD LMP PRICING & SELECT FUTURES

RTO ATC, PEAK, & OFF-PEAK CALENDAR STRIP

DAILY RTO LOAD PROFILES

COMMODITIES PRICING

Not getting these updates delivered weekly into your inbox? Let's fix that, click the link below: