ERCOT summer forward curves have crested toward $160/MWh for July/August.

ERCOT summer forward curves have crested toward $160/MWh for July and August in the wake of an ERCOT ISO report that reserve margins could be below 10% http://www.ercot.com/news/releases/show/144305. ERCOT President and CEO Bill Magness said, “A growing economy and retirements of generating units will tighten reserves available on peak summer days.”

Historically, tight reserve margins indicate a power market where generators can earn scarcity rents far above their variable cost of generation. In the past, Texas heat waves resulted in sustained price spikes near the market ceiling price for several days. However, this traditional thinking does not account for the new dynamics of renewables, which have a relatively small capacity contribution compared to their expected contribution toward energy. Yes, the ERCOT ISO is right that the capacity contribution of renewables can be small under extreme meteorology’s, but the expected energy production of renewables make the odds of ERCOT generators realizing scarcity akin to previous regimes, where reserve margins dipped below 10% a statistically extreme event. While the summer may produce select hours with high prices, the odds of having these prices persist for a sustained period such as a heat wave become a statistically extreme event.

The implications of the market fundamentals suggest that the realized average spot energy prices will fall below the monthly summer forward marks of this late spring and early summer. At the same time, we expect the volatility in day-ahead and real-time prices to continue to increase as a greater portion of the energy supply is derived from intermittent renewables.

How Will Disruptive Technology and Changing Markets Affect Natural Gas in the Future?

Here is an interesting article from UtilityDive.com which highlights the three main reasons why natural gas’s reign may come to a quick end. Three main topics explored are:

  1. Too much capacity for current and future demand
  2. Gas lacks flexibility to ramp up, down quickly
  3. Rapid advance of battery storage

Follow the link below for the full article…

https://www.utilitydive.com/news/why-natural-gas-reign-may-come-to-a-quick-end/524613/

 

Join us for the Ascend Analytics Summit!

Hello!

For the second year, Ascend Analytics is bringing together energy industry experts, senior energy executives, and the broader energy community to discuss the latest trends and best practices in portfolio management and planning. We’d love for you to join us! The Ascend Analytics Summit will take place in beautiful Boulder, CO in October.

This year’s user summit will address decision analysis concerning the most pressing challenges facing the energy industry, including changing market dynamics. The summit will provide a platform for sharing practical insights into the latest approaches for planning and portfolio management. You will learn new approaches to data visualization and how these approaches can concisely communicate complex modeling results.

Discounted Early Bird registration is available through September 14th. To register, go to ascendanalytics.com and click “REGISTER NOW” or look to the last page of the attached agenda. Please don’t hesitate to reach out with any questions or if you need additional information and we would be glad to help out.

We look forward to seeing you at the Summit this year!