At Capacity

Energy Markets Update

In this newsletter, we cover key factors impacting US energy markets.  This week, we recap Earth Day 2025 and cover Canada's LNG exporting, MISO's interconnectivity plans, and compliance and reporting tips for this spring sustainability reporting season. 

Table of Contents

• Market Update
• Earth Day 2025: This Year’s Theme is Clean Energy
• Canada’s Sticky Business: From Liquid Gold To Liquefied Gas
• MISO’s Proposal to Expedite Interconnections
• Spring Into Action: Compliance & Reporting Season is Here!

Weekly Natural Gas Inventories

Source: EIA

Source: EIA

Market Update

• After months of support following a cold winter and general–albeit warranted–concerns of tightening fundamentals in North American, near term rates are softening for both gas and power.
• Natural gas prompt month trades straddled the $3.00 per MMbtu mark this week, the first time since mid-November. Intraday trades surpassed $4.50 per MMbtu on March 10, but they have been on a steady downtrend since.
• Most of the action has been in the near term with gas futures for calendar years 2026, 2027, and 2028 down 10%, 3%, and 1% over the past month. Over the past quarter we’ve been advising customers of value in the 2027 and 2028 strips, now priced at $3.75 and $3.60, respectively. We still think this is a reasonable entry point for budget priority customers, however the near term part of the curve is coming into the “reasonable range” as well. This may be an advantageous entry point for customers who’ve been waiting on the sidelines.
• The decline in recent weeks is almost certainly reflective of the “recession trade” that is mirrored in other markets including equities and consumer staples. One of our concerns is that near term price weakness could give way to further support later out in the curve, particularly in late 2026-2028. Cheap oil and gas will invariably make already skittish drillers more cautious, and this is a lens through which we are sizing up price movement over the coming years. 

FERC approves auction floor and cap for the next two PJM capacity auctions.

• On April 22, the Federal Energy Regulatory Commission (FERC) approved a proposal by PJM Interconnection, the operator of the Mid-Atlantic power grid, which will implement a $325/MW-day price cap and a $175/MW-day floor for the next two capacity auctions.
  • The price collar originated from a negotiation led by PA governor Josh Shapiro in response to last year’s eye watering auction for the June 2025 - May 2026 period, which cleared at $270/MW-day.
  • The proposal has been contentious and even drew opposition from PJMs market monitor.
  • FERC’s approval implicitly locks in a 3-year period of historically high rates for the region. Whether it will incentivize the new generation is uncertain. We have our doubts given the delayed timing of the auctions, and compounding investor uncertainty in today’s tar-iff laden economic environment, let alone a 3-year ahead time horizon. However, the elevated capacity prices over the next few years can be foremost interpreted as a lifeline to marginal thermal generation and even some recently mothballed coal-fired generation. It also presents PJM customers with a meaningful opportunity to mitigate costs with demand response and capacity tag management. Reach out to your energy advisor at commodity@veolia.com

In other news

• The Trump administration submitted substantive orders to halt construction on Dominion Energy Inc.'s 2.6-GW Coastal Virginia Offshore Wind project on April 23 following the one issued on April 16th that suspended construction of Equinor ASA's 810-MW Empire Wind 1 project of the coast of New York. The move adds more uncertainty to an already beleaguered offshore wind industry, whereas up until now, fully permitted projects were thought to be safe from federal intervention.
• After freezing some previously guaranteed funding to renewable energy projects issued under President Biden’s Inflation Reduction Act, the Trump administration has been ordered to resume IRA funding .
• President Trump’s administration asked FERC Commissioner Willie Phillips to step aside, which he did on April 22. Phillips’ resignation ends Democrats’ majority at the agency, leaving the commission with a 2-2 split, and will allow the president to tap a new regulator and install a Republican majority on the five-member panel.
• On April 20, ISO New England reported a record low grid demand of 5,318 MW, attributed to mild weather and increased rooftop solar generation, which peaked at 6,600 MW. This trend underscores the growing impact of distributed solar and the emergence of the infamous “duck curve” demand pattern that presents in markets with higher solar penetration. Make way for ducklings in Boston!
• BP commenced loading its inaugural LNG shipment from Venture Global’s Calcasieu Pass facility in Louisiana, marking the start of its supply agreement. This development reinforces the U.S.‘s position as the world’s leading LNG exporter. The facility has a nominal capacity of 1.3 bcf/d and peak capacity of 1.6 bcf/d. The International Energy Agency projects that North America will account for approximately 85% of global LNG supply growth in 2025, with the U.S. contributing nearly 75%. Key projects include Venture Global’s Plaquemines and Calcasieu Pass facilities, as well as Cheniere’s Corpus Christi expansion.
  
  

Earth Day 2025: This Year’s Theme is Clean Energy

The 55th anniversary of Earth Day, with the theme "OUR POWER, OUR PLANET," was observed on Tuesday, April 22, 2025. This year, the organizers at earthday.org are asking for a commitment to harnessing renewable energy for the progression towards a healthy, sustainable, and equitable future. Their published goal is to triple global renewable energy generation by 2030. Below is a summary of the current status of renewable energy deployment across the world, as well as background on the why and how. 

Back to the basics; what are the benefits of opting for clean energy? Some examples include:

• Less burning of fossil fuels means reduced air pollution, which would alleviate risks of respiratory and cardiovascular diseases like asthma, bronchitis, heart attacks, and strokes.
• With this, decreased greenhouse gas emissions would assist in mitigating climate change and its detriments, such as heatwaves, floods, and the spread of infectious diseases.
• Beyond health benefits, renewable energy will create 14 million new jobs globally. In 2023, renewable energy, worldwide, was worth $1.21 trillion and is projected to grow 17.2% annually from 2024 to 2030.

What does our current global energy portfolio look like? Based on the IEA’s 2025 Global Energy Review, we know that: 

Growth and Demand

• In 2024, global energy demand increased by 2.2%, exceeding the average growth rate of the last ten years. Renewables contributed most to the expansion of global energy supply at 38%, with natural gas following at 28%. Coal, oil, and nuclear accounted for 15%, 11%, and 8% of the growth, respectively.
• Demand for natural gas experienced the most significant increase among fossil fuels. Demand increased by 2.7% in 2024, rising by 115 billion cubic meters (bcm), compared with an average of around 75 bcm annually over the past decade.
• Global electricity consumption rose by nearly 1,100 terawatt-hours (TWh) in 2024, more than twice the annual average increase over the past decade. We are able to attribute the rising global electricity use to increased cooling demand from extreme temperatures, industrial growth, the electrification of transport, and the expansion of data centers.

Data source: IEA

Renewable Energy

• In 2024, 80% of the growth in global electricity generation was provided by renewable sources and nuclear power. Together, they contributed 40% of total generation for the first time, with renewables alone supplying 32%.
• Growth in energy-related carbon dioxide (CO2) emissions continues to decouple from global economic growth. Emissions growth slowed to 0.8% in 2024, while the global economy expanded by more than 3%.
  • Still, total energy-related CO2 emissions hit an all-time high of 37.8 Gt CO2.
    

Source: IEA

What needs to happen for this transformation to take place?

The International Renewable Energy Agency (IRENA) lists key recommendations for tripling renewable power and doubling energy efficiency by 2030. Some important factors include: 

• Enhancing energy efficiency by implementing efficient technologies across various end-use sectors and expanding electrification. 
• With this should come energy efficiency policy measures that include targets with specific timelines, regulatory frameworks like building codes and efficiency standards for appliances, financial incentives, and public campaigns to build awareness of the role of energy efficiency measures, public transport and green mobility for cost savings and collective decarbonization goals. The US has been a leader on many of these standards. 
• Existing electricity infrastructure would need to be expanded and modernized to create a new energy system fit for renewables, e.g. transmission infrastructure.
• Renewable power capacity should be increased more rapidly in developing countries
• Stronger international collaboration

This transformation is a daunting challenge, but one that requires attention and support as we continue to globally develop; invent new technologies; and pursue healthy, sustainable, and equitable futures for all. Every day is Earth Day! 

Canada’s Sticky Business: From Liquid Gold To Liquefied Gas 

An Overview of Canada’s Large-Scale Leap into LNG Exporting

Canada has a long-standing reputation for tapping into and exporting its iconic natural resource, maple syrup, referred to in their industry as “Liquid Gold”. Liquefied Natural Gas (LNG) is a very different natural resource available domestically in large quantities, which the country has yet to achieve export status with for various economic and logistical reasons. It appears that a new era is here, however, as LNG exports from the Great White North are set to begin next quarter, exceeding its liquid gold’s annual export revenues before the year is over. 

• LNG Canada's Kitimat facility received its cooldown cargo earlier this month in a critical pre-startup process of equipment and emissions testing. These steps are expected to be completed by early May and come amid tight global LNG markets, with Asian spot prices (JKM) trading at $11.660/MMBtu as of April 23.
• The facility remains on track for its first LNG production and export this summer, according to project partner Petronas. The project ownership structure also includes Shell as the operator with a 40% stake, PetroChina, Mitsubishi, and Kogas. We note this Canadian-Asian partnership as the first of the new port’s strategic advantages.
• The other key advantage is geography in that embarkments from Kitimat can reach ports in Asian markets 30-50% faster than U.S. Gulf Coast shipments, delivering substantial savings in transportation time and costs, according to S&P Global Insights.
• Phase 1 is projected to generate approximately 10.5 billion CAD in annual revenue, while a proposed Phase 2 would potentially double that. To put this economic growth in perspective: Canada's iconic maple syrup exports, which dominate global trade of liquid gold (LG), will soon be dwarfed by the country's emerging LNG revenue stream by the end of next year. See our commodity revenue projections in the chart below.

Sources: S&P Global Insights - Based on current long-term contract prices in the $12-15/MMBtu range
Agriculture.canada.ca - 2024 net export revenue figure, projecting 3% growth y-o-y through 2026

• Below, we chart the estimated 2024 outputs from major producing nations, contextualizing LNG Canada's expected position in the global market. We note that this landscape is rapidly evolving, with significant capacity expansions underway in both the United States and Qatar, as we covered in our last newsletter.
  
  

Source: EIA

• While Canada has long dominated the global maple syrup trade, the energy sector now watches closely to see how the Great White North will establish itself in global LNG trade. With LNG Canada leading the way with key partnerships secured throughout Asia, the country's role in global gas markets will certainly see significant growth through the second half of the decade. As we saw with the tariff disputes on gas imports and exports last quarter, it's clear that any developments like this coming from Canada have the potential to affect prices for their neighbor to the south.

MISO’s Proposal to Expedite Interconnections

• Interconnection can be a slow process due to the fact that there are over a thousand new generators in the queue totaling over 300 GW. These projects have traditionally been reviewed on a first-come, first-serve basis. We’ve covered in earlier newsletters MISO’s struggle with mitigating the future generation capacity crisis and declining reserve margins as grid demand increases and coal plants are being retired.

Data source: MISO

• On April 18th, MISO filed a novel attempt to address interconnection issues by requesting that FERC allow owners of power plants already running to bypass some of the regulations when replacing retiring generators, even in some cases when a proposed  replacement generator is interconnected at a different location.
• Those in favor of this proposal posit that it would increase the efficiency of interconnecting new generators which would prevent prices from getting out of hand for ratepayers. After all, MISO is projecting 25GW of coal capacity to retire within the next 5 years, and the pace of the current process isn’t keeping up.
• Renewable energy groups have concerns about this proposal as renewable projects make up over 94% of capacity in the queue. Developers of these projects and environmental groups argue that the proposal would create new interconnection points to the grid without putting them through the rigorous impact studies that a majority of projects are subject to. The fear is that non-renewable projects would be able to jump to the front of the long interconnection queue. See Info graph below for all ISOs
•  

Source: S&P Global

• Should FERC approve the proposal, renewable energy projects could be backlogged while incumbent generators, presumably mostly fossil plants, accelerate their interconnection status’. This could also set a precedent for other RTO’s since capacity issues are becoming a main point of discussion across all regions. MISO is requesting that the proposal take effect on May 28th 2025. We’ll update our readers as the docket progresses.

Spring into action: compliance & reporting season is here!

Juggling building performance reporting deadlines can be complicated, particularly for larger customers with disparate portfolios. Below is a summary of deadlines to help you stay organized, avoid missed deadlines, costly non-compliance penalties, and all-around headaches. 

• If you haven’t already, the first crucial step is understanding which regulations - federal, state, and local - apply to your properties. These regulations typically set compliance requirements based on factors such as building size, usage type (such as manufacturing or lab facilities), or other criteria.
• 2025 is a significant milestone in several state and city-wide building performance regulations; in addition to reporting their energy usage, many building owners must also take active measures to decrease their environmental impact and meet specific emissions reduction or energy efficiency targets set by their local regulations.
• While your buildings may not face immediate emissions reduction requirements in the current compliance period, it's essential to think ahead to manage your future obligations. Developing a compliance strategy, assessing the cost impacts, and contracting depending on the chosen pathway - a Power Purchase Agreement (PPA), for example - may require several years of lead time.
• While similar in spirit, these policies vary widely in their accepted compliance mechanisms. For example, Boston’s BERDO policy allows building owners to comply by purchasing unbundled MA Class I Renewable Energy Certificates (RECs). On the other hand, their next door neighbor, Cambridge, does not recognize unbundled RECs of any kind as a valid compliance mechanism. Thus it’s important to understand not only when you need to report, but also, how you are going to comply.
• Northeast cities are the ambitious frontrunners for building energy policies with NYC, Boston, and Cambridge requiring substantial emissions reductions from their largest buildings starting this year. Though, each city's approach varies in its specific requirements and structure.

• Our Energy Markets team has years of experience navigating clients through the sea of building regulations and reporting. We not only help to identify which ordinances will affect your properties, but also can assist in developing customized, cost-effective compliance strategies. For more information, feel free to contact our group commodity@veolia.com

Market Data

Market data disclaimer: Data provided in the "Market Data" section is for the newsletter recipient only, and should not be shared with outside parties.