Energy Markets Update
Weekly natural gas inventories
The U.S. Energy Information Administration reported last week that natural gas in storage increased by 89 Bcf. The five-year average injection for May is about 91.5 Bcf. Total U.S. natural gas in storage stood at 1,732 Bcf last week, 17.1% less than last year and 15.2% lower than the five-year average.
PJM Prepared To Meet Summer Electricity Demand
- The Mid-Atlantic grid operator PJM Interconnection says it has enough supply to reach summer electricity needs for the 65 million people it serves
- PJM is prepared to handle a forecasted summer peak demand for electricity of approximately 149,000 MW but has shown reliability at even higher loads – in excess of 157,000 MW
- PJM's generation capacity of approximately 185,000 MW implies a 24% reserve margin
- Last year’s peak demand was approximately 149,000 MW and PJM is expecting similar conditions this year
- PJM worked with transmission and generation owners throughout the spring to ensure that energy based infrastructure was completed before the summer
ERCOT Forecasts Lower Peak Load for 2022
- The Electric Reliability Council Of Texas Inc. predicts a planning reserve margin of 22.8% for the summer of 2022, down from 23.9% in the Capacity, Demand and Reserves Report issued in December 2021
- A lower peak load year-over-year is offset by a decline in available resources
- ERCOT estimates peak power demand at 77,317 MW during the summer, which considers a 567-MW reduction due to installed rooftop solar capacity
CAL-ISO Facing Limited Reserves this Summer
- Despite adding an additional 4,000 MW of capacity this year, the California Energy Commission (CEC) has determined that CAISO will have a 1,700 MWh capacity shortfall from meeting a “1 event in 10-years” planning target
- Worsening drought, extreme heat, and wildfire have put CAISO in a challenging position to manage system contingencies during a confluence of extreme scenarios
- CAISO has focused on bolstering demand response integration and coordination with other neighboring RTOs, firefighting resources, and market participants
- Managing the "duck curve" associated with the drop-off in solar production has been a growing challenge for the operator
Source: CAISO
Talen Energy Files for Bankruptcy
- Riverstone Holdings LLC-backed Talen Energy Supply LLC and subsidiaries filed for Ch. 11 on May 9th, turning its 12,000 MW of generation capacity over to its debtors and stranding many retail customers throughout the Mid-Atlantic.
- Retail supplier Talen Energy Marketing, LLC told regulators in Ohio, Maryland, and the District of Columbia that it will relinquish its non-affiliated retail customers to default service
- Talen Energy Marketing confirmed to the Pennsylvania PUC it has rejected "certain" customer contracts, and such affected customers will be dropped to default service
- Talen Energy Marketing also intends to sustain its retail licenses in jurisdictions where it will maintain limited retail power sales necessary for function of its affiliated power plants
Connecticut Commits to Net-Zero
- Connecticut Governor Ned Lemont signed into law SB. 10, which codifies a 100% zero-carbon target for electric grid by 2040
- Connecticut did the rest of New England a favor by committing to purchase 50% of the energy and 100% of the “clean energy attributes” from Millstone in 2020. Millstone had been threatening to shut down. At a PPA price of $49 per MWh, this looks like a brilliant deal for rate payers would are hedged 30% on energy. The downside is that while Millstone alone will equate to 60% carbon free energy in the interim, it could leave a big hole to fill when the PPAs expire in 2029 and/or the units retire in 2035 (860 MW) and 2045 (1,230 MW)
- Compare this to New York's decision to shutter Indian Point nuclear station (1,000 MW) last year, four years ahead of the expiration of its operating license
- A separate bill signed last week also expands distributed solar and “neighborhood solar” targets across the state
New York Regulators Pass on Gas
- New York regulators authorized a new motion for natural gas distribution system planning that would restrict new investment in fossil fuel infrastructure
- The new gas system planning process will require LDCs to file a long-term plan every three years and demonstrate with their rate cases how they will dampen future demand with energy efficiency, demand response, and electrification
- In a related order, the commission approved guidelines for gas utilities facing gas supply issues, creating rules for imposing, managing, and lifting a moratorium
- In December 2021, the city also banned gas hookups in new buildings
- The commission also planned to address other issues after the Climate Action Council finalizes its draft of policy recommendations for 2023. Topics range from hydrogen's role in decarbonizing the gas network to the cost of electrifying heating
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