Western Price Survey
August 18, 2017
Western grid operators and utilities stated they are prepared for the Aug. 21 solar eclipse, which is expected to cause a massive drop in solar power generation.
Judging by the Thursday-Friday bump in Western peak power prices, energy traders are also preparing for the eclipse. Western hub values added between $6.55 and as much as $12.70 in that single day’s trading. Friday trades were earmarked for Monday delivery. Off-peak values saw a modest Thursday-to-Friday increase of roughly $3 to $4.
The eclipse is expected to affect solar output from roughly 9 a.m. until noon. The California Independent System Operator forecasts roughly 6,000 MW of power will be dispatched to compensate.
This comes “at a time when [California’s] load may be about 39 GW or 15 percent of its supply,” according to an Aug. 18 Energy GPS report. Analysts said, “It seems like with a nip here and a tuck there the grid operators will have the situation under control.”
Between Aug. 11 and Aug. 18, Western peak power prices added between roughly $4 and as much as $15.10 on average. Mid-Columbia saw the greatest increase, up $15.10 to $39.80/MWh.
Off-peak average values also rose, up $1 to as much as $7.95 in trading.
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Meanwhile, working natural gas in storage was 3,082 Bcf as of Aug. 11, according to U.S. Energy Information Administration estimates. This is a net increase of 53 Bcf compared to the previous week. Storage levels are now 7.6 percent less than a year ago and 1.8 percent greater than the five-year average.
Total national natural gas consumption remained flat week over week at 59.9 Bcf/d, on average, according to the EIA. Natural gas use for power generation was up 1 percent.
The amount of working gas in storage was adjusted by the agency based on resubmitted data. The implied net change was a 2 Bcf increase between the weeks ending July 28 and Aug. 4.
Henry Hub gas traded even at $2.88/MMBtu between Aug. 10 and 17.
Western gas prices shed between 5 and 14 cents in Thursday-to-Thursday trading. El Paso-Permian and Southern California Border gas values each dropped 14 cents, ending at $2.53/MMBtu and $2.68/MMBtu.
CAISO demand peaked at 40,827 MW Aug. 11. Grid demand during the calendar week is expected to reach a peak of 37,521 MW Aug. 18.
In the week ahead, “We will be keeping a close eye on the Pacific region as some weather moves in,” stated Energy GPS analysts in an Aug. 16 report. The concern is “volatility in the wind output in both the Pacific Northwest and California” that can affect the amount of natural gas used for power generation.
Archives of the Western Price Survey for the past year are also available online.
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