Natural gas pricing was slightly up last week, but came off again and power prices were flat to down. PJM and other power grid operators highlighted their ability and precautions to continue to run a reliable grid in the face of COVID-19. Ohio PUC alleges a supplier, knowingly, grossly overcharged customers. Battery Storage deployments were expected to grow exponentially over the next two years. Southeastern US should see above average temperatures into the later half of March. Best wishes and stay safe everyone.
The April 2020 NYMEX Henry Hub traded up to $1.87/MMBtu, a $0.05 (+2.8%) increase from the previous Wednesday. The price of the 12-month strip averaging April 2020 through March 2021 futures contracts climbed $0.08 (+3.8%) to $2.24/MMBtu. For the week ending February 21, the EIA reported net withdrawals from storage of 143 Bcf, which is lower than last year’s net withdrawals of 167 Bcf for this week and higher than the 5-year (2015–19) average net withdrawals of 122 Bcf.
For the week ending March 6, 2020, the EIA reported net withdrawals from storage of 48 Bcf, which is lower than last year’s net withdrawals of 164 Bcf for this week and lower than the 5-year (2015–19) average net withdrawals of 99 Bcf.
Working natural gas in storage totaled 2,043 Bcf, which is 796 Bcf (63.8%) higher than last year’s working gas totals of 1,247 Bcf at the same time and 227 Bcf (12.5%) higher than the 5-year (2015-2019) average of 2,043 Bcf. Total working gas is within the five-year historical range.
Power prices continue to move in a tight range as we exited our record winter but trend is for prices to still trend lower short term as we enter the spring outage season. Most of the major north east power trading hubs and load zones continued to trend lower this week and down roughly another -2% to -3% week over week for most terms. We do expect the weakness or prices to test new lows as the market will need to adjust to lower demand number over the next few months and possibly into the summer 2020 season.
Value to hedge continues in all northeast locations for balance of the year and can monitor and pick your spots with winter 2021 pricing as have seen that move up on some days but we should see additional value open for the winter terms over the shorter term. Continue to stay on top of your customer book make-up and type of customers that will see large drops in energy demand short term to adjust hedge positions and strategy accordingly. Stay safe everyone. Contact TrueLight to stay on top of value in current forward curve pricing and learn more about our portfolio management execution expertise.
Headroom in the CELCO territory of Massachusetts (Eversource) is now available in the shorter periods for contracts with 3 and 6 month terms. Headroom of $0.01597/kWh and $0.00129/kWh is likely for these periods, respectively. Let TrueLight help you stay on top of current rates and subscribe to our PTC tracking and headroom reporting or use our price verification service to ensure you stay on top of all utility rate changes.
The Energy Storage Association highlighted the amount of energy storage capacity deployed in the United stated reaching 3,646MW by 2021 from the 523MW deployed in 2019. Florida Power & Light expects the 409MW Manatee Energy Storage Center to be operational by 2021 in Bradenton, FL. In Northern California, PG&E was in progress on the 730MW Elkhorn battery storage project. Front-of-the-meter, utility-scale storage projects, like these large projects above are poised to have a much larger impact on power pricing as compared to prior forecasts that would focus on behind-the-meter storage. Contact us for advice and valuation modeling on all your clean energy generation development projects.
PJM issued updated guidance and precautions last week as it monitors the COVID-19 situation. The reliable operation of the electricity grid remains PJM’s and other grid operator's top priority. PJM did confirm they can run all its market applications remotely if necessary. PJM, and the market in general, highlighted the need to closely monitor the guidance provided by the Centers for Disease Control (CDC), the World Health Organization, the U.S. State Department and your local/state officials and health departments. The other Independent Systems Operators (ISO’s) in the USA power markets have implemented similar actions. Contact TrueLight for strategic energy market support and analysis of the most up-to-date energy market news or use our price verification service to ensure the most recent market shifts are reflected in your forward price assumptions.
Below average temperatures are forecast for the western continental U.S. in the 8-14 day window starting March 21st. The highest probability for cool anomalies are along the West Coast and in the northern Rockies. Conversely, the East Coast and Texas are expected to see above average temperatures, with the highest chances for warmth South Eastern states and Florida.