Forwards fall on seasonal forecast
Solar, wind increase market share
Houston — In the Electric Reliability Council of Texas wholesale power market, stronger wind output and lighter loads vied with stronger natural gas prices to result in mixed wholesale power prices this November compared with November 2019.
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Day-ahead on-peak locational marginal prices in November averaged in the mid-$20s/MWh range in ERCOT's North and South Hubs and in the high $20s/MWh in the ERCOT Houston load pocket, which were little changed from October LMPs, but flat to slightly higher in comparison with November 2019, according to the S&P Global Platts database.
The wind-heavy West Hub's day-ahead on-peak LMPs averaged in the low $20s/MWh, almost flat with October but down about 12.5% from November 2019.
ERCOT has continued to add wind generation in 2020, approving 1,269 MW of nameplate capacity for commercial operation through the end of November, bringing the total to 25.1 GW.
ERCOT has also almost doubled its solar capacity, much of it in West Texas, approving 1,537 MW of nameplate capacity for commercial operation through the end of November, bringing the total to almost 3.9 GW.
Generation mix
These trends have contributed to renewables taking market share from natural gas and coal, as loads diminished in the shoulder season, averaging just 42.5 GW this November, down from 50.7 GW this October and 43.4 GW in November 2019.
One big factor in the lighter loads was a moderation of temperatures. Population-weighted temperatures averaged 51.6 degrees Fahrenheit this November, down from this October's 56.8 degrees but up significantly from November 2019's 44.7 degrees, according to CustomWeather data.
Population-weighted average combined heating- and cooling-degree days were down this November about 27.7% from this October and about 40.4% from November 2019.
Wind power supplied 27.6% of ERCOT's generation in November, up from 23.3% in October and 22.9% in November 2019. Solar's share was 2.2% this November, down from this October's 2.3% but up from November 2019's 1%.
Gas-fired generation supplied 37.1% of ERCOT's generation this November, down from 44.9% this October and 42.6% in November 2019.
One factor in the gas fleet's year-on-year market share decrease was higher spot gas prices. Houston Ship Channel spot gas averaged $2.957/MMBtu this November, up from November 2019's $2.618/MMBtu, but down from this October's $3.304/MMBtu. Waha spot gas averaged $2.771/MMBtu this November, up from November 2019's $1.624/MMBtu but down from this October's $3.07/MMBtu.
Coal-fired generation's share increased from this October's 19.2% to 20.1% this November. However, this November's total generation, 5.5 TWh, represented a decrease from this October's 6 GWh and November 2019's 5.7 GWh, 20.4% of ERCOT's energy generated.
Forward markets
Power traders appeared to consider the likelihood of milder January weather more important than natural gas prices in using the forward markets to hedge price risk.
ERCOT North Hub January on-peak averaged about $29/MWh this November, down from about $32.75/MWh this October and down from about $31.15/MWh for the January 2020 package in November 2019.
The National Weather Service's November 19 forecast for December, January and February indicated a strong likelihood – 50% to 70% -- of above-normal temperatures across almost all of Texas.
Houston Ship Channel January gas averaged $2.957/MMBtu this November, down from this October's $3.304/MMBtu but up from the $2.618/MMBtu that the January 2020 package averaged in November 2019.
Waha January gas averaged $2.771/MMBtu this November, down from this October's $3.07/MMBtu but up from the $1.624/MMBtu that the January 2020 package averaged in November 2019.
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December 12, 2020 at 04:54AM
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ERCOT Tracker: Higher gas prices, lighter loads have offsetting impacts on ERCOT prices - S&P Global
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