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May 25, 2023
Natural Gas is down about $0.30/MMBtu from last week highs due to the softening of weather. In the prompt year, power prices have come off up to $5/MWh. The backs have come off about $2/MWh. The backs are coming off at a much slower pace due to the potential for more coal retirements and possibility that they will outpace new generation installments.
Weather aside, there is a perception that NG is oversupplied with 2,240 BCF in the ground representing 30% above last year. For the week ending 5/19/2023, the storage expectation is for another injection of +99 BCF.
In PJM, the 25/26 BRA has been delayed indefinitely. PJM continues to seek ways to increase grid reliability. Two issues that are at hand are how to incentivize generators to perform under extreme weather such as during winter storm Elliott in December 2022. The second is addressing the intermittent nature of solar and wind producers as these resources are expected to increase their presence in the product mix.
Interregional Transmission Planning Improvement Act Reintroduced
US Senator Martin Heinrich has reintroduced the Interregional Transmission Planning Improvement Act, a bill aimed at promoting the development of interregional power lines in the United States. These power lines are crucial for expanding renewable energy deployment. The legislation would require the Federal Energy Regulatory Commission (FERC) to establish a final rule within 18 months, focusing on enhancing planning and cost allocation for transmission lines that span multiple regions.
Interregional power line projects have the potential to connect heavily populated areas with remote regions rich in wind and solar energy. However, these projects face significant challenges related to permitting and funding.
Heinrich's bill seeks to ensure that FERC's planning processes consider the economic, reliability, and operational benefits of interregional projects. It also mandates that interregional planning is conducted at least every two years. Additionally, FERC would be obligated to allow transmission developers to recover project costs, provided the benefits outweigh the expenses.
The proposed legislation has garnered support from clean energy developers and industry groups. It aligns with broader efforts in Congress to streamline permitting barriers for energy projects, including transmission. Senator Heinrich's spokesperson expressed hope that the bill would be included in a comprehensive permitting reform package.
Overall, the Interregional Transmission Planning Improvement Act aims to modernize the electric grid, enhance its resilience, and tackle the climate crisis by facilitating interregional transmission projects.
Federal Judge Affirms Approvals for Vineyard Offshore Wind Farm
A federal judge has upheld key approvals for Avangrid Inc.'s Vineyard Offshore Wind Project, an 800-megawatt (MW) initiative. The US District Court for the District of Massachusetts ruled that the US Bureau of Ocean Energy Management (BOEM) and the National Marine Fisheries Service (NMFS) complied with environmental regulations when granting approval for the project. The court agreed with the agencies' assessment that the project's approval took into account the best available science for protecting the endangered North Atlantic Right Whale, including implementing mitigation measures such as seasonal restrictions on pile driving and the use of protected species observers.
The court dismissed claims made by Nantucket Residents Against Turbines, stating that the federal agencies had adequately analyzed relevant studies and data. Avangrid's Chief Operating Officer for Offshore Wind, Sy Oytan, commended the decision and acknowledged the rigorous administrative review that the project underwent over several years.
The ruling has been praised by the American Clean Power Association, with its Vice President of Offshore Wind, Josh Kaplowitz, stating that it validates the effectiveness of the environmental review process for offshore wind projects.
The court is expected to issue further opinions on additional challenges to the project. Avangrid, a subsidiary of Iberdrola SA, co-owns the Vineyard Offshore Wind Project in a joint venture with Copenhagen Infrastructure Partners. The project is anticipated to deliver energy to Massachusetts electric utilities this year and achieve commercial operation in 2024. Avangrid is also developing the New England Wind Farm, a larger offshore wind project consisting of the Park City Wind Offshore and Commonwealth Offshore Wind Project phases.