Smartest Insight | Issue 127

Our weekly company round-up covers the key market and industry news in one place, so you don’t have to look any further to stay ahead.

July 20, 2023


Market Update:

Weather and heat continue to drive the story line this week.  As the weather forecast moves so have prices.  Currently, prompt month NG is up $0.12/MMBTU to $2.77. Gas took a moderate leap up about $0.05/MMBTU on revisions to the temperature forecast.

The EIA report an injection of +41/BCF into storage for the week ending July 14th.  This puts storage in the ground at 2,971 BCF which is 24% higher than last year and 13.8% higher than the 5-year average.  This was 6 BCF below consensus expectations.  The market responded with an additional $0.07/MMBTU move up on this bullish news.

" the new summer" says Rick O'Connel, excecutive director of GridLab, an expert in clean energy policies.  With the retirement of coal plants in the U.S., natural gas has risen to fill the supply void making up about 40% of the fuel mix.  As we learned with Winter Storm Eliott, the NG pipeline system will run into issues when under the stress of extreme cold.  Once used as a backup fuel in the summer for peak load and heating in the winter.  It's now time to beef up our infrastructure to prepare for extreme conditions in the northeast.


Regulatory Report:

New Jersey rejects initial bids for its Competitive Solar Incentive

The New Jersey Board of Public Utilities (BPU) rejected all bids for its Competitive Solar Incentive (CSI) program's first solicitation, aimed at procuring 300 MW of large-scale solar capacity. The bids were deemed too expensive, exceeding the confidential price caps set by the BPU to keep costs down. The high costs were attributed to economic and regulatory uncertainty nationwide, as well as historically elevated levels of solar development costs.

The BPU expressed its commitment to the CSI program and plans to launch a new solicitation for 300 MW of solar power by year-end, with prequalification beginning on October 1 and a bid deadline of December 31. Factors hampering the first solicitation included developers' uncertainty over possible tariffs on solar panel imports from Southeast Asia and concerns over Congress stripping away clean energy incentives.

Surging costs and supply chain concerns have been an ongoing issue for solar power and renewable energy projects due to trade tensions with China. In response to US solar power companies' pressure, the Biden administration implemented a two-year moratorium on tariffs for solar cell and module imports from certain Southeast Asian countries.

The BPU maintained its decision to use price caps to protect ratepayers from excessive bid prices. It called for an analysis of the financial assumptions and external factors used to set the price caps for the next solicitation. The CSI program aims to help New Jersey achieve its goal of fully decarbonizing the power grid by 2050, with the BPU seeking 300 MW of new solar generation annually through 2026.

NYC Transmission deficit concerns for Summer 2025

New York City is facing a potential transmission shortfall in summer 2025, with power demand growing faster than previously predicted and several peaker plants set to go offline due to new environmental regulations. The New York Independent System Operator (NYISO) warned that under the most extreme conditions, the transmission capacity could fall short by 555 MW, a significant increase from the previous forecast of a narrow 50 MW margin.

The increased power demand is attributed to economic growth, population expansion, and the adoption of electrification technologies like heat pumps and electric vehicles. NYISO blames much of the transmission issue on a 2019 state regulation cutting nitrogen oxide emissions from fossil fuel peaker plants, which has led to the shutdown of some plants.

In response to the report, the Independent Power Producers of New York called for a policy revamp to balance grid reliability and clean energy goals. NYISO plans to seek market-based solutions to address the issue, including new transmission lines, generation facilities, and energy efficiency measures, before considering extending the lifetime of peaker plants.

While the completion of the Champlain Hudson Power Express transmission line in mid-2026 may ease transmission pressures temporarily, NYISO warns that the city could face a transmission deficiency again as soon as 2032 due to increasing power demand.