Smartest Insight | Issue 162

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.

April 04, 2024


Market Update:

In Jan and Feb 2023, PJM West traded in the high $40's per Mwh for Cal 25 forward.  Since the beginning of March, they have been on an upward trend now reaching over $55/Mwh.

Natural gas is trading at the lowest point of its trading range in the past 10 years, NG storage is banking the most for this point in time in the past five years and NG production has been pulling at record levels. 

There probably isn't one definitive reason, but coupled together, the following identifiers could provide a good narrative supporting the markets bullishness.  1) Natural gas production has recently come off its highs and is now producing at 97/98 Bcf/day.  2) Rig counts for the U.S. is down to 112 as of Mar 28th, down from a high of 161 in Apr 2023.  3) On Apr 1st, the EIA reported that the U.S. was the largest gas exporter for 2023. In 2023, the U.S. exported an average of 11.9 Bcf/d, a 12% increase from 2022.

Currently, May24 NG is trading at $1.84, up $0.10 from last week.  The 8-14 day outlook calls for a high chance of warmer than expected temps across the country with heavy snow or rain in the forecast in the

New England states and the Rockies.  For week ending March 29th, the NG storage expectation is for a draw of -40 Bcf, which would be in line with last week’s storage report of a draw of -36 Bcf.


Regulatory Report:

US Government Approves 2600MW New England Wind Project, Signaling Major Step Towards Clean Energy Goals

The US government has green-lit Avangrid's 2600MW New England Wind offshore wind venture, marking a pivotal move towards its clean energy goals. Secretary Deb Haaland hailed the project as a crucial step in advancing offshore wind energy and emphasized its potential to lower consumer costs, combat climate change, and create jobs. Avangrid CEO Pedro Azagra lauded the decision as historic and praised the administration's commitment to clean energy. With over 10GW of offshore wind projects approved, Bureau of Ocean Energy Management (BOEM) Director Elizabeth Klein emphasized collaboration and conflict mitigation efforts. National Climate Advisor Ali Zaidi highlighted President Biden's leadership in scaling up offshore wind, underscoring its role in powering millions of homes with clean energy and fostering job creation. Since Biden's tenure began, BOEM has held successful offshore wind lease auctions and is exploring further development opportunities. The New England Wind project, expected to power over 900,000 homes, received final approval after a rigorous review process, demonstrating progress towards a sustainable future.

US Department of Energy Allocates $4 Billion in Tax Credits to Boost Clean Energy Projects in Former Coal Communities

The US Department of Energy is allocating $4 billion in tax credits to over 100 clean energy projects in former coal communities through the 48C program, aiming to strengthen clean energy supply chains and reduce costs. Secretary Jennifer Granholm emphasizes the importance of supporting traditional energy communities in transitioning to clean energy. Ballard Power Systems, NOVONIX, and MP Materials are among the beneficiaries. Ballard plans to use its $54 million credit to build a fuel cell gigafactory in Texas, while NOVONIX received $103 million to produce critical battery materials in Tennessee. MP Materials secured $58.5 million for a rare earth magnet facility in Texas. These investments align with goals to boost clean energy manufacturing, recycling, critical materials processing, and industrial decarbonization. The program is expected to propel the nation towards a cleaner, more resilient energy system while generating high-quality jobs. We anticipate further funding rounds in the near future.

New York's Energy Storage Goals to Cost Up to $2 Billion to add 6GW by 2030

In December 2022, the New York Department of Public Service (DPS) and the New York State Energy Research and Development Authority (NYSERDA) released an updated version of the state's 6 GW Energy Storage Roadmap, doubling the preexisting storage target of 3 GW by 2030. Updated cost estimates for NY’s storage roadmap, released by the New York State Department of Public Service and the New York State Energy Research and Development Authority (NYSERDA) on March 15, reveal that adding 6 GW of energy storage by 2030 in New York is expected to cost up to $2 billion, an increase from the previous estimate of $1.7 billion. Factors such as inflation and higher wholesale capacity price forecasts contributed to the cost hike, resulting in a potential increase of nearly $300 million, according to Stephanie McDermott, assistant counsel for the DPS. The updated roadmap calls for 3 GW of bulk energy storage and increased estimates for retail and residential storage components. Despite recent increases in financing costs for distributed and bulk energy storage projects, there's a long-term trend towards lower prices per megawatt. While energy storage cost estimates based on inflation-skewed data could be pessimistic, industry experts are cautiously optimistic about future interest rate trends, expecting some relief from current pressures.