Smartest Insight | Issue 163

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 11, 2024


Market Update:

This week natural gas prices have increased about $0.15 from the low of $1.76/MMBtu on April 8 for the prompt month.  Currently, May24 is trading at $1.92.  Price increases are reflected proportionally on the electricity market but very sticky when NG has any downward movement.

For the week ending 3/29, natural gas storage reported a draw of -37 Bcf in line with expectations.  This was the last withdrawal week of the season.  The EIA reported that the season ended with a surplus of 40% over the five year average.  As we enter injection season the EIA also expect to inject less by the end of the season due to less NG production during the same period.  Other highlights include 1) Ending injection season with the most NG on record 2) Henry Hub to average $2.20 3) Summer to be hotter than last year with 7% more CDDs.

Another point to note is that for 2024 planned retirements are expected to be minimal at 5.2 GW compared to the average retirements of 13.5 GW in prior years.  Retirements are to pick back up in 2025 with an estimated 10.9 GW to retire then.

Regulatory Report:

New York's Renewable Energy Push: Streamlining Permits Sparks Debate Over Labor and Land Protection

New York faces challenges in ramping up renewable energy due to insufficient infrastructure for transmitting power from remote areas, where most of the solar and wind farms are, to urban centers. Governor Kathy Hochul proposes the RAPID Act to streamline permitting, aiming for one-year approval for clean energy projects, including transmission lines. This act would assign the Office of Renewable Energy Siting (ORES), who do not currently issue permits for transmission lines, this task. This would move ORES from where it is currently sits, within the Department of the State, into the Department of Public Service. This would consolidate permitting for wind, solar and transmission under one roof. This move is lauded by renewable energy advocates but faces opposition from Democrats in the legislature seeking more public input and labor protections. Hochul's plan aims to expedite clean energy deployment, while the legislature adds provisions for local input and labor standards. The debate also involves protecting farmland from energy projects, with the Senate proposing a “farmland conservation” fee for solar projects on prime farmland. Despite differing views, all parties aim to balance clean energy goals with other priorities, like labor rights and agricultural preservation. Additionally, there's emphasis on using American-made materials and ensuring fair wages in clean energy projects to support local economies and workers. The debate underscores the complexity of achieving renewable energy targets while addressing various concerns and trade-offs.

East Coast Offshore Wind Industry Rebounds After Setbacks, Eyes Ambitious Targets

The US offshore wind industry along the East Coast faced setbacks in 2023 with project cancellations, impacting state decarbonization efforts. However, state regulators responded swiftly, leading to improved conditions. New York's Energy Research and Development Authority director emphasized the need for adaptive regulation and collaboration with industry. Despite challenges, the industry is optimistic about future growth. Lessons learned from the setbacks include refocusing companies to consider potential supply chain issues and other risks. Equinor remains committed to offshore wind projects in New York despite setbacks. Federal permitting processes remain largely unaffected by state-level challenges. State policymakers and agencies like NYSERDA are credited with restoring investor confidence and driving progress. New York's recent offshore wind solicitations are promising steps toward meeting ambitious targets. With the potential to reach the 9 GW by 2035 goal. Legislation is being considered to support further offshore wind development in alignment with the larger 20 GW by 2050 climate goals.

ISO New England Proposes Two-Year Delay for Transition to Seasonal Market Design

ISO New England seeks federal approval for a two-year delay to implement a seasonal market design aligning with the region's clean energy transition. The proposal replaces the 19th forward capacity auction with prompt seasonal auctions starting in February 2028. This shift aims to accommodate offshore wind, solar, and battery storage resources expected to dominate the region by 2029. Prompt auctions would eliminate annual rebalancing auctions, providing more accurate demand forecasts and reducing supply uncertainty. The move to a seasonal auction design is projected to reduce capacity prices for the 2028-2029 period by $208 million. ISO-NE aims for FERC approval by May 21, with a backstop option to hold FCA 19 in February 2028 if needed. The implementation timeline involves completing design work on capacity market reforms and filing proposed changes with FERC by 2026 or early 2027.