Smartest Insight | Issue 164
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 19 , 2024
Market Update:
For week ending 4/5/24, the EIA reported a build of +24 Bcf. This brings the total gas in storage to 2,283 Bcf which is a whopping 23.5% increase from last year and a 38.4% increase compared to the 5-year average.
For week ending 4/12/24, the EIA natural gas storage was reported as a build of +50 Bcf on the expectation of a build of + 44 Bcf. Both are considered light builds compared to the 5-year average build of 61 Bcf, which is attributed to above normal temps the steady decline of production.
Currently, the market is experience some volatility over the news that Israel has responded to Iran with what appears to be a limited air strike in response to Iran's large aerial attack over last weekend. Currently prompt gas is trading $1.74. The rest of the NG curve is much higher. Cal 2025 is trading in the mid 3 dollar range. As reported last week, 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.
The 8-14 Day Outlook calls for above normal temps and rain across the country. This translates into temps in the 60's for Philly, New York City and DC. Boston and New England will be 5-10 degrees colder than their neighbors to the south.
Regulatory Report:
Department of Energy Grants $15 Million for Long-Term Energy Storage Projects
The United States Department of Energy has awarded three organizations $5 million each to pursue long-term energy storage initiatives. These programs aim to remove research and development hurdles in the domestic energy storage business, enabling an LDES technology with a path to a levelized storage cost of $0.05/kWh by 2030. The chosen projects include a New Lab effort to enable high-capacity zinc utilization via electrode and electrolyte fundamentals, Battery Council International's "Consortium for Lead Battery Leadership in LDES project," and CleanTech Strategies' efforts to accelerate the development of flow battery technologies. The Long Duration Storage Shot challenge intends to cut resource prices by 90%, while a $505 million four-year long-duration storage project beginning in 2022 attempts to eliminate obstacles to grid energy storage.
Biden Administration Reduces Fees for Wind and Solar Projects on Federal Land
The Biden administration has finalized a rule by the Bureau of Land Management (BLM) to reduce capacity fees by 80% for wind and solar projects on federal land. The rule aims to improve the economics of marginal renewable energy projects that may not otherwise be built. The BLM is currently processing permit applications for 66 utility-scale clean energy projects on public lands in the US West. The rule also includes additional reductions for projects that use domestic content and labor. Acreage rents will now be based on a five-year average of the US Department of Agriculture's state-level pastureland rent survey values, and capacity fees will only be charged in years where generation exceeds the acreage fee. The rule is expected to reduce payments by between $414 million and $510 million over a 10-year period.
Maryland Leads the Nation with Landmark Vehicle-to-Grid Legislation
Maryland has become the first state to introduce a legislation enabling vehicle-to-grid (V2G) technologies to connect to distribution. The Maryland General Assembly passed HB 1256, also known as the Distributed Renewable Integration and Vehicle Electrification (DRIVE) Act, on 2 April. The act allows bidirectional V2G technology to be connected to distribution and creates distributed energy resource (DER) virtual power plants. It also expands utility time-of-use tariffs to allow off-peak charging of electric vehicles (EVs) at off-peak rates. The legislation will apply to investor-owned utilities (IOUs), distinct from municipal utilities or cooperatives. The state's regulatory Public Service Commission will be required to propose new regulations by 1 May 2025. This makes Maryland the first state in the nation to adopt such legislation. California is also working on enabling widespread bidirectional charging, with Senator Nancy Skinner attempting to pass a bill requiring most EVs and charging equipment to allow bidirectional charging. V2G and its cousins, V2H and V2B, are making progress worldwide.
NYISO Power Market Design changes to Enhance Reliability Amid Energy Transition
The New York Independent System Operator (NYISO) is implementing power market design changes to maintain reliability during the energy transition. These changes include introducing dynamic reserves and fast-start pricing elements, balancing intermittency between real-time and day-ahead markets, and assessing the impacts of de-carbonization goals on current NYISO power markets. NYISO is considering a broad spectrum of market product and structural enhancements to incentivize market participants to meet reliability needs anticipated with the Climate Leadership and Community Protection Act (CLCPA). NYISO is also considering new ancillary service products to support sustained ramps, studying existing and near-future regulation needs, and considering ancillary service pricing that supports reliability as the power generation fleet transitions. The "Dynamic Reserves" approach will explore more efficient scheduling of operating reserves based on system conditions and transmission system capability, allowing for appropriate reserves to be procured to cover the largest source contingency under current system conditions and to schedule more reserves in cost-effective regions. NYISO has proposed a concept to procure additional operating reserves to balance deviations in intermittent resource output and load between day-ahead and real-time power markets. These reserves will be procured locationally to align with balancing needs. The 2024 project is underway and will complete design and draft tariff language, with a proposed first phase deployment in 2025. NYISO also identified a minor enhancement to fast-start pricing rules to align supplier schedules with physical operating characteristics.