Morning Energy is a syndicated note originally published through Enverus Intelligence. My contributions will also be distributed here. Please note that links frequently lead to content available only to subscribers of Enverus solutions.
Winter Storm Fern – As Fern’s ice melts, and the market labels it a ‘non-systemwide emergency,’ it’s time to check-in. The worst fears – a repeat of Uri’s chaos and disruption – didn’t materialize. But a non-emergency is not a non-problem. A million folks losing power and Texas roads doing their best impression of Northern Alberta makes for a mess.
The Wins - Load came in near the high end of forecasts (but didn’t blow-out records) and widespread gas-fired generation outages, sustained gas supply disruptions, and large scale load shedding to protect grids were all avoided.
Fragility - Sure, the entire system was fine, but there is pressure under the surface. Forced outages in ERCOT were up ~80% versus Friday (to over 26GW), almost entirely related to renewables. In PJM peak loads are expected to stay near 140GW for most of the week, the DOE just handed PJM a 202(c) green light to run every megawatt they’ve got (even if doing so violates environmental permits or state regulations). And while the system didn’t break, PJM’s WHUB saw a series price spikes Saturday morning that reached $3,000 and Dominion (data center alley) reportedly spiked above $1,800/MWh. Those are prices of stress and scarcity pricing. Must be all those data centers, right?
Price Doesn’t Lie - The cold weather was a double whammy: everyone cranked the heat, spiking demand, while the elements simultaneously tried to freeze off the supply. Need proof? Pipe scrapes show production dipped almost 13 Bcf/d at worst of it. Cash natural gas yesterday morning reached over $60 heading into New York City (Transco Z6) and over $17 in West Texas (Waha). AECO, for my fellow Canadians, was stuck below $3. Gas and power prices did a beautiful, expensive tango, especially where gas was the marginal unit.
Voluntary, not Forced - Ahead of the storm the DOE estimated 35 GW of backup power (concentrated at data centers and other major facilities) nationwide could be tapped, and issued an emergency order authorizing ERCOT to force data centers to shed load. Operators publicly supported the idea. So, what was the measured load reduction in the end? A grand total of… nothing publicly reported. But that doesn’t mean nothing happened - 3GW (~35%) of load was shed in West Texas as power prices rose.
Who kept the lights on? – A huge shout-out to the vintage Oil-Fired Generation in the Northeast. While gas was getting tight, oil fired generation what contributing 44% of New York’s power and 35% of New England’s. They’re like that ancient backup generator in the corner of the office that you forget about until your laptop dies.
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