Morning Energy is a syndicated note I publish 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. Please reach out if you have any questions. Thanks! - Ian.
When the Boogeyman goes to sleep every night, he checks his closet for Chuck Norris (RIP). That meme was always one of my favorites and it is a pretty good way to think about U.S. power markets this spring.
The obvious villains are still heat and gas, but our 90-day power price outlooks suggest the market is increasingly jumpy about the less obvious: which transmission element is out, how quickly Western snowmelt borrows supply from later in the season, and where the stack gets steep (where the grid moves out of the cheap, efficient part of the generation stack and into the more expensive units).
In ERCOT, it’s already been hot (Dallas temperatures reached the mid-90s in March). Projected June power prices sit near $40/MWh, which is exactly where the grid switches from running efficient gas plants to firing up older, expensive ones. Think of it as the edge of a cliff. A few degrees on the wrong day will do it and our bullish case is ~$10/MWh higher.
In PJM, the eastern epicenter of the U.S. data center buildout, the summer risk is more about transmission line outages than new demand (the market recently saw a near$3,000/MWh spike, and not from a cold snap or heat wave event). Case in point: transmission outages near Bedington, West Virginia are the primary price driver in the outlook. Data center load is coming, but this spring’s prices will be shaped more by which lines are down and when, than how many servers are plugged in.
Out west, more water (hydro) does not automatically mean lower prices. Warm weather is melting Pacific Northwest snowpack early, flooding the grid with cheap hydro in April. But that pulls the water forward, and May and June could surprise higher as reservoirs refill. In Southern California, batteries soaking up cheap midday solar inflate demand numbers without tightening the grid during peak evening hours. Load is growing, just not in the hours that matter for pricing.
The Boogeyman this spring is not weather or gas. It is a transmission outage in West Virginia, snowmelt timing in the Cascades, and the part of the ERCOT stack where prices stop being polite.
Coming up: The team is doing a full Winter Lookback on March 26, covering where forecasts tracked vs. diverged across ERCOT, PJM, NYISO, and ISO-NE. Register here.
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