In the independent system operator’s territory, wind has generated an average 212,900 MWh, and captured about 26% market share in the generation stack this month. In May, the renewable generated an average 260,600 MWh in SPP, more than 40% of the total market, ISO data shows.
As wind speeds ebb, generators across the Midcontinent appear to be opting mostly for coal as a backup fuel. In June, coal power has yielded an average 324,100 MWh, representing about 40% of the ISO’s generation. That’s up from an average 196,200 MWh and 31% market share last month.
While slower wind speeds and warmer temperatures this month have also boosted power generation and market share for gas in SPP, the gains are notably smaller compared with those for coal. Higher gas prices are most likely to blame for the growing ascendency of coal as a backup fuel in SPP.
Prices, weather, burns
In June, cash prices at hubs across the Midcontinent have remained close to or above the $3/MMBtu level. At the region’s benchmark upstream location, NGPL Midcontinent, the cash market has averaged about $2.91/MMBtu – nearly double last June’s month-to-date average, S&P Global Platts data shows.
Higher gas prices have limited the upside for power burns in the Midcontinent this summer, despite falling wind generation and similar overall demand for cooling this June, compared to last.
Month to date, population-weighted temperatures in the Midcontinent have averaged 77.8 Fahrenheit, or just one-half degree below levels recorded over the corresponding period last June. Gas-fired power burn in the Midcontinent, meanwhile, has averaged about 1.23 Bcf/d this month – down nearly 275 MMcf/d compared to last June, Platts Analytics data shows.
As forward gas prices continue rising, the outlook for summer power burn demand in the Midcontinent continues to sour.
At market settlement June 18, the NGPL Midcontinent June-July-August strip settled at an average $3.07/MMBtu, down only modestly from an annual high earlier in the week at $3.21, S&P Global Platts’ most recently published M2MS data shows.
According to a recent forecast from S&P Global Platts Analytics – likely built on lower price expectations – fuel switching would result in a smaller-than-100 MMcf/d decline in Midcontinent power burn this summer compared with last. Given this month’s already recorded steep decline, it’s possible that switching will drive a significantly larger drop in balance-of-summer power burn than previously anticipated.