South Hub off-peak real-time jumps 297.7% from June
Wind generation falls to 19.5% of mix, behind coal, gas
August package ended 17.3% below 2019 package
Houston — After a six-month stretch as the lead fuel source, Southwest Power Pool's wind generation took a seasonal plunge of nearly 15 percentage points in July, which, coupled with increasing load demand from summer temperatures, caused wholesale power prices to jump more than 21% month on month.
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Register NowSPP peakload climbed 10.3% month on month and rose nearly 2% year on year to average 44.9 GW in July, according to grid operator data. Peakload reached as high as 48.5 GW on July 17, an 11-month high.
Average temperatures across the SPP footprint were 61.9 degrees Fahrenheit in July, a jump of 10% month on month, which caused cooling-degree days to surge 223% from June, according to S&P Global Platts data. Cooling-degree days climbed 17% year on year even as average temperatures were steady.
Wind generation falls to coal, gas
That surge in demand from rising temperatures caused total generation to climb 9.2% month on month to average 879.351 GWh/day in July, nearly steady with year-ago levels, and called on more fossil fuel generation to meet demand, according to ISO data.
Coal-fired power generation jumped into the lead fuel spot at 37% of the mix for the month, an increase of 8 percentage points month on month. Likewise, natural gas-fired generation rose 7.6 percentage points month on month and increased nearly 3 percentage points year on year to average 34% of the mix.
After maintaining the lead fuel source for six straight months, wind generation plunged 14.6 percentage points month on month and fell nearly 1 percentage point year on year to average 19.5% of the total mix in July, according to ISO data.
The strong month-on-month drop was driven by June wind speeds above normal in an area ranging from the Texas panhandle to western Kansas, which is where much of the SPP wind capacity is located, said Morris Greenberg, senior manager of North American power analytics at S&P Global Platts Analytics. While July and August are normally low wind output months, capacity factors should start to rebound in September.
Spot prices jump on less renewables
The sudden drop in cheap wind power caused power prices to rise.
SPP South Hub on-peak day-ahead locational marginal prices averaged $25.91/MWh in July, a jump of 22.5% from June, but down 21.2% from last July, according to SPP data. Prices reached as high as $39.42/MWh on July 1, a nearly five-month high.
Likewise, South Hub on-peak real-time LMP averaged $27.77/MWh, a spike of 48% month on month and a drop of 15.2% year on year.
Following single-digit off-peak prices from March through June, SPP off-peak day-ahead LMP sank 96.5% month on month to $13.87/MWh, while off-peak real-time LMP plunged 297.7% month on month to $13.10/MWh.
Spot gas prices followed the same trend, though less severe.
Panhandle Texas-Oklahoma spot gas rose 9.4% from June, but fell 4.9% from year-ago levels to average $1.526/MMBtu in July, according to S&P Global Platts assessments.
Forwards continue to trend lower
Power forwards continue to trend lower than the 2019 package, following weaker gas forwards.
Panhandle TX-OK August contract averaged $1.562/MMBtu, down 3% from the 2019 contract last year, despite rolling off the curve at $1.629/MMBtu, 11.7% higher than where the 2019 contract ended, according to Platts data.
SPP South Hub on-peak August averaged $27.94/MWh, down 12.9% from where the 2019 package averaged a year ago and a decrease of 3% month on month, as it rolled off the curve at $26.05/MWh, 17.3% lower than where the 2019 package ended.
Likewise, South Hub on-peak September averaged $25.18/MWh, 9.3% below the 2019 package a year ago, as on-peak October averaged $22.93/MWh, 13.2% lower.
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August 14, 2020 at 03:47AM
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SPP TRACKER: Power prices jump as wind generation plunges, load spikes - S&P Global
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