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In This Issue

Market Policies, Emissions Goals on Collision Course in New England

EIA: Wind, solar and natural gas make most new electrical generation in 2015

Natural Gas and Oil Market Update

EIA - Weekly Natural Gas Storage Report

NYMEX Natural Gas Week-to-Week Price Change

Natural Gas Futures - Five Year Price


NOAA 6 to 10 Day Outlook
Color indicates the probability of forecasted temperatures being above or below a historical average for the period.


Market Overviews

Market Policies, Emissions Goals on Collision Course in New England

RTO Insider | March 24, 2016

ISO-NE market rules favoring natural gas are on a collision course with state and federal environmental mandates, speakers at the EUCI US/Canada Cross-Border Power Summit said Tuesday.

Left to itself, renewable energy advocates said, the market would dictate a shift to natural gas, and only natural gas, ignoring the impact on greenhouse gas emissions.

Backers of gas generation countered that renewables are benefiting from government-backed subsidies and long-term contracts that threaten to reintroduce government-mandated integrated resource planning.

Dan Dolan, president of the New England Power Generators Association, told the conference that state policies are giving renewables undue advantage and undermining conventional generators’ investments in the market.

He cited state-backed long-term contracts that could introduce more than 2,000 MW of Canadian hydropower into the region. “You can’t add that much stuff onto the plate without some of the soup getting spilled over the side,” Dolan said.

In the last two Forward Capacity Auctions conducted by ISO-NE, about 3,200 MW of new gas-fired generation has successfully bid into the market, he said. “Of all those megawatts of cleared resources, not a single one of those has a state-backed long-term contract or other subsidy,” Dolan said.

Francis Pullaro, executive director of RENEW Northeast, which represents renewable energy developers and environmental organizations, said current market rules skew toward natural gas and disadvantage clean energy resources. Natural gas “resources are going to be built over the next couple years with generous capacity payments” that make financing easier to obtain, he said.

Under the FCAs run by ISO-NE, resources are able to lock in prices for seven years. Renewables, Pullaro pointed out, have little capacity value and are only able to obtain financing through long-term contracts, which states have required from the electric distribution companies.

“We really can’t add any more gas to the system than what is already expected to come onto the system over the next few years if we are going to meet our greenhouse gas reduction laws,” he said.

Primary among them is the Massachusetts Global Warming Solutions Act, which requires a 25% reduction in carbon emissions from 1990 levels by 2020. Several New England states have followed suit with similar emission-reduction goals.

To meet its target, Massachusetts Gov. Charlie Baker has proposed a bill, S. 1965, that would allow electric distribution companies to enter into long-term contracts for large hydropower resources and offshore wind.

Janet Besser, vice president of policy and government affairs for the Northeast Clean Energy Council, a trade group for clean energy businesses, said the legislation’s support of offshore wind is “a critical component of the bill.” Wind, combined with hydro resources, could provide firm capacity, especially with a transmission buildout to connect remotely sited resources, she said.

“It’s an overarching policy goal and it is also a goal of customers. They want resources something other than gas … they are not resources being delivered by the market alone.”

The battle for generation market share is unlikely to end any time soon, as the region also faces the prospect that almost 6,000 MW of coal and oil-fired generation that is at least 40 years old will retire in the next few years.

That, observed Ned Bartlett, undersecretary of energy and environmental affairs for Massachusetts, is “enough power to supply Maine, New Hampshire, Vermont and Rhode Island combined.”

Read More:

EIA: Wind, solar and natural gas make most new electrical generation in 2015

Utility Dive | March 24, 2016

Wind, solar and natural gas continue to dominant the current energy landscape as they composed most of the new electrical generation from last year, the latest EIA report said.

About 468 MW of new wind and 145 MW of new solar made 100% of new U.S. electricity generation capacity in January, according to the latest “Energy Infrastructure Update” from the Federal Energy Regulatory Commission (FERC). There was no new nuclear, coal, natural gas, or oil generation capacity.

Renewables now provide 17.93% of U.S. installed electricity generation capacity with hydropower leading at 8.56%, followed by wind at 6.37%, biomass at 1.43%, solar at 1.24%, and geothermal at 0.33%. Non-hydro installed renewable capacity, at 9.37%, beats nuclear’s 9.15% and oil’s 3.84%.

Numbers from EIA show renewables generation growth are higher than the agency’s 2015 forecast. Instead of a 1.8% drop last year, renewables grew by 2.03% to 13.44% of U.S. electrical generation

U.S. electricity providers are expected to increase installed utility-scale generating capacity by 26 GW in 2016, with 93% coming from 9.5 GW of solar generation, 8.0 GW of natural gas power plants, and 6.8 GW of wind installations.

Key Points:

  • Wind, natural gas and solar made up the main sources of new United States electrical generation in 2015, according to the U.S. Energy Information Administration.

  • Wind energy lead the way with 41%, with natural gas and solar following at 30% and 26% respectively, a major shift from 2014 when natural gas was 44% of new electrical generation, solar 27% and wind 26%.

  • The dominant role of wind, natural gas, and solar in supplying new generation capacity is expected to continue in 2016 because of continued low natural gas prices, the five-year extensions for wind and solar federal tax credits, and continuing economic and regulatory pressure to close coal plants.

Read More:

Natural Gas and Oil Market Update


Oil Prices Extend Fall as Stockpile Worries Resurface

The Wall Street Journal | March 24, 2016

Oil prices extended their sharp selloff Thursday after U.S. supply data a day earlier showed swelling stockpiles and stubbornly high production, retreating from the $40-a-barrel range and dashing the view of bullish investors banking on the start of a reversal for the world’s crude oversupply.

The benchmark U.S. oil contract was down 3.2% at $38.54 a barrel on the New York Mercantile Exchange, while the global Brent benchmark was down 2.6% at $39.42 a barrel on the ICE Futures Europe exchange. The declines came on top of Wednesday’s 4% drop in the U.S. contract, its largest in a month, and a 3.2% decline in Brent.


Natural Gas Prices Turn Higher as U.S. Supplies Rise Less Than Expected

Market Watch | March 24, 2016

Natural gas futures turned modestly higher on Thursday after the U.S. Energy Information Administration reported that supplies of the commodity rose by 15 billion cubic feet for the week ended March 18. That was below with the rise of between 18 billion and 22 billion cubic feet expected by analysts polled by Platts. The weekly climb, however, is the first one of the year, marking an end to the heating season. Total stocks now stand at 2.493 trillion cubic feet, up 1.02 trillion cubic feet from a year ago and 846 billion cubic feet above the five-year average, the government said. April natural gas rose about a penny to $1.80 per million British thermal units. Prices traded $1.785 before the supply data.

EIA - Weekly Natural Gas Storage Report

EIA - Weekly Natural Gas Storage Report

Working gas in storage was 2,493 Bcf as of Friday, March 18, 2016, according to EIA estimates. This represents a net increase of 15 Bcf from the previous week. Stocks were 1,017 Bcf higher than last year at this time and 846 Bcf above the five-year average of 1,647 Bcf. At 2,493 Bcf, total working gas is above the five-year historical range.

NYMEX Natural Gas Week-to-Week Price Change NYMEX Natural Gas Week-to-Week Price Change

Natural Gas Futures - Five Year Price ($ per mmBtu)

NYMEX Natural Gas Week-to-Week Price Change - Five Yearly Snapshot

Disclaimer: The information contained in these reports is gathered from public and/or internal sources and is presented solely for the convenience of our customers and Newsletter Subscribers. Patriot Energy Group makes no representation or warranty, express or implied as to the accuracy or completeness of the information set forth in this newsletter, and Patriot Energy shall not have any liability to any person or entity resulting from use of this information in any way.
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