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May 6, 2021
Natural Gas

Natural gas futures have remained range-bound this week after increasing by 17% since the beginning of April. Colder than normal weather, strong LNG exports, low gas production and a very tight supply/demand balance were the main drivers of this rally.

As prices for natural gas approach $3/MMBtu electric generators will look to switch from gas to coal in order to cut costs for power generation. If this happens it should put downward pressure on natural gas prices.

Today's injection of 60 Bcf into storage brings total gas in storage to 1,958 Bcf which is 3% below the 5 year average level.


After remaining in the $11/MWh range for the past two weeks, real-time power is finally starting to creep up in price. The 30 Day Real-time average cost of electricity was $12.69/MWh on May 5th.

In other news, the Indian Point Energy Center in downstate NY shut down its nuclear reactor on Friday, April 30th for the final time. This marks the end of nearly 60 successful years of safe, virtually carbon-free power generation. Indian Point was largely responsible for powering New York City and the lower Hudson Valley region.

Prior to it's closure Indian Point was generating more electricity than all the wind and solar in New York State. With its closure the bulk of the plants electricity output will be replaced by gas generation.
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NYISO head eyes new technologies to reach zero emissions, saying renewables and storage not enough

Upcoming transmission projects and the possibility of offshore wind development will help to even out the availability of carbon-free electricity in New York state, Richard Dewey (NYISO CEO) told reporters on Wednesday. But without an alternative to natural gas, Dewey said he was uncertain how the ISO will achieve zero emission by 2040.

"The way we look at it, with existing technologies — onshore wind, offshore wind, battery storage and solar — our modeling indicates that the 70% renewable target by 2030 is very achievable," Dewey said. "When we start looking at what 2040 looks like, you look at the performance of ... existing assets and the storage capabilities of existing battery technologies, and all our models suggest there are just enough days when the wind doesn't blow and the sun is shielded, and not enough battery storage to fill those gaps."

Dewey said NYISO is tracking the development of green hydrogen, carbon capture and sequestration, advanced nuclear and other potential solutions.

Dewey said NYISO is currently focused on evening out the distribution of renewable energy in the state. The majority of the state's renewable capacity is located in upstate New York, where 90% of the energy produced in 2020 was free of carbon emissions. Downstate New York, on the other hand, produced 77% of its energy in 2020 from fossil fuels. New transmission projects, including nearly $1.4 billion in upgrades currently under construction, will transfer renewable energy generated in the north and west to the population centers of New York City and Long Island, Dewey said.

Read the full article here
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