SPP Tracker: Weaker demand, gas prices drive down spot, forward power prices

Houston — Weaker power demand from coronavirus pandemic stay-home orders and lower natural gas prices pulled down Southwest Power Pool wholesale power prices as much as 36% year on year in April, with more wind generation only adding to depressed prices.

Peakload fell to 27,593 MW in April, down 4.5% month on month and down 4.3% year on year as customer energy usage patterns changed with a drop in commercial demand that overshadowed any bump in residential demand, according to SPP data.

GENERATION MIX

Wind generation remained the lead fuel source at nearly 39% of the total fuel mix for April, jumping 4 percentage points month on month and up 2.8 percentage points year on year, according to SPP data.

"SPP's wind capacity has risen steadily and dramatically over the last decade and we've repeatedly set and subsequently beat wind-peak and wind-penetration records over that time, the most recent being a wind penetration record of 73.20% on April 27," SPP spokeswoman Meghan Sever said. "Looking ahead, wind remains the single largest component of our generator interconnection queue."

Currently, 800 MW of wind is expected to be added by the end of the year, Sever said, adding the grid operator anticipates continuing to set new wind and renewable records.

"We are confident in our ability to serve a large portion of SPP's load with renewables, even during seasons of increased demand," Sever said.

For the fourth month in a row, wind displaced coal-fired generation, which accounted for around 22% of the mix in April, dropping 5.6 percentage points year on year. Coal output plunged 23.2% year on year and fell 14.4% from March to average 134,176/MWh/d.

Natural gas-fired generation also slipped to about 25% of the total mix, down nearly 3 percentage points month on month, as output sank 15.4% from March to average 152,498 MWh/d.

Hydro output climbed 18% year on year to average 36,605 MWh/d.

Total generation averaged 606,679 MWh/d, down 5.8% month on month and a loss of 3.8% year on year, according to SPP data.

SPOT PRICES

SPP North Hub day-ahead on-peak locational marginal prices averaged $16.41/MTh in April, down 35.8% from a year ago and down 8.8% from March, according to SPP data. The day-ahead to real-time spread was nearly $2 as on-peak real-time sank 42.6% year on year to average $14.42/MWh.

South Hub real-time off-peak plunged 109% to average negative 86 cents/MWh leading to an off-peak day-ahead to real-time spread of $6.25.

Helping pull down power prices, spot gas at Panhandle, TX-OK sank 26% year on year to average $1.339/MMBtu in April, as prices dipped down to $1.02/MMBtu, the lowest level since October, according to S&P Global Platts data.

FORWARD CURVE

Forward power prices continued to follow lower gas forwards.

Panhandle, TX-OK May averaged $1.368/MMBtu, down 27.4% from where the 2019 package averaged a year ago, as the June contract was down 21% to average $1.534/MMBtu and the July contract averaged $1.718/MMBtu, down 19.3%, according to Platts data.

SPP South Hub on-peak May averaged $21.74/MWh, down about 9% month on month and a drop of nearly 22% from where the 2019 package averaged a year ago. The package rolled off the curve at $20.60/MWh, a package low and $7.20 below where the 2019 package ended.

The on-peak June and July packages were both roughly 10% lower than their 2019 counterparts to average $26.05/MWh and $31.16/MWh, respectively.

The South Hub on-peak August package averaged $30.38/MWh, 6.5% lower than the 2019 package last year.