CAISO wind generation falls, thermal rises as power prices reach record highs

A drop in wind and solar generation is leading to an increase in natural gas-fired usage to meet the rise in cooling demand as a heat wave sweeps across the Western US driving up wholesale power prices.

The highest power prices were in the Northwest, where NOB on-peak day-ahead reached a new record of $1,004/MWh for Aug. 16 delivery, surpassing the previous record by $4, according to pricing data from Platts, a part of S&P Global Commodity Insights. Several other trading hubs across the region were priced near or above $1,000/MWh but did not set records.

"A dangerous heat wave will continue in the Pacific Northwest/Northern Rockies as a strong ridge of high pressure remains in place aloft, with most of the region under heat-related advisories and warnings," the US National Weather Service said in its daily forecast discussion. "Numerous near record-tying/breaking highs are possible. Overnight lows will be near record-tying/breaking warm levels as well, providing little relief from the heat overnight."

These high temperatures are expected to continue through this week and highs in the interior California valleys will trend a bit hotter, with triple-digit temperatures expected and heat advisories in place.

A heat advisory is in effect from Central California to northern Idaho, and an excessive heat warning stretches from northwestern California to the Washington-Canada border, according to the weather service. A red flag warning is called for parts of Oregon and Washington because of wind gusts of up to 40 mph that could start wildfires.

Wildfire risks

"Any fires that develop have a high probability of spreading rapidly," according to the weather service. "Abundant lightning can also ignite new fires and strain firefighting resources."

There are more than 100 active fires in the Bonneville Power Administration service areas, said BPA spokeswoman Maryam Habibi.

"BPA personnel are monitoring 14 of those for potential impacts," she said. "Currently, only one fire is very close to one of our lines, but it is a 500-kV line on steel towers and our local line workers are keeping tabs on it."

Wind speeds associated with this heat wave continue to remain below a level that would trigger consideration for Public Safety Power Shutoff, she added.

Thermal on the rise

California Independent System Operator wind generation dropped 70% day on day to a high of 719 MW Aug. 14 and is forecast to reach a maximum of 910 on Aug. 15, according to CAISO data. In comparison, wind generation averaged 2.6 GW Aug. 1-13.

Wind's market share fell to 3.5% of the fuel mix Aug. 14, a four-month low, after reaching a month-to-date high of 12.3% Aug. 3, according to CAISO data. Last August, wind averaged 7% of the fuel mix.

To make up for the drop in wind generation, thermal's market share jumped to nearly 51% of the fuel mix Aug. 14, according to CAISO data. In comparison, thermal averaged about 42% of the market share in August 2022.

With more demand for thermal generation, spot natural gas prices at SoCal city-gates jumped 69% day on day to $8.055/MMBtu for Aug. 15, according to pricing data from Platts.

California market

CAISO forecast peakload to jump 10% day on day to 45.3 GW Aug. 15 and climb to around 46.17 GW Aug. 16. So far this month, peakload has averaged 37.15 GW, 5% lower than a year ago when peakload reached a high of 42.6 GW in August.

The expected load this week could reach the highest level since CAISO broke a 16-year-old demand record late last summer. The all-time demand record of 52.061 GW was set Sept. 6, 2022, during a weeklong heat wave.

The increase in expected demand is driving up power prices.

NP15 on-peak day-ahead traded around $35.25/MWh for Aug. 16 delivery on ICE, while SP15 on-peak traded around 348.25/MWh. SP15 on-peak balance of the week was bid at $112.50/MWh and offered at $149/MWh.

The CAISO footprint is under restricted maintenance operations from noon to 10 pm PT Aug. 15-17 due to anticipated high load and temperatures across the grid to ensure generator and transmission availability and to minimize maintenance outages.

This is the first time this year that CAISO has declared restricted maintenance operations. In July, it declared an Energy Emergency Alert watch for two days and entered EEA1.

Last year, CAISO called for restricted maintenance operations 16 times with nine EEA watches and six EEA1, according to the grid emergencies history report. The grid operator also issued 11 flex alerts last year.