US POWER TRACKER: Thermal tops solar in July, Sep forwards above spot prices

September power forwards across the West are at their lowest levels of the year because of weak natural gas forward prices as thermal generation overtook solar to lead the fuel mix. Despite the market weakness, September forwards remain at a premium to the September 2023 day-ahead price averages.

The September outlook indicates equal chances for above-normal and below-normal temperatures for the central and south California Coast, as well as the Pacific Northwest, according to the US National Weather Service's Climate Prediction Center.

Mid-C on-peak September averaged $95.57/MWh in July, 51.5% lower than what the on-peak day-ahead price averaged in September 2023, according to data from Platts, part of S&P Global Commodity Insights. Forwards prices have fallen since then, averaging in the mid-$60s/MWh by mid-August, 53% below the 2023 forwards package a year ago and reaching a 37-month package low.

The trend continues across the West, with Palo Verde on-peak September averaging $89.67/MWh in July, 96.3% lower than the on-peak day-ahead average price for September 2023. The September 2024 package is currently in the low $70s/MWh, 51% lower than the 2023 forwards package a year ago and a 40-month package low..

Gas influence

Power forwards are following gas forwards, which have been falling. The Sumas September contract is currently around $1.510/MMBtu, 62% lower than the September 2023 forwards package a year ago and 33% lower than the spot price average from September 2023.

Commodity Insights forecast California Independent System Operator's gas fleet to generate 299 GWh/d in September. In comparison, burning fuel at the same rate as September 2023 would consume 2.015 Bcf/d, a 26.6% year-on-year increase.

Gas plants burned an average of 2.323 Bcf/d in July to generate an average of 281.456 GWh/d, an analysis of Commodity Insights data showed. That is a nearly 86% jump from June and about 5% higher than a year ago.

Thermal surpasses solar

Thermal generation surpassed solar-powered generation in July to regain its position at the top of the fuel mix.

Solar topped the fuel mix from March through June, the longest stretch on record. There were three other times solar surpassed thermal, but only for a single month: May 2018, May 2019 and May 2023.

Thermal averaged 37.3% of the July mix, climbing nearly 18 percentage points month on month, but remained 6 percentage lower than a year ago, according to CAISO data. Meanwhile, solar fell nearly 7 points month on month to average 24.9% of the mix in July, up nearly 4 points from last year.

Wind and solar generation curtailments reached a year-to-date low of 67.648 GWh in July as the thermal market share surpassed renewables. So far this month, curtailments have totaled 18.271 GWh through Aug. 11, up 10.5% from the same period a year ago, CAISO data showed.

"The battery fleet continued to perform during evening peaks despite renewables covering a lower percentage of load this month, hitting over 5 GW of dispatch on many evenings this July," Commodity Insights said in the latest North American Electricity Short-term Outlook.

Hydro outlook

Imported generation has been on a downward trend, thanks to a strong hydro year. Imports were down nearly 2 points from June, but were up 5 points year on year, according to CAISO data.

"In 2025, under normal weather conditions, California's hydropower generation is forecasted to total nearly 30 TWh, with a peak in May at 3.3 TWh," said Hilary Bao, Commodity Insights senior analyst.

Meanwhile in the Northwest, hydropower generation is forecasted to total 119.5 TWh in 2025 under normal weather conditions.

"However, the below-normal water supply in 2024 may continue to impact reservoir water levels in 2025, due to dry soil moisture and relatively low water reservoirs in the current year," Bao said.

Spot markets

CAISO peakload averaged 39.568 GW in July, up 22.2% from June and 6.2% higher than a year ago. Population-weighted temperatures in CAISO were nearly 2 degrees higher in July compared to a year ago with 25% more cooling-degrees days than normal, according to CustomWeather data.

SP15 on-peak day-ahead locational marginal prices averaged $48.64/MWh in July, 160.5% higher than June, but 36% lower than a year ago, according to CAISO data. Power prices followed gas prices. SoCal city-gate spot averaged $2.399/MMBtu in July, up 37% from June, but down 56.5% from a year ago, according to Platts data.

Likewise, peakload in the Pacific Northwest averaged 7.987 GW in July, up 15.6% from June and 5.5% higher than a year ago, according to Bonneville Power Administrator data. Population-weighted temperatures in BPA averaged 73.2 degrees Fahrenheit in July, nearly 6 degrees higher than normal, leading to 97.3% more cooling-degrees days than normal, according to CustomWeather data.

Mid-C on-peak day-ahead averaged $80.13/MWh, a jump of 126% from June, but 18.2% lower than last July, according to Platts data. The day-ahead package averaged a $26.32 premium to on-peak hourly prices, the highest since January, as Mid-C on-peak hourly was down 36% year on year to average $53.81/MWh in July.