US POWER TRACKER: Western forwards tumble on gas prices as renewables rise

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Western US power forwards are falling on lower natural gas forwards, as renewables generation is driving down thermal usage, with above-normal temperatures expected throughout the fall season.

The three-month outlook shows the region has greater chances for above-normal temperatures through December, according to the US National Weather Service's Climate Prediction Center.

Palo Verde on-peak October rolled off the curve at $43.75/MWh, 42.4% lower than where the 2022 package ended, according to S&P Global Commodity Insights data. The on-peak November package is currently in the low $50s/MWh, 21% below where its 2022 counterpart was a year ago, and the December package is in the mid-$70s/MWh, increasing to stand 3% higher than the year-ago package after averaging 10% lower in September.

Power forwards are following gas forwards lower down the curve.

PG&E city-gate October rolled off the curve at $4.224/MMBtu, 44% below where its 2022 contact ended. The November contract is currently around $5.940/MMBtu, 21% higher than its year-ago counterpart, while December is around $8.136/MMBtu, 1% higher than the 2022 contract a year ago.

Renewables market share rises

Thermal generation slipped nearly 6 percentage points year on year to average 35.5% of the total fuel mix in September, according to CAISO data.

Meanwhile, all renewable resources increased market share. Solar-powered generation rose 5.5 points from a year ago to average 20.3% of the total fuel mix, while hydro increased 4.7 points from last year to average 11.4% of the mix and wind increased nearly 2 points year on year to 11.4% of the mix, according to CAISO data.

In the Northwest, hydro was down 5.5 points from a year ago to average nearly 70% of the total fuel mix for the month, according to Bonneville Power Administration data. The drop in hydro caused thermal generation to rise nearly 3 points year on year to average about 14% of the mix in September. At the same time, wind generation rose 2 points from last year to average 10% of the mix.

Solar generation to drop

Utilities and grid operators across the West are preparing for a drop in solar generation Oct. 14 during the annular solar eclipse. The eclipse begins in Oregon at 9:13 am PT and ends in Texas at 12:03 pm CT, according to NASA. An annular solar eclipse occurs when the moon passes in front of the sun, appearing slightly smaller than the sun, so it does not block the entire solar disk.

Each Western Energy Imbalance Market area will have varying times and magnitude of eclipse impact, with sun obscuration ranging from 65%-90%.

In CAISO, solar makes up the vast majority of supply during the middle of the day, and the short-term forecasting team expects grid-scale renewables generation to decline by 9.374 GW during the eclipse. Meanwhile, at the same time gross load will increase by 2.374 GW.

CAISO will work with both interstate and intrastate gas suppliers to ensure availability during the eclipse, as well as with hydro and battery resources to assist with large ramps.

The BPA expects to see some fluctuations in generation and loads in the Pacific Northwest -- less than 100 MW over the course of the eclipse -- but nothing that should impact reliability, BPA spokesperson Doug Johnson said.

NV Energy is working with its forecast vendors to quantify the impacts on both load and solar output, but expects to have sufficient flexibility with its resources to manage any impacts associated with the eclipse and does not foresee any issues or major impacts to the system, spokeswoman Meghin Delaney said.