As Midwest market share for wind rises, gas generation sees downside risk

Denver — Recent wind capacity additions in the US Midwest and higher utilization factors for the renewable are giving wind generation more market share in SPP and MISO this month, compared to last November, in a trend that could pose downside risk to regional gas-fired power burn this winter.

Month-to-date, wind has captured over 41% of the market share for power generation in SPP, up from an average 31% market share month-to-date last November. In MISO, wind power has accounted for 20% of the generation share this month compared to just 11% last November, data from S&P Global Platts shows.

Higher market share for wind this month can be attributed in part to increased capacity. The combined territories for SPP and MISO are now home to over 48 GW of nameplate wind-generating capacity – up from an estimated 42.6 GW of capacity last November.

Increased market share for wind, though, can also be attributed to higher utilization rates.

Month to date, wind generation across SPP and MISO has averaged 24.0 GW, implying a nearly 50% utilization factor. Month-to-date last November, wind generation from the combined territories averaged 17.3 GW – equivalent to a utilization factor of just 41%, data from the US Energy Information Administration shows.

Power burn, weather, gas prices

In November, wind generation has undoubtedly pressured power burns and market share for gas.

Month-to-date, generator gas demand in the Midwest and midcontinent regions has averaged a combined 2.6 Bcf/d – down from an average 3.5 Bcf/d last November, Platts Analytics data shows.

In SPP, market share for gas has fallen about 2 percentage points this month, compared to November 2019. In MISO, gas has ceded about 4 percentage points this November compared to last.

Some of those declines can be attributed to warmer weather. Month to date, the population-weighted temperature in the Midwest and midcontinent regions has averaged about 3.2 degrees Fahrenheit above normal. Over the same period last November, Midcontinent temperatures averaged nearly 11.3 degrees below normal, weather data compiled by S&P Global Platts Analytics shows.

While warmer weather has undoubtedly curbed electric heating demand, gas prices don't appear to be a significant factor driving lower power burn demand. At key upper-Midwest gas hubs in SPP and MISO, cash prices are actually modestly lower this November compared to last.

At Northern Ventura, cash prices have averaged $2.45/MMBtu this month, down about 14 cents compared to last November's month-to-date average. At the Michcon city-gate, the cash market has averaged $2.48/MMBtu this November, down roughly 7 cents compared to its year-ago level, S&P Global Platts data shows.