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California's gas-fired generators get heat-driven boost in September

Q2: U.S. Solar and Wind Power by the Numbers

Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

Rate case activity slips, COVID-19 proceedings remain at the forefront in August

California's gas-fired generators get heat-driven boost in September

California's power market bucked the prevailing trend of weak demand and low prices that loomed over most of the rest of the country in September.

During the month, the state saw cooling degree days, a proxy for space-cooling demand for electricity, that were 17% above normal, helping to drive peak demand 16.6% higher year over year.

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According to data from S&P Global Market Intelligence, as day-ahead on-peak power prices averaged 0.5% higher year over year in the U.S., those in the California ISO broke 21.1% higher to $43.50/MWh, nearly $10/MWh higher than the U.S. average.

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At the same time, spot natural gas prices at hubs serving generators in the state's market declined 1.5% year over year to just under $3/MMBtu, boosting gas-fired implied heat rates, or the efficiency rate at which the market cost of power equals the cost of burning natural gas to generate power, by 23% to 14,609 Btu/kWh.

In PJM Interconnection and the Midcontinent ISO, each having a substantial amount of coal-fired generation, spark spreads were mixed, falling 3.6% in PJM and moving 8.7% higher in the Midwest ISO.

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Meanwhile, coal-fired implied heat rates declined in both markets as they fell to a greater extent in PJM to boost natural gas' relative advantage year over year.

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Market prices can provide clues as to which fuel sources are dominating the U.S. generation fuel mix. Year-to-date through the end of July, coal narrowly retained the top spot despite natural gas having provided that month's largest share.

Market prices and included industry data are current as of the time of publication and are subject to change. For more detailed market data, including power, natural gas and coal index prices, as well as forwards and futures, visit our Commodities pages.