Southwest Power Pool wholesale power prices jumped 98.6% year on year in September with demand up 15.3% on above-normal temperatures as spot gas prices continued to climb.
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SPP peakload averaged 39.974 MW for September, down 12.2% month on month on seasonality, but the 15.3% year-on-year jump was from population-weighted average temperatures 7.5% above year-ago levels, leading cooling-degrees days to be 74% higher year on year, according to CustomWeather data. Daily peakload reached as high as 46.467 GW Sept. 1, 10% higher year on year.
Typically, power prices decrease month on month heading into the fall season on less cooling demand, but the warmer weather drove up demand as well as power prices.
SPP South Hub on-peak day-ahead locational marginal prices climbed 129.5% year on year and rose 10.6% month on month to average $52.21/MWh in September, according to SPP data. Prices reached as high as $69.01/MWh Sept. 17, the highest level since record high prices during the February storm.
South Hub on-peak real-time jumped 130.8% from a year ago to average $51.99/MWh as prices reached as high as $99.46/MWh Sept. 15, the highest level since the February storm.
While North Hub on-peak day-ahead LMP increased 67.8% year on year, it fell 22.3% from August to average $33.31/MWh for September.
Helping drive up power prices, spot gas at Texas-Oklahoma spiked 182.7% year on year and was up 24.2% month on month to average $4.657/MMBtu, according to S&P Global Platts pricing data. Prices reached as high as $5.245/MMBtu Sept. 29, the highest level since record prices during the February winter storm.
Coal remains king
Coal-fired power remained the lead fuel source at 39% of the total fuel mix for September despite slipping two percentage points month on month, according to SPP data.
Due to tight supplies, September-delivered PRB 8,800 Btu/lb coal prices averaged a seven-year high $13.19/st FOB rail, up from the $12.60/st average for September deliveries and the $11.70/st average in the year-ago month. It was the highest monthly average since $13.23/st in July 2014.
Roughly 51% of the total non-lignite coal capacity in the US reported days of supply under 60 days after July, up from 21.6% in July 2020 and the highest share in a month since 54% after July 2018, according to the latest US Energy Information Administration data released Sept. 24.
Along with the sharp increase in PRB coal prices, natural gas prices also rose to a seven-year high, likely affecting gas' generation share. The NYMEX Henry Hub gas futures contract averaged a seven-year high $5.115/MMBtu in September, up from $4.031/MMBtu in August and $2.28/MMBtu in September 2020. It was the highest monthly average since $5.163/MMBtu in February 2014.
Between the March average and the September average, prompt-month PRB prices jumped $1.29, or 10.8%, while Henry Hub prices soared $1.95, or 95.1%.
High gas prices helped drive down gas-fired power to average 18.2% for the month, a decrease of 11.6 percentage points year on year and down 5.2 percentage points month on month.
Meanwhile, wind-powered generation made up 33.2% of the total fuel mix, an increase of 11.7 percentage points from a year ago and up 6.4 percentage points from August, according to SPP data. SPP expected wind to lead the fuel stack for all of 2021 for a second consecutive year, with 4.235 GW on schedule to be added by the end of the year, according to the Generator Interconnection Request queue.
Coal surpassed wind in the fuel mix in June.
Total generation averaged 33.034 GW in September, down 11.6% from August and down 7% from a year ago, according to SPP data.
Forward curve rises
Power forwards continued to trend high down the curve, following higher gas forwards.
SPP South Hub on-peak October rolled off the curve at $54.30/MWh, 134% above where the 2020 package ended last year, according to Platts data.
South Hub on-peak November is currently in the mid-$60s/MWh, 180/MWh higher than its 2020 counterpart a year ago, while the on-peak December package is in the low $70s/MWh, 170% above the 2020 package a year ago.
Texas-Oklahoma October rolled off the curve at $5.409/MMBtu, 202.5% above where the 2020 package ended. The November contract is around $6.067/MMbtu, 176% higher than its 2020 counterpart last year, while December is around $6.495/MMbtu, 128% higher.