Monday's eclipse cut a path across the US, causing concern for power grid operators — especially those with significant amounts of solar power generation. How did prices react, and what else is ahead in 2017? The North American power pricing team of Kassia Micek, Charles Noh and Jeff Zhou look at how solar output fell during the eclipse, including in California ISO, ERCOT and PJM. Then they take a look ahead to the rest of 2017 in those markets as well as to the next solar eclipse to cut through the US in April 2024.
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Eclipse prompted a balancing act by US markets as it curtailed solar power
KASSIA: As an eclipse cast a shadow across the country Monday, all focus was on power grid operators to see how they handled the sudden loss of solar generation.
Welcome to the Commodities Spotlight Podcast from S&P Global Platts. I’m Kassia Micek, with the Platts North American power pricing team, based out of the Platts Houston office. And I’m joined by my two colleagues.
CHARLES: I’m Charles Noh, with the Platts North American power pricing team in Houston.
JEFF: And I’m Jeff Zhou, also based in the Platts Houston office and covering North American power prices.
Today, we’re looking at how power markets ensured the lights stayed on during Monday’s eclipse. Let’s start in California, which has the most solar capacity in the country. Kassia, what did you see out West?
KASSIA: Overall, California ISO was pleased with the outcome. The last total solar eclipse in North America was in 1979 when there was no solar generation. Now, California has roughly 10,000 MW of solar, which is nearly half of its renewable generation.
Even though California was outside the total eclipse path, it had a 76% eclipse in the north and 58% in the south. So, the ISO started planning last year and looked at how officials handled the 2015 eclipse in Germany, which has nearly 40,000 MW of Europe’s 90,000 MW of solar.
JEFF:How did that help California on Monday?
KASSIA: The ISO was most concerned about managing the steep ramp rates as solar decreased and then increased with the eclipse, and filling in the gap left behind with other resources that have much slower ramp rates. Basically, it was a balancing act.
The ISO reported no issues as solar output fell from 6,400 MW to as low as 3,000 MW during the eclipse, and then rapidly ramped up to a daily peak near 9,700 MW, all in a matter of hours. Thermal generation, mostly natural gas, filled in that gap Monday, jumping 46% day on day as solar output dropped nearly 16%.
JEFF:What effect did that have on prices?
KASSIA:Real-time power prices were mostly steady in the teens to low $20s/MWh Monday, but did fall as low as negative $14/MWh as solar surged back onto the grid after the eclipse. The market responded to those negative prices and the solar ramp rate backed off before reaching the daily peak.
CHARLES:How are things looking in Cal-ISO for the rest of this year?
KASSIA: SP15 on-peak balance-of-the-month and next-week prices are in the low $60s/MWh, compared to day-ahead in the $30s/MWh, indicating prices could rise in the near term.
Cal-ISO Fourth Quarter is coming in above last year’s day-ahead on expectations of rising gas prices heading into the heating season. Right now, SP15 on-peak Q4 is in the mid-$30s/MWh, compared to an average in the low $30s/MWh for October-December day-ahead.
JEFF:Let’s jump over to the East Coast. Charlie, what did you see on Monday?
CHARLES:The eclipse had a minimal impact in the Northeast, given the relatively low concentration of solar in the region.
The PJM footprint, which reaches 13 states and the District of Columbia, lost roughly 520 MW of solar during the eclipse. In addition, behind-the-meter solar generation decreased roughly 1,700 MW. But cooler temperatures from cloud cover more than offset the loss of power from rooftop panels.
KASSIA:Was there any impact to power prices?
CHARLES:Real-time prices in the Northeast were not visibly affected by Monday’s eclipse.
In New England, Internal Hub real-time locational marginal prices averaged in the mid-teens, with negative prices in the early morning hours, climbing to as high as the low $30s/MWh in the late afternoon. In New York City, Zone J real-time prices also appeared unaffected, averaging in the low $40s/MWh on Monday. In PJM, Western Hub real-time LMP averaged in the high $20s/MWh, similar to the averages seen in the previous week.
The eclipse completed its US visibility in North Carolina, which is behind only California in solar capacity. Duke Energy has 2,500 MW of solar output in North Carolina and lost about 1,700 MW of that during the eclipse, less than expected.
JEFF:What about the rest of 2017? Any more changes coming for PJM?
CHARLES: Currently, solar generation currently comprises less than 1% of PJM’s 185,000 MW of generation capacity. The mix is shifting, however, and solar capacity is expected to grow from 1.7 GW in 2016 to 2.5 GW in 2017, according to estimates from S&P Global Market Intelligence. Wind capacity is also expected to increase from 7.3 GW to 8 GW over the same period. Still, combined-cycle gas plant projects are making the largest gains, increasing from 34.2 GW to 38.6 GW.
KASSIA:Let’s shift to Texas, where the impact of the eclipse was expected to be minimal, despite having a healthy renewables portfolio.
JEFF:Solar capacity in ERCOT is nearly 900 MW, less than 1% of its power supply. Even with as much as a 78% eclipse in the state, real-time prices were steady in the high $20s/MWh Monday as solar output fell near 300 MW.
CHARLES:Does ERCOT have plans to increase its solar output?
JEFF: Current projections call for solar to reach 2.8 GW by the end of 2020, so ERCOT is taking a closer look at the April 8, 2024 solar eclipse, which will cut right through Texas.
Right now, the ERCOT North Hub on-peak April 2024 package is averaging the upper $20s/MWh.
KASSIA:What about a more short-term look — how is the fall shaping up for ERCOT?
JEFF:The grid operator projected peak demand for the fall would top 56 GW, making the operating reserve capacity at over 16 GW assuming normal outages. North Hub October-November on-peak packages have averaged in the mid-$20s/MWh this month, flat from the day-ahead on-peak locational marginal prices over fall 2016.
KASSIA:We’ll be keeping an eye on the solar buildout across the US, especially as the next eclipse approaches in 2024. Until next time, thanks for listening.
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