Based on our 1H 2018 long-term forecast from our North America Power & Renewables Service, carbon assumptions and higher gas prices provide room for both price and renewables in the North American power market:

• With long-term gas prices expected to be $0.30 to $0.40/mmbtu higher by the 2030s, power prices rise relative to our H2 2017 outlook.
• Regionally, gas prices project higher by as much as $0.50 to $0.75/mmbtu in places like the PJM, while Western gas prices show a slight downward revision as the lower gas price projections compound increasing renewable penetration. Prices here are $1.00 to $2.00/MWh lower on average in the long term.
• Long-term prices in the Northeast are more predisposed to lower pressure given a concentration in off-shore wind development.
• Conversely, some load pockets like ERCOT Houston show additional upward price pressure as they become increasingly isolated from renewable penetration in the forecast.
• With changes in gas prices tending to account for much the movement in long-term power prices, heat rate deltas relative to our H2 2017 report tend to be more constrained than the absolute movement in power prices.