Commodity market report
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69 Pages

Southeast Power & Renewables markets long-term outlook H1 2015

Southeast Power & Renewables markets long-term outlook H1 2015

Report summary

North American power markets are adapting as demand growth struggles against energy efficiency improvements and demand response programs. Economics of wind and solar are improving, as within the next decade, utility scale solar becomes attractive from a purely economic standpoint in many regions.  Coal capacity that has survived MATS and CSPAR are also under threat from low natural gas prices.  Further, the industry awaits EPA’s CPP announcement, requiring reductions in carbon in 2020.

What's included?

This report includes 16 file(s)

  • Southeast Power & Renewables markets long-term outlook H1 2015 PDF - 1.83 MB 69 Pages, 3 Tables, 31 Figures
  • Southeast Regional Market Overview.pdf PDF - 1.56 MB
  • NAPS LTO Capacity Prices Southeast 5 31 2015.xls XLS - 220.00 KB
  • NAPS LTO Coal Clean Equipment Data Southeast 5 31 2015.xls XLS - 405.50 KB
  • NAPS LTO Coal Retirements Southeast 5 31 2015.xls XLS - 119.50 KB
  • NAPS LTO Delivered Fuel Prices Nominal Southeast 5 31 2015.xls XLS - 314.00 KB
  • NAPS LTO Delivered Fuel Prices Real Southeast 5 31 2015.xls XLS - 313.00 KB
  • NAPS LTO Load Forecast Southeast 5 31 2015.xls XLS - 6.39 MB
  • NAPS LTO MacroEconomics Assumptions Southeast 5 31 2015.xls XLS - 1.78 MB
  • NAPS LTO Prices Sparks IHR Darks Nominal Southeast 5 31 2015.xls XLS - 13.46 MB
  • NAPS LTO Prices Sparks IHR Darks Real Southeast 5 31 2015.xls XLS - 13.46 MB
  • NAPS LTO Renewable Energy Credit Prices Southeast 5 31 2015.xls XLS - 4.52 MB
  • NAPS LTO State RPS Targets Southeast 5 31 2015.xls XLS - 963.50 KB
  • NAPS LTO Supply Demand Energy Southeast 5 31 2015.xls XLS - 2.75 MB
  • NAPS LTO Emission Prices Nominal Southeast 5 31 2015.xls XLS - 134.50 KB
  • NAPS LTO Emission Prices Real Southeast 5 31 2015.xls XLS - 134.50 KB


The power sector is rapidly transitioning to a cleaner generation mix supported by technological and regulatory changes. Regional markets and structures are adjusting to these new realities with implications on fuel demand, commodity pricing and asset values.

This Power Markets Long Term Outlook report provides a detailed analysis of supply, demand and price fundamentals, as well as the regulatory and market issues affecting regional power markets.

Use this report to examine key issues driving regulatory and economic trends and identify future growth opportunities in regional power markets.

Wood Mackenzie's detailed analysis and reliable market forecasts give you a strong foundation for your investment decisions and corporate planning. Our experienced power research analysts use high-quality proprietary gas, coal and oil markets research to help you unlock power market fundamentals and identify future growth opportunities.

  • Executive summary
  • Policy and regulation
    • Emission reduction policies shadow energy markets
      • Key takeaways:
      • Concerns with CPP that make it unlikely to be finalized in it's current form
  • Demand
    • Key takeaways
    • Energy efficiency
    • Demand response
    • FERC 745
    • Prospects of Demand Response likely uneven across markets
    • Distributed generation
    • Electric vehicle build-out presents a long term uncertainty to the forecast
  • Costs
    • Natural Gas Markets
      • Key takeaways:
      • Supply
      • Demand
    • Prices
      • Henry Hub price outlook
      • Basis outlook
    • Coal Markets
      • Key takeaways:
      • Market fundamentals – policy and economics continue to erode coal’s position
      • Longer-term power sector fundamentals offer little support
      • Prices ultimately struggle to find traction
    • Carbon Pricing
      • Key takeaways:
      • United States federal Regime
      • California (and Quebec) cap and trade
      • RGGI
  • Supply
    • Key takeaways:
    • Coal to gas conversions continue to accelerate our retirement projections
    • Changes in federal policies could drive incremental retirements
    • Federal policy reversal combined with local reliability rules could lessen the final tally of retirements
    • Current status of the PTC
    • Expansion of distributed solar generation to see support as soft costs come down
    • Natural Gas – the foundation for new power generation supply
    • Key takeaways:
  • Emissions
  • Supply-demand balances
  • Trade
    • Transmission
    • Competitive transmission projects still see obstacles to project success
  • Prices
    • Key takeaways:
  • Energy Prices
    • ERCOT: Market attempts to correct for true amount of wind penetration on prices
      • Impact of Operational Reserve Demand Curves in summer of 2014
    • PJM: Epicenter of gas price volatility
      • Winter/summer pricing dynamics driven by dual natural gas pipeline capacity limits
      • Summer upside still exists for pricing
    • MISO Central/North:
      • PTC-concentrated wind build depresses Iowa prices while Indiana and Michigan are pulled higher by PJM market interaction
    • Northeast - winter basis pressure is alleviated over the forecast
    • Southeast – natural gas, demand growth and carbon policy set the direction for market pricing
    • WECC
      • Near to mid term volatility increasing in California
      • As the high cost regional market, California drives prices across the WECC
      • Coal retirements boost local natural gas generation in Desert Southwest
      • Pacific Northwest pricing relationships to change on transmission build out
      • Colorado: an eddy against the stream
      • Alberta: an island on to itself
  • Capacity Prices
    • Key takeaways:
      • Illinois in focus
      • 2016: Illinois in focus again
      • 2017 +
      • Risks
      • PJM Reliability Pricing Model (RPM)
        • 2018/2019 Auction Results
      • Auction price
        • RTO
          • Demand Response
          • Imports
          • Impact of lower capital cost assumptions / CONE / Net CONE
          • LDA pricing
          • Long Term Capacity prices
          • Figure 25: PJM Supply Demand Balances: H1 2015 vs H2 2014
          • ISO New England Forward Capacity Market (FCM)
            • Dynamic De-list price
            • New capacity market boundaries
            • Lower Net Cone
            • Incorporating DG forecasts within FCM
        • ISO New England supply demand balances
      • NYISO ICAP market Outlook
        • Other Markets
        • Capacity Markets to Grow?
    • RPS Compliance and REC prices
      • Key takeaways:
      • NEPOOL-GIS
      • PJM-GATS
      • WREGIS
      • NYSERDA
      • MIRECS and M-RETS
      • NARR
      • ERCOT
    • New Entrant Economics
      • Net revenue analysis for North American power markets will be disrupted by new wind and solar capacity being integrated over the forecast horizon
      • California has initiated the path to viability in alternative resources
      • ERCOT looks to extend the solar footprint in a sea of wind generation
      • Despite a lack of current RPS goals, the Southeast may be in the best position to pick up the solar mantle

In this report there are 34 tables or charts, including:

  • Executive summary
  • Policy and regulation
    • Table 1: Environmental Policy Assumptions
    • Figure 1: CPP Compliance Timeline
  • Demand
    • Figure 2 GDP growth and electric demand growth linkage
    • Figure 3: State retail sales percentage above/below pre-recession levels
    • Figure 4: Domestic Energy and its impacts : Resurgence of Industrial Demand
    • Figure 5: Current demand response saturation by market as percent of peak
  • Costs
    • Figure 6: Henry Hub outlook
    • Figure 7: Price outlook and marginal plays
    • Figure 9: US coal demand by sector
    • Figure 10: FOB coal price forecast (Real 2015 US$)
    • Figure 11: Base Case assumed carbon price
  • Supply
    • Figure 12: Comparison of Wood Mackenzie assumed coal retirements over previous forecasts
    • Figure 13: Installed wind capability
    • Figure 14: Large Scale Solar
    • Figure 15: US generation outlook by fuel class
    • Figure 16: Changes in generation by region 2014-2035
  • Emissions
    • Figure 17: US Emissions History and Forecast
    • Figure 18: Change in Emissions
  • Supply-demand balances
    • Figure 19: Regional supply and demand balances
  • Trade
  • Prices
  • Energy Prices
    • Table 2: ORDC Impacts in August of 2014
  • Capacity Prices
    • Figure 20: Supply Demand Balances: H1 2015 vs H2 2014
    • Figure 21: MISO Capacity Price Outlook
    • Figure 22: Changes in the Variable Resource Requirement (VRR) curve:
    • Figure 23: COMED supply curve:
    • Figure 24: PJM COMED and EMAAC Capacity Prices
    • Capacity Prices: Image 6
    • Figure 26: ISONE Supply Demand Balances: H1 2015 vs H2 2014
    • Figure 27: ISONE capacity price outlook
    • Table 3 NYISO ICAP Parameters
    • Figure 28: Supply Demand Balance
    • Figure 29: NYISO Cap Price forecast
    • Figure 30: California resource economics for new generating capacity
    • Figure 31: ERCOT resource economics for new generating capacity
    • Figure 32: SERC Southeast resource economics for new generating capacity
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