Commodity market report

Southeast power markets short-term outlook January 2015

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Report summary

Current prices for natural gas have flipped the coal and combined cycle contributions to regional supply stacks. Although falling natural gas prices have put downward pressure on wholesale power prices a shift of coal to marginal operator provides some limit to this drop. With these operating differences not all generators will see similar impacts to returns across markets in 2015. Coal loses market share and value while the least efficient gas combined cycles pick up the most value.

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    Southeast power markets short-term outlook January 2015

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    NAPS STO Southeast 1 31 2015.xls

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    Southeast power markets short-term outlook January 2015

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Table of contents

  • Executive summary
    • Tightening fundamentals point to natural gas pricing upside for the balance of winter
      • Winter natural gas withdrawal rates to rise as weather driven demand should outpace a mild December
      • Winter 2015-'16 and 2016
      • Oil price declines and US E&P response
      • Falling oil prices putting downward pressure on delivered coal costs
    • Coal plant retirements
      • Some plants slated for retirement in PJM may live to see another year of utilization
      • Figure 1: US nuclear refuelling schedule
      • Renewable build-out could see some headwinds in 2015 beyond phase out of the federal PTC
      • Changing roles: lower gas prices push coal to the margin as natural gas shifts to baseload in some markets
      • Lower gas prices also induce gas on gas competition in addition to coal to gas switching
      • Coal utilization constraints alter inter-zonal market competitiveness
      • Impact on utilization and values
      • Figure 4: Change in operations and value for regional operating plants by technology
    • ERCOT
    • Northeast
    • Midwest
    • Southeast
    • WECC
  • Scenario Overview

Tables and charts

This report includes 14 images and tables including:

Images

  • Figure 5: ERCOT historical and forecast all-in energy price outlook
  • Figure 6: New York historical and forecast all-in energy price outlook
  • Figure 7: New England historical and forecast all-in energy price outlook
  • Figure 8: PJM historical and forecast all-in energy price outlook
  • Figure 9: MISO historical and forecast all-in energy price outlook
  • Figure 10: Southeast historical and forecast all-in energy price outlook
  • Figure 11: WECC historical and forecast all-in energy price outlook
  • Supply: Image 1
  • Supply: Image 2
  • Supply: Image 3
  • Supply: Image 4
  • Supply: Image 5
  • Supply: Image 6

Tables

  • Scenario Overview: Table 1

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