Commodity Market Report
WECC power markets long-term outlook H1 2019: Who's the greenest? Accelerated state plans for renewables pressure prices
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Report summary
Although power demand growth has been constrained, as the step-change of energy efficiency gains begin to moderate, signs of an increasing demand recovery are continuing to emerge. Still, pressure from increasing renewable integration, constrained natural gas prices, and additional negative burdens are beginning to test the reliability of select markets. Despite some of these integration challenges, green states are now challenging the industry to meet very deep decarbonization goals.
Table of contents
- Natural gas market shows resilience in the face of associated gas although price forecast projects lower overall vs H2 2018 in the long term
- This outlook continues to assume a federal carbon price in the US starting 2028. This will also serve as a backstop floor price for all states under regional programs in the future.
- More regions and states are looking to price carbon or increase carbon targets in the absence of federal legislation including New Jersey into RGGI. All Canadian provinces are subject to a carbon price starting 2019 based on provincial policies or federal backstop prices.
- Technology LCOEs (levelized cost of energy):Cost of mature solar and wind technologies now below gas technologies across geographies in NA; expected to stay that way despite phase down of subsidies.
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Battery Cost
- 2019 has already begun to deliver hints as to which regions may be at risk to reliability and resiliency events in the near to mid-term. In ERCOT and California intra-day price volatility is pointing to need for more reserves sooner rather than later. While in MISO and PJM, baseload generation failed to see significant prices this winter, despite renewables only able to contribute little to peak hours.
- Renewable build out continues to supress prices. Northeastern markets are at more risk to lower pricing as mandates look to leverage off shore wind development. Combined wind and solar development will constrain prices in many markets.
Tables and charts
This report includes 3 images and tables including:
- Figure 1: H1 2019 vs H2 2018 forecast henry hub price
- Figure 2: LCOE ($/MWh) forecast for various technologies
- Figure 3: Battery Cost Forecast
What's included
This report contains:
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