Infographic: US Power Tracker

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(Latest update June 10, 2024)

The United States' diverse power market environment has certain common fundamentals such as current prices' influence on forward prices, the cost of inputs such as natural gas, the generation mix, weather and power demand. Cold snaps in winter and heat waves in summer drive up demand along with power prices. Hurricanes and intermittent renewable power growth can raise energy demand, reliability and price risk.

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Five trends that will define global power markets in the next 10 years

From 2015 to 2023, the worldwide deployment of clean energy resources grew from 120 GW/year to 530 GW/year. By 2035, the reference outlook of S&P Global Commodity Insights sees this figure reach 730 GW/year. This evolution is transforming power market operations worldwide, stimulating the sector's supply chains, and advancing the global effort to decarbonize. Commodity Insights recently published a report analyzing how the build-out of renewables is expected to grow rapidly in the coming decades, how the mix of resources for power generation will trend toward more clean energies, and how power sector emissions will vary substantially across major markets. Here is a portion of the discussion topics and a summary of five trends that will define power markets worldwide between now and 2035. 1. Global power demand will increase by a third in the next 10 years Economic growth in the emerging markets and electrification -- including data center demand -- will drive the bulk of new electricity consumption, dampened by increasing energy efficiency efforts. The Asia-Pacific region alone, with its strong industrial base, will capture 66% of overall demand growth. 2. Renewables will capture nearly 90% of all new power generation capacity globally, becoming a dominant source of power by 2035 Renewables will grow by over 740 GW annually between now and 2035. Carbon-free resources, such as renewables plus hydro, nuclear and batteries, will account for 70% of all installed generation capacity in 2035. Solar and wind capacity will make up most clean energy additions, growing by 5.9 TW and 1.9 TW, respectively, between now and 2035. Electricity storage capacity -- a critical source of grid flexibility enabling the renewables deployments -- is expected to expand by 30% per year during the period. 3. Conventional thermal fuels will still make up 35% of global generation and 30% of installed capacity by 2035 Natural gas will play an important role as a baseload source of power and as a flexible resource providing reliability to power systems. In emerging markets in particular, rapid demand growth will drive more additions of conventional resources, mainly natural gas. Over 2024-35, natural gas will add 47 GW/year globally and on a net basis. Coal generation, on the other hand, will be in net decline everywhere except India and a few smaller markets. 4. Investment in renewables, battery storage and hydrogen electrolyzers will average $775 billion annually between now and 2030 -- or about 40% above 2023 levels -- in real terms Large regional variations will exist in investment levels, resulting from differences in resource endowment, energy security concerns, policy initiatives including incentives and supply chain localization requirements and the ability to attract financing. The rapidly growing Asia-Pacific region will capture about 46% of the investment total, Europe another 26% and North America 16%. Utility-scale and distributed solar projects will represent almost 40% of investments. The cost of clean energies per megawatt will fall. 5. Global power generation will emit 10% less CO2 in 2035 than it does today The emissions reductions are driven mainly by coal retirements in Europe and North America, a slowdown in coal generation in China, and the widespread penetration of clean energies. This reduction is insufficient, however, to position the world toward meeting its long-term climate goals. with analysis from Francesco D'Avack The information summarized in this video is sourced from the Global Power and Renewables service and the Clean Energy Technology service , both part of S&P Global Commodity Insights.

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India Elections: Infographic - Eyes on policy push to accelerate gas demand

Results of India’s 18th general elections are scheduled for June 4, with the new government facing a formidable task of providing affordable, stable and clean energy supplies that could be achieved by increasing the role of natural gas in the country's primary energy mix, among other steps. The country has already set a target for natural gas to achieve a 15% share of the energy mix by 2030, a challenging task given that the current share hovers around 6%-7%, according to industry estimates. Accelerated gas market reforms, increased gas-fired generation reflecting power market improvements and speeding up infrastructure are some steps that would aid the country's ambitions of becoming a gas-based economy. Click here for the full-size infographic

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India's AMNS signs 500,000 mt/year LNG deal with Shell at 11.5% slope to crude oil

Arcelor Mittal Nippon Steel India has signed a deal with Shell for the supply of 500,000 mt/year of LNG starting from 2027 for 10 years, at an 11.5% slope to crude oil, sources told S&P Global Commodity Insights May 23. This marks the first deal priced below 12% slope to crude oil since Europe switched to consuming LNG after reducing pipeline gas consumption from Russia following its invasion of Ukraine. The deal involves certain flexibilities that the seller can exercise, such as one additional cargo per year, sources said. "The contract is signed for 10 years for 500,000 mt/year starting in 2027 and there is no DQT (downward quantity tolerance)," one of the sources said. Sources added that the deal was likely to include some flexibility around deliveries at the Hazira LNG terminal. Official spokespersons for Arcelor Mittal Nippon Steel India and Shell did not respond to queries at the time of writing. Below 12% slope After Russia's invasion of Ukraine, the LNG market was focused on energy security. As global LNG markets adjusted to the change and spot prices eased from the record high seen in 2022, affordability has become an important component of energy security for South Asian and Southeast Asian buyers. A Singapore-based source said the news was big because, with this deal, it seemed that the market has corrected below 12% slope to crude oil. A Europe-based source said the price was understandable if there was some flexibility afforded in the deal for the supplier. LNG buyers have been negotiating hard to lower oil-linked price slopes for long-term contracts as market participants expect additional volumes from the US and Qatar to be made available later this decade. The expectation of additional supply being available from 2025 onward has put pressure on long-term pricing slopes, especially as LNG spot prices have eased from the elevated levels seen in 2022 and early 2023. Platts assessed the West India Marker, the benchmark price for LNG cargoes delivered to west India ports and the Middle East, for July at $11.163/MMBtu on May 21, according to S&P Global Commodity Insights data. According to the forward curve on May 21, the WIM derivative for calendar year 2027 was assessed at $9.675/MMBtu.

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Potential record-setting hurricane season is forecast and may weaken energy demand, prices

The National Oceanic and Atmospheric Administration on May 23 projected the most tropical cyclones ever in its early hurricane season forecast, and such storms could weaken energy demand and prices in landfall areas during what may be an otherwise warmer-than-normal summer. In particular, NOAA made the following forecast: 17-25 named storms, up from 14.7 for 1991-2023 Eight to 13 hurricanes, up from 7.2 for 1991-2023 Four to seven major hurricanes, up from 3.2 for 1991-2023 At the high end of the forecast, the season could equal 2020's record seven major hurricanes and approach 2020's record 30 named storms and 2005's record 15 hurricanes. "As one of the strongest El Nino ever observed nears its end, NOAA scientists predict a quick transition to La Nina conditions, which are conducive to Atlantic hurricane activity because La Nina tends to lessen wind shear in the tropics," NOAA said. "At the same time, abundant oceanic heat content in the tropical Atlantic Ocean and Caribbean Sea creates more energy to fuel storm development." Energy market impacts Tropical cyclones making landfall 2021 through 2023 cut peakloads at affected grids an average of 18%, power burns an average of 17%, and power prices -- excluding the Electric Reliability Council of Texas South Hub's extreme case in 2023 -- an average of 38%. ERCOT had one of its hottest summers on record in 2023, so day-ahead on-peak locational marginal prices at the South Hub averaged almost $795/MWh on Aug. 15, the Tuesday before Tropical Storm Harold hit South Texas on Tuesday, Aug. 22, when prices averaged less than $60/MWh. The change was drastic, inasmuch as ERCOT load fell just 1.5% on the week, and natural gas power burn actually increased 10.7%. South Texas has a large wind generation fleet, which may have been taken offline during the storm due to transmission constraints or grid reliability concerns. Grant Gunter, energy markets expert at PA Consulting, said hurricanes "can be a mixed bag for supply and demand" for natural gas. The production impact "used to be the typical thinking for hurricanes," as they would diminish offshore production as platforms shut down and evacuate, Gunter said in a May 23 email. "However, as offshore gas production has fallen and moved more onshore, these impacts have become more muted," Gunter said. "A mild hurricane likely won't impact onshore Gulf Coast production all that much." In contrast, hurricanes can have a big impact on power burn and shut-in LNG exports, Gunter said. The National Weather Service on May 16 forecast enhanced chances – 40% to 60% -- for above-normal temperatures for June, July and August across the US South Atlantic and Gulf Coast. CustomWeather on May 22 forecast temperatures to be zero to two degrees above normal across the region in June. "Power outages naturally reduce power burn demand, which is a significant source of demand in Texas and the Southeast," Gunter said. "LNG facilities, which are situated primarily along the Texas and Louisiana Gulf Coast, will usually halt exports during hurricanes due to rough seas and an inability to bring in tankers to load. These shut-ins can last 3-5 days or more depending on the severity of the storm, and a single LNG facility shutting in can result in 2+ Bcf/d of demand going offline. Ian Palao, vice president for strategic energy services at POWWR, an energy management service, advised considering ERCOT's likely heavy heat-driven power demand, despite the hurricane forecast. "Because of the random nature of hurricane landfall, I wouldn't expect an increased level of forecasted tropical activity to nullify the potential heat risk this far out in time," Palao said in a May 23 email. Hurricanes in the past have affected not only the demand side from reduced load due to system outages but also the supply side, due to reduced offshore production. "I would say hurricanes have more of a demand (gas burn for electricity generation) impact than a supply impact as significant swaths of cities can be off the grid for upwards of a week or more (thinking of Hurricanes Harvey and Ida)," Palao said. "Additionally, given that on-shore gas production far outpaces off-shore production, a temporary shutdown of offshore rigs will be but a blip in total supply." Risk management As of May 22, day-weighted average on-peak power forwards for the 2024 hurricane season, June 1 through Nov. 30, were less than day-ahead on-peak prices at relevant hub in ERCOT, but had premiums in comparison with day-ahead on-peak power in the Southeast and at the Midcontinent Independent System Operator's Louisiana Hub. Campbell Faulkner, senior vice president and chief data analyst at OTC Global Holdings, a Houston-based interdealer commodity broker, said "over all forward market seems to mostly be pricing in generalized 'heavy load' season prices that have been driven up" by weather-normalized load growth. "From the risk side, there are some very difficult to predict effects of what a major hurricane would do to any of the Southern control districts," Faulkner said in a May 23 email. "Florida is the best equipped to deal with a major strike. Texas? Well the derecho storms that recently rolled through highlight the extreme risk that a Houston-centered major wind event hurricane could cause." Gary Germeroth, a PA Consulting energy market risk management expert, said the location and strength of such storms affect the risk of lost load the most. "The forward markets, even at a near coastal hub months before the hurricane season begins, do not have any information or data that indicates the timing or severity of hurricane landfall, so the incorporation of a long-term forecast like this is interesting data to the market, but not likely a key component of forward price," Germeroth said in a May 23 email. Another risk to consider is the effect on solar installations, which have grown substantially over the past few years along the Gulf Coast, particularly in Florida and Texas. Tulane Energy Institute Associate Director Eric Smith said Florida's "new solar capabilities will be vulnerable to damage from wind-borne debris." "Texas is also vulnerable to wind damage to both solar and wind assets," Smith said May 23. But Derek HasBrouck, PA Consulting's ReliabilityOne program director in a May 23 email that storm tracks from the more active seasons of 2004 and 2005 show the grid and solar installations are distributed widely over the peninsula, such that "any one hurricane, or even several, are not going to make the sort of direct hits required to cause extensive damage." "And, to the extent those installations have associated storage and/or inverters capable of operating islanded from the grid, any installations that are not damaged are useful resources for consumers and/or the utility," HasBrouck said. Effects on oil, gas, LNG The US Energy Information Administration noted that production of crude oil dipped during Hurricanes Katrina and Rita in 2005, Hurricanes Gustav and Ike in 2008 and Hurricane Ida in 2021. Export terminals for liquefied natural gas (LNG) on the Gulf Coast could be in harm's way as well, the EIA said in a May 22 analysis. The US exports about 13 billion cubic feet of LNG daily, mainly through Gulf Coast facilities. "Although LNG facilities generally have many layers of protection from direct impact, hurricanes can damage electrical and marine infrastructure and hamper ship movement," the EIA analysis said. Hurricane Laura in 2020 temporarily halted LNG exports from Louisiana's Sabine Pass and Cameron LNG facilities. All that said, OTC Global Holdings' Faulkner described forecasts for an abnormally active hurricane season are "borderline useless." "Last year was supposed to be horrible and ended up being rather benign," Faulkner said May 23. "Thus the prognosticating and fear mongering is an exercise designed to drive clicks and induce fear in the wider populace." But Faulkner acknowledged that if a hurricane does approach the Gulf Coast, its effect "could be serious, especially given the importance of LNG exports," causing gas prices to "plummet."