Infographic: The impact of the total solar eclipse on US power generation

Banner Image

A total solar eclipse will cross North America on April 8, resulting in heavily reduced solar power plant output. It will differ from an annular eclipse in that the sun will be entirely blocked by the moon, rather than partially blocked with a visible halo of sunlight. Power markets in Texas and the Mid-Atlantic region are expected to see the biggest impact in solar-powered generation.

Related feature: US solar eclipse expected to significantly reduce solar power output in several markets (subscriber content)

Click here for the full-size infographic

Tags

  • Gas & Power

Related content

News

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.

News

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."

News

European LNG prices reach five-month high as global competition heats up

European LNG prices rose to a five-month high as ongoing geopolitical risk factors and tightness in European LNG supply intensified competition with other global demand hubs, market sources said. Platts, part of S&P Global Commodity Insights, assessed the DES Northwest Europe and Mediterranean markers for July at $10.445/MMBtu May 21, up 33.4 cents/MMBtu on the day, and at the highest levels seen since Dec. 27, when it was at $10.756/MMBtu. At the same time, Platts assessed the East Med marker at $10.645/MMBtu, also the highest seen since Dec. 27. LNG prices across Europe are under pressure, with market participants looking to compete for cargoes against Asia. Heat waves in Asia have sparked stronger seasonal demand, creating sturdy competition between the European and Asian LNG supply. In comparison, JKM also recently reached a price high of $11.498/MMBtu on May 20 -- the highest since Dec. 18 -- before falling slightly to $11.485/MMBtu May 21, Commodity Insights data showed. Although Europe is comfortable with high gas inventories, European LNG supply has constricted week on week. In both the NWE and Mediterranean, LNG traders saw sellers with the flexibility in taking cargoes toward Asia over Northwest Europe and suggested that prices in Europe need to increase further to attract selling interest. "No expectation [for demand] to pick up, people cannot pay, [Europe is] completely out of price," an LNG trader said. LNG dynamics While natural gas prices have strengthened recently amid continued geopolitical uncertainty and a tightening supply environment for both pipeline flows and LNG imports into the continent, European natural gas prices have yet to reach highs touched in mid-April. Despite an uptick in planned maintenance on the Norwegian Continental Shelf, which analysts at Commodity Insights expect will reduce flows from these assets by 11% month on month, Norwegian gas nominations have remained relatively strong averaging 300.5 million cu m/d in May so far basis data from offshore pipeline Gassco. Although most of the ongoing maintenances on the Atlantic side are planned, the market is still wary of any potential extensions which could put pressure on the market going into the third quarter, where injections are expected to be stronger. "There is a lot of maintenance in the North Sea...Just because [the maintenances] are planned doesn't reduce the potential impact if things go wrong," an Atlantic-based trader said. "With a relatively tight LNG market, this skews risk to the upside." Narrow spreads Historically as TTF prices increase, LNG-TTF spreads would widen. However, LNG-TTF spreads have remained persistently narrow due to increased global competition for LNG, sources said. Traders pointed to a "new normal" with expectations that the spreads will stay narrow as European bids remain relatively strong to attract cargoes. "I am bullish on LNG-TTF spreads, TTF seems to be lagging behind the [geopolitical] news," a second LNG trader said, adding that European prices were still falling behind those seen in Asia. Platts assessed NWE LNG prices at a 17.5 cents/MMBtu discount to the TTF Dutch gas hub price. The discount has averaged around 41 cents/MMBtu this year so far, compared with the 2023 average of $1.70/MMBtu. Similarly, East and West Med prices have been strong compared with TTF which has made it uneconomical to import LNG, pushing European and Med market participants to replenish supply on inland pipeline volumes. "PVB [the Spanish gas hub price] has been strengthening the past few days which is indicating a tightening [LNG] market and that is the same in the East Med too," the second LNG trader said. A Med-based trader said: "[The] market seems tight, and any news can push prices to spike." "Pipegas has great activity, we have this LNG freeze, but pipeline gas is a more hot environment, especially with the narrow LNG-TTF spreads it makes more sense to buy on gas," another Med-based trader said. However, the tight spreads were disincentivizing LNG flows into the continent as the prices, albeit high for European buyers, were unable to compete with the cargoes heading to Asia. "The only ones that are buying is because they have a firm commitment or they really need it," another trader said. "Everyone is cancelling." This is reflected in the low LNG imports into the continent accompanied with gas sendout levels from LNG facilities at multimonth lows.

News

US light-duty EVs surpass rail electricity consumption for the first time

EV electricity consumption up five times since 2018 US EV market forecast to overtake Europe in 10 years Light-duty electric vehicles consumed more electricity than rail systems across the US for the first time in 2023, the US Energy Information Administration said May 20. US EV sales have risen in recent years with light-duty EVs accounting for 16% of all LDVs in 2023, according to the EIA. "Annual electricity consumption by railways has been the largest electricity end-use category in the transportation sector published in the Electric Power Monthly since 2003, stable for the past two decades and averaging about 7,000 GWh," the EIA said. "The US has had only limited expansion of municipal railway systems or electrified passenger rail during that period." The number of battery electric vehicle model options have increased as their prices have declined, according to the EIA. In 2023, BEVs accounted for 72% of overall electricity consumption by EVs. "Estimated annual electricity consumption by EVs grew to 7,596 GWh in 2023, almost five times the consumption in 2018," the EIA said, adding the shares of electricity consumed by BEVs and by plug-in hybrid electric vehicles were about the same in 2018. US to overtake Europe The US plug-in EV market wrapped up 2023 with a total of 1.4 million units sold in 2023, a 54% year-over-year increase, Suzanna Massingue, a low-carbon transportation analyst with S&P Global, said May 20. "Growth is expected to continue in 2024, with annual sales forecast to reach 1.6 million sales this year," Massingue said. "Future growth will be driven by incentives brought by the Inflation Reduction Act, such as tax credits for buying eligible electric vehicles, as well as tailpipe emission standards recently finalized by the Environmental Protection Agency." By the end of the decade, EV sales are forecast to reach 5.5 million, accounting for one in three light duty vehicles sold, she added. S&P Commodity Insights expects that the US EV market will grow to become the second largest globally, forecast to overtake Europe in 10 years, driven by the size of the automotive market, population and levels of wealth. West is the best The Pacific Census Division consumed the most electricity by EVs in any region of the US in 2023 with 40% of the total, according to the EIA. The South Atlantic Census Division had the second-most consumption at 15.5%, while Middle Atlantic Census Division was third with 8.8%. California accounts for about 85% of electricity consumption by LDVs in the contiguous part of the Pacific Census Division, according to the EIA. California has the highest concentration of EVs of any state in the US, and therefore California EVs consume more electricity than in any other state. In 2023, 33.9% of US EV electricity consumption was in California, followed by Florida at 6.0%. The US presents differing rates of EV adoption across the country, with California leading in terms of plug-in EV sales and stock, Massingue said. "This can be greatly attributed to the progressive policy and incentives available, extensive investment in charging infrastructure and the Low Carbon Fuel Standard which aims to reduce transport related greenhouse gas emissions," Massingue said. "Additionally, the California Air Resources Board has also voted to ban the sale of new internal combustion engine passenger vehicles in the state by 2035, with the interim goal of 35% of new passenger vehicles to be zero-emission vehicles by 2026 and 68 by 2030." California reached a zero-emission vehicle milestone in second quarter 2023 with 125,939 ZEVs sold, accounting for 25.4% of all new car sales in the state. California ZEV sales reached a Q1 record with 102,507 sold in Q1 2024, rebounding from a 14% quarter-on-quarter drop in Q4 2023. The EIA recently started publishing experimental estimates for light-duty vehicle electricity consumption, which are not collected on its traditional surveys but are derived using a model. The EIA compared the estimates with consumption data from electric utilities that report transportation sector end use, which is almost only municipal and regional rail systems. The EIA's new estimates of LDV electricity consumption are based on models and subject to model error. "We are releasing these new estimates to solicit comments by email on the potential uses of the data, the methodology, and possible enhancements," the EIA said.