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On May 16, 2019, the Federal Energy Regulatory Commission (FERC) Officer of Electric Reliability and Enforcement published its Summer 2019 Reliability and Energy Market Assessment, which is the summary report of anticipated summer reliability challenges for U.S. electric and natural gas markets. In addition to this summary, many Independent System Operators (ISOs) and North American Electric Reliability Corporation (NERC) Regional Entities (REs) publish region-specific outlooks. The FERC highlights help us understand holistic, grid-wide trends that may impact various regions differently.

While the National Oceanic and Atmospheric Administration (NOAA) forecasts “higher than average temperatures for the West, South, and East”, it is important to note that all ISOs and REs – with the exception of the Texas Regional Entity ERCOT – anticipate having resources to meet their demand needs. The electric demand growth within ERCOT is steadily increasing, causing potential constraints on the grid. Energy Emergency Alerts (EEAs) are expected to be utilized throughout the summer. To read more about ERCOT’s unique challenges, read our previous article ERCOT Summer Weather Outlook.

Interestingly, the net demand for electricity is “forecast to decrease by approximately 0.3 percent […] when compared to last year”. This phenomenon is due to reductions associated with “greater energy efficiency” and “behind-the-meter systems”. There is an anticipated increase of total generating capacity over summer 2018, with nearly 6.7 GW of capacity entering commercial operations.

There is a continued dependence on natural gas generation, fueling a “high percentage of natural gas-fired capacity in all regions”. Natural gas futures price movements are expected to be “generally mixed” across the U.S. Western states are forecast to have the highest price changes with trading hubs already experiencing 20 percent and greater prices when compared to last year. Southern California “remains the highest priced point in the county”. The Aliso Canyon Natural Gas inventories remain an “item of focus” for the Western Interconnection in particular, though the Southern California facility is better positioned going into this summer when compared to 2018.

As described in our previous article detailing the CAISO Summer 2019 Weather Outlook, hydropower is expected to be strong in California but “slightly below historical levels” in other states and regions. Snowpack levels reported in April 2019 for the West and British Columbia may “limit the options for low-cost imports into CAISO” during the summer.

Battery storage is continuing to increase, in part due to the ongoing implementation of FERC Order No. 841 regarding electric storage participation in organized markets. California has seen the fastest growth, accounting for “30 percent of the total storage capacity in the continental U.S.” A total of 142 MW of battery storage across all areas is expected in 2019. Wind and solar capacity are also steadily increasing across the U.S. with “approximately 14 GW of capacity” scheduled for operation nationwide in 2019. Future wind and solar growth may plateau in coming years, however, due to a decline in tax credit programs for such projects.

The FERC weather outlook is a sample of how the markets are preparing for the summer, but what is your team doing to prepare? Environmental trends and predictions are just a portion of the information that real-time teams need to be situationally aware. Having robust situational awareness can mean the difference between operational lag and efficiency, as well as profit loss and growth. Contact our team at Power Settlements to discuss ways your team can improve its situational awareness and gain visibility over critical information.

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