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<em>Natural Gas Energy Electricity Energy Market Headlines TPI Takeaway Market Snapshot for Monday August 21 2023<em>

The latest TPI Market Snapshot shares PJM Grid Peak Demand Alerts and the latest energy headlines and market conditions.

Peak Demand Days Expected This Week

There is a High Threat of setting one of the five highest peak demand days today (Monday, August 21).

Today’s forecasted peak demand is 139,415 MW during hour ending 18. This represents a credible threat of setting one of the peaks for the 2023 5CP season. After today, we will return to Low Threats for the forecasted horizon. As usual, alerts will be sent on High Threat days only.

We recommend curtailing your load from 3:30 pm to 6:00 pm (EPT) to the extent your operations allow.

As of Monday, forecasters predict Thursday could also see a peak demand day.

Forecast Peak Usage For The Week:

Monday, August 21, 2023
The expected timeframe for peak usage: 5:00 pm – 6:00 pm
Potential Peak Demand: 139,560 MW

Thursday, August 24, 2023
The expected timeframe for peak usage: 5:00 pm – 6:00 pm
Likely Peak Demand: 132,182 MW

WEATHER: 6-10 DAY AND 8-14 DAY OUTLOOK

Forecasters predict that the extreme heat we had in July (a record in Earth’s recorded history) and a good part of August will ease off in September. The prompt month price of Natural Gas, approaching $3.00, fell back to below $2.60 on this news and of a +35 Bcf injection lower than the five-year average but well above last year’s injection.

EIA: WEEKLY GAS STORAGE

NATURAL GAS AND OIL RIG COUNTS

Electricity – FORWARD POWER PRICING

Power pricing in the BJM and AD Hub increased sharply in August, rising to almost $2.00 per MWh. Expect this to continue as the gas surplus we have enjoyed all year narrows over the five-year average. We had an excess of almost 20% against the five-year average in mid-May, and now that surplus is down to just above 10%

With the extreme heat affecting major population centers, electricity demand will be much higher as all those air conditioners work overtime. We have already seen pricing increases in the PJM BGE Hub and the PJM AD Hub, which will likely continue. Forward power pricing for 2024 still sits well below the forward power pricing for 2025-’27, with the electricity cost rising the further you go.

Hello, REAP

Some Inflation Reduction Act programs are beginning to reach the public. One to note is the REAP program, the Rural Energy for America Program.

With programs like the REAP program, the government gives manufacturers and businesses, classified as small businesses, grants to pay for 50% of solar projects and other efficiency projects. Coupled with existing tax breaks, this could almost cover 100% of the cost. The REPA program is only available in areas outside of metro populations.

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NATURAL GAS 12-MONTH PRICING

ALL ABOUT THE NYMEX TWELVE-MONTH STRIP 

  • The NYMEX Twelve Month Strip is the average of the upcoming 12 months of closing Henry Hub natural gas futures prices as reported on CME/NYMEX.
  • A futures strip is the buying or selling of futures contracts in sequential delivery months traded as a single transaction.
  • The NYMEX Twelve Month Strip can lock in a specific price for natural gas futures for a year with 12 monthly contracts connected into a strip.
  • The average price of these 12 contracts is the particular price that traders can transact at, indicating the direction of natural gas prices.
  • The price of the NYMEX Twelve Month Strip can show the average cost of the next twelve months’ worth of futures.
  • The NYMEX Twelve Month Strip is also used to understand the direction of natural gas prices and to lock in a specific price for natural gas futures for a year.