Cheap natural gas, high wind output stifle SPP power prices: report
Low natural gas prices and high wind output pushed down real-time average locational marginal prices in the Southwest Power Pool in the spring, compared with the winter and with spring 2015, the SPP said Wednesday.
SPP’s internal market monitor filed on Wednesday a Quarterly State of the Market Report for March through May 2016 at the Arkansas Public Service Commission, which showed an average real-time LMP of $17.37/MWh this spring, compared with $17.82/MWh in December through February and $20.95/MWh in spring 2015.
“The lengthy decline in gas costs continues to have a major impact on energy markets,” the report states. “Historically, gas prices and real-time prices have been highly correlated in SPP. Workably competitive markets should experience highly correlated gas costs and energy prices in general.”
At the Panhandle Eastern Pipe Line, which SPP uses as a natural gas price benchmark, the average price for March through May was about $1.68/MMBtu, compared with $1.98/MMBtu for December through February and $2.46/MMBtu for spring 2015.
Wind accounted for 21.5% of all energy this spring, compared with about 15% in spring 2015, the report states, while the share of all energy supplied by coal-fired generation reached its lowest level, about 41%, since the start of organized markets in SPP in 2007.
Coal-fired generation’s share was 42.6% in March, 39.5% in April and 41.6% in May. In contrast, spring 2015’s coal-fired share was 56%, and in 2007, the first year of SPP’s organized markets, the coal-fired share was more than 65%.