Power Forwards in PJM Trend Higher, RGGI CO2 Allowances Increase 5% | Energy Watch Blog
Published June 21, 2021 | energy-watch
June has brought about high temperatures and strong electricity demand to the PJM, NYISO, and ISO-NE power markets with elevated prices. Northeast power futures reacted quickly and are trading significantly higher. Despite this rally in prices, ESAI’s gas outlook is stable and believes the futures are overvalued.
In this blog, we’ll provide a brief update on each of the ISO’s and an update on the RGGI Quarterly Auction (Auction 52).
Here is a brief update on each of the ISOs:
- PJM – a 730 MW coal plant retirement has supported higher prices in a few zones and at PJM West Hub. A strong forward gas basis for the winter months and overvalued fall spark spreads have lifted the power forwards, but ESAI’s forward gas basis is around $0.25/MMBtu below the markets, resulting in a weaker forecast. Projected spark spreads moving into the fall seem to be overvalued.
- ISO-New England – ESAI forecasts an increase in power prices in July, but still bearish to the New England futures. Mass Hub heat rates are likely to be lower than the Forward Curve Heat Rate, supporting ESAI’s bearish outlook.
- NYISO – the recent retirement of Indian point 3 nuclear, in addition to the high temperatures and load levels support the uptick in futures prices. However, Transco Zone 6 (NY) natural gas forwards are higher than anticipated and trading overvalue in the market, which has also unnecessarily bolstered futures prices.
RGGI Quarterly Auction (Auction 52), was held on June 2, 2021. The RGGI Auction saw bullish pricing with clearing prices settling almost 5 percent higher than last quarter. The warmer-than-normal weather and expected reductions to the program cap with new states joining RGGI pushed the clearing price up. Subscribers: Check out the full Energy Watch Report for a deep dive into CRRs and OTC Prices, as well as ESAI’s CO2 emission projections.
Look for PJM’s BRA Results and MOPR Reform analysis in our next publication of Energy Watch at the end of June. For more information and specific price data, check out ESAI’s Free Trial Service here: ESAI Power Free Trial.
Learn About Renewable Energy
ESAI Power evaluates the renewable energy issues, markets and trends in the PJM, New York, and New England market footprints. Coverage includes solar, onshore and offshore wind, hydroelectric, and storage. For each region, ESAI Power details the regulatory and market factors that impact the supply and demand balance for Class I Renewable Energy Credits (RECs) and projects the supply and demand balance of Class I RECs through 2030.
Learn About Energy Watch Monthly
Energy Watch MonthlyTM provides nine-month zonal pricing forecast and discussion of policy changes and other key market influencers in the Northeast regions, as well as a natural gas forecast which provides analysis of Henry Hub and regional basis dynamics. The energy forecast put forth in this monthly is based on both ESAI and forward fuel forecasts and compared with forward market energy prices.
Learn About Energy Watch Quarterly
Energy Watch QuarterlyTM provides a quarterly analysis of market and policy issues affecting energy pricing dynamics over the next 10-year period for both the power and natural gas sectors. This analysis includes forecasts of pool-wide and zonal energy prices in New England, New York, and PJM, including forecasts of fuel inputs. Supporting assumptions are provided in each quarterly report.