Volatility Ahead: Freezing Cold Sends U.S. Power Prices Higher

A fast-evolving cold weather system from Canada has cast a major arctic front across the northern, central, and southern plains. The series of storms is expected to hold strength through early next week. Forecasts predict the potential for record demand in ERCOT and SPP through early next week. Both regions are regularly exceeding their day-ahead forecasts often by several thousands of megawatts-per-hour. Under these stressed conditions, both systems are already seeing reduced Operating Reserves, transmission congestion which results in extreme prices.       ERCOT Looking Back – How Freezing Weather Changed the Markets   This week’s conditions are similar to what happened during the first week of February 2011.  During that period, an extreme cold spike led to a sharp increase in demand, several thermal generators tripped offline due to the extreme temperatures, and windfarms capacity was reduced due to icy conditions.  This resulted in rolling blackouts, which further compounded the issue as many natural gas compressing stations were left without power and could not supply generators need to recover the system. The load forecast for February 15-16, 2021, will stretch operating reserves and likely lead to high prices and the potential for extreme volatility. Thankfully, the lessons learned… continue reading

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Source: CTRM Center

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