Energy Market Update

June 2021

Edge Insights energy experts are constantly monitoring energy market conditions in order to help ensure the best possible pricing and contract terms for our clients.  The following report is a snap shot of current conditions intended to help our clients stay informed of market dynamics.

Market Overview:

Natural Gas and Electric prices have been higher for the nearest trading months over the past couple of weeks, and are expected to remain firm as the first part of June shows and early summer heat demand.  Extended range models are also showing above average temps into July.

Influencing the market are expectations of below 5 year average natural gas storage levels going into next winter, high LNG exports, and continued lower production.  Replacement of coal use for electric generation by wind and solar are not expected to impact energy prices in the near term.  As these renewable sources grow, and natural gas use declines, how that effects electric prices is yet to be determined.  The initial spend to develop renewals will play a large part over the coming years.

This chart shows the natural gas NYMEX Futures historic to current market average strip prices. Blending in 2023 & 2024 into your contracts is a good move at this time.

June’s gas index price settled on May 26th at $2.984/Dth, up 5.9¢ from last month.

This chart shows the 12 month average wholesale electric pricing on PJM Western Hub. 

Natural Gas Storage Update: 

The storage report for week ending May 28th shows an average injection of 98 Billion Cubic Feet (Bcf).  This puts levels at 2.6% below the 5-year average by 61 Bcf, and 386 Bcf below last year at this time.  Current percentage of total capacity is at 52.9% at 2,313 Bcf.

Energy news:  Maps of electric Generation Planned Additions and Closures

(Click on Links below to open full size graphic)

Planned Additions

Added in Past Month

Planned Closures

Closed in Past Month

Market Opportunity:   

The near month’s market rates are fair, however, the out years are good.  Longer term deals for electric and natural are you best option at this time.

The market opportunity is a ranking of how we perceive timing of contract purchases for natural gas or electric.

Information provided by the Energy Division of Edge Insights, Inc.

Note:  Our clients have the option of purchasing 100% of their electricity from renewable sources, such as wind and solar.  Speak to your Edge Insights representative for more information.

May 2021

Edge Insights energy experts are constantly monitoring energy market conditions in order to help ensure the best possible pricing and contract terms for our clients.  The following report is a snap shot of current conditions intended to help our clients stay informed of market dynamics.

Market Overview:

Currently:  Energy prices have been inching up over the past few weeks as the first part of May shows some above average heat demand.  This will eventually lead to a bearish sentiment as we move closer to summer and peak cooling season.  Natural gas production has not recovered from the record high in 2019, even though gas fed to LNG processing is very strong.  This will effect gas storage levels with projections being below the 5 year average by winter, and continuing throughout 2022 and beyond.  Natural gas and electric market prices are expected to remain firm throughout this period.

Looking Farther Out: Renewable energy growth will impact the fossil fuel industry, pressuring the already financially stressed well drilling companies and the overall natural gas production volumes.  The question is how much and how fast these green energy sources are brought to market.  Expect higher levels of volatility in supply and demand swings over the coming years.   A quick glance at the NYMEX Futures Market for energy, being priced lower than the current year, suggests that investors are being cautious.

This chart shows the natural gas NYMEX Futures historic to current market average strip prices.

May’s gas index price settled on April 28th 24th at $2.925/Dth, up 33.9¢ from last month.

This chart shows the 12 month average wholesale electric pricing on PJM Western Hub. 

Natural Gas Storage Update: 

The storage report for week ending April 30th shows a below average injection of 60 Billion Cubic Feet (Bcf).  This puts levels at 3.3% below the 5-year average by 61 Bcf, and 345 Bcf below last year at this time.  Current percentage of total capacity is at 44.8% at 1,958 Bcf.

Energy news:  

Solar panelRecord new solar installations in Pennsylvania in 2020

Solar panel – Getty Images/Hemera

By Marcus Schneck | mschneck@pennlive.com

Pennsylvania saw 265 megawatts of new solar energy capacity added in 2020, a record for the state, according to the U.S. Solar Market Insight 2020 Year-in-Review report, released today by the Solar Energy Industries Association and Wood Mackenzie.

That moved Pennsylvania up to 16th in the country in added capacity after 2 previous years at 25th.

Nationally the solar industry grew 43 percent and installed a record 19.2 gigawatts of capacity last year, according to the report.

Wood MacKenzie noted that solar led all technologies in new electric-generating capacity added for the second year in a row and projected that the U.S. solar industry will install a cumulative 324 gigawatts of new capacity to reach a total of 419 gigawatts over the next decade.

“After a slowdown in (the second quarter of 2020) due to the pandemic, the solar industry innovated and came roaring back to continue our trajectory as America’s leading source of new energy,” said SEIA president and CEO Abigail Ross Hopper.

The 8 gigawatts of new installations in the last quarter of 2020 marked the largest quarter in U.S. solar history.  Hopper noted, “The forecast shows that by 2030, the equivalent of one in eight American homes will have solar, but we still have a long way to go if we want to reach our goals in the Solar+ Decade. This report makes it clear that smart policies work. The action we take now will determine the pace of our growth and whether we use solar to fuel our economy and meet this climate moment.”

California, Texas and Florida are the top 3 states for annual solar capacity additions for the second straight year, and Virginia joins them as a fourth state installing over 1 gigawatts of solar PV.

In 2020, 27 states installed over 100 megawatts of new solar capacity, a new record.

Residential deployment was up 11 percent from 2019, reaching a record 3.1 gigawatts. That was lower than the 18 percent growth in 2019, as residential installations were significantly impacted by the pandemic in the first half of 2020.

The SEIA is leading the transformation to a clean energy economy, creating the framework for solar to achieve 20 percent of U.S. electricity generation by 2030.

Wood Mackenzie, a Verisk Analytics business, is a source of commercial intelligence for the world’s natural resources sector.

Market Opportunity:

  The near month’s market rates are fair, however, the out years are good.  Longer term deals for electric and natural are your best option at this time!

The market opportunity is a ranking of how we perceive timing of contract purchases for natural gas or electric.

Information provided by the Energy Division of Edge Insights, Inc.

Note:  Our clients have the option of purchasing 100% of their electricity from renewable sources, such as wind and solar.  Speak to your Edge Insights representative for more information.

Benchmarking electric and gas consumption will let you quantify your energy efficiency efforts.  Talk to your Edge Insights account representative to learn how you can start a ‘Green Initiative’ program for your business.

March 2021

Edge Insights energy experts are constantly monitoring energy market conditions in order to help ensure the best possible pricing and contract terms for our clients.  The following report is a snap shot of current conditions intended to help our clients stay informed of market dynamics.

Market Overview:

The recent ‘Polar Vortex’ caused enormous damage in Texas  and  constrained natural gas delivery for a good portion of central U.S. .  

The primary problem in Texas is that to avoid federal regulations the Electric Reliability Council of Texas (ERCOT) that runs the electric grid in Texas, is not connected to the national power grid.  This prohibited ERCOT from relying on neighboring states to supplement its crippled electric generation during this crisis.  Because this grid does not usually deal with extremely low temperatures it was not winterized, like is done in the northern part of the country.  Additionally, wind is a big part of Texas’ electric generation, and freezing precipitation crippled the windmills.  Oil / gas wells were frozen and could not produce, and with a severely reduced source of fuel or wind, the electric generators were not able to keep up with the demand.  The Federal Energy Regulatory Commission (FERC)) is reviewing and working with ERCOT and other federal agencies to address and find solutions for the future.  It will take some time to work out the legal and insurance ramifications of this event.  The dip in the Polar Jetstream this far south was quite unusual.  Climate activists are suggesting that increased temperature departures across the globe can cause this dip in the polar Jetstream.

This extreme event has reduced natural gas storage levels below the 5 year average.  This will support higher market rates and avoid the very low prices we saw in 2020.  Above normal winter temperatures in 2020  financially hurt many producers, so any period of supply and demand balance gives them a chance to pay down debt and possibly open new wells over time. 

Across the country we are seeing above average temperatures forecasted for March, which will reduce demand on natural gas, at the same time LNG exports are also slowing.  Storage levels are expected to return to a normal range by spring.

This chart shows the natural gas NYMEX Futures historic to current market average strip prices.

March’s gas index price settled on February 24th at $2.854/Dth, up 9.4¢ from last month.

This chart shows the 12 month average wholesale electric pricing on PJM Western Hub. 

Natural Gas Storage Update: 

The storage report for week ending February 26th shows a withdrawal of 98 Billion Cubic Feet (Bcf).  This puts levels at 8.8% below the 5-year average by 178 Bcf, and 277 Bcf below last year at this time.  Current percentage of total capacity is at 42.2% at 1,845 Bcf.

Energy news:  ALTERNATIVE ENERGY COMPANIES ARE A HOT INVESTMENT ITEM

Alternative energy companies that utilize hydrogen as a fuel source rather than fossil fuels, are making their investors a lot of “green” over the past 6 months.  Stock prices on alternative energy companies are up sharply.  Quite simply a fuel cell converts the chemical energy from a fuel such as hydrogen, and an agent such as oxygen, into electricity.  There are many applications for fuel cells, including portable power plants, cogeneration,  cars, buses, and forklifts, among others.  The technology is impressive, but many challenges remain before this technology will be widely accepted and make sense from a financial standpoint.  Fuel cells are less efficient than other types of electrical generation, and they are far more expensive.

In the run-up to the 2020 election and after the election ended, with Joe Biden taking over for Donald Trump,  the prevailing thought is that “green energy” will become a much larger part of the energy scene globally.  The thinking is that the government will be much more likely to support these types of companies, both financially, and with steeper regulations on traditional energy providers, which would make alternative energy more competitive.    Let’s take a look at some of companies in this area and what they do:

Fuel Cell Energy (FCEL)  Stock price as of 2/25/21: $17

(from Yahoo finance):  FuelCell Energy, Inc., together with its subsidiaries, designs, manufactures, sells, installs, operates, and services stationary fuel cell power plants for distributed baseload power generation.

This company has been in existence since 1969 and is based in Danbury CT

Plug Power (PLUG)  Stock price as of 2/25/21: $45

(from Yahoo finance):  Plug Power Inc. provides hydrogen fuel cell turnkey solutions for the electric mobility and stationary power markets in North America and Europe. It focuses on proton exchange membrane (PEM) fuel cell and fuel processing technologies, fuel cell/battery hybrid technologies, and related hydrogen storage and dispensing infrastructure.

Plug’s main market at present is forklifts.

This company has been in existence since 1997 and is based in Latham NY

Ballard Power (BLDP):  Stock price as of 2/25/21:  $28

(from Yahoo finance): Ballard Power Systems Inc. engages in the design, development, manufacture, sale, and service of proton exchange membrane fuel cell products. The company offers heavy duty modules, fuel cell stacks, backup power systems, and portable power/ unmanned aerial vehicles (UAV), and material handling products

This company was founded in 1979 and is a Canadian company.

Disclaimer:  Edge Insights is in no way offering any advice or opinions on investing in any of these companies.

Market Opportunity:  

 The out years on the futures market are good, so longer term deals for electric and natural gas should be considered if renewing contracts.

The market opportunity is a ranking of how we perceive timing of contract purchases for natural gas or electric.

Information provided by the Energy Division of Edge Insights, Inc.

Note:  Our clients have the option of purchasing 100% of their electricity from renewable sources, such as wind and solar.  Speak to your Edge Insights representative for more information.

Benchmarking electric and gas consumption will let you quantify your energy efficiency efforts.  Talk to your Edge Insights account representative to learn how you can start a ‘Green Initiative’ program for your business.

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