July 1, 2025
Author: Jennifer Newman, VP, Research, REsurety
I am excited to share that our Q2 2025 Weather-Smart Fundamentals Forecast release is now available in REsurety’s CleanSight platform. Since 2022, our Weather-Smart Fundamentals Forecasts have helped customers better understand the connection between weather, market fundamentals, and project value.
With our tools and services, customers can evaluate clean energy projects under expected conditions, stress test downside risk, and identify potential upside. They can build and track portfolios that help mitigate correlated risks — and measure the carbon impact of clean generation, storage, and consumption based on location, timing, and grid dynamics.
In this quarterly installment, we see prices remain relatively flat in the near term, but begin rising in the mid to long term as large new loads put added strain on the system.
Before jumping into the details of our latest forecast, it’s worth revisiting the fundamentals that make such insights possible.
What is a fundamentals model, and why are we using it?
My team’s goal is to forecast how power prices could evolve over the next 20 years, and we’re doing that with a fundamentals model. This means taking all the components that impact price formation — supply, amount of wind or solar generation, gas plant capacity, system demand, the constraints around how electrons move around — and solving for how to meet the region’s load at the least cost possible. It’s the same logic that underlies real-world power markets. The fundamentals model simulates those dynamics to predict future power prices.
Weather-Smart comes in because we don’t just do this simulation for typical weather conditions — we look at 40 years of weather variability and input that into our model to get a distribution of potential weather outcomes. That’s really important because weather can have a big impact on power prices.
For starters, if it’s really hot in the summer, or really cold in the winter, demand is going to be higher, which tends to drive up the price of electricity. Weather also impacts the supply side, especially when renewables are involved. If it’s really cloudy or if it’s not very windy, then you’re not going to have as much wind or solar generation, and that will impact prices as well. Our Weather-Smart fundamentals modeling brings together all that weather variability along with market fundamentals to predict prices in the future.
From there the name of the game with forecasting prices is forecasting load growth. Most of the markets that we forecast — primarily ERCOT, MISO, and PJM — are expecting a lot of data centers to come online in the next 10 to 20 years, which will dramatically increase load. Many of these markets have not seen a ton of load growth year over year, so this is going to be an almost exponential increase in the amount of load on the system. They’re also expecting to bring more capacity online, including a significant amount of new renewables, along with gas and storage.
Testing the limits of load growth
An important challenge is to determine if load forecasts are realistic. Do we think that all these data centers will actually come online? And if so, how can we build up the capacity to serve the load while avoiding rolling blackouts?
In nearly all cases we erred on the side of making downward adjustments to ISO-provided load forecasts, to reflect a) more realistic rates of load growth and b) capacity build-out based on historical trends. We’re seeing many markets moving toward more solar now that it’s relatively cheap. This will cause the value of solar to decrease in a so-called cannibalization effect, where the more and more solar you get on the grid, the less valuable it becomes. Meanwhile as all that solar competes against other solar projects, bringing down energy prices, wind can get a positive edge.
Wind tends to be stronger at night, and as solar generation ramps up during the day, it pushes high prices into the evening. Wind can take advantage of that shift — capturing those higher prices and becoming more valuable as a result. Consequently, we’re starting to see wind value recover in markets that have historically low wind capture rates, such as ERCOT and SPP.
In some markets, we even see brief morning price spikes before solar kicks in, especially when wind has already tapered off — and storage is often well positioned to benefit from those early high-price hours too.
More broadly, we closely track movements across these markets with the goal to produce the most realistic forecasts possible. We’re focused on what we think is realistic, while also showing the variability around that. This includes weather-driven variability, as well as scenarios based on different gas price assumptions. We provide both high and low gas scenarios to show how prices might respond, since gas plays such a major role in shaping the price of power.
Ultimately our goal is to reflect the most likely outcomes, while also accounting for the uncertainty built into both the weather and the fundamentals.
Want to learn more? Find more information in our Weather-Smart Fundamentals Modeling brief.
Ready to dive into the Q2 2025 numbers? Customers, log in to CleanSight.
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