April 20, 2026
Praneeth Gurumurthy, Data Science Engineer
At REsurety, we help our clients understand and offset two types of risks: weather risks and price risks. Our industry-leading and trusted fundamentals-based price forecasts, published twice a year, quantify these risks so that both buyers and sellers of renewable energy can better track the components that affect prices, and ultimately, project revenue. As power markets grow more volatile due to rapid changes in load and supply, commodity price swings due to geopolitics, and more frequent extreme weather events, we must update our forecasts more frequently. A standard practice in the industry is to use price forward curves as an instrument to gauge changes in forecast prices. But forward prices can be speculative and can overreact to changes in market sentiment.
Starting in May, we are complementing our fundamental price forecasts with a more dynamic short-term forecast in CleanSight Manage.
The short-term forecast strikes a balance between being responsive to the materialized price swings while not being over-reactive to speculative price signals. If you’re logged into CleanSight Manage, you’ll be able to view these hourly forecasts alongside our fundamentals forecast. Our short-term forecasts are still grounded in fundamentals, but refreshed continuously. In addition to changes in supply or demand shocks and commodity price swings, the model is responsive to any materialized price swings caused by extreme weather events like heat waves.
What does this have to do with the War in Iran? As oil production and supply chains have been upended, the price of crude oil has increased from just below $60 at the beginning of 2026 to over $110 – more than an 80% increase. Crude oil makes up less than 1% of the U.S. electricity supply; the most prevalent source of U.S. electricity is natural gas. The conflict in Iran and the closure of the Strait of Hormuz have precipitated what has been called the “Worst energy shock of all time,” severely curtailing global oil and LNG output.
While intuition suggests such a massive spike in crude would send domestic electricity costs soaring in tandem, the structural evolution of the U.S. market since the 2019 shale revolution provides a critical disconnect. Because the U.S. remains an export-capacity-constrained state for natural gas, our domestic supply cannot be fully diverted to meet global demand. This “trapped” surplus effectively decouples domestic energy costs from international volatility, suggesting that even as global oil prices fluctuate, U.S. natural gas — and by extension, PPA prices — remain remarkably insulated.
As a case study, we looked at the two months leading up to the War in Iran at the end of February 2026. We analyzed how the forecast for the average price for the month of March evolved over time. The market forward price curves, REsurety’s fundamentals-based forecast, and REsurety’s short-term forecast exhibit very different characteristics.
Market forward prices:
Rose from above $45 to near $65 / MWh and then fell back to just over $40 / MWh. This volatility can create more uncertainty for clients.
REsurety fundamentals-based forecast:
Held constant at $39 / MWh because it is updated twice a year. These forecasts are designed not to be overreactive to market dynamics; while this can be a valuable tool for planning, we recognize that some clients need more data during periods of extreme dynamism in market conditions.
REsurety short-term forecasts:
Moved from $45 to $36 / MWh and then to $45 / MWh. Short-term forecasts demonstrate a more measured reaction because they react to the materialized price volatility. These forecasts are not as sensitive to the risk or fear premium present in the market sentiment, helping our clients to see signal through the noise in periods of volatility.
But how do these volatile forecasts compare to the actual prices in March 2026?
We looked at the error in the forecasts compared to the actual monthly average price (around $34 / MWh). Comparing the forecasts with the actuals:
When compared to the actual March monthly average price (through March 26th, 2026), the percent error for forward curves ranged from around 30% to over 100% error.
With our REsurety short-term forecast, this error ranged from 20% to 40%. Over the course of the entire two month period the fundamentals-based (non-reactive) forecast achieves a better accuracy at just above 20% error.
In this scenario, where the average price in March 2026 was not significantly affected ($34 / MWh in March 2026 vs. $35 / MWh in 2025) by the ongoing War with Iran, our non-reactive fundamentals-based forecast wins. However, in a scenario where external factors do result in changes in the actual price, like a heat wave, a more reactive but fundamentals-grounded forecast like our short-term forecast can be useful.
If you’re interested in learning more about these offerings and whether REsurety is right for you, reach out to a member of our team:
DISCLAIMER: This blog post contains information related to REsurety and the commodity interest derivatives services and other services that REsurety provides. Any statements of fact in this presentation are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor do they purport to be complete. No responsibility is assumed with respect to any such statement, nor with respect to any expression of opinion which may be contained herein. The risk of loss in trading commodity interest derivatives contracts can be substantial. Each investor must carefully consider whether this type of investment is appropriate for them or their company. Please be aware that past performance is not necessarily indicative of future results.
This material is intended for informational purposes only. REsurety does not provide research reports as defined under CFTC Regulation 1.71, and this material should not be construed as a recommendation or advice with respect to any commodity interest transaction.