Tag: REmap

Media Advisory: Prolonged periods of negative pricing in Q1 set new record

Blair Allen

REsurety’s REmap Q1 State of the Renewables Market report presents generation-weighted value, shape value, and capacity factor for major U.S. hubs

BOSTON, MAY 10, 2022 – The U.S. power grid saw record lows in the first quarter of 2022, REsurety’s REmap Q1 2022 State of the Renewables Market Report finds, with prolonged negative pricing in Texas expected to ease this summer.

Unlike the soaring prices of last year during the Texas energy crisis of February 2021, this year the ERCOT power grid saw record lows in Q1. It was another turn in a developing plotline REsurety commented on last quarter. 

One example: In February 2021, ERCOT West Hub (among others) settled at the market price cap of $9,000/MWh for three days; in February 2022 ERCOT West Hub saw a two day period where prices never rose above $0/MWh. Mild demand coupled with sustained periods of high wind and solar generation created the conditions for this negative pricing event, though these conditions weren’t isolated to only those few days. In fact, by the end of the quarter, West Hub more than doubled the number of negative-priced hours than were seen in Q1 the year prior.

REsurety creates the REmap-powered State of the Renewables Market report every quarter to provide readers with data-driven insight into the value and latest emerging trends of renewables in U.S. markets. The team uses its knowledge in power markets, atmospheric science, and renewable offtake to analyze thousands of locations, and summarize a few key findings, using the data that is available via its interactive software tool, REmap.

Key components in the report to be used to analyze trends in a given ISO, sub-regions of an ISO, or hub, are:

  • The generation weighted value, or the realized value of the wind and solar projects 
  • The shape value, or the relationship between the generation value and the simple-average market price
  • The net capacity factor for operating wind and solar projects 
Blair Allen, Director, Software Customer Success, REsurety
Blair Allen

“Using the modeled energy in REmap, which tells us how projects could have performed based on underlying wind/solar resource availability, last quarter West Texas solar projects saw anywhere from 20 to 30% of their potential hourly production for a given month happen in negatively priced hours. However, in reality, these projects weren’t operating at their potential capacity in these intervals, and either shut down or significantly ramped down production,” reports Blair Allen, Director, Software Customer Success, REsurety. 

Over the next quarter as the weather starts to transition to summer conditions negative pricing is expected to decline. With an increase and shift in demand, Q2 will likely be a transitional period, with the frequency of negative pricing hours remaining high to start before subsiding more materially by the end of the summer in mid Q3. 

The power of REmap lies in the historical and predictive modeling for renewable energy projects across the United States, as well as the ability to analyze hypothetical installations. Learn more by reading the Q1 report

About REsurety

REsurety is the leading analytics company empowering the clean energy economy. Operating at the intersection of weather, power markets, and financial modeling, we enable the industry’s decision-makers to thrive through best-in-class value and risk intelligence, and the tools to act on it. For more information, visit www.resurety.com or follow REsurety on LinkedIn

Contact:  Allison Lenthall, [email protected], +1-202-322-8285


Disclaimer.

Q1 2022 REmap Report

REsurety creates the REmap-powered State of the Renewables Market report every quarter to provide readers with data-driven insight into the emerging trends and value of renewables in U.S. power markets. We combine our domain expertise in power markets, atmospheric science, and renewable offtake to analyze thousands of projects and locations and summarize key findings here. All of the data behind this analysis is available via our interactive software tool, REmap. Please fill out the form to access the full report, the Editor’s Note is below.

Q1 2022 State of the Renewables Market Report
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Blair Allen, director, software customer success, REsurety

Blair Allen
Director, Software Customer Success, REsurety

Editor’s Note: As the first quarter of 2022 concludes, we reflect on historic highs and historic lows. Another record in ERCOT marks the quarter’s passing, just as one did a year ago following the market events of February 2021. However, unlike the soaring prices of last year, this record involves a prolonged period of negative pricing, and another turn in a developing plotline we commented on last quarter.Please fill out the form below to access the report.

Consider this comparison: in February 2021 ERCOT West Hub (along with others) settled at the market price cap of $9,000/MWh for three days; in February 2022 ERCOT West Hub saw a two day period where prices never rose above $0/MWh. Mild demand coupled with sustained periods of high wind and solar generation created the conditions for this negative pricing event, though these conditions weren’t isolated to only those few days. In fact, by the end of the quarter, West Hub would more than double the number of negative-priced hours than were seen in Q1 the year prior.

One impact of this increasing frequency in negative pricing is rising levels of curtailment, particularly among solar projects which, unlike wind, don’t benefit from the production tax credit and are less likely to operate below $0/MWh. For example, using the modeled energy in REmap, which tells us how projects could have performed based on underlying wind/solar resource availability, last quarter West Texas solar projects saw anywhere from 20 to 30% of their potential hourly production for a given month fall in negatively priced hours. However, in reality these projects weren’t operating at their potential capacity in these intervals, and either shut down or significantly ramped down production.

Another important angle to consider: whereas for the last few years hourly negative prices at West Hub were evenly split between on-peak and off-peak hours during this time of year, this year saw that balance shift to 60/40 in favor of on-peak hours. The cause for this shift is clear: increasing amounts of solar capacity means that low pricing is no longer just following the production profiles for wind, and is coinciding more regularly with the rise and fall of solar energy.

Looking ahead, as seasons change into summer conditions so too do we expect a change in the volume of negative pricing. An increase and shift in demand– which will steadily move more towards the mid afternoon as air conditioning ramps–and a decline in wind production at the same time should converge to steadily mitigate on-peak negative price frequency. Q2 will likely be a transitional period, with frequency of negative pricing hours remaining high to start before subsiding more materially by the end of the quarter.

Confidently Partner on Renewable Project Investments Using REmap: Hannon Armstrong Case Study

Hannon_Armstrong_Border

How Hannon Armstrong Uses REmap to Evaluate and Price Investments More Effectively

We sat down with Rich Santoroski, Chief Risk Officer, and Raj Singamsetti, Market & Regulatory Lead of the climate investment firm Hannon Armstrong, to talk about how they use REmap to conduct investments in renewable projects. 

With more than $8 billion in managed assets, Hannon Armstrong’s (NYSE: HASI) core purpose is to make climate positive investment with superior risk-adjusted returns. The company’s vision is that every investment should improve its climate future, which is why they require that all prospective investments are neutral to negative on incremental carbon emissions or have some other tangible environmental benefit, such as reducing water consumption.

Hannan Armstrong uses REsurety tool REmap to evaluate renewable project investments.

We use REmap in every deal because we trust it to help us to understand real world performance and to determine the appropriate value of an investment.” 

Rich Santoroski, Chief Risk Officer, Hannon Armstrong 

Learn how Hannon Armstrong uses REsurety’s Renewable Energy Market Analytics Platform (REmap)

Hannon Armstrong Case Study explains how they use REsurety's REmap tool to evaluate renewable energy investments.
Click on the image for the full case study.

Summer 2020 Brought ERCOT Market Challenges, But Nothing Like 2019

REmap harnesses weather and power market data to show how wind and solar producers were financially impacted in August 2020 in ERCOT.

The Texas power market made headlines in August 2019 when wholesale prices for electricity repeatedly spiked close to and even hit the $9,000-per-megawatt-hour (MWh) cap. This August, average hourly prices peaked at “just” $1,700 per MWh, the afternoon of Aug. 15.

There were many reasons for the reduced price volatility in Texas this year. First, it was hotter in Texas in August 2019, reaching 104 degrees in Houston on Aug. 13 and 14, versus this year’s high of 99 degrees on Aug. 16.

Peak demand was close to the same—74,820 MW on Aug. 12, 2019, versus 74,164 MW on Aug. 13 of this year, across ERCOT, the main Texas grid. But ERCOT’s reserve margins have increased since last year with the addition of new capacity—most notably solar.

‘Shape’ Of Texas Wind This Summer Spared Price Spikes

In ERCOT, we see that production-weighted prices for wind projects in August 2020 ranged from good to not-great. Most wind projects saw production-weighted prices in the high $10s to low $20s per MWh. Projects near the Gulf Coast were again the standout, getting into the $40s and $50s per MWh.

As we added data for this August and removed last August, the trailing 12-month average pricing for wind projects decreased across all of ERCOT’s major trading hubs, with prices now close to or dropping below all-time lows. But financial performance for clean energy buyers and sellers should also be measured through the “shape” metric.

Shape measures the value of a clean energy project’s generation relative to the value of baseload power. So for example, a renewable energy project that generated power only worth an average of $20 per MWh during a month when baseload power averaged $30 per MWh would have a negative $10 per MWh shape.Figure 1. In August 2019, the most negative wind shape values were concentrated in the northeast part of Texas, whereas in this map from August 2020, the most negative shape values were concentrated in the northwest part of the state. Coast wind projects fared best.

The August 2020 shape (Figure 1) for wind projects ranged from -$15 per MWh relative to baseload, to more than +$16 per MWh, with the vast majority of operating projects falling toward the bottom of that range. While this is admittedly a volatile range, it pales in comparison to last summer, which saw wind project shape values as negative as -$111/MWh and as positive as $84/MWh.

Across both summers, the highest positive shape values were reserved for the few projects operating directly along the ERCOT coastline.

Solar Outperformed Wind, Though Moreso in 2019

For solar producers in ERCOT, meanwhile, production-weighted prices in the real-time market ranged from the low $50s per MWh to the low $60s per MWh. These prices were much higher than wind, but a far cry from last August, when Texas solar fetched rates nearing $350 per MWh.

Solar shape in ERCOT this August ranged from positive ($17 per MWh relative to baseload) to very positive (into the $30s per MWh). In August 2019 that positive shape ranged from the $80s to north of $200 per MWh—reinforcing how last August was comparatively more volatile, but also resulted in a higher payout for solar projects across the board.

However, it is worth highlighting here that a positive shape as compared to baseload power does not necessarily mean strong financial performance for a solar project, as its hedging strategy can cause high sensitivities to poorly-timed cloud cover. 

The image below (Figure 2) shows the shape value of solar in August 2020 when we compare the as-generated value of power against the average hourly generation profile (the “12×24 shape value”)—a structure that is used in some financial hedges for solar projects.

The cause of the disparity between the shape winners and shape losers during this period was primarily driven by a few hours of cloud cover, seen in the accompanying cloud cover photograph. (There was a similar story to tell in California this August, with ill-timed cloud cover hurting solar generation during price spikes).Figure 2. August 2020 “12×24” solar shape values in West Texas were materially impacted by cloud cover, dipping lower than -$5/MWh in the ERCOT West real-time market.

REmap lets us leverage atmospheric science, power market modeling and big data to bring unprecedented transparency and insight to the clean energy industry — empowering better decisions, faster.Figure 3. Cloud cover over ERCOT during an afternoon price spike on Aug. 31, 2020. Source: NEXLAB, College of Dupage

The lessons we draw from examining August 2020 and August 2019 region- and project-level performance highlight how weather and its timing can impact clean energy financial performance. Temperature, wind speed, and cloud cover (Figure 3)—and when they occur—are increasingly the drivers of success for a given project or off-take contract.


Reposted as in Power Magazine.

REsurety launches REmap, expanding the industry’s access to critical value & risk analytics

Map-based SaaS tool provides unprecedented transparency and insight into clean energy markets, illustrating today how COVID-19 has impacted renewable projects and driven record-setting low prices.

BOSTON, May 28, 2020 /PRNewswire/ — A new information services product that harnesses a massive project performance dataset and suite of financial analytics that industry leaders use to make long-term asset and contract decisions for wind and solar energy has revealed that the low energy demand during the coronavirus shutdown, combined with low natural gas prices and high renewable generation, has resulted in unprecedented low power prices in multiple U.S. markets.

REsurety, the industry leader in clean energy valuation and risk analytics, said the insights available from its Renewable Energy Market Analytics Platform (“REmap”) include that the production-weighted wholesale price of electricity for wind projects fell to all-time lows during the COVID-19 pandemic across markets including SPP, PJM and MISO – with extreme lows reaching below $2 per MWh for the entire month of April in high wind penetration regions such as Oklahoma.

REsurety today is publicly announcing the launch of its REmap information service. The REmap tool integrates weather and power market data at an unprecedented scale, calculating hourly financial performance for 15,000 operational and greenfield locations, which REsurety uses to provide clients with the industry-wide context and site-specific depth of insight needed to make better decisions faster. 

“We’re expanding the access to our secret sauce,” said REsurety CEO Lee Taylor. For years, REsurety has used its proprietary data and analytics to support the analysis of hedging instruments. Now, through REmap, REsurety makes that insight available by subscription to support a much broader set of use cases, including greenfield prospecting, M&A diligence, and offtake and hedge analysis.

“Clean energy markets are going through a revolution,” Taylor added. “The scale and complexity of risks facing clean energy projects and their offtakers are at an all-time high. Understanding and managing those risks requires a step change in information – and that’s why we built REmap.”

REmap leverages REsurety’s unique expertise at the intersection of atmospheric science, power market modeling and big data. Billions of data points from many sources are collected, cleansed, and analyzed to provide the financial metrics that are critical to renewable energy decision makers’ success. Existing customers include developers, hedge providers, C&I buyers, and advisors.

“REmap is a sea change in the access to quantity and quality of data,” said Joan Hutchinson, Managing Director of Marathon Capital, an early REmap client. “It has assisted Marathon in providing our clients with data-driven insights and solutions efficiently – even before project data is shared.”

Jim Howell, CEO of Birch Infrastructure, also a REmap client, commented, “Identifying the optimal location to invest in renewables has always been somewhat of a dark art – relying on intuition and point-specific analyses. REmap gives us the information we need to truly optimize our procurement and hedging activities.”

Reposted as in PR Newsire.