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Energy Market Update: May 29, 2018

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What’s going on in the marketplace for power generation demand?

In this week’s Energy Market Update, Direct Energy Business Strategist, Tim Bigler, talks about natural gas demand and what could change.

Tune in to the video below.

 

Power Generation Demand

Think of powerplant efficiency like you do with automobiles: higher miles per gallon gets you more distance for your dollar. Similarly, more btus gets you more kilowatt hours of electricity for your dollar.

Therefore, higher power generation efficiency equates to lower electricity generation pricing.

Because many plants are so efficient, there has been some discussion that efficiencies are actually creating higher demand. In 2018, we’re seeing approximately 2 million dekatherms per day higher demand, compared to 2016 and 2017. Almost all regions of the United States see this trend, led by the Northeast. There is also a massive year-over-year surplus of natural gas across the United States.

The bottom line? Even if summer 2018 is mild, demand for power may not go down – especially if prices stay lower. Demand may actually go up. So, when you’re looking at the commodity portion of your load, and wondering why the NYMEX isn’t going down, this could be one of the reasons.

Stay tuned to the Direct Energy Business Blog for the latest market news and information.

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Posted: May 29, 2018

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