Electricity Prices Have Dropped, Natural Gas and Renewable Generation Make Gains

2017 ◽  
Vol 34 (1) ◽  
pp. 19-24
Author(s):  
Keyword(s):  
Natural Gas ◽  
Renewable Generation ◽  
Electricity Prices

Convenience Yields in Electricity Prices: Evidence from the Natural Gas Market

2016 ◽  
Vol 37 (5) ◽  
pp. 522-538 ◽  
Author(s):  
Nikolaos Milonas ◽  
Nikolaos Paratsiokas
Keyword(s):  
Natural Gas ◽  
Electricity Prices ◽  
Natural Gas Market ◽  
Gas Market

Comparing Flexible CO2 Capture in Gas- and Coal-Dominated Electricity Markets

2011 ◽  
Author(s):  
John R. Fyffe ◽  
Stuart M. Cohen ◽  
Michael E. Webber
Keyword(s):  
Natural Gas ◽  
Co2 Emissions ◽  
Co2 Capture ◽  
Electricity Markets ◽  
Power Plants ◽  
Electricity Price ◽  
Economic Viability ◽  
Electricity Prices ◽  
Modeling Framework ◽  
Co2 Capture Systems

Coal-fired power plants are a source of inexpensive, reliable electricity for many countries. Unfortunately, their high carbon dioxide (CO2) emissions rates contribute significantly to global climate change. With the likelihood of future policies limiting CO2 emissions, CO2 capture and sequestration (CCS) could allow for the continued use of coal while low- and zero-emission generation sources are developed and implemented. This work compares the potential impact of flexibly operating CO2 capture systems on the economic viability of using CCS in gas- and coal-dominated electricity markets. The comparison is made using a previously developed modeling framework to analyze two different markets: 1) a natural-gas dominated market (the Electric Reliability Council of Texas, or ERCOT) and 2) a coal-dominated market (the National Electricity Market, or NEM in Australia). The model uses performance and economic parameters for each power plant to determine the annual generation, CO2 emissions, and operating profits for each plant for specified input fuel prices and CO2 emissions costs. Previous studies of ERCOT found that flexible CO2 capture operation could improve the economic viability of coal-fired power plants with CO2 capture when there are opportunities to reduce CO2 capture load and increase electrical output when electricity prices are high. The model was used to compare the implications of using CO2 capture systems in the two electricity systems under CO2 emissions penalties from 0–100 US dollars per metric ton of CO2. Half the coal-fired power plants in each grid were selected to be considered for a CO2 capture retrofit based on plant efficiency, whether or not SO2 scrubbers are already installed on the plant, and the plant’s proximity to viable sequestration sites. Plants considered for CO2 capture systems are compared with and without inflexible CO2 capture as well as with two different flexible operation strategies. With more coal-fired power plants being dispatched as the marginal generator and setting the electricity price in the NEM, electricity prices increase faster due to CO2 prices than in ERCOT where natural gas-plants typically set the electricity price. The model showed moderate CO2 emissions reductions in ERCOT with CO2 capture and no CO2 price because increased costs at coal-fired power plants led to reduced generation. Without CO2 prices, installing CO2 capture on coal-fired power plants resulted in moderately reduced CO2 emissions in ERCOT as the coal-fired power plants became more expensive and were replaced with less expensive natural gas-fired generators. Without changing the makeup of the plant fleet in NEM, a CO2 price would not currently promote significant replacement of coal-fired power plants because there is minimal excess capacity with low CO2 emissions rates that can displace existing coal-fired power plants. Additionally, retrofitting CO2 capture onto half of the coal-based fleet in NEM did not reduce CO2 emissions significantly without CO2 costs being implemented because the plants with capture become more expensive and were replaced by the coal-fired power plants without CO2 capture. Operating profits at NEM capture plants increased as CO2 price increased much faster than capture plants in ERCOT. The higher rate of increasing profits for plants in NEM is due to the marginal generators in NEM being coal-based facilities with higher CO2 emissions penalties than the natural gas-fired facilities that set electricity prices in ERCOT. Overall, coal-fired power plants were more profitable with CO2 capture systems than without in both ERCOT and NEM when CO2 prices were higher than USD25/ton.

Impact of fossil fuel prices on electricity prices in Mexico

2019 ◽  
Vol 46 (2) ◽  
pp. 356-371 ◽  
Author(s):  
Bruno Bernal ◽  
Juan Carlos Molero ◽  
Fernando Perez De Gracia
Keyword(s):  
Natural Gas ◽  
Crude Oil ◽  
Fossil Fuel ◽  
Positive Impact ◽  
Electricity Price ◽  
Electricity Prices ◽  
Content Type ◽  
Fuel Prices ◽  
Electricity Rates ◽  
Domestic Electricity

Purpose The purpose of this paper is to examine the impact of fossil fuel prices – crude oil, natural gas and coal – on different electricity prices in Mexico. The use of alternative variables for electricity price helps to increase the robustness of the analysis in comparison to previous empirical studies. Design/methodology/approach The authors use an unrestricted vector autoregressive model and the sample covers the period January 2006 to January 2016. Findings Empirical findings suggest that crude oil, natural gas and coal prices have a significant positive impact on electricity prices – domestic electricity rates – in Mexico in the short run. Furthermore, crude oil and natural gas prices have also a significant positive impact on electricity prices – commercial and industrial electricity rates. Originality/value Two are the main contributions. First, this paper explores the nexus among crude oil, natural gas, coal and electricity prices in Mexico, while previous studies focus on the US, UK and some European economies. Second, instead of using one electricity price as a reference of national or domestic electricity sector, the analysis considers alternative Mexican electricity prices.

scholarly journals Pricing spark spread options in electricity markets

2021 ◽  
Author(s):  
Shivani Sharma
Keyword(s):  
Natural Gas ◽  
Electricity Markets ◽  
Nuclear Power ◽  
Real Data ◽  
Jump Diffusion ◽  
Electricity Prices ◽  
Market Prices ◽  
Spread Options ◽  
Master's Thesis ◽  
Jump Diffusion Model

This master's thesis develops a pricing method for spark spread options using a Monte Carlo method. The underlying commodities of interest, natural gas and uranium highlight the prevalence of natural gas power and nuclear power in Canada. To characterize the dynamics of electricity prices and capture specific features they have, two Levy models are proposed: a jump-diffusion model and a time-changed model. Real data are used to calibrate the models, using the daily average market prices for the last five years. We created a method to compute the price of the derivative under realistic modelling conditions using parameters found through the real data. Such models can be used to value the spark spread contracts to mitigate the risk associated the contracts.

scholarly journals A comparative study of sustainable industrial heat supply based on economic and thermodynamic factors

2018 ◽  
Vol 68 (3) ◽  
pp. 145-156
Author(s):  
Magdalena Wolf ◽  
Tobias Pröll
Keyword(s):  
Natural Gas ◽  
Heat Supply ◽  
Combined Cycle ◽  
Electricity Price ◽  
Coefficient Of Performance ◽  
Economic Conditions ◽  
Saturated Steam ◽  
Heat Recovery Boiler ◽  
Electricity Prices ◽  
Temperature Heat

SummaryThree different process types of heat supply for industrial production processes requiring low temperature heat at 140°C are analyzed and compared with each other. The thermodynamic and economic efficiency of a gas turbine process with a heat recovery boiler (GT), a gas and steam turbine combined cycle process with a back-pressure turbine (GT-CC) and a high temperature heat pump (HTHP) system recovering waste heat from humid exhaust air between 90°C and 50°C are assessed based on energy flows, exergy flows and costs of heat provided as 4 bar (abs) saturated steam. The economic analysis bases on the comparison of the consumption-related costs of heat, the capital-related costs of heat and the operation-related costs of heat. The payback-times are calculated for different HTHP investment cost levels (1000 EUR/kWQ, 750 EUR/kWQ, 500 EUR/kWQ and 250 EUR/kWQ). To evaluate the effects of fluctuating energy costs, a sensitivity analysis with varying gas and electricity prices has been carried out.The results show that the HTHP system, even with modest performance assumptions, has a higher exergetic efficiency than the GT or the GT-CC process. For the consumption-related costs, the economic calculation shows that the operation of a HTHP, working with a coefficient of performance (COP) of four and for a natural gas price of 25 EUR/MWh, is the cheapest way of heat production as long as the electricity price is lower than 45 EUR/MWh. An electricity price above 45 EUR/MWh makes a GT-CC process more favorable. For the period from January 2013 until June 2016, the total costs of heat and the payback times, based on real gas and electricity prices from the EEX, are calculated and analyzed. For overall cost-optimized heat supply, the results show that the share of heat provided by the HTHP system varies between 45% and 76% between January 2013 and June 2016. Especially in 2013 and 2014, the economic conditions for operating heat pumps were very good. Since October 2015, the natural gas prices have seen a decrease and the economic conditions shifted again favoring the industrial heat supply with combined heat and power systems.

Mexico's auto industry enjoys strong momentum

2015 ◽  
Keyword(s):  
Natural Gas ◽  
Oil Prices ◽  
Economic Reforms ◽  
The Other ◽  
Electricity Prices ◽  
Short Term ◽  
Content Type ◽  
Competitive Edge ◽  
Labour Costs ◽  
Negative Shock

Significance Further investments are to follow. Ford is expected to announce on April 17 that it will invest 2.5 billion dollars to build engines and transmissions, with about half the amount invested in northern Chihuahua, the other half in Guanajuato. Impacts Booming auto production and exports should partly compensate for the negative shock from falling oil prices. Recent economic reforms should also enhance competitiveness, notably as natural gas and electricity prices fall towards world levels. Labour costs have not risen significantly in recent years, but greater wage demands by automotive unions cannot be discarded. Recent peso depreciation should add at least a short-term boost to Mexico's competitive edge in dollars.

scholarly journals Energy Market Prices in Times of COVID-19: The Case of Electricity and Natural Gas in Spain

Energies ◽  
2021 ◽  
Vol 14 (6) ◽  
pp. 1632
Author(s):  
Luis M. Abadie
Keyword(s):  
Natural Gas ◽  
Probability Distributions ◽  
Energy Market ◽  
Strong Impact ◽  
Electricity Prices ◽  
Market Prices ◽  
Spanish Society ◽  
Spot Prices ◽  
Natural Gas Prices ◽  
Almost All

The COVID-19 pandemic is having a strong impact on the economies of all countries, negatively affecting almost all sectors. This paper compares Spanish electricity and natural gas prices in the first half-year of 2020 with the prices expected for that period at the end of 2019. The half-year of 2020 selected coincides with the period of greatest impact of COVID-19 on Spanish society. Expected prices and their future probability distributions are calculated using a stochastic model with deterministic and stochastic parts; the stochastic part includes mean-reverting and jumps behaviour. The model is calibrated with 2016–2019 daily spot prices for electricity and with day-ahead prices for natural gas. The results show large monthly differences between the prices expected at the end of the year 2019 and the actual prices for the half-year; in May 2020, wholesale electricity prices are found to be EUR 31.60/MWh lower than expected, i.e., 60% lower. In the case of natural gas, the prices in the same month are EUR 8.96/MWh lower than expected, i.e., 62% lower. The spark spread (SS) is positive but lower than expected and also lower than in the same months of the previous year.

scholarly journals Renewable Power and Electricity Prices: The Impact of Forward Markets

2021 ◽  
Author(s):  
Heikki Peura ◽  
Derek W. Bunn
Keyword(s):  
Production Cost ◽  
Numerical Study ◽  
Order Effect ◽  
Market Model ◽  
Wind Generation ◽  
Renewable Generation ◽  
Electricity Prices ◽  
Forward Markets ◽  
Renewable Power ◽  
The Impact

Increasing variable renewable power generation (e.g., wind) is expected to reduce wholesale electricity prices by virtue of its low marginal production cost. This merit-order effect of renewables displacing incumbent conventional (e.g., gas) generation forms the theoretical underpinning for investment decisions and policy in the power industry. This paper uses a game-theoretic market model to investigate how intermittently available wind generation affects electricity prices in the presence of forward markets, which are widely used by power companies to hedge against revenue variability ahead of near-real-time spot trading. We find that in addition to the established merit-order effect, renewable generation affects power prices through forward-market hedging. This forward effect reinforces the merit-order effect in reducing prices for moderate amounts of wind generation capacity but mitigates or even reverses it for higher capacities. For moderate wind capacity, uncertainty over its output increases hedging, and these higher forward sales lead to lower prices. For higher capacities, however, wind variability conversely causes power producers to behave less aggressively in forward trading for fear of unfavorable spot-market positions. The lower sales counteract the merit-order effect, and prices may then paradoxically increase with wind capacity despite its lower production cost. We confirm the potential for such reversals in a numerical study, suggesting new empirical questions while providing potential explanations for previously contradictory observed effects of market fundamentals. We conclude that considering the conventional merit-order effect alone is insufficient for evaluating the price impacts of variable renewable generation in the presence of forward markets. This paper was accepted by Vishal Gaur, operations management.

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