Forrest
@forrest_f_
Investing in renewables at an oil & gas company Writing about energy, climate, and tradeoffs
Following up on an interesting discussion over the weekend. PJM's capacity market, the "Base Residual Auction", was designed to be a residual market. Here's what PJM's CEO said on the topic.
Xiao you make a good point. I actually just wrote a piece on the residual market aspect that I’m sharing Monday. PJM does not view the capacity market as a tool to incentivize new build.
Great thread. Obvious follow up is why publicly traded IPPs are priced as if forwards are at that premium? A) Public investors think the prices will rise to that level? OR B) They think that all of the IPPs capacity will be contracted with data centers?
A power market puzzle: If Big Tech pays $90-100+/MWh for electricity PPAs while power price forwards trade at $50, why is there no arbitrage? TLDR: The 'gap' isn't real - corporate PPAs bundle 24/7 clean attributes, location premiums, and credit guarantees worth $25-60/MWh…
Received a few questions related to this, so I pulled together some thoughts in a more organized format. balancingauthority.substack.com/p/the-grid-nee…
Interesting discussion re: hyperscalers and CCGTs. To bring it full circle: New-build CCGTs need long-term fixed power pricing. But, nobody wants to take long-term gas price risk. Hyperscalers won't write heat rate call options; would write PPAs. PPAs don't fix CCGTs gas risk.
Interesting discussion re: hyperscalers and CCGTs. To bring it full circle: New-build CCGTs need long-term fixed power pricing. But, nobody wants to take long-term gas price risk. Hyperscalers won't write heat rate call options; would write PPAs. PPAs don't fix CCGTs gas risk.
This is the point, though. Where are they if this was so easy and the hyperscalers were willing to underwrite the LT risk for developers? Outside of Meta-Entergy (which is non-standard), there haven't been announcements. This can change but shows that there's more…
Seen this logic a few times: Battery cost needs to be added to cost of solar to get “true cost” since solar needs backup. Isn’t this the case with coal/gas? Not to the same degree, but all CCGT/coal needs peakers. There is no resource that operates 100% and is dispatchable.
Most popular energy myth on X right now: Batteries were helpful on a given grid on a given day, therefore we need battery, solar, and wind subsidies. Truth: Without subsidies, batteries would be used, but less—since they wouldn’t need to compensate for solar/wind unreliability.…
Gotta give solar credit where its due. The Northeast is straining under a few 100-degree days. In 2023, Texas hit 100+ for 24 days straight. 24 days in a row. Solar performs in the summer.