Webinar Analysts: A Record Hot Summer, Data Center Demand and Natural Gas Fundamentals
During the June Constellation monthly Energy Market Intelligence Webinar, Constellation’s Commodities Management Group (CMG) provided comprehensive coverage of various significant factors affecting the energy landscape. These included insights into the potential hottest summer on record, natural gas fundamentals, summer readiness assessments from NERC, and a deep dive into data centers and their impact in shaping the energy landscape.
Weather Update
The team began the webinar by covering the latest outlooks for the summer, including predictions of potentially record-breaking heat as the U.S. is hit with the first heat wave of the year. The pattern of heat is expected to continue throughout July and August, especially in the Midwest and to the East. The team also discussed the tropical storm outlook as the first named tropical storm, Alberto, is expected to bring rain to South Texas. The tropical storm season is expected to be active, with predictions of around 20 named storms. Other topics included recent volcanic eruption impact on weather patterns, U.S. drought updates and the transition from El Niño to La Niña weather patterns, which will enhance storm activity.
Natural Gas Fundamentals
The panel of energy fundamentals experts discussed the natural gas storage and production picture, which continues to trend bullish. Production has seen slight increases, narrowing the storage surplus, but the potential for a record-high summer temperatures has increased power burns across the U.S. LNG exports are running close to full capacity at 13 Bcf/day Additionally, the Mountain Valley Pipeline (2 Bcf/d), which has faced legal challenges and delays in its construction, was approved by FERC to begin commercial operation on June 11. Volumes on MVP should begin to ramp up to 2 Bcf/d in the coming month.
Data Centers
Steve Chambers from Constellation’s Commercialization & Development team joined this month’s webinar to discuss data centers, one of today’s hottest trends in the energy industry. The number of energy-intensive data centers has exploded over the past few years, largely to meet the growing interest and adoption of artificial intelligence (AI) software. Steve and the team discussed impacts on electricity demand, which is expected to drive overall U.S. electricity load growth higher for the first time in over a decade. They also addressed the challenges data centers and large corporations face in decarbonization while maintaining reliability. Infrastructure development issues such as permitting, grid connection backlogs, and supply chain bottlenecks for renewables and transmission components are also part of the overall challenge that data centers and new electric power generation face.
Summer Reliability Assessments
The team covered the recent Summer Reliability Assessment from the North American Electric Reliability Corporation (NERC). This assessment ensures that power systems are prepared for the high-demand summer season. It evaluates the readiness of power plants, transmission systems and other critical infrastructure to handle peak summer loads and potential challenges such as heat waves or storms. Overall, all regions are generally prepared with resource adequacy to meet normal peak demand this summer.
However, there are seven areas facing ‘elevated risk’ of shortfalls due to rising demand, generator retirements, unplanned outages, drought, and the potential for low wind performance. The grid is increasingly having to deal with the challenge of “net load” during sunset hours. Net load is overall grid demand minus intermittent generation, primarily from solar and wind sources. From the hours of 7 to 9 pm, as solar activity declines, the overall grid load remains elevated. This means that the load served by thermal generation, or batteries can increase rapidly. Additionally, the variability of wind generation keeps grid operators on their toes on some summer evenings.
We invite you to join us for our next Energy Market Intel Webinar on Wednesday, July 17th at 2 pm ET. Constellation energy experts will offer detailed and timely updates on factors affecting energy landscape such as weather, natural gas storage and production, and domestic and global economic conditions. Register by visiting www.constellation.com/marketintelwebinar.
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