A new hourly price forecast launched by S&P Global Market Intelligence, developed to help analyze the profitability of various types of generation as renewables are integrated into organized power markets, has drawn both praise and criticism from industry observers.
Announced on Nov. 18, the new "energy transition dataset" includes hourly price forecasts for power plant hubs in S&P Global Market Intelligence's Power Forecast series.
"Understanding how the economics of the grid impact ... a power plant is key to decoding the signals that are driving the transition from traditional generation sources to renewable energy," said Steve Piper, S&P Global Market Intelligence research director for energy. "Having deep on-the-ground differentiated insights provides a unique view into the broader market trends, such as whether a region is more suited to a particular technology and where the investments will likely flow."
For example, the new dataset indicates that California wind resources can capitalize more easily on intraday peak pricing, as coastal wind output tends to ramp up toward the end of the day, just as solar resources' output falls and real-time prices surge.
S&P Global Platts Analytics also generates a set of hourly price forecasts for various market hubs, said Travis Whalen, a Platts Analytics power market analyst, but only a monthly average through 2050, while Market Intelligence generates a forecast for ever hour for every year, 20 years into the future.
"There is a broad range of people who could benefit from these numbers -- traders, to the extent that they deal with longer-term hedging, but probably more important would be generation developers and utilities who will need to understand how changing generation mixes will change the price profiles they need to hedge against," Whalen said in a Nov. 19 email. "The changing relationships between on-peak and off-peak, especially seasonally will be important to both groups."
A range of scenarios
Eric Smith, associate director of the Tulane Energy Institute, said, "I think this addition will assist operators of smaller, intermittent, sources and perhaps even providers of energy storage, both short term, such as battery owners, and longer term suppliers -- e.g., pumped storage."
However baseload nuclear capacity or other conventional load-following capacity suppliers would not likely benefit, Smith said, because of "the time needed to ramp up or down on capacity."
"As far as California is concerned, it can only help a bad situation and only then at the margin," Smith said. "California really needs more new, reliable, gas-fired, dispatchable power. Anything else is only another bucket on the Titanic."
AJ Goulding, a non-resident fellow of the Columbia University Center on Global Energy Policy and president of London Economic International, described Market Intelligence's forecast as "an interesting product," but weather and demand patterns can vary substantially from historical patterns, which can diminish accuracy.
"Hourly forecasts are not particularly new, and any decision for which they would be used requires sound scenario analysis," Goulding said in a Nov. 19 email. "So I would argue that the product is not a replacement for looking at a broad range of potential hourly outcomes based on plausible combinations of weather, generation mix, and generator availability."
