In February 2021, a cold snap caused major outages across ISOs, several deaths, and would define the discussions that happened throughout the energy industry the rest of the year. Less than halfway through the first month of 2022, it appears that extreme weather concerns will continue - for good reason (Utility Dive 2022).
During the first week of January, the East Coast was hit by a winter storm that resulted in almost 1 million customers losing power on Monday, January 3rd. By Tuesday morning, regional utilities had restored power for about half of those customers.
Later in the week, MISO came close to experiencing a major event. On Friday, January 7th, the grid operator implemented conservative operations and a maximum generation warning due to single-digit temperatures that forced generation offline. MISOs maximum generation warnings instruct market participants to update generation resource availability and load modifying resource availability. Additionally, the ISO requests that transmission owners prepare to modify their configuration. During conservative operations, the ISO also asks that generation and transmission maintenance be canceled or rescheduled (RTO Insider 2022).
MISO saw a morning peak above 97 GW on Friday morning, but the RTO was still able to rescind the warning and conservative operations by mid-morning. However, MISO did see real-time prices hit $230 / MWh during their evening peak.
MISO has been concerned about winter events, particularly in the month of January. The RTO anticipates that they will see a 101 GW system peak, with only 108 GW in available capacity to meet that demand this month. The ISO anticipates that, in the event of an extreme cold snap, they will need to rely upon imports from bordering ISO PJM. However, there are concerns that if PJM experienced a major storm at the same time, it could be catastrophic (RTO Insider 2022).
While the mercury drops across the northeast, average energy prices in New England have risen accordingly. In the NEISO, average energy prices are averaging over $100/mwh, particularly as prices plummet below 20 degrees (chart below - prices in red, temperature in blue).
The elevated prices are void of meaningful congestion, indicating elevated prices are a result of the supply stack for the region.
Additionally, we are seeing the activation of Oil driven generation segments of the fleet, confirming another piece of the elevated energy pricing (prices in red, oil generation in yellow).
While we avoided major disasters during the cold weather snap last week, it appears that weather and generation availability will continue to be a defining trend of 2022. We’re less than halfway through January, and ISOs have experienced some near misses.