The pandemic has caused PJM’s on-peak power prices to fall during the months of March and April. In the 12 states that are included in the PJM footprint, plus the District Columbia, every state except Pennsylvania had stay-at-home policies at least until the end of March. And all those states, except for Kentucky, had the policies in effect through April.
Across PJM hubs in April, day-ahead on-peak locational marginal prices averaged around $17.50/MWh, which was down as much as 39.6% from April 2019 levels, and as much as 9.8% from averages in March.
Reduced consumption throughout PJM, due to stay-at home orders, was to blame for the low power prices. The daily peak load in PJM for April averaged about 78.3 GW, which is down almost 11% from March and down 7.8% from April 2019.
Natural gas generated most of PJM’s power demand this April, which was down from March, but up from April 2019 when gas plants had a second-place share. Nuclear, wind, and coal-fire also produced a significant amount of power in April, and the amounts were both up from last month and April 2019.
Although natural gas was responsible most of the power generated, and the price of natural gas has fallen recently, it was not a factor in the low power prices this month. Spot gas averaged $1.506/MMBtu this April, which were up 2.9% from last month, but also down compared to April 2019.
Weather conditions also had little effect on power prices. The average heating and cooling degree days this April were up 49.7% from April 2019, but they were down 14.4% from March totals. Going forward, weather forecast for June, July and August, was released in April, and indicates a high chance for above-normal temperatures for the entire PJM footprint. Normal temperatures for western segments in Illinois, Indiana and Kentucky are also a possibility.
Commercial and industrial businesses should be aware of the ways they can benefit from the low prices the energy market it is experiencing. Securing these prices in a future energy contract, through unique purchasing strategies can help manage the cost of energy a business spends. Talking to an energy advisor can be a lucrative decision, as they are able to assist in navigating the complex energy market to help provide businesses the best opportunity to save the most money over time.
Although it is unclear when the energy market will start to see a reversal, it’s suggested that you speak to an energy professional as soon as possible. The energy market may start to recover at any time, as stay at home orders are lifted and the U.S. carries on with business as usual.
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