Connect with us

Hi, what are you looking for?

CleanTechnica

Fossil Fuels

New England Natural Gas & Electricity Prices Increase on Supply Constraints, High Demand

The spot natural gas price at the Algonquin Citygate, a trading hub and the benchmark for the natural gas price in New England, averaged $20.55 per million British thermal units (MMBtu) during January 2022 — the highest monthly average price since February 2014 — and exceeded $28/MMBtu on several days as part of a pattern of price spikes this winter.

The wholesale day-ahead electricity price in New England also increased; the daily average price rose above $100 per megawatt-hour (MWh) 25 times in January 2022. Price spikes in New England will likely continue this winter in response to extreme cold weather events because natural gas pipeline supply remains constrained and imports of liquefied natural gas (LNG) remain scarce as the region competes for LNG in a tight global spot market with high prices.

Several factors account for high spot natural gas prices and electricity prices this winter:

  • Weather-driven load increases
  • Constraints on the region’s interstate natural gas pipelines
  • Limited incremental LNG supplies

Weather-driven load increases. During the week ending January 11, natural gas consumption in New England (for both space heating and electric power generation) rose to 4.9 billion cubic feet per day (Bcf/d), according to IHS Markit—the most since January 2021—contributing to high spot natural gas and electricity prices. A cold start to January 2022 has pushed average New England natural gas demand over 4.1 Bcf/d so far this year (January 1–31). Overall natural gas demand in New England is up 13% so far this winter (November 1–January 31) compared with the previous five-season average.

Regional pipeline constraints. From January 7 to 21, 2022, natural gas-fired generation in New England declined 14% compared with the period from December 31 to January 6, according to our Hourly Electric Grid Monitor. Natural gas pipeline constraints limited the amount of natural gas that could be delivered to power plants, leading to the reactivation of several power plants that burn fuel oil to help meet electricity demand. Oil-fired generation has accounted for as much as 20% of New England’s electric supply during several hourly intervals since January 7. New England has not used substantial amounts of fuel oil to meet electricity loads since January 2018, during a bomb cyclone winter storm.

Source: Graph by the U.S. Energy Information Administration (EIA), using EIA’s Hourly Electric Grid Monitor and data from ISO New England


Limited incremental LNG supply. Limited LNG availability has also contributed to higher natural gas prices in New England this winter. End users in New England have to compete for LNG in a tight global market with currently high spot prices. On peak demand days, LNG contribxutes up to 35% of New England’s natural gas supply. In January, the natural gas spot price averaged $21/MMBtu at the Algonquin Citygate, $28/MMBtu at the Title Transfer Facility in Europe, and $29/MMBtu in Asia. In previous winters, LNG imports moderated the spot price in New England and had limited price spikes.

Courtesy of Today In Energy.

Principal contributors: Chris Peterson, Mark Morey, Victoria Zaretskaya

Top image source: Graph created by the U.S. Energy Information Administration, based on data from Natural Gas Intelligence and S&P Capital IQ

 
Don't want to miss a cleantech story? Sign up for daily news updates from CleanTechnica on email. Or follow us on Google News!
 

Have a tip for CleanTechnica, want to advertise, or want to suggest a guest for our CleanTech Talk podcast? Contact us here.
Advertisement
 
 

-- the EIA collects, analyzes, and disseminates independent and impartial energy information to promote sound policymaking, efficient markets, and public understanding of energy and its interaction with the economy and the environment.

Comments

You May Also Like

Clean Power

If utilities modernize the way they select the resources they run each day, they can save carbon and reduce energy prices. Over the past...

Climate Change

Germany activated the “alarm stage,” phase two of three of the country’s emergency methane-based gas plans, on Thursday after Russia’s Gazprom throttled deliveries by...

Fossil Fuels

Average wholesale prices for electricity at major trading hubs in the United States were higher in 2021 than in 2020 as increasing costs for...

Clean Power

Secrecy about the price that California utilities pay for natural gas contracts is a new sign that PV has now passed market price parity...

Copyright © 2023 CleanTechnica. The content produced by this site is for entertainment purposes only. Opinions and comments published on this site may not be sanctioned by and do not necessarily represent the views of CleanTechnica, its owners, sponsors, affiliates, or subsidiaries.