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Heat Wave Strikes the Northwest

In June, the Pacific Northwest experienced the hottest temperatures ever recorded for the region. Temperatures broke well into triple digits for most of the region for the first time ever recorded. As a result of the high temperatures, power load and subsequently power pricing increased to new summer highs. Today’s Energy Market insight will look back at the impacts of the record heat wave on power market dynamics for the Pacific Northwest.

During the heat wave, Idaho and Washington experienced multiple days with temperatures in the triple digits setting multiple new daily records for temperature. Additionally, over the last 11 years, from the timeframe of Jun-1 to Jul-17 (47 days), the max temperature occurred this year on 20 of those days in Idaho or 43% of the days this year, setting a new record.

This heat wave had a predictable impact on load. Using Idaho Power Company (IPCO) to represent load in ID, 2021 showed the highest average June hourly load profile at all hours of the day over the last several years, with a gap between 2020 and 2021 of almost 1 GWh during peak times (3.3 GWh compared to 2.5 GWh during last year). As such, IPCO had to import a significant amount of power during that time, much more than it historically has had to. For several hours during the month of June in 2021, all time highs for power imports into IPCO were seen.

Understandably, such a spike in the load profile of a balancing authority like IPCO would cause significant price spikes. Using CAISO pricing nodes which are assigned to IPCO as a representation for IPCO power pricing, the below chart shows how the hourly average price for the months of June and July compares in 2021 to previous recent years.

To this point, the story has been Idaho experienced record heat which resulted in unprecedented load, all time high imports, and price spikes, all of which are expected given the temperatures. Another fact is that as solar and wind capacity have been built out in recent years in the area, between WA, OR, and ID about 1.5 GW of coal capacity has been retired since 2020, dropping the capacity to just over 700 MW.

Typically, retiring a consistent baseload plant could have a significant impact on the system when record demand hits the area. However, Idaho, and the broader Northwest, did not experience rolling blackouts during this time. Combine this information with the imports, we can see a more connected grid like the broader Western Energy Imbalance Market allows for balancing authorities to meet high demand without having blackouts. When balancing authorities do not have the ability to ramp imports, like in ERCOT, severe weather events can play a larger role in the disruption of power reliability.

To learn more about power market dynamics, including load and capacity analysis, check out BTU Analytics’ Power View.

 

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Corey Boettiger is a Senior Quantitative Analyst at BTU Analytics. He works primarily on BTU Analytics’ power market analysis, with a focus on power price modeling and plant revenue modeling. He has previously been involved in several areas of BTU Analytics’ market research, including wellhead economic and NGL production, and has created and maintained several of BTU Analytics’ models. He holds a B.S. in Applied Mathematics and Statistics from the Colorado School of Mines.

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