Monthly wholesale electricity prices and demand in New England, May 2022
Wholesale power prices averaged $74.79 per megawatt-hour (MWh)1 in the Real-Time Energy Market in May 2022, up 211% compared to the previous year. Day-Ahead Energy Market averages rose to $76.71/MWh, up 207% from May 2021.
By the numbers
|May 2022 and Percent Change from May 2021 and April 2022||May 2022||May 2021||April 2022|
|Average Real-Time Electricity Price ($/megawatt-hour)||$74.79||211.4%||25.9%|
|Average Natural Gas Price ($/MMBtu)||$7.77||239.3%||19.9%|
|Peak Demand||18,891 MW||0.0%||31.2%|
|Total Electricity Use||8,943 GWh||3.3%||8.0%|
|Weather-Normalized Use2||8,287 GWh||-4.2%||-0.7%|
Drivers of wholesale electricity prices
In general, the two main drivers of wholesale electricity prices in New England are the cost of fuel used to produce electricity and consumer demand.
Power plant fuel
Fuel is typically one of the major input costs in producing electricity. Natural gas is the predominant fuel in New England, used to generate 53% of the power produced in 2021 by New England’s power plants, and natural gas-fired power plants usually set the price of wholesale electricity in the region. As a result, average wholesale electricity prices are closely linked to natural gas prices.
The average natural gas price during May was $7.77 per million British thermal units (MMBtu)3. The price was up 239% from the May 2021 average Massachusetts natural gas index price of $2.29/MMBtu. The Mass. index price is a volume-weighted average of trades at four natural gas delivery points in Massachusetts, including two Algonquin points, the Tennessee Gas Pipeline, and the Dracut Interconnect.
May wholesale electricity and natural gas prices
Demand is driven primarily by weather, as well as economic factors.
Energy usage during May was 8,943 GWh, up 3.3% from 8,655 GWh in May 2021.
The average temperature during May was 61˚ Fahrenheit (F) in New England, up 2˚ from the previous May. The average dewpoint, a measure of humidity, was 47˚F in May, up 5˚ from the previous May. There were 19 cooling degree days4 (CDD) during May, while the normal number of CDD in May is 6 in New England. In May 2021, there were 7 CDD. There were 179 heating degree days (HDD) during May, while the normal number of HDD in May is 241 in New England. In May 2021, there were 214 HDD.
Consumer demand for electricity for the month peaked on May 22 during the hour from 5 to 6 p.m., when the temperature in New England was 87°F and the dewpoint was 64°. Demand reached 18,891 MW. The May 2022 peak was roughly flat compared to the May 2021 peak of 18,882 MW, set during the hour from 5 to 6 p.m. on May 26, when the temperature was 85°F and the dewpoint was 64°.
Peak demand is driven by weather, which drives the use of heating and air conditioning equipment. The all-time high winter peak was 22,818 MW, recorded during a cold snap in January 2004 when the temperature was -1°F and the dewpoint was -20°. The all-time peak demand in New England was 28,130 MW, recorded during an August 2006 heat wave, when the temperature was 94°F and the dewpoint was 74°. Air conditioning use is far more widespread than electric heating in New England, so weather tends to have a relatively greater impact on the summer peak than the winter peak.
May monthly peak demand and total and weather-normalized energy use
Fuel mix and emissions
The mix of resources used in any given time period depends on price and availability, as well as supplemental resource commitments needed to ensure system stability.
Natural gas-fired and nuclear generation produced about 76% of the 7,826 GWh of electric energy generated within New England during May, at about 56% and 20%, respectively. Renewable resources generated about 14% of the energy produced within New England, including 5.3% from wood, refuse, and landfill gas; 3.2% from wind; and 5.3% from solar resources. Hydroelectric resources generated 10%. Oil and coal resources generated 0.1%. The region also received net imports of about 1,228 GWh of electricity from neighboring regions.
May generation in New England, by fuel source
The mix of resources used to produce the region’s electricity is a key driver of CO2 emissions. The ISO estimates these emissions through an analysis that blends data on electricity generation by fuel type with an emissions factor for each fuel that is based on data from the Environmental Protection Agency.
May estimated CO2 emissions in New England, by fuel source (metric tons)
New England power plants produced an estimated 2.4 million metric tons of CO2 in May 2022, up 18% from 2 million metric tons in May 2021.
Estimated CO2 emissions from natural gas-fired plants—typically the largest source of emissions, due to the significant amount of power these resources produce—increased 28% year over year, from 1.4 million metric tons to 1.8 million metric tons. Natural gas-fired resources generated a larger share of the region’s electricity in May 2022 compared to the previous year, leading to the emissions increase. Meanwhile, power generation from the region’s nuclear units, which do not produce CO2 emissions, decreased year over year.
CO2 emissions from other resources—mostly refuse and wood—were estimated at 588,496 metric tons in May 2022, down 6.2% from 627,216 metric tons last year. These resources accounted for about 25% of the region’s estimated CO2 emissions in May 2022.
Oil- and coal-fired resources produced an estimated 7,202 metric tons of CO2, more than double the May 2021 estimate of 3,213 metric tons. These resources accounted for about 0.3% of the region’s total estimated CO2 emissions.
1One megawatt (MW) of electricity can serve about 750 to 1,000 average homes in New England. A megawatt-hour (MWh) of electricity can serve about 1,000 homes for one hour. One gigawatt-hour (GWh) can serve about 1 million homes for one hour.
2Weather-normalized demand indicates how much electricity would have been consumed if the weather had been the same as the average weather over the last 20 years.
3A British thermal unit (Btu) is used to describe the heat value of fuels, providing a uniform standard for comparing different fuels. One million British thermal units are shown as MMBtu.
4A degree day is a measure of heating or cooling. A zero degree day occurs when no heating or cooling is required; as temperatures drop, more heating days are recorded; when temperatures rise, more cooling days are recorded. The base point for measuring degree days is 65 degrees. Each degree of a day’s mean temperature that is above 65 degrees is counted as one cooling degree day, while each degree of a day’s mean temperature that is below 65 degrees is counted as one heating degree day. A day’s mean temperature of 90 degrees equals 25 cooling degree days, while a day’s mean temperature of 45 degrees equals 20 heating degree days.
Historical weather data provided by DTN, LLC.; Underlying natural gas data furnished by ICE.