September 2, 2022

Monthly wholesale electricity prices and demand in New England, July 2022

Prices up in both day-ahead, real-time markets in July

Wholesale power prices averaged $90.68 per megawatt-hour (MWh)¹ in the Real-Time Energy Market in July 2022, up 154% compared to the previous year. Day-Ahead Energy Market averages rose to $89.85/MWh, up 142% from July 2021.

A six-day heat wave led to higher demand and a month-over-month increase in wholesale electricity prices, while continued high prices for natural gas accounted for the year-over-year price increase in the energy markets.

By the numbers

July 2022 and Percent Change from July 2021 and June 2022	July 2022	July 2021	June 2022
Average Real-Time Electricity Price ($/megawatt-hour)	$90.68	153.6%	26.5%
Average Natural Gas Price ($/MMBtu)	$7.49	134.8%	3.7%
Peak Demand	24,609 MW	6.3%	23.3%
Total Electricity Use	12,140 GWh	9.8%	27.7%
Weather-Normalized Use²	11,894 GWh	6.0%	21.0%

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 July was $7.49 per million British thermal units (MMBtu)³. The price was up 135% from the July 2021 average Massachusetts natural gas index price of $3.19/MMBtu. The 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.

July wholesale electricity and natural gas prices

Electricity demand

Demand is driven primarily by weather, as well as economic factors. Energy usage during July increased 9.8% to 12,140 GWh from the 11,056 GWh used in July 2021.

The average temperature during July was 75˚ Fahrenheit (F) in New England, up 5˚ from July 2021. Temperatures hovered between 7˚ and 9˚ Fahrenheit (F) above normal during the July 19-24 heat wave, which was the region’s longest in several years. The average dewpoint, a measure of humidity, was 61˚F in July, up 1˚ from the previous July. Dew points during the heat wave were not extreme, and the heat index remained below 100˚F. There were 146 cooling degree days⁴ (CDD) during July, while the normal number of CDD in July is 124 in New England. In July 2021, there were 107 CDD. There were no heating degree days (HDD) during July, while the normal number of HDD in July is 3 in New England. In July 2021, there were 13 HDD.

Peak demand for grid electricity topped 23,000 megawatts (MW) on four days during the heat wave, but remained slightly below ISO New England’s forecast for average summer weather. Consumer demand for electricity for the month peaked on July 20—the second day of the heat wave—during the hour from 5 to 6 p.m., when the temperature in New England was 90°F and the dewpoint was 66°. Demand reached 24,609 MW. The July 2022 peak was 6.3% higher than the July 2021 peak of 23,152 MW, set during the hour from 3 to 4 p.m. on July 16, when the temperature was 89°F and the dewpoint was 69°.

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.

July 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 85% of the 10,900 GWh of electric energy generated within New England during July, at about 62% and 23%, respectively. Renewable resources generated about 11% of the energy produced within New England, including 4.1% from wood, refuse, and landfill gas; 2.4% from wind; and 4.1% from solar resources. Coal resources generated 0.1% while oil-fired resources generated 0.7%. Hydroelectric resources generated 3.8%. The region also received net imports of about 1,449 GWh of electricity from neighboring regions.

July 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.

July estimated CO₂ emissions in New England, by fuel source (metric tons)

New England power plants produced an estimated 3.47 million metric tons of CO₂ in July 2022, up 17% from 2.97 million metric tons in July 2021. High demand for electricity associated with the heat wave drove the increase.

Estimated CO₂ emissions from natural gas-fired plants—typically the largest source of emissions, due to the significant amount of power these resources produce—rose 21% year over year, from 2.2 million metric tons to 2.7 million metric tons, and accounted for 78% of the region’s estimated emissions.

Oil-fired resources produced an estimated 125,294 metric tons of CO₂—more than nine times the July 2021 estimate of 13,484 metric tons. These resources accounted for 3.6% of the region’s total estimated CO₂ emissions, compared to less than 1% last year. Coal-fired resources produced an estimated 13,666 metric tons of CO₂, about 0.4% of the region’s total and a slight drop from last year.

CO₂ emissions from other resources—mostly refuse and wood—were estimated at 616,219 metric tons in July 2022, down 11.6% from 697,168 metric tons last year. These resources accounted for 17.7% of the region’s estimated CO₂ emissions in July 2022.

_{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.}