Monthly wholesale electricity prices and demand in New England, August 2022
Wholesale power prices averaged $95.99 per megawatt-hour (MWh)1 in the Real-Time Energy Market in August 2022, up 96% compared to the previous year. Day-Ahead Energy Market averages rose to $99.55/MWh, up 101% from August 2021.
By the numbers
|August 2022 and Percent Change from August 2021 and July 2022||August 2022||August 2021||July 2022|
|Average Real-Time Electricity Price ($/megawatt-hour)||$95.99||96.2%||5.9%|
|Average Natural Gas Price ($/MMBtu)||$8.37||113.0%||11.7%|
|Peak Demand||24,775 MW||-1.8%||0.7%|
|Total Electricity Use||12,246 GWh||1.2%||0.9%|
|Weather-Normalized Use2||11,574 GWh||3.6%||-2.7%|
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 August was $8.37 per million British thermal units (MMBtu)3. The price was up 113% from the August 2021 average Massachusetts natural gas index price of $3.93/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.
August wholesale electricity and natural gas prices
Demand is driven primarily by weather, as well as economic factors. Energy usage during August increased 1.2% to 12,246 GWh from the 12,099 GWh used in August 2021.
The region experienced its second heat wave of the summer in August, with temperatures hitting 90° or higher for six consecutive days from August 4-9. The average temperature for the month was 75˚ Fahrenheit (F) in New England, up 1˚ from the previous August. The average dewpoint, a measure of humidity, was 63˚F in August, up 2˚ from the previous August. There were 156 cooling degree days4 (CDD) during August, while the normal number of CDD in August is 104 in New England. In August 2021, there were 171 CDD. There were no heating degree days (HDD) during August, while the normal number of HDD in August is 6 in New England. There were no HDD in August 2021.
Consumer demand for electricity for the month peaked amid the heat wave. The peak was recorded during the hour from 5 to 6 p.m. on August 4, when the temperature in New England was 91°F and the dewpoint was 67°. Demand reached 24,775 MW. The August 2022 peak was 1.8% lower than the August 2021 peak of 25,241 MW, set during the hour from 5 to 6 p.m. on August 12, when the temperature was 91°F and the dewpoint was 71°.
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.
August 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 87% of the 10,788 GWh of electric energy generated within New England during August, at about 64% and 23%, respectively. Renewable resources generated about 9% of the energy produced within New England, including 3.8% from wood, refuse, and landfill gas; 1.4% from wind; and 3.7% from solar resources. Coal and oil-fired resources each generated 0.2%. Hydroelectric resources generated 4.1%. The region also received net imports of about 1,654 GWh of electricity from neighboring regions.
August 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.
August estimated CO2 emissions in New England, by fuel source (metric tons)
Emissions were flat in August 2022 compared to August 2021, with New England power plants producing an estimated 3.4 million metric tons of CO2.
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 6% year over year, from 2.61 million metric tons to 2.75 million metric tons, and accounted for over 80% of the region’s estimated emissions.
Oil-fired resources produced an estimated 40,115 metric tons of CO2, a year-over-year drop of 25%. These resources accounted for 1.2% of the region’s total estimated CO2 emissions, compared to 1.6% last year. Coal-fired resources produced an estimated 20,035 metric tons of CO2—about 0.6% of the region’s total and a 13% drop from last year.
CO2 emissions from other resources—mostly refuse and wood—were estimated at 576,579 metric tons in August 2022, down 18% from 704,415 metric tons last year. These resources accounted for 17% of the region’s estimated CO2 emissions in August 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.
Historical weather data provided by DTN, LLC.; Underlying natural gas data furnished by ICE.