Monthly wholesale electricity prices and demand in New England, August 2023
Wholesale power prices averaged $28.81 per megawatt-hour (MWh)1 in the Real-Time Energy Market in August 2023, down 70% compared to the previous year. Day-Ahead Energy Market averages were $26.94/MWh, down 73% from August 2022.
By the numbers
|August 2023 and Percent Change from August 2022 and July 2023||August 2023||August 2022||July 2023|
|Average Real-Time Electricity Price ($/megawatt-hour)||$28.81||-70.0%||-26.2%|
|Average Natural Gas Price ($/MMBtu)||$1.40||-83.3%||-48.7%|
|Peak Demand||19,691 MWs||-20.5%||-14.3%|
|Total Electricity Use||10,532 GWh||-14.0%||-12.4%|
|Weather-Normalized Use2||10,713 GWh||-7.4%||-2.1%|
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 52% of the power produced in 2022 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 $1.40 per million British thermal units (MMBtu)3. The price was down 83% from the August 2022 average Massachusetts natural gas index price of $8.37/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.
Wholesale electricity and natural gas prices, 2003-2023
Demand is driven primarily by weather, as well as economic factors. Energy usage during August decreased 14.0% to 10,532 GWh from the 12,245 GWh used in August 2022.
The average temperature during August was 70˚ Fahrenheit (F) in New England, down 5˚ from the previous August. The average dewpoint, a measure of humidity, was 60˚F in August, down 3˚ from the previous August. There were 84 cooling degree days4 (CDD) during August, while the normal number of CDD in August is 103 in New England. In August 2022, there were 156 CDD. There were 0 heating degree days (HDD) during August, while the normal number of HDD in August is 7 in New England. In August 2022, there were 0 HDD.
Consumer demand for electricity for the month peaked on August 21 during the hour from 5 to 6 p.m., when the temperature in New England was 83°F and the dewpoint was 65°. Demand reached 19,691 MW. The August 2023 peak was 20.5% lower than the August 2022 peak of 24,780 MW, set during the hour from 5 to 6 p.m. on August 4, when the temperature was 91°F and the dewpoint was 67°.
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.
Monthly peak demand and total and weather-normalized energy use
Resource 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 80% of the 9,651 GWh of electric energy generated within New England during August, at about 56% and 24%, respectively. Renewable resources generated about 11%, including 4.5% from wood, refuse, and landfill gas; 2.4% from wind; and 4.1% from solar resources. Hydroelectric resources generated 8.5%. Oil-fired resources generated 0.1%; coal-fired resources did not generate a statistically significant amount of electricity. The region also received net imports of about 1,056 GWh of electricity from neighboring regions.
August generation in New England, by source
The mix of resources used to produce the region’s electricity is a key driver of carbon dioxide (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.5
August estimated CO2 emissions in New England, by fuel source (metric tons)
New England power plants produced an estimated 2.75 million metric tons of CO2 in August 2023, a decrease of 17% from last year.
Estimated CO2 emissions from natural gas-fired plants—typically the largest source of emissions, due to the significant amount of power these resources produce—fell 21% year over year, from 2.71 million metric tons to 2.13 million. These resources accounted for 78% of the power system’s estimated emissions.
Coal-fired resources produced an estimated 418 metric tons of CO2—a 98% drop from August 2022, and 0.02% of the total. Oil-fired resources produced an estimated 8,816 metric tons of CO2 (0.3% of the total), a year-over-year decrease of 58%.
CO2 emissions from other resources—mostly refuse and wood—were estimated at 609,699 metric tons, up 5% from last year. These resources accounted for about 22% of the power system’s estimated CO2 emissions for the month.
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.
5The factors used to calculate estimated CO2 emissions were updated in January 2023. ISO New England analysts regularly review and refine the methodology used to develop these emissions factors, in order to reflect the characteristics of New England’s generating fleet and improve the accuracy of the estimates.
Historical weather data provided by DTN, LLC.; Underlying natural gas data furnished by ICE.