2022 is shaping up to be another unique year for the energy markets. Demand for electricity shifted throughout 2021 due to the increase in people working from home, and a colder winter which caused most of the population to rely on electricity to heat their homes.

According to the U.S. Energy Information Administration overall price for retail electricity consumption is projected to increase 3.8% as the supply catches up with demand.
Energy generated by renewable resources will increase to 23% compared to 20% in 2021 which is good news for the renewable energy industry.

For the first time since 2009, coal energy generation grew since many consumers needed more power to sustain their home offices and keep their operations running

Natural Gas

• At the end of the first week of January and close to mid-way through the withdrawal season, natural gas storage inventories stood at 3,016 Bcf. That figure is 2.7% above the five-year average and 6.2% below last year's levels.
• Natural gas rig counts are now at 107. A year ago, that number stood at 84.
• Gas production is around 94.3 Bcf/day.
• US domestic gas demand has averaged 110.5Bct/d so far this January, up 16.8 Bcf/d, or 18%, from the the latter half of December, Natural gas demand for power generation is around 27.6 Bcf/Day.
• Future gas prices for 2022 and 2023 strips continue to be higher than average.

Electricity

• Electricity prices in the mid-Atlantic and the Great Lakes Region were up 1-3 percent from the prior week. Real-Time prices in ERCOT averaged $23.23 per MWh.
• On 12/23, FERC issued an order overturning its prior approval of PJM's Operating Reserve Demand Curve (ORDC) reforms approved in May 2020. This will impact the capacity market so much that the 2023/24 Capacity Auction has been delayed. Expect further developments on this story.
• Forward power prices in the Great Lakes Region, including ComEd, remain relatively within the price level range experienced since early December. However, colder temperatures are starting to drive them up further.
• The forward power price strips through 2026 have recently risen +1% on average. Those forward prices are roughly 10% lower than the all-time high prices for 2022.
• Due to a mild start to winter, day-ahead index power prices in COMED averaged 34% lower than the previous month of November but were still 38% greater than the December average of 2020.

Weather

• The past week has shown the impact of the arctic blasts impacting large swathes of the US.
• The projected pattern will be variable, with some significant cold spells followed by brief warm-ups. The Southeast continues to be the least affected.
• In terms of heating degree days, January is likely to come in close to "normal" or slightly below.

• Natural gas surges 13% as a cold snap ahead is expected to boost demand. Many analysts are reshaping their forecasts since heating demand is higher than they originally predicted.
• U.S. oil producers ramp up fracking in a sign of stronger output gains. Since oil prices have already surpassed $80 per barrel, oil operators are seeking new solutions to boost their production capabilities.
• Earth-saving promises in ESG fund prospectuses aren’t all that green. Investors who are socially conscious and want to invest in companies with green initiatives should be wary of where they put their money since ESG regulations are still very loose.

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A fascinating fact you didn’t know about energy

Have you ever wondered why birds sitting on a power line don’t get electrocuted? If a bird sits on just one power line it is safe. However, if the bird touches another line with a wing or a foot, it creates a circuit, causing the electricity to flow through the bird’s body. This results in electrocution.