As generators entered maintenance outages and wind generation began to climb, the Midcontinent ISO (MISO) was on track for an active spring shoulder season with elevated risk for price strength and congestion. However, the arrival of the COVID-19 pandemic has derailed demand patterns and expectations in the region. At this point, little is known, and there are numerous possibilities for how this pandemic will impact MISO and the greater power industry. As widespread speculation and theories circulate, our data and analytics provide some clarity and direction as we navigate these unforeseen circumstances. MISO is already seeing stark changes in demand patterns, and if one thing is for sure, it's that demand will continue to rapidly shift and evolve as human behavior changes at an unprecedented rate.
Initial Impacts on Power Demand
The first noticeable impact of COVID-19 in MISO was a decrease in the velocity of the morning demand ramp. School and office closures have led most of the workforce to work from home and contributed to a steady decline in morning load levels. Our meteorologist, Jefferson Rhoads, quantified the delayed morning ramp through a series of slope calculations. Since the start of the widespread social-distancing and work-from-home mandates on March 9, the rate of increase in load from 5am to 9am has declined (Figure 1).
This flattened demand curve has shifted the peak demand hour into the early afternoon. Historically, the normal MISO shoulder season (i.e., spring or fall) load curve has distinct morning and evening peaks that occur as most Midwesterners leave the house in the morning and return home at night. With most people now home throughout the day, the load profile has shifted due to a combination of later wake-up times and increased daytime lighting load. The slowed morning demand ramp and the absence of an evening ramp have driven the two peaks to converge in the early afternoon (Figure 2). After the initial phase of the COVID-19 pandemic, it is evident that the response procedures put in place by Midwestern states have driven a shift in MISO’s demand profile.
Other Market Effects
While we were able to extract and analyze the delayed morning ramp pattern, there is still a great deal of uncertainty about the duration of the virus and its impact on market operations. Each state is in a different stage of COVID-19 procedures and regulations, making demand analysis extremely complex. It is possible that generation maintenance and transmission outages may be postponed to limit people working in close proximity, which would ultimately lower congestion risks. This also connects to concerns around staffing, as widespread infection among plant operators could prevent plants from operating.
Prior to the spread of the virus, MISO saw uncharacteristically cheap pricing from mild demand and extremely low gas prices. With COVID-19, many are worried that MISO prices will remain cheap, as gas prices and the capacity of generation on outage appear unlikely to rise. Still, we are only two weeks into the pandemic, and as such, there is not enough substantial evidence to make these assumptions at this time.
This constantly evolving, dynamic situation will have MISO on its toes in the upcoming weeks. We expect further demand destruction to come into play as COVID-19 spreads deeper into MISO territory. As patterns emerge, our MISO team will continue to dig into the impacts of COVID-19 on pricing, generation, and congestion and will be sharing these insights with customers. To learn more about our services or to speak with an expert, please click here.