As cheap baseload power, nuclear generating units can have a significant impact on power prices in their respective ISOs. Usually priced at the bottom of the supply stack, the loss or derate of one of these units can result in significant volatility as higher-priced coal, gas or peaking generation is called upon to replace them. This volatility represents an opportunity to wholesale traders who are able to capitalize on timely information before the market reacts.
The Nuclear Regulatory Commission’s (NRC) daily morning status report, based on plant maintenance data reported the previous day by NRC inspectors, is relied upon by market participants as an indicator of expected percentage capacity daily output for each nuclear unit in the US. What happens when unexpected outages, unplanned maintenance or other events take place? The NRC's morning reports are essentially obsolete and traders lose market visibility. In these cases, the only traders with true visibility into the factors driving the market that day are those with access to real-time output data. Genscape's Power RT service utilizes electromagnetic frequency technology to provide up to the minute information on output on approximately 77% of the entire US nuclear fleet.
As an analyst with the Boston-based PJM market intelligence team, I use the NRC's morning report as part of my daily analysis. Throughout the first week of June, we eagerly anticipated the return of Susquehanna 1 from an unplanned outage, encouraged by increasingly optimistic NRC reports and third-party news sources stating that this unit was on the verge of ramping back online. In reality, our real-time monitoring Power RT data painted a different picture.
Using this proprietary technology, we identified an approximate 10 percent deviation (~100 MW) between NRC reported and actual output at the Susquehanna Nuclear Unit based on Power RT data (see first graph below) last week. These deviations in output translate into significant price volatility as real-time conditions diverge from market participants' expectations using NRC data. The second graph below shows the real-time peak clears on dollar amounts compared to output data based on Genscape monitoring on West Hub, the most heavily traded hub in the US. Where there are relatively high differences between reported and actual output we see instances of a higher clear for West Hub without this generation running in real-time.
Click each graph for a larger view.
Anyone taking a short term position on power in any region can see first-mover advantage with real-time energy actuals. With Power IQ, traders get commentary, information and price forecasts that offer a comprehensive picture of the power market. Combined with Power RT, a tool for real-time power plant status, traders gain a new level of transparency that offers exclusive opportunities to make strategic moves where other market participants face a blind spot. Genscape offers free trials of all its power market services. To learn more or request a free trial visit: http://info.genscape.com/power-services.
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