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Winter Storms and Summer Sun: Weather-Driven Variations in Market Outcomes and Asset Economics in PJM

Key takeaways from the session include the following:

  • Variations in weather alone can drive large swings in annual natural gas prices, renewable generation, and load; this can drive year-on-year ATC fluctuations of up to >$10/MWh in PJM.
  • Hourly power prices can rise well above $500/MWh in some PJM regions, driven by winter storms and natural gas price spikes.
  • By 2040, annual gross margins across asset classes could see strong variations due to weather, with thermal assets most affected.
  • A single day of spiking natural gas prices in northeast PJM can contribute significantly to a CC asset’s annual wholesale gross margins but only moderately to renewables’ margins.
  • Downside weather-year risk for renewable revenues is mitigated by the inverse correlation between total generation and GWAs, while winter storms add upside—although they also add risk of Capacity Performance penalties for capacity resources.

If you have any questions or would like to learn more about our PJM coverage, please contact Jay DeCunzo

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