CALGARY, Alberta (Oct. 23, 2024) — Enverus Intelligence® Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS company that leverages generative AI across its solutions, has released a new report looking at natural gas-fired generation, which is becoming more attractive to investors because of its critical role in balancing the grid amid increased load growth expectations, accelerated coal retirements and higher levels of intermittent generation.
This report builds on EIR’s previous solar, battery storage and onshore wind market screening analyses to identify top regions for natural gas power plants in the U.S. Taking into account factors like forward power prices, gas feedstock costs, power demand growth, evolution of the generation mix and relative cost of entry via acquisition, SPP screens as the premier market.
“Natural gas-fired generation is becoming more attractive to investors because of its critical role in balancing the grid amid increased load growth expectations, accelerated coal retirements and higher levels of intermittent generation,” said EIR analyst Corianna Mah.
“We find SPP stands out as the premier market for natural gas generation, driven by factors such as robust forward power prices, low gas feedstock costs, the absence of carbon pricing and higher expected price volatility. Conversely, NYISO, CAISO and ISONE are the least attractive due to high feedstock costs, low spark spreads, lower expected power price volatility, weaker demand growth and higher carbon prices,” added Mah.
“Our top three markets — SPP, WECC and ERCOT — score high marks for expected load expansion because of power-hungry data centers, cryptocurrency mining, and oil and gas electrification in their territories. ERCOT and SPP also benefit from lower feedstock costs thanks to natural gas production in their regions, while WECC’s forward power price curve is strong enough to offset its higher gas costs,” Mah said.
Key takeaways from the report:
- SPP screens as the premier Tier 1 market for natural gas generation due to its attractive forward power prices, low gas feedstock costs, lack of carbon pricing, higher expected price volatility and relatively low acquisition cost of entry.
- NYISO, CAISO and ISONE rank as the least-attractive markets, or Tier 4, due to high gas feedstock costs, low spark spreads, lower expected power price volatility, relatively weak demand growth, high carbon prices and high acquisition cost of entry.
- Forecast load growth is the most important factor in EIR’s market assessment. Increased demand amplifies the need for reliable and dispatchable resources like natural gas plants that will play a crucial role in backstopping intermittent renewables.
- Spark spreads are another key factor in EIR’s analysis, with the top three markets ranking highly based on current forward price curves. Forward power prices in these markets are likely elevated due to expected load growth.
EIR’s analysis pulls from a variety of Enverus products including Enverus Intelligence® Research, Enverus FOUNDATIONS® P&R, Enverus Energy Transition M&A, and MarketView®.
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About Enverus Intelligence® Research
Enverus Intelligence® | Research, Inc. (EIR) is a subsidiary of Enverus that publishes energy-sector research focused on the oil, natural gas, power and renewable industries. EIR publishes reports including asset and company valuations, resource assessments, technical evaluations and macro-economic forecasts; and helps make intelligent connections for energy industry participants, service companies and capital providers worldwide. Enverus is the most trusted, energy-dedicated SaaS company, with a platform built to create value from generative AI, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 95% of U.S. energy producers, and more than 40,000 suppliers. Learn more at Enverus.com.
Media Contact: Jon Haubert | 303.396.5996
