1/7 The recent PJM capacity auction saw a surprising (to many) spike in clearing prices. Energy markets are a complex system, so understanding the path that brought us to this point is important. Here's a breakdown of the key factors behind this shift:

https://x.com/JavierBlas/status/1818606181042065834

2/7 Market Seller Offer Cap (MSOC): Implemented in 2021, it initially suppressed offer prices. This led to years of low clearing prices, setting the stage for the recent surprise. icf.com/insights/energ…

1/10 Battery storage in the Texas power market very likely to be a poor investment, but over 100,000 MW is now in the interconnection queue. Let's break down this down.⚡️🔋 #energytransition 2/10 It’s always been easy to develop power generation in Texas. Most battery storage projects are targeting a slim ancillary services market with a total of about 5k MW with over 3k MW already in operation. When supply > demand in power markets prices quickly collapse.

Today’s energy crisis is not a failure of renewables, but it is a harbinger of things that we need to address to get through the energy transition. As we electrify our economy we will increase, not decrease, our reliance on natural gas capacity to preserve reliability. 1 This does not mean that we will burn more gas, just the opposite. We will burn less gas as more zero marginal cost renewables hit the electric grid. 2

Utility scale renewable finance needs to be reimagined. The capital stack for renewable projects has traditionally been tax equity, back leverage/debt, and project equity — supported by two primary ways to create revenue: 1. long term PPA’s and 2. long term hedges.
1/ Most PPA’s result in the sale of as available MWh’s to load like a utility or corporate customer.  The key risk is that the projected output is less than the expected output resulting in a proportional decrease in cash flow - usually not a big deal.
2/