Energy Transition – What it really means, and how it impacts your business.

We’re adding renewable generation sources like Wind and Solar literally as fast as they can be financed and built, which is one step toward lowering carbon emissions. But what and who else will it impact?

Renewable generation is intermittent. Some days the wind doesn’t blow. Rainy days dramatically reduce the output from solar.

But there are more complications than those weather events.

While solar only produces when the sun is out, the entire fleet of generation ramps from zero to full output within an hour or two and then back down around sunset. A similar but inverted ramp happens to wind output most days where overnight sees high output that falls through the morning hours. These unpredictable changes in generation output cause headaches for Independent System Operators (ISO’s).

When energy sources become unavailable, ISOs must use alternate generation sources, which usually end up being natural gas or coal-fired to fill in the gaps between fluctuating generation supply and demand on the grid. Deploying those resources can result in volatility to spot market pricing during the morning and evening ramp hours.

While a customer on a fixed-priced contract won’t see any direct charges from price spikes, they will be impacted as energy futures prices rise during the transition, likely causing the rate on their next contract to be higher.

Customers with contracts on an index or hybrid product will see those price spikes come through on their invoice unless they make some operational changes to limit exposure during those times of high risk.

To learn more, contact us today!