Spring is a unique season in the energy market. Demand is typically mild, renewable generation is strong, and power plants go offline for maintenance before the summer heat arrives. For many in the industry, it's a brief period to catch our breath after the challenges of winter. However, shoulder season can also bring some unexpected price dynamics. Energy prices can spike, not necessarily due to extreme weather, but because of shifting supply conditions. Outages, changes in renewable generation, and even the shift in sunrise time all play a role in volatility.
One common question we’ve been hearing lately is:
“Why have ERCOT’s morning ramp DA prices been higher than summer DA prices?”
Looking at the past two years, the data confirms this trend. Average day-ahead (DA) LMPs for HE6-9 in March have been higher in ERCOT’s HB_North and HB_Houston than during the peak summer months. Given that March is typically a mild-demand month, what’s driving this?
And this isn’t just an ERCOT phenomenon, MISO and PJM show similar patterns.
The Key Factor: Net Demand
The answer lies in net demand, or load minus renewable generation and outages. During winter and shoulder months, net demand tends to be higher in the morning compared to the afternoon. This is largely due to shorter daylight hours and the impact of daylight saving time.
When we "spring forward" in early March, sunrise shifts an hour later, but people’s morning routines remain unchanged (aside from maybe an extra cup of coffee). Without significant levels of solar generation available in those early hours, net demand is significantly higher, pushing up DA prices.
As more solar and wind generation come online, renewable forecasting will become increasingly critical — especially given its impact on energy prices in recent years — which is why Amperon provides RTO-level and zonal net demand forecasts for nearly every North American ISO.
How This Compares to Winter
In winter, high prices are typically driven by a short time ramp time for a fully loaded thermal fleet. The recent ERCOT winter peak demand record illustrates this well. On the morning of February 20th, ERCOT came close to breaking its all-time natural gas generation record, hitting 48.8 GW, just 0.6 GW shy of the previous record set last January.
ERCOT is known for experiencing dual price peaks during winter, with morning peaks typically occurring in HE6-9 and evening peaks in HE18-22. As we transition into spring and summer, those morning peaks start to fade, leaving the afternoon and evening hours as the primary drivers of price spikes.
The Role of Outages in Shoulder Season
Spring is also when generators schedule outages for refueling, maintenance, and other necessary work, taking advantage of the season’s typically lower demand. However, this also means the supply stack is weaker than usual, increasing price volatility – especially if renewable generation underperforms. On March 1st alone, about 6 GW of generation went offline in ERCOT, with that number growing in the days since. In contrast, during summer outages are minimized since every available resource is needed to meet high demand.
The Other Side of the Coin: Why Midday Prices Are the Lowest in Shoulder Season
On the flip side, midday hours during shoulder season typically see the lowest energy prices. The reason? Net demand — again! This is when renewable generation is at its strongest, particularly solar, which reaches peak output. At the same time, overall electricity demand is at its lowest.
Several factors contribute to this midday dip in net demand:
Last spring, CAISO experienced record breaking negative LMPs during midday hours in April, along with historic curtailment levels due to negative pricing and excess renewable generation. In some cases, net demand even dipped into negative territory. Since renewables can supply a significant portion of midday demand, lower levels of natural gas generation are often running, further driving prices down.
As we move deeper into spring, we expect morning DA prices to ease as sunrise gradually shifts earlier. Meanwhile, evening peak prices will likely rise as higher temperatures drive up cooling demand and renewable generation becomes more variable. Once people return home from work or school and power usage ramps up, volatility will shift toward later hours.
Shoulder season may not always get the same attention as summer or winter, but it plays a crucial role in shaping energy market dynamics. Understanding these seasonal shifts helps market participants anticipate price movements and adjust strategies accordingly.
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