{"id":1087,"date":"2014-05-06T19:46:34","date_gmt":"2014-05-07T00:46:34","guid":{"rendered":"https:\/\/allenergyconsulting.com\/blog\/?p=1087"},"modified":"2014-05-06T19:46:34","modified_gmt":"2014-05-07T00:46:34","slug":"sell-winter-pjm-west-trading-risk-product","status":"publish","type":"post","link":"https:\/\/allenergyconsulting.com\/blog\/2014\/05\/06\/sell-winter-pjm-west-trading-risk-product\/","title":{"rendered":"Sell Winter PJM-West? Trading & Risk Product"},"content":{"rendered":"
\n

A common question is how can I use PMA in my organization? \u00a0There are multiple ways PMA can help your organization including enhancing all focus on the gas, coal, and power markets. \u00a0PMA can increase your fundamental understanding in the gas, coal, markets. \u00a0PMA can help you evaluate generation assets and portfolios. \u00a0PMA can also be used to evaluate risk and trading opportunities. \u00a0In the following example, we will describe a simple case of how PMA can deliver a potential trading opportunity and be used to evaluate risk and reward.<\/span><\/p>\n

With the new online interface, one can quickly get an assessment of the model in relationship to the forward curve. \u00a0PMA runs every day with the latest futures markets prices for natural gas and coal. \u00a0 Three scenarios are run each day – Base, High Power Price, and Low Power Price case. \u00a0 The Base uses a normalized weather based on 2003-2013. \u00a0The high uses the 2010 weather pattern, and the low uses the 2009 weather pattern. \u00a0The selection of these years are based on\u00a0our 10 year weather analysis just completed a few weeks ago<\/a>. \u00a0The high and low also changes henry hub and retirement and builds plus forced outages – a complete description of the cases are available for our subscribers.<\/span><\/p>\n

The following are direct screen shots from our latest online interface for the April 29th runs. \u00a0Three lines are presented. \u00a0The yellow solid line represents the forward curve. \u00a0The blue solid line represents the model output. \u00a0 The dash red line represents the historical tendency of the model from our 4 year calibration run by month. \u00a0In the example below, the model has a tendency to under-forecast the shoulder months- therefore the dash red line above the blue line.<\/span><\/p>\n

Base Case (click image to enlarge)<\/span><\/p>\n

\"\"<\/a><\/p>\n

In the Base Case, we can identify that this year summer and winter could be a potential sell given both red and blue line below the futures curve.<\/span><\/p>\n

High Case\u00a0<\/span>(click image to enlarge)<\/p>\n

\"\"<\/a><\/p>\n

In the High Case, the summer sell is not looking too good. \u00a0 If the summer temperatures are to be similar to 2010, and gas prices move up 50 cents and planned new builds fail to perform or deliver as expected, PJM West summer prices can blow up leaving the sell summer trade losing over $30\/MWh in July. \u00a0 However, the winter trade shows a rather smaller worse case scenario of $5\/MWh in January.<\/span><\/p>\n

Low Case\u00a0<\/span>(click image to enlarge)<\/p>\n

\"\"<\/a><\/p>\n


\n<\/span><\/p>\n

The Low Case represents the potential reward of the sell trade. \u00a0In the summer, the potential gain in the sell trade is around $12\/MWh for July. \u00a0This is the same spread seen for the winter sell trade for January.<\/span><\/p>\n

Clearly, the risk and reward view would point to the winter trade over the summer trade. \u00a0I would suggest a few more next steps before exercising the winter trade. \u00a0 Potentially, I would identify a spread to be long to balance mitigating against any major catastrophic event such as major gas pipeline issue. \u00a0This spread can come in the form of ON-OFF peak spread, location spread, to a heat rate trade. \u00a0To identify the other side, one can easily research that by using the drop down menus and following the same analysis above. \u00a0Another step I would take is to run additional price, weather, and outage scenarios. \u00a0 PMA subscribers have complete access to all this.<\/span><\/p>\n

Besides the easy to use online interface, PMA subscribers get full access to the data files. \u00a0<\/span>PMA subscribers get the online access, the daily files, and the study files. \u00a0 In addition, prime members receive-at no additional cost reports such as presented above,\u00a0<\/span>the Summer 2014 Outlook report<\/a>\u00a0,\u00a0the recent\u00a0<\/span>briefing\u00a0<\/a>on what is causing the gas demand drop, and where it is coming from. \u00a0Subscribers also have the opportunity for free private consultations. \u00a0Discussions can range from answering more detailed questions on the studies to discussing potential scenarios of the future.<\/span><\/p>\n

A demo of the daily file is available with restricted viewing. \u00a0Click here to download.<\/a>\u00a0\u00a0<\/span><\/span>Please contact me to schedule an online demo meeting<\/span>dkb@allenergyconsulting.com<\/a>\u00a0or 614-356-0484<\/span><\/p>\n

We are focused not only on supplying answers, but empowering you to find answers.<\/span><\/p>\n<\/div>\n

\n

Your Inspired Energy Consultant,<\/span><\/p>\n

David<\/span><\/p>\n<\/div>\n


\n<\/span><\/div>\n
David K. Bellman
\nFounder & Principal
\nAll Energy Consulting LLC
\n“Independent analysis and opinions without a bias.”
\n614-356-0484
\ndkb@allenergyconsulting.com<\/a>
\nblog:\u00a0https:\/\/allenergyconsulting.com\/blog\/category\/market-insights\/<\/a><\/span><\/div>\n
<\/div>\n","protected":false},"excerpt":{"rendered":"

A common question is how can I use PMA in my organization? \u00a0There are multiple ways PMA can help your organization including enhancing all focus on the gas, coal, and power markets. \u00a0PMA can increase your fundamental understanding in the gas, coal, markets. \u00a0PMA can help you evaluate generation assets and portfolios. \u00a0PMA can also […]<\/p>\n","protected":false},"author":1,"featured_media":32,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,3,6],"tags":[269,268,104],"class_list":["post-1087","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-market-insights","category-natural-gas","category-power","tag-pjm-west","tag-power-trading","tag-risk"],"_links":{"self":[{"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/posts\/1087","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/comments?post=1087"}],"version-history":[{"count":2,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/posts\/1087\/revisions"}],"predecessor-version":[{"id":1089,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/posts\/1087\/revisions\/1089"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/media\/32"}],"wp:attachment":[{"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/media?parent=1087"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/categories?post=1087"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/tags?post=1087"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}