Monday, Feb. 16, 2009

Energy Sector to be Stimulated
to the Tune of $61 Billion

No one would have imagined a year ago that energy efficiency would receive such significant Federal funding. The DOE's funding for smart grid technology last year was less than $2 million; the stimulus plan is dedicating over $9 billion to research and building a new grid.

Energy's Piece of the Stimulus Pie-

• $9 billion for a smart power grid,

• $21 billion for advanced battery technology and other energy efficiency measures.

• $20 billion in tax incentives for renewable energy and energy efficiency over the next 10 years.

• $6.3 billion for energy efficiency in multifamily housing getting federal assistance, such as HUD-sponsored low-income housing.

• $5 billion to weatherize more than 1 million homes owned by "modest-income" families.

What's in it for business? Quite a bit since all productivity improvements to the grid are accretive and will translate into annual improvements in energy efficiency. We will be reviewing the impact of the stimulus plan over the next few weeks. The grid is a good place to start since it has been woefully neglected. A smart grid is one of the long term keys to national energy efficiency.

Howard Scott, Managing Director of Cognysant Systems noted in an article on metering.com that the Stimulus Plan will provide $4.5 billion for the smart grid to be matched with an additional $4.5 billion by utilities over the next two years.

"Though $9 billion is a large number, it is a small fraction of the total cost to upgrade America's energy grid," Scott says. As the concept of a smart grid is still in its infancy and the Stimulus Plan funding is to quickly create large numbers of new jobs, "it is clear that this money must be spent to both maximize employment and provide key infrastructure needed for smart grids."

The infrastructure mentioned could be a smart meter in each of your business locations. We predict that within five years every small and medium-sized business will be able to access some of the same energy saving benefits that large companies have been experiencing for years.

Not coincidentally, CON-ED and LIPA (Long Island Power Authority) are presenting "shovel-ready" plans involving net metering, solar power generation and a major wind farm development. A smarter grid also means that owners can become smarter purchasers of energy which is a key mission of Power Management Company.

Global Warming's Negative Loops Mean Bad News for the Planet
In a study released last week by the Carnegie Institution at Stanford University, scientists raised another warning that our models for predicting the rate of growth of global warming are wrong. Due to several negative biological feedback loops; the dramatic increase of CO2 from China and India over the past decade, and decreases in the size of the of polar ice caps, scientists will have to recalibrate all current estimates relating to the rate of global warming. "We are basically looking now at a future climate that's beyond anything we've considered seriously in climate model simulations," notes Christopher Field, CI's founding director.

Natural Gas Storage
Working gas in storage was 2,020 Bcf as of Friday, February 6, 2009, according to EIA estimates. This represents a net decline of 159 Bcf from the previous week. Stocks were 44 Bcf higher than last year at this time and 24 Bcf above the 5-year average of 1,996 Bcf.

Natural Gas Exploration in Free Fall
Production activity in the US continues to decline at an increasing pace. According to the Baker Hughes Drill Rig Report, there are 50 fewer rigs in the field last week (2/6/09) compared to the previous week; and 374 fewer rigs than last year at this time.

Natural Gas Market Watch- Intraday Prices Snapshot
Here are the intraday prices on the NYMEX electronic market this morning (Monday) at about 10:00 AM for the next five months($ per mmbtu, intraday prices):
Mar.-09 $4.300 -0.152
Apr.-09 $4.312 -0.147
May.-09 $4.434 -0.116
Jun.-09 $4.558 -0.127
Jul.-09 $4.699 -0.125

Natural Gas Futures:
PMC 30-Day, 90-Day, 12-month Natural Gas Futures Chart

Crude Oil Watch
The OPEC Basket Data  price was up to $42.13 per bbl at end of day last Friday.
West Texas Cushing traded up $3.53 to $37.51 per bbl last Friday.
NYMEX Crude front month future is down $0.66 per bbl this morning to $37.68 at 8:52 AM.

Electricity Watch
Northeastern electricity prices remain in a stable and low range. Review the historic trends for key electric markets in the Northeast with the Day Ahead Electric pricing data charts from the PMC database, updated every Monday.
 
Weather Trends
According to the National Weather Service, most of the Northeast will be colder than normal next week and gradually turn around to much warmer than normal in two weeks. Could this be a precursor to an El Nino effect?
 
NOAA Forecast for Next Week
8-14 Day forecast
NOAA Forecast- 30-Days

Written and Researched by Martin Linskey; Energy Charts developed by Charles Myers.

Disclaimer: This information is provided for the use of our customers and potential customers. Power Management Company assumes no responsibility or liability for the accuracy or completeness of pricing or information in this document. Historical data was obtained from sources that we believe to be reliable, but we do not guarantee its accuracy or completeness. It is not intended to provide advice or recommendation. Views are subject to change without notice.