Those that can’t wouldn’t only miss out on making money-but they could also face fines and be forced to spend millions of dollars to buy power on the spot market to meet contractual obligations. The plants that manage to remain online and continue producing power would stand to make huge profits.
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If there are blackouts or brownouts this summer, power markets would be torn into a sharp divide of haves and have nots. Constellation Energy, for instance, expects to see limited gains because prices for almost all of its electricity output this year were locked in through contracts at the start of 2022, a spokesman said. Representatives of the other companies declined to comment or didn’t respond. It won't be a windfall for all power producers. Power giants including Vistra Corp., NRG Energy Inc. and Energy Harbor stand to gain, too. The likely beneficiaries, meanwhile, are some of America’s biggest private-equity firms that have bought up coal- and gas-fired plants in recent years, including ArcLight and Blackstone. Read: US industrial complex starts to buckle from high power costs Steep electricity bills have begun to force some industrial companies to dial back operations. The profits will come at the expense of households and businesses, which are already facing the worst inflation in decades. “These prices reflect the increased risk of shortfalls,” said Peter Rosenthal, head of North American power for Energy Aspects, adding that he’s never seen margins this wide across so much of the country in more than 20 years analyzing power markets.Īlso See: Texans Asked to Conserve Electricity as Grid Nears the Brink Now the market is sending its own unambiguous distress signal. They reflect concerns among wholesale power traders that extreme heat in the weeks ahead will drive electricity demand to record levels, making supplies perilously tight. State and federal officials have already warned that electric grids could be pushed to the brink of blackouts. While a potential windfall for power-plant owners, the wide margins suggest trouble for the country’s strained grids.
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In Texas, it’s up almost 10-fold for gas plants, said BloombergNEF. On America’s largest grid, stretching from New Jersey to Illinois, a key metric for gauging the profitability of coal plants has nearly quadrupled from a year ago to $43 per megawatt-hour, according to Energy Aspects Ltd., an electricity research and data provider. (Bloomberg) - US power plants are poised to reap their best summertime profits in nearly two decades thanks to soaring electricity prices that are outpacing the high costs of natural gas and coal.