With the election of Donald Trump, federal and state energy policies may sharply diverge in the near future. Some states, such as New York and California, are trying to reduce carbon emissions, while President-elect Trump appears to have other priorities.  Trump’s campaign proposals are preliminary, but a few general directions are clear. Here is how those divergent strategies and transition plans may impact energy policy.

As we look at opportunities to impact climate change, out-of-the-box thinking may help us bridge the gap until fossil fuel plants are out of the picture. Those of you who enjoy the beach may have noticed the “Fudgie – Wudgie” guy (that is what we called him in the 20th century) selling ice cream on the beach out of shopping bags or pushing a cart. Rather than using ice that will not last the full day, he uses a solid form of carbon dioxide (CO2) known as dried ice. Did you know that CO2 also occurs in liquid form? Well, somewhat.

On behalf of the team at 5, I am pleased to forward our market letter for the last quarter of 2016. The most important policy development in Q4 was the election of Donald Trump as the 45th President of the United States. Mr. Trump was elected on a platform that promised energy independence, increased drilling of oil and natural gas, and an end to the war on coal. While other events might be overshadowed by the election, a review of recent energy developments question the impact of the Federal Government on the energy market. In fact, state policy and changes in energy technology may have a greater impact on the energy market than who holds control of the executive office. A few recent market developments are summarized below.

On behalf of the team at 5, I am pleased to forward our market letter for the third quarter of 2016. Before turning to our discussion of general market developments, I’d like to highlight an important trend shown in our technical energy charts. Our market guru, Eric Plateis, built proprietary analytical tools to forecast the future direction of electricity and natural gas prices. Below is Eric’s chart of the Henry Hub rolling prompt month price of natural gas (the next month in the year) from late July to today.

On-site power storage is becoming a realistic possibility. However, as with most opportunities to cut energy costs, the devil may be in the contractual details. If contract terms are not specified clearly, it could be a bunch of hocus pocus.

The cost of battery power (measured in dollars per storable kilowatt-hour, $/kWh) has been rapidly falling. The cost of solar panels has also dropped, making its renewable power competitive, after the inclusion of incentives and subsidies. But solar panels only generate power when the sun shines. If some of that power could be stored, it may help trim a building’s peak load and provide off-peak power.

Many new suppliers and brokers have recently entered the field of retail energy procurement. Ensuring the viability and integrity of these new companies is as important as any business agreement you enter. The importance of understanding supply contract details and language cannot be overstated. Verifying the credibility of unknown entities can prevent future troubles.

The lexicon surrounding energy and climate change issues never stops growing. A recent addition is “carbon leakage”, which may occur due to the difference in the strictness of climate policies between two nations.

The US Department of Energy (DOE) defines a microgrid as “a group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid. A microgrid can connect and disconnect from the grid to enable it to operate in both grid-connected or island-mode.”

On behalf of the entire team at 5, I am pleased to forward our market letter for the second quarter of 2016. Q2 marks the end of a long period of relatively flat and/or decreasing electricity and natural gas prices. The recent reversal is well represented by the following chart, which shows how prompt month natural gas has traded over the past 6 months.

I am pleased to forward the first issue of Volume 5 of 5’s Quarterly Market Letter. The energy market remained relatively flat in Q1 and continues to trade at or near historically low levels. The chart below shows how little natural gas prices ¹ have changed in the first three months of 2016. As noted below, the price of natural gas for the month of May 2016 and calendar years 2017, 2018, 2019, 2020 and 2021 were almost the same at the end of March as they were at the beginning of January.