A first in decades for lower-48 electricity trade with the U.S.’ northern partner.
Mobius Intel Brief:
- The Canadian power grid’s significant exposure to hydropower output means it’s particularly vulnerable to variable weather patterns. This Spring’s low water levels flipped the U.S.-Canada power relationship on its head, with the United States becoming a net exporter of electricity to Canada for the first Jan.-Jun. period in data going back more than a decade.
- Behind the scenes in the U.S., lower-48 grid load (via the EIA’s form-930) has yet to display robust YoY growth from highly anticipated demand drivers like EVs and data centers. Meanwhile, generation resources are outperforming 2023 and 2022 by double-digit percentage points.
The U.S. Turns Power Exporter?
Canada’s hydroelectric generation provides approximately 59% of the country’s total power supply — but only when water levels are high enough.
However, unpredictability is the name of the game for all energy resources that depend on Mother Nature, so this year’s extreme drought conditions are a considerable complication for Canada’s power providers.
With water levels in several of Canada’s most populated W/SW regions at record Spring lows, Canadian territorial power authorities are turning to the U.S. for electricity supplies.
As a result, the continental United States became a net power exporter to Canada from January to June for the first time according to data going back at least a decade.
From March 1st to May 31st, the lower 48 U.S. exported a net 112 GW of power across the northern border versus 360 GW and 437 GW of imports in 2023 and 2022, respectively.
In Canada’s favor, meanwhile, is near-flat load growth in the lower 48 U.S. in 2024 — only 2.4% higher than the same period’s average in 2023.
That flat load growth has created a springboard for surplus generation to meet higher Canadian import demand, with resources across the United States’ fuel mix displaying robust year-on-year increases.
According to EIA form-930, CONUS wind-generated power output has outperformed the 2023 and 2022 averages by 75.6% and 62.6%, respectively.
As an aside, power industry participants should note the substantial increase in year-on-year variability in wind output alongside a growing generation fleet.
Wind isn’t the only resource outperforming previous years.
Jan-June 2024 gas-fired power generation increased by 70.5% and 83.8% from the same period in 2023 and 2022, respectively.
This year’s growth in CONUS natural gas-fired output has held the gas-to-wind generation ratio at 3.05 from 3.06 in 2023.
Tallying Jan-June U.S. Generation Growth by Resource
According to the EIA form-930, U.S. generation resources are outperforming 2023 levels by a substantial margin in 2024 YTD.
- Coal: +54%
- Hydro: +58%
- Nuclear: +66%
Solar output is the fastest-growing in the CONUS fuel mix in 2024, with daily output posting an average increase of 127% from the same period in 2023.
As the U.S. prepares for peak cooling demand season, Canada’s low hydro output will become a considerable reliability risk variable for the country’s consumers.
Below the border, however, peak cooling demand isn’t the only factor for power market stakeholders to consider. Summer is also the peak “Dunkelflaute” season for the U.S. renewable fleet — a period characterized by the highest frequency of consecutive days with low renewable output.
As noted in recent Mobius Daily Market Updates (here and here), weather models are predicting a hotter-than-normal summer for most of the lower 48 U.S.
Should forecasts prove accurate, power and fuel markets will likely experience pronounced price volatility on days with substantial grid load and lower-than-expected wind output.
