Dive Brief:

• Average locational-based energy prices in the Southwest Power Pool this spring were $17.37/MWh, compared to $20.95/MWh in spring 2015 and $34.72/MWh the year before, according to a report from the grid operator's market monitor.
• Coal generation is in decline, from 59% in spring 2014 to about 41% this year.
• At the same time, wind generation has grown from about 15% last spring to 21% this year, resulting in the grid seeing the most significant transmission congestion in the “wind alley” of the Texas panhandle, western Oklahoma and western Kansas.

Dive Insight:

A rise in wind power, combined with sustained low gas prices, has sent power prices on the SPP grid spiraling in the last two years.

"The lengthy decline in gas costs continues to have a major impact on energy markets," according to a report from the grid operator's market monitor. "Historically gas prices and Real-Time prices have been highly correlated in  SPP. Workably competitive markets should experience highly correlated gas costs and energy prices in general."

The average gas cost at the Panhandle Hub this spring was $1.68/MMBtu, compared to $2.46/MMBtu in spring 2015 and $4.66/MMBtu in spring 2014.

Additionally, "the three months of the spring 2016 season saw the lowest percentage of generation by coal resources since the start of organized markets in Southwest Power Pool in 2007," the monitor reported. Coal generation is now roughly 40% of the grid's power, down from 65% 2007, the first year SPP operated as an organized market.

Wind generation continues to increase, and accounted for over 20% of all energy produced in February, March and April of this year, and almost 19% in May.

"In total, wind accounted for 21.5% of all energy produced in Spring 2016, compared to 15% in Spring 2015," the report said. "As has been the pattern the last several months, most congestion in the SPP
footprint can be found in the “wind alley” of the Texas panhandle, western Oklahoma and western Kansas. Cleared virtual transactions continue to increase and are now close to the
typical level experienced in other markets at about 10% of reported load."

The grid operator isn't isn't alone experiencing a decline in prices as natural gas tamps down power prices. Bloomberg reported power prices in the PJM market declined about 40% as natural gas and new capacity slashed costs.