Energy Market Extra: Hurricane Florence

Contributed By: Robbie Fraser, Commodity Analyst | Schneider Electric Energy & Sustainability Services

In this energy market video bulletin, Robbie Fraser assesses the near-term and longer-term impacts of Hurricane Florence on energy supply, including cooler temperatures across parts of the Midwest and Northeast.

Though the majority of the storm has passed, with limited impact thus far on regional power markets, there are several continuing risk factors that companies should keep an eye on. Initial effects should consist of a quick dip in power generation demand. However, lingering impacts could prove to be more bullish for two reasons:

Strong enough rain could take nuclear generation facilities offline for a few weeks. Lost generation will likely be made up from gas fired power plants, ultimately leading to more demand than the initial drop.
Flooding in West Virginia and Pennsylvania resulting from the storm’s northerly and inland progress could take Northeast production offline. Production could take a few weeks to ramp back up.

Overall, the natural gas market should see limited volatility from Hurricane Florence, with the known impact of cooler temperatures and initial demand weakness likely serving as the prominent market factor. In all cases, price impact from Florence is expected to be limited to the near-term, with the back end of the forward curve essentially unaffected by short-term supply/demand changes.