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Market View: Reconsidering US gas

The role of fossil gas as a counterweight to ongoing dominance of intermittent renewable power in utility and corporate investment plans has become a pressing issue as forecasters balance between current planning cases and the constraints imposed by legacy infrastructure.

Energy transition dealmaking continued to inch forward two weeks after a banner rout in the sector's public equity prices, with sustained power demand growth underpinning new capital deployment.

Private capital groups with energy transition funds continue to back renewables, but private equity has migrated toward services, manufacturing and ancillary business lines and use cases in recent weeks. Apollo, headed by potential Trump US Treasury Secretary nominee Marc Rowan, picked up the majority interest in industrial power developer State Group from Blue Wolf Capital in a deal arranged by investment bank Moelis out of Apollo’s clean energy fund, constituting a bet on further distribution, efficiency and digitization efforts at manufacturers.

Karbone price insightWith capacity prices in contango at elevated outright levels across the US, industrial buyers are motivated to seek the lowest-cost electrons wherever possible. SPP deliverable capacity in the 2029 planning year is at a more than $50/MW-day premium to prompt year capacity on the Karbone hub.

While lower fossil gas prices linked to expanded drilling access under the Trump administration could have a pass-through effect on capacity and power pricing, a long history of tariffs approved by utility commissioners and FERC and implemented by RTOs have shown little correlation between cheaper gas and cheaper power. The long-term role of gas will be in focus at a FERC hearing scheduled for Thursday on the agency’s Order 1920 dictating changes to US power planning.

Meanwhile, Arizona will get a 200 MW/800 megawatt-hour battery energy storage system manufactured in the US by Tesla in 2025. EDP Renewables signed a long-term offtake agreement with Salt River Project this week, and has been greenlit in part because it was able to demonstrate significant water usage savings compared to fossil gas that would require water-intensive fracking extraction techniques.

In a more gas-reliant vision of the future US energy system, interest in renewable natural gas and other decarbonized gas generation pathways could reignite. Early indications that permitting for carbon capture systems could ease under a new administration, and the potential to monetize RNG and similar technologies through state and federal incentive programs could play a bigger rather than a smaller role under new Federal guidance.

Market View: Trump transition risks

The Karbone research team has held calls and meetings with energy transition stakeholders and Trump transition team members since Tuesday November 5, seeking to better understand the context for trading, financing and price discovery for power, capacity and environmental attributes under the incoming administration.

In the early days of the transition to the second Trump presidency, the signals are clear that energy market participants may need to take the incoming administration’s campaign promises “literally,” as well as seriously.

A full report detailing insights from those conversations is available on the Karbone data hub. The top six takeaways are:

  1. Risk to IRA guidance is higher than consensus.
  2. Offshore wind in the US is on life support.
  3. EPA enforcement and funding are in the GOP's crosshairs. 
  4. Fossil gas prices may be volatile to the downside.
  5. Tariff management will become a big(ger) business.
  6. Construction costs will rise.

 

Market View: RINs crash, Renewables dealmaking rebound

D3 RINs have gone on a wild ride in trading sessions this week, crashing lower on November 13 as traders reversed course on what had otherwise been a surprise post-election pop in RINs pricing.

Fundamentals blended with politics in the tightly balanced pricing environment for late 2024 D3 RINs trade to create a 10+ standard deviation volatility event. Specifically, an unexpectedly early regulatory filing to reduce 2024 demand created a rush for exits; D3 prices plunged, with the bid removed by uncertainty about an accelerated EPA ruling merging with general bearishness on the Trump administration's expected granting of small refinery exemptions.

Most energy transition markets still operate at more of a remove from direct federal government management, but natural volatility can be significantly exacerbated by sudden political shifts and regulatory opacity.

Karbone price insight: None of the D-codes were spared in the clean fuels sell-off, but D3 2023 and D3 2024 RINs marked the most dramatic declines, falling roughly 17% and 16% respectively. D3 2025 RINs fell nearly 10%, closing the session at a $2.65 mid.

A post-election lull in IRA tax credit financing for renewable energy appears to have last just a week, as a second nine-figure deal closed in as many days. Private capital-backed Pine Gate Renewables closed a $290 million back leverage debt financing and tax credit transfer deal on a trio of solar projects in ERCOT and in Alabama. Three European banks clubbed together to underwrite the deal, which included transfer of IRA tax credits to a corporate buyer.

Karbone price insight: Load growth in US power remains the most bankable trend in energy markets today. Fuel choice and environmental attributes still matter, but proven ability to deploy generation and interconnection access is driving deal close even as environmental and permitting regulations remain in flux. Capacity prices quoted by Karbone are elevated in historical terms across the country, with less-liquid markets at a significant premium to more volatile RTOs with deeper capacity participation.

Market View: State action, Resi swoon, Tax equity

Prices for book and claim RECs in California moved higher in the days after the state’s air resources board cleared a more aggressive pathway for transportation emissions in the state.

California book and claim product fundamentals are linked to deployment of electric vehicles that can align their demand for power with renewable electricity supply.

Karbone price insight: The Karbone merchant curve model for book and claim RECs contains wide potential for dispersion between the high, low and base cases for pricing. As the program moves into the 2030s and 2040s, the forecasted high price scenario holds at more than 300% the low price scenario.

Equity swoon: Following Trump’s victory, stocks of residential rooftop solar system and equipment providers saw significant declines. Sunnova Energy fell by more than half, and Sunrun dipped by nearly a third. Component supplier SolarEdge and competitor Enphase fell by double digits. First Solar Inc., known for thin-film panels, dropped 10.1%, while utility-scale tracker supplier Nextracker Inc. declined by 5.6%.

Karbone price insight: The correlation between equity prices and environmental attributes pricing represented in REC markets is not direct. Reduced financial capacity for residential solar could actually tighten some SREC markets, with changes to resulting supply and demand fundamentals triggering a reevaluation of the Karbone merchant curves.

The first big post-election US renewable tax credit deal closed a week after Trump’s victory, indicating investors are still expecting sustained policy durability for the core IRA credits through the incoming administration. Private equity firm Carlyle's portco Copia closed a $519 million tax equity commitment November 12 for a solar-BESS project in Arizona, with JP Morgan as the tax equity investor.

Karbone price insight: Arizona is outside the RTO structure that other states and regions use to manage capacity, and as the desert southwest undergoes the same kind of load growth forecast for other regions the expected need for solar and battery collocated energy campuses remains high. Prices for traded capacity in adjacent RTOs tracked by Karbone are in a steep contango, indicating tightening supply availability.

Market View: RECs at the gas-wind nexus

Capacity and REC markets are drifting toward renewed disruption as regulators and strategic planners continue to ignore the potential for multi-year delays in US deployment of offshore wind.

While the election of a vocal anti-wind advocate to the presidency places a spotlight on the risks to offshore wind projects, a looming late 2020s shortfall in highly rated power supply from offshore wind farms has been inching closer for several years.

A handful of large and complex projects, with a high capex intensity and persistent performance issues, have become the pivotal binary risk determinants for power and capacity in a number of regional markets.  

PJM, NYISO and NEPOOL are the markets most at risk from a shortfall or extended delay in offshore wind project deployment. The combination of strict state-level renewable portfolio standards and a limited number of alternative sources of large-scale renewable power in those regions make them subject to a mechanistic floor for REC prices if offshore wind fails to deploy on schedule.

Karbone’s most recent merchant curves for PJM REC markets show a significant detour from current fundamentals-implied pathways if offshore wind projects are slowed. REC prices stay much higher for much longer, hugging the ACP through the life of compliance programs, as long as offshore wind projects are absent.

Karbone price insight: While the current Karbone PJM tri-qualified REC merchant curve forecasts all include some level of offshore wind deployment in the RTO, the high case does incorporate a delay in offshore wind into the early 2030s. That gives the merchant curve for that contract a very different shape, with RECs peaking near $50/MWh in 2030 and remaining above the mid-2024 reference price of $40/MWh through to 2043. In both the base and low cases, REC prices fall swiftly in the 2030s as offshore wind REC supply drives markets below $25/MWh.

At the same time, capacity markets could be whipsawed as the primary competitor for wind in provision of highly accredited capacity is fossil gas. Updates to capacity market methodologies as power supply shortages bite amid growing load demand have created a gas versus wind tradeoff for project developers.

That tradeoff is relatively clear in markets where new gas can come online, and while onshore wind power continues to deploy in those scenarios, so does new gas power.

In markets like the US Northeast where gas pipeline expansions face more serious obstacles, gas-by-wire through RTO-level power imports could meet the capacity shortage where transmission is available, but the resulting grid fuel mix keeps a robust bid for RECs to keep RPS accounting balanced.

The rebound for gas has been clear in the flood of new integrated resource plans from major US utilities, and unabated gas has a longer and more financeable future alongside renewables if current Trump administration proposals go ahead. The implications for environmental attributes, however, are a one-way trade absent offshore wind or revisions to state RPS programs.

Market View: D4 and D5 RINs, Hydrogen, MISO

Late breaking: The CARB vote on increased LCFS targets passed 12-2 late Friday night. Karbone’s trading teams are watching for price impacts and reviewing shifting fundamentals in light of the decision.

Clean fuels markets in the US charged higher in the wake of the presidential election last week, with D4 and D5 RINs gapping higher. The Karbone hub price for 2024 D4, D5 and D6 RINs all moved more than 5% higher amid high trading volume on November 7, and 2025 prices for the same D-codes surged as well.

The price increases are a tariff story, with market participants betting that a mix of federal tariffs and limitations on foreign feedstocks and used cooking oil will contract supply more than any moves to unwind federal environmental programs will limit demand. A shift to a production tax credit structure from a blending tax credit structure already expected in 2025 would further undercut exports, juicing the post-election bump for the complex.

Still-nascent clean hydrogen markets, which have targeted fuels displacement as one path to wider adoption, were hit at the end of last week by Air Products’ decision to pull out of a large green hydrogen project in Texas. Air Products is one of the rare hydrogen developers with deep expertise in fossil fuel-based hydrogen and access to offtakers, so its decision is particularly challenging for US clean hydrogen development, which was still dependent on billions of dollars in early-stage funding from US government programs.

At the same time, power investment continues to move ahead, with regulated utility Ameren confirming it would update its $55 billion capex plan in the next few months to reflect additional new data center demand. The company’s resource plan is long on both natural gas and renewables, with Ameren recently acquiring existing solar assets and getting approval to build a new gas plant in Missouri.

Karbone price insight: Power generation availability in Missouri is looking especially tight ahead of the pending MISO fixed resource adequacy plan season. MISO zone 5 covers Ameren’s Missouri service area, and prompt season indications for capacity on the Karbone hub have the zone priced at the higher end of the RTO’s ten zones through the forward strip. Over the last 12 months, Zone 5 capacity prices have broadly held at narrow premiums to year-ago levels.

The global gathering of the climate community in Azerbaijan, kicking off this week at COP29, was always likely to be overshadowed by the US presidential election and the global lack of progress on agreed emissions reductions ambitions. With the US set to again exit the governing UN climate agreements and bodies, the focus among other country representatives attending the COP has been on China’s delegation.

Chinese production of cleantech for export markets has become a major economic pillar of the country’s economy, and sustained engagement with importing countries at COP could be vital to surviving anticipated cleantech and other tariffs from the incoming Trump administration. New announcements from China signaling a recommitment to the energy global transition would create a diplomatic and trade flashpoint with the US as tariff-setting processes kick off.

Market View: Repricing US Renewables

Private capital fundraising continued uninterrupted in a volatile week for public equities and debt for energy transition plays, as investors with longer-term horizons relied on shifting industry fundamentals dominated by a still-intensifying shortage in US power supply.

Longbow Capital closed on its second energy transition fund against the background of the US election, while Pelican Energy Partners closed what may be the first pure-play nuclear energy services fund at $450 million, above both its target and its original upper limit.

Nuclear power enjoys a bipartisan tailwind, and the industry has lobbied the Trump transition team to redeploy remaining DOE loan program money from the IRA into exclusively underwriting new nuclear projects.

Renewable energy fundraising outside the private markets could be subject to a late 2024 stress test if Brookfield Renewables proceeds with a multi-billion dollar share offering. The fund filed paperwork in the days before the election targeting a more than $6 billion share of LP units. Bankers questioned whether the offering would proceed, given the post-election swoon in renewable energy pure-play firms.

Karbone price insight: Early analysis indicates that while up to a third of announced US renewable projects might be threatened by a full revocation of the IRA, that would cut an extremely ambitious pipeline to a merely historically robust one.

Equity markets are almost certainly mispricing the Trump trade in energy. Even in the event of a full-scale revocation of both federal incentives and federal emissions regulations new fossil fuel infrastructure would struggle to compete in many cases with renewables plus storage. Retirements of fossil fuel, already slowing, would likely be further delayed, but new load growth will be renewables-dominated.

The more vital question for individual renewable projects is likely to be the much more niche, but impactful issue of treatment under capacity accreditation methodologies in individual power markets. Proposed changes to accreditation have already compressed the realized value of solar, and to a lesser degree wind and batteries, in a number of US energy markets, with implications for project financing.

Recent trade in power markets indicate that any perception of slowing fossil retirements creates a drag on capacity price quotes. New price indications in PJM have slipped on the expectation that an auction delay in that market will ultimately loosen capacity market conditions there.

Market View: Wild Card Wednesday

Publicly traded equity and debt markets were first to register an impact from former President Trump’s victory in the US election, with commodity impacts muted as market participants evaluated the potential for shifts in supply and demand within currently active delivery windows.

The Trump campaign’s messaging on clean energy support has been mixed in recent months, but there is little doubt that the new administration will back away from the concept of an energy transition organized via emissions targets aligned with global goals.

The extent to which a promised “unleashing” of the US oil and gas sector can overwhelm the competitive generating economics of renewables and firmly established state and regional environmental regulation is still unclear. Promises to ease permitting and boost infrastructure largely did not turn into action under the first Trump term, but progress on either could accelerate rather than delay renewable energy deployment.

For project developers, the impact of higher import tariffs and an immigration crackdown that cuts the construction workforce are both the first order concerns: Tariffs are largely within the presidential remit, and changes could happen quickly once the new administration takes power.

Higher prices for foreign components before replacement domestic manufacturing is ready means compressed returns for many energy firms, though the heavy reliance on Chinese components for solar in particular has been reflected in hits to equity valuations in that sector since markets opened today.

Environmental markets eyeing a Trump presidential election victory are taking solace in the sustained commitment of states to pricing and managing environmental attributes.

Action in environmental commodities is already largely based on state and regional programs, with federal programs in recent years more often based on a blend of tax credits and long-range targets rather than compliance pricing programs.

The history of the last Trump administration was characterized by a contradictory revival in state-level compliance market ambitions, even as federal programs were either slowed or challenged.

On the compliance side, participation and outright price levels continued to surge in the US through the first Trump presidency. Pennsylvania, which as with this year voted for Trump in 2016, boosted its compliance program ambitions significantly in 2017, and prices for related RECs contracts have climbed since.

The voluntary environmental attributes market also picked up during the Trump years, as corporates concerned about the lack of US policy in an emissions-constrained global economy built positions and expertise through voluntary mechanisms.

The forward price curve for a number of environmental commodities tracked by Karbone remained in contango on the eve of the US election, and outright prices for many markets barely budged through the closing days of the tight campaign.

National CRS-listed voluntary RECs dipped slightly at the front and back ends of the curve since mid-October, but the 2029-2033 strip held steady.

Market View: Carbon Credits, Solar, BETA Technologies

What will finally move carbon credit pricing? Approval of four new standards for participation in the aviation-oriented CORSIA trading system, forecast by voluntary carbon market participants to drive more demand, has failed to move prompt pricing for CORSIA credits. The Gold Standard, Verra, Global Carbon Council and Climate Action Reserve standards approved by CORSIA are all from well-established carbon market stakeholders.

Karbone price insight: Spot prices for CORSIA credits on the Karbone data hub have remained flat around $0.65 since the announcement. While the CORSIA approval could indicate a deepening in the market as more offset projects qualify and higher standards underpin demand, the forward curve for most voluntary credits remains unchanged, implying unchanged fundamentals.

Softbank-backed solar resi firm Enpal completed a rare cleantech asset-backed €240 million securitization of 8,500 loans for rooftop installations. Solar ABS has become increasingly common, but residential and rooftop rollups remain relatively rare, limiting the flow of institutional capital to the resi sector. Increased comfort in capital markets with the financial instrument could open the door for significantly cheaper financing of residential solar.

In utility scale solar, a set of long-term, fixed-price power purchase agreements with counterparties like AT&T and Toyota have enabled Enbridge to sanction an 815 MW solar project located about 150 miles outside of Dallas, Texas. The Sequoia project is scheduled to be completed in two phases and carries an estimated cost of $1.1 billion. ERCOT solar is competing in a crowded marketplace, and financiers increasingly seek firm offtake before backing projects.

Electrification of more forms of transit remains a wild card for load growth forecasts. Despite the challenges, electrified flight continues to attract capital commitments. The Qatar Investment Authority led a $318 million growth investment in electric aerospace company BETA Technologies, joined by existing backers Fidelity and TPG. 

Market View: Power planners strike back

US federal power regulators had a busy week, overturning market expectations as they issued rulings with disruptive potential.

After spending Friday in closely watched technical discussions about a raft of co-location filings from proposed data centers seeking to take meaningful flows of nuclear power out of regional markets, FERC issued a ruling on Amazon’s proposed agreement with the Talen Energy-controlled Susquehanna nuclear plant that will shift outlooks across power and capacity.

By denying Amazon’s new tariff, FERC – with greater clarity than expected – emphasized that it would continue to prioritize grid reliability and existing stakeholders over rapid load growth and new power market entrants.

Early analysis of the Talen/Susquehanna ruling indicates data center counterparties may now begin ramping up their evaluation of behind-the-meter options, with impacts on fundamentals across power, environmental commodities and even clean fuels that compete with transport electrification.

The commission had already issued a more technical ruling last week on accreditation for new power additions in capacity markets, in response to a filing from MISO that had roiled strategic planners.

The MISO plan could inadvertently create conditions for an even tighter-appearing capacity market, with the potential for upside volatility similar to that seen in PJM earlier this year, all against the background of a more sweeping market redesign for the crucial RTO due for release in the coming weeks.

Karbone price insight: Almost every US energy market bears some exposure to shifts in power market regulation at a time when broader electrification and near-term load growth are intersecting to create an apparent fundamental supply shortage for electrons.

The extent to which capacity markets are accurately and usefully able to reflect these shifting fundamentals comes down to market design and consumer tolerance for higher power prices.

Forward price indications on the Karbone data hub based on fundamentals consistently diverge from realized pricing for the same zones and delivery windows, providing room for traders and strategics to take meaningful positions on how market realities align with market management methodologies.

Market View: Hedging RINs, SPP, Nuclear for AWS

D3 RIN hedging strategy discussions are playing a starring role in quarterly earnings calls at firms like NYSE-listed Waste Connections, where management recently described a strategy a strategy of price hedging through forward RIN sales and other mechanisms, and emphasized future uncertainty in both RNG and RINs prices in forecasting company results.

Montauk Renewables’ Q3 earnings, scheduled for after the bell on November 12, regularly feature a host of questions on D3 RINs pricing, and are closely watched for market color.

Karbone price insight: Bank analysts peppered management with questions about potential weakness in D3 RINs pricing. The 2024 contract has held above $3/gallon since February 2023, marking highs above $3.50/gallon in September before weakening in recent weeks to within 15 cents of the 2025 D3 RINs contract. The 2025 strip flirted with the $3.00/gallon mark but remained just below that resistance level as October ended.

The Southwest Power Pool’s approval of an integrated transmission plan covering 89 projects and representing a record $7.7 billion of investment was attributed to expectations of climbing peak demand as already high levels of renewable energy penetration climb even higher. Transmission will be key to providing access to capacity when intermittent generation falls off or weather events strain reliability, although the individual projects in the SPP ITP still face a gauntlet of regulatory and market challenges before they come online.

Karbone price insight: As of this week, the Karbone data hub shows Summer 2026 deliverable capacity in SPP trading at a ~30% premium to summer 2025 and a 450% premium to winter 2025-2026.

Seeking to avoid transmission risk altogether, Amazon Web Services’ proposed “inside the fence” colocation services agreement with Talen-managed nuclear power plant Susquehanna is due for approval by FERC next week. The 480MW PPA has met objections from competing generators AEP and Exelon, who argue that AWS and Talen would be circumventing obligations to grid reliability and resource adequacy by failing to deliver their clean capacity to the grid.

One last thing: Mubadala-backed $20 billion private equity firm Aquarian Capital bought clean energy retrofit construction financing specialist Pace Equity in a deal advised by a collection of Wall Street heavyweights, including Guggenheim Securities, where Aquarian founder Rudy Sahan used to work.

Market View: Utility debt, Carbon credits, Gas for AI

Utilities continue to find easy access to debt and equity capital: NextEra issued a $1.47 billion composite units offering underwritten by JP Morgan, Mizuho and Goldman Sachs – allowing it to deploy capital from the holding company level across multiple units and capital types as the renewable energy giant works to streamline its financing.

In Europe, Iberdrola SA has issued £500 million in 12-year green bonds, to support future renewable investments in the UK. The issuance, which attracted demand exceeding £2.1 billion, has a coupon rate of 5.25%.

Climeworks, the Swiss carbon removal company, has made a deal with Morgan Stanley to sequester 40,000 tons of carbon dioxide before 2037. The deal allows Climeworks to test the scalability of their technology and enables Morgan Stanley to claim offsets for its emissions. The deal marks a further expansion into the US market for Climeworks, which has been awarded more than $50 million from the DOE for a project proposal in Louisiana.

Karbone price insight: Prices of international carbon credits could shift quickly if removal companies prove that their technology works at scale. While historical prices for nature-based carbon removal credits on the Karbone data hub have shown a steady decline since the beginning of the year, falling from $16.75 to $14.90, technology-based removals like Climework's DAC garner a significant and persistent premium.

Natural gas could be the primary fuel of choice for $50 billion of data centers and associated power generation being backed by private equity firms KKR and Energy Capital Partners in a new deal that adds to a growing list of private capital digital infrastructure deals. ECP leaders have noted that electricity availability may be the bottleneck to progress in the AI boom, and said that gas will be at the forefront of investment in order to offset the intermittency of renewables.

On October 25th, Governors of PJM Interconnection (PJM) states wrote a joint letter to PJM's CEO requesting near-term actions to "prevent unnecessary increases in capacity costs that would be passed on to our residents and businesses". The letter was signed by the Governor's Offices of Illinois, Maryland, Delaware, New Jersey, and Pennsylvania. The letter highlights "serious flaws" that need to be addressed before the next auction via a 205 filing and special PJM Board session.

Market View: Growing pains for power

After decades of low growth, US electricity reliability monitor NERC now anticipates a significant increase in its forecast for peak demand, primarily due to the projected jump in the number of datacenters. 

While peak demand grew by roughly 3% over the last 10 years, NERC says its estimate of 13% growth for the next 10 years is already outdated.  

Karbone price insight: New power load driven by datacenters, crypto mining facilities, and EVs presents a complicated challenge for renewable generators. NERC has made note of inverter-based solar facilities falling offline without warning in recent years, prompting new mandatory reliability standards can often be misaligned with intermittent generation.

Price increases in capacity markets have proved remarkably sticky in some regional power markets. CAISO system resource adequacy pricing for both the 2026 and 2027 calendar year spreads on the Karbone data hub have maintained at well above year-ago levels even as they retreated from volatile summer trading highs.

Potential for shortfalls is driving regional power markets closer together. MISO and the Tennessee Valley Authority have asked FERC to clear them to sell power to each other under emergency conditions.

The forecast-disrupting role of large load like data centers is also about to get its day at FERC. A scheduled November 1 meeting of the commission will provide power developers, investors and local regulators a sense of the federal government’s preferred approach to managing the new challenges of large load, now qualified by the upcoming NERC revisions.

Well intended market design by regulators can often have unintended consequences. In Europe, where energy transition is both further evolved and facing unique challenges, the German government is facing a 20 billion euro bill for its renewable-supporting feed in tariff. That program is now up for revision, part of a sweeping rethink of transition policy details globally as the once “alternative energy” industry matures and goes mainstream.

Market View: Energy storage spreads

The proliferation of battery storage in the US power and energy markets is creating a margin-chasing “roulette wheel” business strategy for developers and asset owners contending with opacity in both market fundamentals and market design.

With “spread” between operating costs and power or ancillary services revenues rotating seasonally, daily and even within hourly ranges for batteries, energy storage suppliers need to demonstrate to financial markets that they have a plan for capturing revenue with every new spin of the wheel.

Expectations that batteries would compete head-to-head with fossil gas generation in the capacity markets seemed increasingly unlikely to market participants the Karbone research team met with alongside an energy conference in New York at the end of last week.

As both the energy and ancillary services margins in power markets appear to get rapidly swamped by ever-cheaper supply, it is direct, often behind-the-meter and grid-edge applications that developers and bankers are often seeking to leverage in new financing packages.

Karbone price insight: The increased complexity of power markets are reflected in time and locational spreads across power markets. While full RTO price quotes may appear to weaken, individual zones and different delivery strips can indicate fundamental tightness that energy storage plays can leverage.

Forward prices for firm versus deliverable SPP capacity on the Karbone data hub are only one example of many such spreads visible in hub data. Firm capacity forwards are holding in a smooth contango through to Cal 2029, while forward deliverable capacity spreads are holding in a wide-ranging backwardation.

Karbone clients and counterparties noted last week that a crucial difference between batteries and gas remains the “cycle time to market” in an increasingly volatile power sector where reserve margins are caught between cheap intermittent renewables and rising load growth.

While the difference between the slower ramping of a combined cycle peaker and an instant battery connection would have made little difference in a traditional power market, those time gaps may be the difference between uptime and a blackout (and profit and loss) in an increasingly electrified economy.

Market View: Strong earnings, Iowa nuclear, PE biofuels

The Karbone team is holding meetings alongside an energy transition finance event in New York today, amid remarkably resilient dealflow across every vector, from electrification and renewable fuels to advanced battery tech.

A strong earnings season provides the background to a firm bid for assets in both “the IRA economy” (a theme of the conference sessions) and the natural gas complex. Tesla’s pre-open results that featured more than $700 million in revenue from environmental attribute sales and a surge in profitability for its battery unit gave a further “bullish” shine to client and counterparty interactions.

Karbone price insight: Neither equity nor commodity price moves reflected the potential for sustained growth in asset-level dealmaking foreshadowed by strong financial results, with volatility subdued after a run-up for most prices at the end of the summer. The biggest price moves for the week on the Karbone hub were largely for soon-expiring contract strips as year-end approaches, with European guarantee of origin prompt plus one strips the exception as the contracts for 2026 ticked higher.

Markets also didn’t get what they wanted from otherwise robust NextEra earnings: An announcement that the firm would restart the Duane Arnold nuclear plant in Iowa. With other utilities signing banner agreements to restart idled nuclear units to support data center growth, a Duane Arnold restart for NextEra would have given the trend further evidence of inevitability. As it is, bank analysts reviewing the company’s outperformance elsewhere noted the level of available local wind generation may make a nuclear restart uneconomic.

On the fuels side, private equity firm KKR continued building out its biofuels rollup business with a 25% stake in the biorefining and biogas unit of Italy’s oil champion Eni, while Vanguard Renewables’ Virginia RNG facility joint venture is starting construction supported by an offtake with AstraZeneca’s facilities in bordering Maryland.

One more thing: If the cheapest MW is the one you never use then the energy efficiency platform Redaptive, which just scored a $100 million equity check from CPPIB, should benefit from any rise in consumer-level energy pricing.