Energy markets have gotten more interesting over the past 24 months. We’ve said it before, we will say it again. After approximately 7 years of relatively low prices and low volatility, markets have grown increasingly volatile over the last several years. What can we expect for the coming year? How can customers prepare for dynamic energy markets? 

There is a range of conflicting pressures on energy markets, particularly in the Northeast. For example, we can expect: 

• Strong natural gas supply and significant availability of natural gas in storage, at least through to the start of next Winter; 
• Increasing electrification and high electricity demand; 
• Continued efforts to phase-out fossil fuels in power generation; 
• Weather;
• Utility and independent system operator investment in improving reliability; and 
• Development of new, emerging technologies and designs (hydrogen, battery storage, virtual power plants). 

What impact might these various dynamics have on energy markets? High levels of storage, a drop in natural gas prices and a moderation of interest rates puts downward pressure on power and gas prices. However, weather, reliability concerns, increases in electricity demand, and an effort to phase out fossil fuels will likely put upward pressure on energy markets, particularly in the short and medium term (1-3 years). There are cross-cutting influences on energy markets.

As reported by Utility Dive, “For utilities and the clean energy sector, 2024 could bring “an exceptional level of volatility and opportunity,” according to Bank of America Global Research analysts.”