Published June 22, 2026
By NZero
Energy price volatility remains a major challenge for organizations trying to manage operating costs, forecast expenses, and make informed investment decisions. Electricity markets are influenced by a wide range of factors, including fuel prices, weather conditions, infrastructure availability, and changes in demand. While short-term fluctuations often attract the most attention, long-term market stability is frequently shaped by investments that take years to develop. One recent example is the Champlain Hudson Power Express (CHPE), a transmission project that began delivering hydropower from Quebec to New York City in 2026. Although the project was primarily developed to increase access to low-carbon electricity, it also highlights how transmission infrastructure can influence energy market fundamentals and contribute to greater price stability over time. For businesses seeking to improve energy budgeting and forecasting, understanding the relationship between infrastructure investment and energy costs is becoming increasingly important.
The past several years have demonstrated how quickly energy markets can change. Natural gas price spikes, supply disruptions, extreme weather events, and growing electricity demand have contributed to periods of significant volatility across many regions. In competitive electricity markets, these fluctuations can affect wholesale prices, utility costs, and long-term procurement decisions.
For businesses, volatile energy prices create operational challenges. Higher energy costs can reduce profit margins, complicate financial planning, and make it more difficult to evaluate investments in equipment, facilities, or sustainability initiatives. Companies with multiple facilities may face additional complexity when managing energy expenses across different markets and utility territories.
As electricity demand continues to grow due to data centers, electrification initiatives, and economic development, concerns about reliability and affordability have become increasingly important. Businesses are therefore paying closer attention to the factors that influence market conditions beyond monthly utility bills. Infrastructure investments, generation capacity additions, and transmission upgrades can all affect the balance between electricity supply and demand, ultimately influencing long-term price trends.
This broader perspective is particularly valuable because many drivers of energy costs emerge gradually. While market participants often focus on near-term events, investments that strengthen grid infrastructure can shape pricing dynamics for decades.
The Champlain Hudson Power Express provides a useful example of how infrastructure investments can support electricity market stability. The project consists of a 339-mile high-voltage direct current transmission line connecting hydropower resources in Quebec with New York City. With a transmission capacity of 1,250 megawatts, the line is expected to supply approximately 20 percent of New York City’s electricity demand.
Large urban centers often face challenges related to limited local generation capacity, transmission congestion, and growing electricity demand. When supply becomes constrained, electricity prices can rise significantly during peak periods. Expanding access to additional sources of generation helps reduce these pressures and improves system flexibility.
Transmission projects play a critical role in connecting regions with abundant electricity resources to areas where demand is concentrated. In many cases, clean energy resources such as hydropower, wind, and solar generation are located far from major population centers. Without sufficient transmission capacity, these resources cannot fully contribute to regional electricity markets.
The CHPE project increases New York City’s access to imported hydropower while diversifying available supply sources. Greater supply diversity can help improve reliability during periods of high demand and reduce dependence on a smaller number of generating resources. Although no single project can eliminate market volatility, expanding access to electricity through transmission investments can strengthen overall market resilience.
One reason the CHPE project is attracting attention is the nature of the electricity resource it delivers. Hydropower differs from fossil fuel generation because it is not directly exposed to the same fuel commodity price fluctuations that affect natural gas and coal-fired power plants.
In many electricity markets, natural gas plays a significant role in determining wholesale power prices. When natural gas prices increase due to supply constraints, geopolitical events, or seasonal demand changes, electricity prices often rise as well. Businesses can experience the effects through higher utility bills and increased uncertainty in energy budgeting.
Hydropower operates differently. While hydropower facilities have their own operational and environmental considerations, they are not dependent on purchasing fuel in the same way that thermal power plants are. As a result, hydropower can provide a more stable source of electricity generation over long periods.
Diversification is another important factor. Electricity systems generally perform more effectively when they rely on a variety of generation resources rather than a single dominant fuel source. A diverse mix can help reduce exposure to market shocks affecting any individual resource type.
The addition of hydropower through transmission infrastructure does not guarantee lower prices in every situation. Electricity markets remain influenced by weather, demand growth, fuel costs, and regulatory changes. However, increasing access to resources with relatively stable operating costs can contribute to more balanced market conditions and reduce some sources of volatility.
