New England made it through the just-completed winter with less “drama” than it did during the 2014 polar vortex thanks to the use of oil and liquefied natural gas (LNG) as backup fuels for natural gas generation, ISO New England (ISO-NE) President and CEO Gordon van Welie said March 26.
ISO-NE’s van Welie and Commissioner Asim Haque of the Public Utilities Commission of Ohio (PUCO), discussed gas and electric matters during the event, “Gas-Electric Interdependency: The Realities of Keeping the Lights On.” The session was organized by ICF International and held at the National Press Club in Washington, D.C.
“LNG and oil are the only ways we can keep reliability” in the short term, van Welie said. Any new pipeline will take three years or more to develop, the ISO-NE official said.
“The way we get through is on oil and on LNG,” until infrastructure can be built, van Welie said. Weather will be the big unknown, the ISO official added.
With coal going “out of style,” as Haque put it, and new power generation being dominated by renewables and natural gas, electric reliability is becoming more complicated, both speakers said.
Natural gas is becoming the predominant fuel source, van Welie noted. Gas generated only 15% of New England’s electric power in 2000, but that figured jumped to 44% in 2014. Oil generation went from 22% to only 1% over that same period while coal-fired generation dropped from 18% to 5%, according to an ISO-NE chart.
The future mix is apt to become even more skewed based on proposed new generation. About 99% of the 9,000 MW in proposed capacity in the region would come from natural gas (57%) and wind (42%), van Welie said.
But natural gas dependency and its “just-in-time” delivery system poses an immediate risk to reliability, van Welie said. Large chunks of New England’s natural gas fleet were unavailable for various reasons during the worst days of the 2014 polar vortex, said the ISO-NE official.
While Ohio still has more available coal generation, Haque said the 2014 polar vortex did raise some “red flags” for him regarding dependence on natural gas generation.
Both PJM Interconnection and ISO-NE have been increasingly pushing natural gas power plants to “be there” during times of high demand, Haque said.
Luckily, high forward prices for the winter of 2014-2015 attracted LNG and oil supplies into the region, van Welie said. Also, the ISO-NE winter program provided incentives to fill fuel tanks before the winter, so the region was well positioned with regard to fuel inventory. The ISO is trying to offer incentives to overcome “the risk of warm weather” that would reduce the need for backup generation, van Welie said.
ISO-NE also got lucky on both the weather and market prices for petroleum, van Welie said. “The coldest winter weather happened in the month of February, when the days were longer and the loads were therefore lower,” he said.
“Oil prices dropped — (and therefore oil generation was frequently economic) — dampening gas and electricity price volatility,” van Welie said. “That said, we still saw many days in February with spot gas prices in the $20 – $30 MMBTU range, which is very high by historical standards,” the ISO-NE official added.
ISO-NE is continuing to work with the FERC and stakeholders to assess interim winter solutions until a “pay for performance” program becomes effective in June 2018, van Welie said.
But long-term solutions on infrastructure are still needed, van Welie said. It’s still more economic for many generators serving ISO-NE to use oil and LNG as backup fuels during winter months than to commit to a 20-year contract with a natural gas pipeline developer, said the ISO official.
Merchant gas generators typically will not sign long-term contracts for firm gas transportation, since it is more economic for them to buy transportation in the secondary market (when it is available), or switch to oil when the pipelines are constrained, van Welie said.
Many on-and off-shore electric transmission proposals are vying to move renewable energy to New England load centers, van Welie. These include projects such as the Northern Pass and Northeast Energy Link proposal. At the same time, big transmission projects also require major capital investments, the ISO official cautioned.