The planned retirement of the Entergy (NYSE:ETR) Pilgrim nuclear plant in Massachusetts, combined with other generation retirements in recent times, will likely leave New England increasingly dependent on natural gas, according to Genscape.
The firm also said in an Oct. 29 blog post that planned gas pipeline infrastructure, electric transmission lines and use of liquefied natural gas (LNG) as a backup fuel will help the situation somewhat.
Entergy recently announced that it will retire the Pilgrim nuclear plant by 2019, possibly sooner if the company elects to forego a planned refueling outage.
“With several other nuclear and coal retirements in recent years, there are many days where New England relies on natural gas power plants to supply over 50%,” said Genscape Power Market Analyst Lindsey Cohen.
In the much-discussed Polar Vortex cold snap of January 2014, Algonquin natural gas cash prices climbed to a record $78/mmBtu, pushing the day-ahead market electricity price at clear at more than $437/MWh, Cohen said.
Use of LNG as a backup source should be considered only temporary solution given the nature of LNG delivery by ship as well as the competitive global marketplace, Cohen said. Oil has also become “occasionally” economic during the past few years. The analyst added.
Several planned pipeline expansion projects will marginally increase the total natural gas capacity into New England. The most substantial of these is Kinder Morgan’s Northeast Energy Direct, which will improve capacity by 1.2 Bcf/d on the Tennessee Gas infrastructure. This, however, is not expected to be implemented until at least 2018, Cohen said.
Eversource’s Northern Pass, a transmission line through New Hampshire, will bring inexpensive hydropower from Canada into the region. However, this 1,000 MW project continues to face opposition from many in New Hampshire, Cohen said.
According to ISO-New England (ISO NE), over 3,000 MW of generation is planned for retirement by 2017. This includes the retirement of the Dynegy’s (NYSE:DYN) 1,600 MW Brayton coal plant in southeast Massachusetts in 2017. As the last major coal plant in New England, the loss of this unit may significantly impact prices as base load is removed from the supply stack and natural gas units are brought on to serve New England’s load, Cohen said.
Genscape was founded in 1999 by two power traders. Genscape is a firm that provides data and analysis across global commodity and energy markets.