ISO-NE exec: New England a bit like ‘the canary in the coal mine’ in dealing with changing generation mix

Although building infrastructure in New England is a challenge, the energy market in the region presents opportunities for companies to add transmission lines as the power grid sees generation retirements and new wind power facilities, several speakers said Dec. 2 at the TransForum East conference held in Washington, D.C., and presented by PennWell’s TransmissionHub.

New England is a bit like “the canary in the coal mine” in dealing with the changing generation mix, in that what is happening in the region now likely will be taking place in other parts of the country a few years down the road, Kevin Flynn, senior regulatory counsel at the ISO New England (ISO-NE), said during his presentation on natural gas and power matters.

Natural gas-fired generation went from 15% of the generation mix in 2000 to 44% in 2014, while oil-fired units went from 22% to 1% over the same time frame, and coal-fired units went from 18% to 5%, Flynn said. Because of pipeline constraints and other issues hindering the ability of gas-fired generators to ensure gas deliveries, ISO-NE believes that more pipeline capacity is needed in the region, he said.

Wind power resources in the region amount to about 800 MW currently, with more than 4,000 MW proposed in the ISO-NE generation interconnection queue, he added. Of the proposed generation facilities in the region, gas-fired units account for 61% of the proposed capacity, with wind accounting for 37%, Flynn said.

The wind resources favoring generation development tend to be in northern New England, which is far from the major load centers and result in the need for transmission additions, Flynn said. As of Oct. 1, seven transmission projects had been proposed in the ISO-NE interconnection queue, totaling more than 4,000 MW of capacity, primarily from large-scale hydropower resources in eastern Canada and wind power facilities in northern New England, he added.

Combining the storage capabilities of hydropower plants in Canada with wind power facilities being added in the Northeast could help address the intermittency of the wind resources, Seth Parker, vice president and principal at Levitan & Associates, said during a panel that focused on major transmission projects in the East. Being able to smooth out the deliveries from renewable facilities in the region has a lot of potential in the long term as more renewable resources are developed several years from now, Parker said.

Any transmission to move renewable resources to load centers to meet state renewable policy goals would not be reliability projects, which have a different cost allocation plan associated with them, Flynn noted. For reliability transmission projects, costs are allocated based on load within the states, meaning Massachusetts customers pay 46.2% of the costs and Connecticut customers pay 25.3% of the costs, with the remaining four states – New Hampshire, Maine, Rhode Island and Vermont – each paying less than 10% of the costs.

For public policy transmission facilities to meet state renewable goals, the default cost allocation plan calls for 70% of the costs to be shared as under a reliability project, and 30% being assigned to the state where the renewable policy drives the need for any such facility, added Jason Marshall, general counsel for the New England States Committee on Electricity (NESCOE), during the panel session.

That type of a facility has not been built yet in New England, so the cost allocation proposal has not been tested, Marshall said.

Cost allocation can be contentious, Parker said, referring to protests over facilities in other ISO regions, and while New England has a plan in place, “we’ll be seeing a lot of these issues” in the coming years.

Flynn acknowledged that it is hard to site multi-state transmission projects in New England, but he counted it as a success that ISO-NE and transmission owners have added several such facilities, including the Interstate Reliability Project, which is due to begin service soon.

One of the companies involved in that project, Eversource Energy (NYSE:ES), also is developing the Northern Pass Project, a 192-mile facility to bring renewable energy from Quebec into New Hampshire. The $1.6bn Northern Pass project has faced opposition and changed the design to accommodate different concerns, noted Marvin Bellis senior counsel at Eversource, during the panel session.

Bellis has been involved with the project since 2008, and he shared some lessons learned for transmission developers, even as the Northern Pass facility still has several steps to complete, including siting approval in New Hampshire.

“Don’t underestimate your opponents,” Bellis advised, noting that with social media and instant communication capabilities, the opposition of a few individuals can be amplified to look bigger than what they are.

“Having site control at the outset is critical,” he added, recounting that easement negotiations can drag out and hold up a project.

And even though transmission facilities provide good value to consumers and developers can point to numerous benefits and job prospects, opponents will dismiss them, he said.

“They don’t care about the jobs or costs or price benefits,” so developers need to have a consistent and effective communication strategy to deal with those sentiments, Bellis said.

Even lining up public support with elected leaders may not help much because by the time a project is in the middle of a development phase, elections can change the political landscape and erode public support, added Marshall.

With numerous transmission projects on the horizon in New England, “it should be a busy 2016,” he said.

Story updated on Dec. 8 at 9:30 am EST to reflect current length of Northern Pass Project in 12th paragraph.