ISO New England works its way toward ‘hybrid’ generating fleet

ISO New England is working through a series of issues, including increased dependency on natural gas, as it tries to get the regional power grid in position for the future.

Gordon van Welie, president and CEO of ISO New England, on Jan. 26 presented a State of the Grid media briefing. He said: “The New England power system continues to be in a precarious position during extended periods of extreme cold. The region will continue to be in this position until the New England’s natural gas infrastructure is expanded to meet the demand for gas.”

The key points he highlighted are:

  • First, New England’s competitive wholesale electricity markets have been the foundation enabling the transformation of the region’s resource mix. Competition has resulted in significant investment in resources that are cleaner and more efficient.
  • Second, New England’s generation fleet is undergoing rapid change. The use of natural gas to generate electricity continues to grow, retirements of coal, oil and nuclear power plants are continuing, and levels of wind and solar resources and energy-efficiency measures are also growing. The transformation is bringing both benefits and challenges to reliable operation of the power system.
  • Third, New England needs additional energy infrastructure. That includes natural gas infrastructure to meet growing demand for natural gas for both heating and power generation. New electric transmission infrastructure will also be needed to fully realize the New England states’ clean energy goals to bring wind from northern New England or Canadian hydro down to the population centers in southern New England.
  • Fourth, the price of wholesale power in New England is directly correlated to the price of natural gas. When generators can’t get natural gas, prices spike. But for most of 2015, gas pipelines were able to deliver plenty of low-priced natural gas to New England generators, and wholesale power prices dropped to levels that were competitive with other regions of the country.
  • Finally, ISO New England and its stakeholders have worked together to address the challenges of this transformation. “We’ve made major changes to both operations and markets to address the challenges to power system reliability,” van Welie said. “We’ll continue to work with market participants, policy makers and other regional stakeholders to maintain a reliable power system and competitive wholesale markets as the transformation continues.”

He said the shift to natural-gas-fired generation has been underway for the last two decades. New England’s competitive wholesale electricity markets have attracted significant investment in new power plants. Most of this new investment has been in highly efficient, natural-gas-fired plants that are relatively easy to site and less expensive to build and run than other types of power plants. Booming production of natural gas from the Marcellus Shale, on New England’s doorstep, has made low-priced natural gas available to the region, most of the time. When there’s enough pipeline capacity to serve the region’s power generators, New England’s wholesale electricity prices can compete with the prices in regions where electricity is typically less costly.

In the winter, though, the pipelines serving New England are operating at full capacity just to meet heating demand. When that happens, the region has experienced challenges to power system reliability as well as extreme price spikes. During most of the year, the low price of natural gas is setting the wholesale price of electric energy, so power plants using more expensive fuels are getting squeezed financially. As a result, more and more non-natural-gas-fired generators are retiring.

New England at the forefront in developing clean energy

The New England states are leading the nation in development of energy-efficiency measures and support of clean energy resources. Primarily, these have been large-scale wind in remote areas of the region, and also behind-the-meter solar. Some state clean-energy goals also seek more large-scale hydro from Canada. Whether it’s wind in northern New England or hydro from Canada, more high-voltage transmission lines will be needed to bring that energy down to New England’s population centers, van Welie said.

The transition to greater levels of renewables will require fast and flexible resources that can ramp their output up and down on command to balance the variable output of these weather-dependent resources. Paradoxically, the current technology that can do this best is in natural-gas generators.

New England has conventional grid-scale energy storage in the form of two large pumped hydro storage facilities, and the states are launching initiatives in support of emerging storage technologies. The developers of the newer storage resources are just beginning to explore how they can participate in the wholesale markets.

Distributed generation located at consumers’ sites, such as solar panels, is growing rapidly in New England. This is especially true in states like Massachusetts that have policies encouraging the development of solar. Distributed generation is on the distribution system operated by the utilities, and not on the high-voltage system operated by the ISO. While the ISO can’t “see” these resources or control their output, they are already having an impact on consumer demand, he said.

The generation fleet in ISO-NE is shifting to a “hybrid” fleet from a system based almost entirely on large-scale oil, coal, and nuclear generators located near large population centers. This hybrid grid will continue to include large generators, but they will be mostly natural gas power plants located near large population centers and wind facilities in remote locations. Increasingly, the resource mix will include distributed generation, such as solar panels located at customers’ sites, and resources that reduce demand, such as energy efficiency measures and companies that can lower their power usage when needed. The larger generators will keep electricity flowing on the regional power system while the smaller, distributed resources will help reduce the amount of energy that needs to be produced.

van Welie noted: “It wouldn’t be surprising if, within the next 10 or 15 years, as much as a fifth of New England’s resource mix consists of distributed resources. This ‘hybrid’ blend of resources will change how we operate the power grid, and will require significant investment in energy infrastructure to support it.”

The coal and oil units left in place don’t generally run much anymore

Last year, natural-gas-fired power plants produced just under half, or 49%, of the electricity generated in New England. That’s up from 15% in 2000, and is more than any other fuel source in the region. Meanwhile, the combined use of coal and oil has fallen dramatically over the same period, from 40% to 6%. “Coal- and oil-fired resources rarely operate any more,” van Welie pointed out. “They’re typically called on to run only during the summer when electricity demand is highest, and in the winter when natural gas pipelines are constrained or spiking natural gas prices make them more economical. Because they rarely run, they rarely get paid in the energy market, and that’s a major driver of generator retirements in New England.”

He said the retirement of the Vermont Yankee nuclear station at the end of 2014 also had an impact on the generation mix. Nuclear power’s share of total generation dropped from 34% in 2014 to 30% last year.

When natural gas delivery to natural gas generators is limited by pipeline capacity constraints, the ISO must dispatch other generating resources to maintain grid reliability. These resources are often coal- and oil-fired power plants with access to fuel stored on-site. Coal and oil made vital contributions to the fuel mix during high natural gas demand days last winter, particularly during last February’s extended cold. 

As you might expect, emissions go up in winter when the ISO must use more oil and coal plants to maintain reliability, van Welie said. “Coal and oil power plants are obviously still important to keeping the lights on, but many are retiring and more are at risk of retirement,” he added.

By 2019, the region will have lost more than 10% of its current capacity with the retirement of 4,200 MW of power plants that don’t use natural gas. That includes two baseload nuclear stations, Vermont Yankee and Pilgrim in Massachusetts. Beyond the 4,200 MW of known retirements, as much as 6,000 MW of aging coal- and oil-fired plants are at risk of retirement. That’s primarily due to financial pressure because for most of the year, they don’t run.

The 4,200-MW retirement list includes:

  • Salem Harbor, 749 MW, coal/oil;
  • Vermont Yankee, 604 MW, nuclear;
  • Norwalk Harbor, 342 MW, oil;
  • Brayton Point, 1,535 MW, coal/oil;
  • Mount Tom, 143 MW, coal; and
  • Pilgrim, 677 MW, nuclear.

The plants beyond that considered by ISO-NE to be at risk of retirement are Yarmouth, Newington, Schiller, Merrimack, Mystic, Canal, West Springfield, Montville, Middletown, New Haven and Bridgeport Harbor.

The retiring coal, oil, and nuclear units are going to be replaced by more natural gas and wind. To effectively use these resources, constraints on the natural gas supply into New England must be addressed and transmission lines must be built to bring the wind energy down to population centers in southern New England, van Welie said. The retirement of power plants that don’t use natural gas also raises the question of how the ISO will operate the grid reliably when natural-gas power plants can’t get fuel.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.