New England Grid Faces Myriad Challenges Amid Changing Power Sector Landscape

An analysis released by ISO New England on Thursday identifies several challenges that could dramatically change New England’s grid, including the retirement of generators and the integration of renewable resources.

Nearly 13,200 MW of new generation capacity has been added to the grid since November 1997, including new plants that have brought down sulfur dioxide and nitrogen oxide emissions by more than 60%, and the grid operator spent $4.6 billion on 379 projects needed to boost reliability between 2002 and 2011. But despite advances in transmission, generation, demand response, and wholesale markets, “the energy landscape is rapidly changing,” as rules and policy goals relating to emissions, renewables, and energy efficiency evolve.

“The region has already experienced some of the operational issues that underscore the significance of these challenges,” Gordon van Welie, ISO New England president and CEO, said at a media briefing on Thursday. “In fact, we believe that New England is on the leading edge of seeing some of these challenges emerge.”

“While the current tools we have in place have helped us manage these challenges and maintain reliability, we need to consider enhancing these tools so that we can continue to maintain reliability in the future and ensure efficient outcomes as changes to the grid occur.”

The operator laid out five core issues that it believes will affect the future of the regional power grid in its “Strategic Planning Initiative.” These include: resource performance and flexibility; increased reliance on natural gas-fired capacity; retirement of generators; integration of variable/renewable resources; and alignment of planning and markets.

The first two challenges—resource performance and flexibility and a reliance on natural gas—have already emerged over the past several years and would likely continue to affect power system operations over the next several years, van Welie said. “We have also seen the start of the third challenge, which is the retirement of generators, although the pace of retirement will likely increase in the next few years. The retirement of generators will also likely accelerate discussion of the fifth challenge, which is the alignment of planning and markets.” It could be several years before New England sees greater levels of wind interconnected to the grid, “but clearly there’s some work to be done to make that feasible,” he added.

Vamsi Chadalavada, executive vice president and chief operating officer at ISO New England, said the resource performance and flexibility challenge was exemplified by the extended heat wave this July. On July 22, the fourth consecutive day of the heat wave, the region nearly set a record for peak electricity demand of 27,702 MW, just shy of the August 2006 all-time record of 28,130 MW.

“In general, we saw resources both over-perform and under-perform,” he said. “Depending on the location of the resource, this deviation from the expected response level could present other issues on the system.”

In 2010, New England produced 46% of its power using natural gas—more than from nuclear, coal, and oil, combined, Chadalavada noted. “Several factors have contributed to the shift to natural gas, including both environmental policy and global economics. Over the years we’ve seen the price of natural gas increase and decrease, with its price tracking closely to the price of oil. This is no longer the case. With natural gas prices now much lower, there is a growing separation between the price of oil and natural gas, making generators that use oil less competitive.”

The increasing reliance on natural gas means the region is “quickly affected when problems on the system arise,” he said. “The risk becomes more pronounced in the winter, when a substantial amount of the fuel is needed simultaneously for home heating and electricity generation.” Just-in-time delivery of natural gas to power plants can make New England vulnerable to natural gas constraints and infrastructure problems, and the loss of any significant natural gas supply may also hamper system operators because oil-fired plants cannot start up quickly enough to replace the sudden and unexpected loss of generation, he explained.

Making matters worse, New England’s power profile has dramatically changed as oil generation plummeted from 15% a decade ago to just 0.5% last year and natural gas generation has surged. In the past five years alone, 730 MW of generation has retired in the region, and “we expect this trend to increase over time,” Chadalavada said. Retirement of Dominion’s 745-MW Salem Harbor station in 2014 could hamper reliability—as would closure of Entergy’s Vermont Yankee nuclear plant in March 2012.

“Coal plants are also finding it harder to compete in the region’s markets and are running more infrequently,” he said. “Proposed environmental regulations may also accelerate the retirement of oil- and coal-fired generation, because significant capital investments will likely be needed to comply with emissions standards.” The operator estimates that between 3,300 and 5,300 MW of oil- and coal-fired capacity could be affected by the rules.

Meanwhile, policy has shifted to boosting renewables. Five of the six New England states currently have renewable portfolio standards (RPS) aimed at increasing the amount of generation produced by renewable resources, such as wind and solar, Chadalavada added. While Vermont does not have a traditional RPS model, it does have a program structured to achieve similar outcomes. These goals could account for 30% of New England’s total supply in less than 10 years—most of which is expected to be wind.

But “the transportation of large amounts of wind energy will not be cheap,” he said. “Billions of dollars in infrastructure investment will be needed to move wind from where it will be produced to where it will be consumed. It’s a hot topic and one that is currently being debated at the state and federal levels—who should pay for transmission upgrades to meet public policy goals?”

It was imperative the ISO New England made preparations before interconnecting the large amount of wind, including developing a wind forecasting system, as well as changes to the marketplace to help stimulate the addition of fast-ramping resources that can balance out the variability of wind on very short notice. “As with the other challenges, it is likely that changes to current market rules will be made to help increase the reliability of the system if a large amount of wind is interconnected,” he said.

Sources: POWERnews, ISO New England