ISO-NE PUBLIC
J U L Y 2 8 , 2 0 1 5 | D E N V E R , C O
Gordon van Welie P R E S I D E N T A N D C E O
2015 IEEE Power & Energy Society General Meeting
Challenges Facing the New England Power System
ISO-NE PUBLIC
New England Has Seen Dramatic Changes in the Energy Mix: From Oil and Coal to Natural Gas
31%
22% 18%
15% 13%
1.7%
34%
1% 5%
44%
15%
1%
Nuclear Oil Coal Natural Gas Hydroand Other
Renewables
PumpedStorage
2000 2014
Percent of Total Electric Energy Production by Fuel Type (2000 vs. 2014)
Source: ISO New England Net Energy and Peak Load by Source Other renewables include landfill gas, biomass, other biomass gas, wind, solar, municipal solid waste, and miscellaneous fuels
2
ISO-NE PUBLIC
The Region Has Lost—and Is at Risk of Losing—Substantial Non-Gas Resources
3
• Salem Harbor Station (749 MW) – 4 units (coal & oil)
• Vermont Yankee Station (604 MW) – 1 unit (nuclear)
• Norwalk Harbor Station (342 MW) – 3 units (oil)
• Brayton Point Station (1,535 MW) – 4 units (coal & oil)
• Mount Tom Station (143 MW) – 1 unit (coal)
• Additional retirements are looming
Major Retirements Underway:
ISO-NE PUBLIC
Source: Final ISO New England EE Forecast for 2019-2024 (April 2015)
Energy Efficiency Is Slowing Peak Demand Growth and Flattening Energy Use
28,000
29,000
30,000
31,000
32,000
33,000
34,000
35,000
Summer Peak (MW)
125,000
130,000
135,000
140,000
145,000
150,000
155,000
Annual Energy (GWh)
The gross forecast of peak demand and energy use
The forecast minus the impact of EE participating in the Forward Capacity Market to date
The forecast minus anticipated EE growth
4
ISO-NE PUBLIC
State Policy Requirements Are Driving Proposals for Renewable Energy
10% 11%
12.5%
15%
20%
59%*
0%
5%
10%
15%
20%
25%
ME NH RI MA CT VT
State Renewable Portfolio Standard (RPS)* for Class I or New Renewable Energy by 2020
* State Renewable Portfolio Standards (RPS) promote the development of renewable energy resources by requiring electricity providers (electric distribution companies and competitive suppliers) to serve a minimum percentage of their retail load using renewable energy. Vermont’s new Renewable Energy Standard has a ‘total renewable energy’ requirement (reflected above), which recognizes large-scale hydro and all other classes of renewable energy.
5
ISO-NE PUBLIC
ISO New England Forecasts Strong Growth in Solar PV
40
900
2,400
0
500
1000
1500
2000
2500
3000
January2010
Thru2014
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Me
gaw
atts
(M
W)
Cumulative Growth in Solar PV through 2024 (MW)
Source: Final PV Forecast (April 2015); Note: MW values are AC nameplate
6
ISO-NE PUBLIC
MA 480 MW
ME 3,080 MW
NH 65
MW
VT 30
MW
All Proposed Generation Developers are proposing to build more than 12,000 MW of generation, including 8 GW of gas-fired generation and 4 GW of wind
Wind Proposals
Infrastructure Will Be Needed to Deliver Energy from Proposed Resources: Natural Gas and Wind Power
Source: ISO Generator Interconnection Queue (June 2015) FERC Jurisdictional Proposals Only
ME 3,307 MW
NH 91
MW
VT 152 MW
MA 472 MW
Natural gas 66%
Wind 33%
Other 1%
7
ISO-NE PUBLIC
Region Has Made Major Investments in Transmission Infrastructure to Ensure a Reliable Electric Grid
$0
$1.1
$1.9
$0.8
$0.4 $0.4 $0.5
$1.4
$0.5
$0.9 $0.8
$2.4
$0.6
$0.3
$0
$1
$1
$2
$2
$3
$3
2002 2003-07 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: ISO New England RSP Transmission Project Listing, June 2015 Estimated future investment includes projects under construction, planned and proposed
Cumulative Investment through June 2015 $7.2 billion
Estimated Future Investment through 2019 $4.8 billion
Annual Investment in Transmission to Maintain Reliability (in billions)
8
ISO-NE PUBLIC
9
Elective Transmission Proposals Are Vying to Move Renewable Energy to New England Load Centers
• Ten elective transmission projects have been proposed, representing more than 7,300 MW of potential imports, as of June 1, 2015 – Only a subset will likely be developed
• Primarily large-scale wind resources from northern New England and hydropower from eastern Canada
Source: ISO Interconnection Queue (June 2015) http://www.iso-ne.com/system-planning/transmission-planning/interconnection-request-queue
ISO-NE PUBLIC
Region Has Not Developed Gas Pipeline Infrastructure to Keep Pace with Growth of Gas-fired Generation
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
1997 1999 2001 2003 2005 2007 2009 2011 2013
Natural Gas
Oil
Biomass
Fuel Cell
Hydro
Solar
Wind
Nuclear uprate
Cumulative New Generating Capacity in New England (MW)
10
ISO-NE PUBLIC
New England Shifts to Coal and Oil in the Winter
Dai
ly E
ner
gy M
Wh
0
50,000
100,000
150,000
200,000
250,000
December 1, 2014 January 1, 2015 February 1, 2015
Daily Energy for December 2014 - February 2015 (MWh)
Oil
Coal
Natural Gas / LNG
11
Winter 2014‒2015 Fossil Fuel Mix
ISO-NE PUBLIC
Natural Gas and Wholesale Electricity Prices Are Linked
Elec
tric
En
ergy
$/M
Wh
Fu
el $/M
MB
tu
$0
$5
$10
$15
$20
$25
$30
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
Wholesale Electricity at New England Hub (Real-Time LMP) Natural Gas
Monthly Average Natural Gas and Wholesale Electricity Prices in New England
12
Hurricanes hit the Gulf
Before the Recession and
Marcellus Shale gas boom
Winter 2012/2013
Winter 2013/2014
Record low natural gas and wholesale electricity prices
Winter 2014/2015
ISO-NE PUBLIC
Natural Gas Prices are High During the Winter Relative to Other Regions
$0
$5
$10
$15
$20
$25
$30Monthly Average Natural Gas Prices ($/MMBtu)
Henry Hub Algonquin Citygate Transco Zone 6 (NY)
Winter 2012/2013
Winter 2014/2015
Winter 2013/2014
Underlying natural gas data furnished by:
Fuel
$/M
MB
tu
13
ISO-NE PUBLIC
A Comparison of the Last Two Winters
Why were prices less volatile this past winter?
• 2014/2015 Winter Reliability Program provided incentives to fill tanks before the start of the winter
• Coldest winter weather happened in February, when days were longer and demand was down
• High forward prices, due to high prices the previous winter, attracted large supplies of LNG to the region
• Oil prices were half what they were a year ago
14
Winter
2013/2014
Winter
2014/2015
%
change
Average monthly
temperature (°F) 26.5 25.5 - 3.8%
Total energy
consumption (GWh) 33,991 33,654 - 1.0%
Peak demand (MW) 21,453 20,556 - 4.2%
Date of peak 12/17/2013 1/8/2015 -
Average wholesale
energy price at Hub
($/MWh)
$137.60 $76.64 - 44.3%
Average gas price at
Algonquin ($/MMBtu) $19.33 $10.70 - 44.6%
Total value of energy
markets (in billions) $5.05 B $2.77 B - 45.1%
ISO-NE PUBLIC
15
What Actions Has the ISO Taken to Improve Gas-Electric Coordination?
• Increased information sharing and operational interfaces with natural gas pipelines
• Shifted the day-ahead energy market timeline to better align the electricity and natural gas markets
• Implemented energy market offer-flexibility enhancements
• Strengthened incentives for resources to perform during stressed system conditions (i.e., reserve shortages)
• Strengthened long-term incentives through the capacity market for resources to invest in operational improvements and secure fuel arrangements to ensure resource performance (“Pay for Performance”)