ARC recently attended the August 2021 New England Public Power Association (NEPPA) conference, where Gordon Van Welie, President & CEO of grid operator ISO New England (ISO-NE) described the challenges to maintain reliable, low-cost power, while meeting the urgent goals to decarbonize electric power. Gordon mentioned how obsolete regulations and policies are preventing the electric grid from efficiently making the right investments in the needed generation, transmission, and distribution assets. According to Gordon, unless new electric markets are developed, rolling blackouts may come to New England grid customers. It should be noted that this is a class of risk not generally considered in North America by supply chain professionals. But, if it can occur in New England, it can probably occur across the entire United States.
According to Gordon, the MOPR (Minimum Operating Price Rule) that protects legacy fossil-fueled power plants from competition needs to be abandoned and replaced with the new ANOPR (Advance Notice of Proposed Rulemaking). The FERC (Federal Energy Regulatory Commission) needs to enable grid operators to create new capacity-based markets. New England has a wholesale energy market, ancillary service markets, and a forward capacity market, but new market structures and rules are needed. Studies done by NESCOE (New England States Committee on Electricity) provided comments on new market designs to FERC.
Presentations at the NEPPA meeting were consistent in their message that the utilities industry needs new regulations and policies to plan and build the right assets to keep cost low and reliability high. For example, former FERC commissioner Neil Chatterjee, a Kentucky Republican who was known as Mitch McConnell’s “Coal Guy” has changed priorities now that he has retired. Neil’s August 30th twitter post indicates he is supporting putting a price on carbon and joining the Climate Leadership Council (CLC) and Americans for Carbon Dividends. Economists and several of the large integrated oil companies like Shell, BP, and Total support putting a price on carbon as the most effective way of fairly reducing CO2 emissions across the whole energy industry including electric power, transportation, and building HVAC. Chatterjee is attempting to bring Republicans to the table to address our climate crisis as putting a price on carbon is politically difficult and it remains to be seen how this will unfold.
Key Problems for New England’s Electric Grid
New England is transitioning to a power system with heavy penetration of renewable energy resources to meet state environmental objectives. This means New England is transitioning away from generating resources with on-site fuel storage.
- New England is already natural gas constrained in winter months. Since 2013, roughly 7,000 MW of generation have retired or announced plans for retirement in the coming years.
- FERC rejected the ISO-NE Energy Security Improvements (ESI) proposal. New options are needed.
- Flexible resources will be needed to balance the variability of renewable energy.
- The market design needs to ensure we can attract and retain the resources needed throughout the clean energy transition.
- New England, as a region, needs to evaluate the amount of risk it can live with for extreme weather events, whether to mitigate those risks, by how much, and by whom.
It is projected that New England will see a winter peak as homes transition to electric heating. In late December 2017, and early January 2018, New England temperatures fell well below the winter average temperatures and stayed at that level for a two-week period. New weather patterns with less on-site energy storage increases the risk of power outages. New England has two pumped-storage hydro facilities that have operated since the 1970s. These resources can supply up to 1,800 MW of power within 10 minutes for up to 7 hours, but New England could use on-demand power for a duration of one or two weeks. To handle cold weather events, ISO-NE is developing plans for controlled outages and will work with the distribution companies and state regulators, to ensure the ability of distribution companies to implement controlled outages.
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