Q&A talks to Gordon van Welie, president and CEO of ISO New England Inc., which operates the six-state New England power system and oversees the region's wholesale electricity marketplace.
Q: After energy prices spiked during the frigid 2013-2014 winter, Connecticut and other New England states have enjoyed lower wholesale electricity prices. Should we feel at ease?
A: New England has been lucky. We've had relatively mild winters recently, so there's been enough natural gas for both heating and electricity generation. That's important for three reasons: natural gas prices are at record lows, the cost of fuel is the biggest factor in wholesale electricity prices, and half the electricity generated in New England comes from power plants using natural gas.
Wholesale power prices last year were the lowest since 2003, primarily because we didn't see the severe natural gas pipeline constraints of colder winters. Price volatility aside, power system reliability is at risk if almost half our generating fleet can't get fuel.
New England's fuel infrastructure has barely expanded, while demand for natural gas for power plants and for heating continues to rise. We're still vulnerable to price spikes, and to growing challenges to reliability.
Q: About 4,200 megawatts of coal, oil and nuclear power plants will be retired by 2019. What will replace them, and what will be the impact of this changing resource mix?
A: About half of the proposed new power plants would use natural gas, and about 40 percent would be wind farms. More natural gas generation will increase the need for fuel infrastructure. Solutions could include dual-fuel capability — generators could add the ability to use oil stored on-site if they can't get gas — or more pipeline capacity or liquefied natural gas storage.
The onshore wind farms are proposed for far northern New England, which will require expansion of the region's transmission system.
The transition from coal and oil to natural gas and renewables has reduced carbon emissions significantly in New England. However, the retirements of nuclear power plants, which have no emissions, could reverse the trend.
The other concern is reliability. When natural gas generators can't get fuel in winter, we've relied heavily on coal, oil and nuclear generators to keep the lights on. But what will happen when they retire and their replacements can't get fuel? There aren't enough wind farms to fill the gap and solar is of limited help in winter, when demand peaks after sunset. Battery storage still isn't cost-effective and grid-scale. Energy efficiency is helping, but large-scale electricity production will still be needed to meet the demand.
Q: A potential rise in emissions is a concern. If renewables require costly transmission lines that take a long time to build, and grid-scale energy storage is years away, what's the best mix of energy sources in the near term?
A: New England's competitive wholesale markets and the states' clean-energy initiatives are determining the resource mix. Competitive markets have attracted investment in natural-gas-fired generators, while the states' public policy initiatives are supporting energy efficiency, renewable resources, and customer-sited solar arrays.
Until we have a fully renewable power system with battery backup, the grid will need fast, flexible generators — like natural gas generators — to balance the variations in wind and sun energy.
Q: ISO-NE can't order natural gas pipeline expansions or implement a carbon tax, but you're considering increasing performance incentives for generators and offering special reliability contracts to certain non-gas plants to postpone retirement. What else can be done to ensure long-term grid reliability?
A: Incentives have already been established for generators to perform whenever needed; considering the region's growing fuel security challenge, those incentives may need to be enhanced.
Special reliability contracts will only be considered if we've run out of alternatives. We're currently conducting a fuel-security study, and developing a proposal to incorporate energy resources supported by state policies into the wholesale market while maintaining competitive prices for other resources.