Energy Management KPIs Electricity demand- Electricity demand is measured by the rate at which electrical energy is delivered. It is measured by the generation and distribution facilities. Emissions- Emissions refer to the anthropogenic release of gasses (often greenhouse gasses such…Read full post
Indian Point Closure: No Effect* on Grid Reliability
Last week, a report from NY’s grid operator announced there will not be any reliability concerns when Indian Point is deactivated in 2020 and 2021, assuming the inclusion of three major generation facilities currently under construction (1.8 GW, or 1800 MW – all natural gas). Without the three gas generation facilities, there would be “both resource adequacy and transmission security reliability violations.” However, the analysis shows additions of just 200 MW by 2023 and 600 MW by 2027 would resolve the deficiency. So, do we need the gas generation currently under construction or can the resource deficiency be met with renewables, transmission, and energy efficiency? Reliability is one concern, but what about the impact on energy and capacity pricing? Read on for more.
- NYISO Report Overview
- Can the potential deficiency be met without natural gas?
- What’s the projected impact on energy and capacity pricing?
NYISO Report Overview
The NYISO assessment “finds that reliability criteria would be met without Indian Point Energy Center throughout the Study Period under the assumed and forecasted base case system conditions”. The base case includes generation and transmission projects that “have met significant milestones such that there is a reasonable expectation in completion of the project,” which in this case includes three major generation facilities (all natural gas fired): Bayonne Energy Center II Uprate (Zone J, 120 MW), CPV Valley Energy Center (Zone G, 678 MW), and Cricket Valley Energy Center (Zone G, 1,020 MW). Under these assumptions, both reliability and transmission security are a non-issue.
However, if you remove the three major generation facilities, there are both resource adequacy and transmission security reliability criteria violations. The assessment quantifies the shortfall of power in the table below, showing a need of just 200 MW by 2023 and 600 MW by 2027.
Can the potential deficiency be met without natural gas?
In short, yes. The “compensatory megawatts” specified by the NYISO in the assessment are generic perfect-capacity resources, i.e. technology/fuel agnostic. The assessment is saying we need 200 MW by 2023, whether delivered by new natural gas generation (as assumed in base case), or wind, solar, battery, energy efficiency, etc.
|Generation Technology||Capacity Factor||Required MW Installed to Meet “Perfect-Capacity” 200 MW Need|
|Natural Gas Combined Cycle||55.9%||358|
The source of the 200 MW is not what’s important in the assessment, but it is what’s important when considering the goals of NY state (50% renewables by 2030), NYC (80% GHG reduction by 2050), and the energy that these resources would be replacing from Indian Point (carbon free nuclear – i.e. any non-renewable replacement is an increase in GHG emissions).
What’s the projected impact on energy and capacity pricing?
While reliability and transmission security won’t be impacted under the base case assumptions, there will likely be impacts on energy and capacity pricing, attractiveness of additional transmission upgrades/projects, and natural gas market supply/demand. According to a white paper from ICF last March, the following are potential impacts from the closure of Indian Point:
- Capacity prices could soar to $135/kW-year or higher in 2021 in the Lower Hudson Valley, absent additional builds
- Energy prices may increase in the Lower Hudson Valley and NYC by as much as 5%.
- Transmission upgrades are now more compelling, namely the Order 1000 projects for Central/East and UPNY/SENY interfaces.
- Northeast gas markets will likely tighten with up to 200-300 mmcf/d incremental demand from CPV Valley and Cricket Valley.
With natural gas effectively replacing nuclear, it’s likely that power pricing becomes even more correlated with natural gas pricing, and the region is more exposed to natural gas price volatility as it relies more and more on gas for generation. It’ll be interesting to see how the relationship develops with additional transmission potentially coming online (1000 MW TDI Champlain Power Express) and offshore wind.
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