Dive Brief:

• A new report from the ISO New England concludes the region's dependence on natural gas could create serious problems in the event of a fuel shortage; as more gas-fired power plants come online the situation is likely to become more apparent.
• The study considered almost two dozen scenarios that included winter-long outages at four major energy facilities in the region and several other variables. The report concludes all but four scenarios result in fuel shortages requiring rolling blackouts.
• The results show that "trends affecting New England’s power system may intensify the region’s fuel-security risk," the ISO concluded. 

Dive Insight:

A recent coal snap that left the East Coast struggling with bitter temperatures illustrates much of the issue detailed in New England's new report.

In the northern United States, generators were forced to turn to coal and fuel oil to maintain supply, though regional grid operators were able to maintain the grid. New England shifted the bulk of its generation to fuel oil, producing a generation mix that was about 24% gas, 24% nuclear and 33% fuel oil.

Among the ISO's new report, it concluded that power system reliability is "heavily dependent on LNG and electricity imports," and "more dual-fuel capability is also a key reliability factor, but permitting for construction and emissions is difficult."

All but four of 23 scenarios examined in the report resulted in fuel shortages requiring rolling blackouts, which the grid operator said means the trends affecting New England’s power system "may intensify the region’s fuel-security risk."

The ISO intends to discuss the study with stakeholders, regulators, and policymakers throughout this year. A key question to be addressed: What level of fuel-security risk will the ISO and the region"be willing to tolerate?"

ISO New England CEO Gordon van Welie said the operator conducted the study "as a logical extension of our responsibility to ensure power system reliability in New England. ... With this information, we can begin a
discussion with regional stakeholders about how to ensure continued power system reliability, especially as the region moves toward economy-wide decarbonization.”  

More renewables can help lessen the fuel security risk, the report found, "but are likely to drive coal and oil-fired generation retirements, requiring higher LNG imports to counteract the loss of stored fuels."

Impending retirements could exacerbate the reliance on natural gas as well. According to the report, recent and impending retirements of coal-fired, oil-fired and nuclear power plants mean that by June 2021, about 4,600 MW of generators that use fuels other than natural gas will be pulled offline.

That represents more than 10% of the region’s total installed power plant capacity, according to the ISO.

"The retirements of these aging generators may accelerate as more renewable resources are added to the regional power system," the report noted. "Renewable resources often have the benefit of state and federal financial incentives, as well as long-term contracts sponsored by states seeking to expand their clean energy portfolios. As such, these renewable resources have low costs and can bring down prices in both the energy and capacity markets."

However the report concluded the lower prices "may drive out coal- and oil-fired generators and nuclear plants dependent on these revenues."