Electricity Markets

ISO New England issues winter fuel security analysis

ISO New England on Jan. 17 released a study assessing whether possible future resource combinations would have enough fuel to ensure bulk power system reliability throughout an entire winter. The results indicate that maintaining reliability is likely to become more challenging, especially if current power system trends continue, the grid operator said.

In late 2016, ISO-NE began the Operational Fuel-Security Analysis to quantify the region’s future fuel-security risk -- the possibility that power plants won’t have or be able to get the fuel they need to meet consumer demand and maintain power system reliability.

The study grew out of the ISO’s experiences operating the system through challenging winter conditions, as well as its observations regarding trends affecting power system operation, the grid operator noted.

On multiple occasions in recent winters, the ISO has had to manage the system with uncertainty about whether power plants could arrange for the fuel -- primarily natural gas -- needed to run, the report’s executive summary noted.

“Because the ISO has no jurisdiction over other industries’ various fuel-delivery systems, it has addressed the effects of insufficient fuel supplies on the power system by employing real-time emergency operating procedures and implementing market design changes to incentivize generators to arrange for adequate fuel supplies,” ISO-NE said in the analysis. It said it has also worked on improving communication and coordination with natural gas pipeline operators.

The ISO said that it has been able to maintain power system reliability during severe winter conditions without using all its emergency procedures. “However, the evolving generation mix is increasingly susceptible to variable and uncertain factors. Natural gas pipeline constraints, the logistics of importing liquefied natural gas and fuel oil, the impact of New England’s weather on the availability and timing of fuel deliveries, and the amount and timing of electricity generated by renewable resources all contribute to a high level of uncertainty for ISO system operations.”

ISO-NE said that the significant trends driving the evolution of New England’s power system include the growing demand for natural gas in the region, natural gas infrastructure capacity that is not always adequate to deliver all the gas needed during winter for both heating and power generation and the large portion of proposed new power plants that would run on natural gas.

“Meanwhile, coal, oil, and nuclear power plants have been essential for reliability when natural gas is in short supply, but they are retiring,” ISO-NE noted in a Jan. 17 news release.

New England has limited dual-fuel generating capability (the ability to switch between natural gas and oil) and siting and permitting new dual-fuel power plants is becoming more difficult, as emissions restrictions on burning oil are tightening.

The operational analysis examined a range of potential future scenarios and measured how often energy shortfalls would require the ISO to employ emergency actions, up to and including rolling blackouts.

The operational impact was measured in hours of emergency operating procedures that would be necessary to maintain system reliability when not enough fuel was available to generate all the electricity needed to meet forecasted electricity demand during the entire winter of 2024/2025.

Gordon van Welie, CEO of ISO-NE, said that while the study examines a future winter period, New England’s power system operations during the recent cold spell highlighted the importance of fuel security to reliability.

“Due to the gas infrastructure constraints and the high price of gas, the region relied heavily on oil-fired generation to keep the lights on, causing fuel inventories to be rapidly depleted and straining the oil supply chain,” he said. “As oil inventories began to run low and storm conditions made fuel deliveries difficult, the ISO was forced to limit the operation of certain oil units to conserve fuel until gas became more widely available.”

The study developed 23 hypothetical scenarios, incorporating the same types of resources and fuels used in the current generating fleet.

ISO-NE said the study accounted for the demand-reducing effects of projected energy efficiency measures and distributed solar power, assumed no additional natural gas pipeline capacity to serve generators would be added during the timeframe of the study and assumed all New England coal plants had retired.

The 23 scenarios examined the operational impacts of winter-long outages at four major energy facilities in the region, as well as varying levels of five key variables: (1) retirements of coal- and oil-fired power plants; (2) availability of liquefied natural gas (LNG); (3) oil tank inventories at dual-fuel generators; (4) electricity imports from neighboring power systems; and (5) additions of renewable resources.

The study’s findings suggest six major conclusions, ISO-NE said:

Outages: The region is vulnerable to the season-long outage of any of several major energy facilities;

Stored fuels: Power system reliability is heavily dependent on sufficient LNG injections and electricity imports. More dual-fuel capability is also a key reliability factor, but permitting for construction and meeting tightening state emissions standards are both difficult;

Logistics: The timely availability of fuel is critical, highlighting the importance of fuel-delivery logistics, which can be difficult to predict;

Risk trends: All but four scenarios result in fuel shortages requiring rolling blackouts, indicating the trends affecting New England’s power system may intensify the region’s fuel-security risk;

Renewables: More renewable resources can help lessen the region’s fuel security risk, but are likely to drive coal and oil-fired generation retirements, requiring continued LNG imports to counteract the loss of stored fuels; and

Positive outcomes: Higher levels of LNG, imports, and renewables can minimize system stress and maintain reliability. Scenarios with higher levels of these resources show fewer hours of emergency actions, depletion of reserves and load shedding compared to the reference case. To attain these higher levels, delivery assurances for LNG and electricity imports and transmission expansion will be needed.

The grid operator will discuss the results of the operational fuel-security analysis with stakeholders, regulators, and policymakers through 2018.

It said that a key question will be the level of fuel-security risk the ISO and the region would be willing to tolerate. The ISO will also work with stakeholders to determine whether further operational or market design measures will be needed to address the fuel-security risks already confronting the power system and that may accelerate in the coming years.