This week the operator of New England's wholesale electricity markets made a series of filings with its federal regulator providing information on its upcoming thirteenth forward capacity auction, through which electric generators may commit to providing electric capacity during the period from June 1, 2022 through May 31, 2023.
ISO New England Inc. is the independent system operator and wholesale market-maker for most of New England's electricity grid. It is a private, not-for-profit entity, which operates pursuant to a tariff on file with the Federal Energy Regulatory Commission. As part of its planning for system operations, ISO-NE operates a forward capacity market through which it conducts annual auctions through which qualified generators and other resources may bid to obtain commitments to provide capacity in a future year, in exchange for which resources will be compensated. The next primary auction for capacity supply obligations will be Forward Capacity Auction 13 (or FCA 13), which will be held beginning on February 4, 2019, and will cover the 2022-2023 capacity commitment period.
In advance of each primary auction, ISO-NE calculates an "Installed Capacity Requirement," which it defines as a measure of the installed resources that are
projected to be necessary to meet reliability standards in light of total forecasted load
requirements for the New England Control Area and to maintain sufficient reserve capacity to
meet reliability standards. In computing the Installed Capacity Requirement, the grid operator considers parameters and assumptions including load forecast, resource capacity ratings, and resource availability. It also considers what relief
can be obtained during a capacity deficiency through measures including emergency assistance (tie benefits) from neighboring interconnected regions (New Brunswick, New York, and Quebec), load reduction by reducing system voltage by 5%, and running the system at a minimal level of operating reserve.
In its November 6 Installed Capacity Requirement filing, the grid operator told the Commission that it proposed a installed capacity requirement for FCA 13 of 33,750 megawatts, after taking into account 969 megawatts of credits over interconnection with Canadian utility Hydro-Quebec.
In a parallel Informational Filing for qualification in FCA 13, the grid operator noted that 31,432 megawatts of existing generating capacity resources qualified for the 2022-2023 capacity commitment period, as did 80 megawatts of existing import capacity resources, and 3,413 megawatts of existing demand capacity resources, totaling 34,925 megawatts of existing capacity. Some resources submitted bids to retire, and 3,223 megawatts of resources submitted bids to withdraw in part or in whole from the auction if it clears below a defined price. Additionally, ISO-NE qualified 238 new capacity resources, totaling 8,716 megawatts.
ISO-NE will conduct its thirteenth forward capacity auction starting on February 4, 2019.
Energy powers society; society's choices shape energy policy. A blog about our energy resources and the choices they present for society.
Showing posts with label forward capacity market. Show all posts
Showing posts with label forward capacity market. Show all posts
ISO-NE projects slow growth in electricity demand
Wednesday, May 13, 2015
New England's electric grid operator predicts slow growth in annual energy usage in the region over the next decade, with slightly quicker growth in peak demand.
ISO New England, Inc. develops an annual long-term load forecast using factors including state and regional economic forecasts and 40 years of weather history. Its most recent baseline forecast projects a compound annual growth rate of 1.0% in total energy usage in New England from 2015 to 2024. For 2015, ISO-NE projects 138,745 gigawatt-hours (GWh) of load, growing to 152,280 GWh in 2024.
ISO-NE's forecast also projects future peak demand, a measure of the highest amount of electricity used in a single hour in New England. Often, peak demand drives the need for constructing and maintaining power plants and transmission lines (and energy efficiency investments). According to the latest ISO-NE forecast, New England's peak electricity demand is projected to rise by a compound annual growth rate of 1.3%, from 28,395 MW this year to 31,905 MW in 2024.
These baseline projections for future peak demand and energy usage take into account load reductions that can be expected from future installations of distributed solar photovoltaic facilities. ISO-NE has prepared a separate Distributed Generation Forecast to estimate the load-reducing effects of distributed solar facilities developed as a result of state policy goals.
ISO-NE's baseline projections do not account for significant energy-efficiency savings, neither those committed through the region’s three-year Forward Capacity Market (FCM) nor future savings that can be expected beyond the FCM timeframe.
 |
| A Maine power plant -- the ecomaine Waste-to-Energy plant in Portland, Maine. |
ISO New England, Inc. develops an annual long-term load forecast using factors including state and regional economic forecasts and 40 years of weather history. Its most recent baseline forecast projects a compound annual growth rate of 1.0% in total energy usage in New England from 2015 to 2024. For 2015, ISO-NE projects 138,745 gigawatt-hours (GWh) of load, growing to 152,280 GWh in 2024.
ISO-NE's forecast also projects future peak demand, a measure of the highest amount of electricity used in a single hour in New England. Often, peak demand drives the need for constructing and maintaining power plants and transmission lines (and energy efficiency investments). According to the latest ISO-NE forecast, New England's peak electricity demand is projected to rise by a compound annual growth rate of 1.3%, from 28,395 MW this year to 31,905 MW in 2024.
These baseline projections for future peak demand and energy usage take into account load reductions that can be expected from future installations of distributed solar photovoltaic facilities. ISO-NE has prepared a separate Distributed Generation Forecast to estimate the load-reducing effects of distributed solar facilities developed as a result of state policy goals.
ISO-NE's baseline projections do not account for significant energy-efficiency savings, neither those committed through the region’s three-year Forward Capacity Market (FCM) nor future savings that can be expected beyond the FCM timeframe.
Salem power plant wins market deferral
Wednesday, December 10, 2014
Federal regulators have granted a request by the developer of a power plant in Salem, Massachusetts, to defer its commitment to provide power to the New England market. The process reflects challenges inherent to developing power plants in the Boston area, as well as methods to mitigate the impacts of those challenges.
Footprint Power Salem Harbor Development LP is in the process of redeveloping the site of a defunct coal-powered generation plant. The former Salem Harbor Power Station could produce up to 745 megawatts of power, fueled by coal and oil. In 2010, Footprint identified the site as a potential facility for redevelopment and, on August 3, 2012, it acquired the plant from Dominion Energy Salem Harbor, LLC. Footprint now plans to build what the Federal Energy Regulatory Commission has described as two state-of-the art, efficient, low-emission, quick-start natural gas turbine generators; two steam-turbine generators; and two heat-recovery steam generators, including pollution control equipment, with aggregate generating capacity of 674 megawatts.
The New England electricity market compensates generators and other resources for two main products: energy and capacity. Energy represents the volume of power sold by a market participant (measured in megawatt-hours), while capacity represents the intended full-load sustained output of a facility (measured in megawatts). Regional grid operator ISO New England, Inc. operates a forward capacity market, under which generators can lock in the payments for capacity several years in advance of actually operating. This structure is designed to ensure that the region has sufficient generating capacity to meet future needs, as well as to help new generation projects secure financing and be built despite long permitting and construction lead times.
Footprint bid its proposed natural gas power plant into New England's seventh Forward Capacity Auction, also known as FCA7. That auction was held in February 2013, and gave Footprint a future capacity market revenue stream in exchange for the obligation to provide capacity over a one-year capacity commitment period starting on June 1, 2016. According to Footprint, it then had 39 months to obtain all necessary permits, secure financing arrangements and complete construction of the plant, a process that had never been tested for a new plant not subsidized or sponsored by a state.
While Footprint secured many of the necessary permits promptly, one permit in particular -- a federal Prevention of Significant Deterioration (PSD) permit under the Clean Air Act -- took longer than expected. Obtaining a PSD permit from the Massachusetts Department of Environmental Protection, acting under federally delegated authority, involves a five-phase process: (1) pre-application; (2) application; (3) draft permit preparation; (4) public participation; and (5) final decision to issue or deny a PSD permit. While Footprint finally obtained its PSD permit -- and survived a last-minute appeal of that permit's issuance -- Footprint says the delay and revenue uncertainty the resulting uncertainty of revenues impaired its ability to finance the project. While Footprint had exercised an option to lock in its capacity rates for five years, without the deferral one full year of stable revenue would be lost, making potential lenders and equity providers unwilling to provide financing.
Under ISO-NE's tariff, a market participant may seek a deferral of its capacity supply obligation if three criteria are met. First, the resource must first request and receive from ISO-NE a written reliability determination indicating that the absence of the resource's capacity would result in a transmission system reliability issue in both the associated Capacity Commitment Period and the next Capacity Commitment Period. If ISO-NE makes such a determination, then the resource may file with the Federal Energy Regulatory Commission for a one-year deferral of its Capacity Supply Obligation. The resource must include in its filing to the Commission (1) the reliability determination from ISO-NE; (2) a demonstration that the project's development delay is due to factors beyond the control of the resource; and (3) a demonstration that the deferral is critical to the resource's ability to achieve commercial operation.
Footprint applied to the Commission for such a deferral on October 7, 2014. On December 5, the Commission granted Footprint's request. The Commission noted that ISO-NE had issued a reliability determination finding that the Footprint facility is needed for reliability in the 2016-2017 Capacity Commitment Period and the subsequent 2017-2018 period, that Footprint had demonstrated that it has failed to achieve commercial operation on time due to factors beyond its control, and that Footprint has demonstrated that the deferral is critical to the Facility’s ability to achieve commercial operation.
Footprint's experience highlights several key dynamics affecting New England power plant development. The story is framed by the retirement of an aging coal plant and its replacement with natural gas-fired generation, a trend occurring across the U.S. It features the challenges of securing necessary environmental permits and surviving appeals by project opponents. Footprint's experience also highlights the features of the New England forward capacity market, and how it affects developers of new power plants.
 |
| Stacks of the former Salem Harbor Power Station, before its decommissioning. |
Footprint Power Salem Harbor Development LP is in the process of redeveloping the site of a defunct coal-powered generation plant. The former Salem Harbor Power Station could produce up to 745 megawatts of power, fueled by coal and oil. In 2010, Footprint identified the site as a potential facility for redevelopment and, on August 3, 2012, it acquired the plant from Dominion Energy Salem Harbor, LLC. Footprint now plans to build what the Federal Energy Regulatory Commission has described as two state-of-the art, efficient, low-emission, quick-start natural gas turbine generators; two steam-turbine generators; and two heat-recovery steam generators, including pollution control equipment, with aggregate generating capacity of 674 megawatts.
The New England electricity market compensates generators and other resources for two main products: energy and capacity. Energy represents the volume of power sold by a market participant (measured in megawatt-hours), while capacity represents the intended full-load sustained output of a facility (measured in megawatts). Regional grid operator ISO New England, Inc. operates a forward capacity market, under which generators can lock in the payments for capacity several years in advance of actually operating. This structure is designed to ensure that the region has sufficient generating capacity to meet future needs, as well as to help new generation projects secure financing and be built despite long permitting and construction lead times.
Footprint bid its proposed natural gas power plant into New England's seventh Forward Capacity Auction, also known as FCA7. That auction was held in February 2013, and gave Footprint a future capacity market revenue stream in exchange for the obligation to provide capacity over a one-year capacity commitment period starting on June 1, 2016. According to Footprint, it then had 39 months to obtain all necessary permits, secure financing arrangements and complete construction of the plant, a process that had never been tested for a new plant not subsidized or sponsored by a state.
While Footprint secured many of the necessary permits promptly, one permit in particular -- a federal Prevention of Significant Deterioration (PSD) permit under the Clean Air Act -- took longer than expected. Obtaining a PSD permit from the Massachusetts Department of Environmental Protection, acting under federally delegated authority, involves a five-phase process: (1) pre-application; (2) application; (3) draft permit preparation; (4) public participation; and (5) final decision to issue or deny a PSD permit. While Footprint finally obtained its PSD permit -- and survived a last-minute appeal of that permit's issuance -- Footprint says the delay and revenue uncertainty the resulting uncertainty of revenues impaired its ability to finance the project. While Footprint had exercised an option to lock in its capacity rates for five years, without the deferral one full year of stable revenue would be lost, making potential lenders and equity providers unwilling to provide financing.
Under ISO-NE's tariff, a market participant may seek a deferral of its capacity supply obligation if three criteria are met. First, the resource must first request and receive from ISO-NE a written reliability determination indicating that the absence of the resource's capacity would result in a transmission system reliability issue in both the associated Capacity Commitment Period and the next Capacity Commitment Period. If ISO-NE makes such a determination, then the resource may file with the Federal Energy Regulatory Commission for a one-year deferral of its Capacity Supply Obligation. The resource must include in its filing to the Commission (1) the reliability determination from ISO-NE; (2) a demonstration that the project's development delay is due to factors beyond the control of the resource; and (3) a demonstration that the deferral is critical to the resource's ability to achieve commercial operation.
Footprint applied to the Commission for such a deferral on October 7, 2014. On December 5, the Commission granted Footprint's request. The Commission noted that ISO-NE had issued a reliability determination finding that the Footprint facility is needed for reliability in the 2016-2017 Capacity Commitment Period and the subsequent 2017-2018 period, that Footprint had demonstrated that it has failed to achieve commercial operation on time due to factors beyond its control, and that Footprint has demonstrated that the deferral is critical to the Facility’s ability to achieve commercial operation.
Footprint's experience highlights several key dynamics affecting New England power plant development. The story is framed by the retirement of an aging coal plant and its replacement with natural gas-fired generation, a trend occurring across the U.S. It features the challenges of securing necessary environmental permits and surviving appeals by project opponents. Footprint's experience also highlights the features of the New England forward capacity market, and how it affects developers of new power plants.
End in sight for New England's largest coal plant
Wednesday, October 9, 2013
New England's largest coal-fired power plant will close by May 2017, according to its owner. The Brayton Point Power Station in Somerset, Massachusetts, consists of three coal-fired units and a unit capable of burning natural gas and oil, with a net generating capacity of 1,537.6 megawatts. Within 4 years, it will follow other large New England coal-fired power plants like Salem Harbor Power Station into history.
The forces leading to Brayton Point's closure have been gathering for years. The U.S. energy industry is in the midst of a revolution led by affordable and abundant natural gas supplies. Meanwhile, tighter environmental regulations on air emissions from coal-fired power plants have made these traditionally cheap generators more and more expensive to run. This past March, Brayton Point's previous owner Dominion Resources Inc. announced plans to sell the plant and two other fossil-fired plants to a subsidiary of Energy Capital Partners LLC. That deal was consummated in August.
In an effort to keep the plant economic, Energy Capital Partners reportedly worked with regional electricity grid operator ISO New England Inc. on an agreement under which Brayton Point would have been paid for its ability to be called upon to provide electric generating capacity when needed. But when Brayton Point demanded a higher price for this capacity than ISO New England was willing to offer, the generator submitted papers indicating that it would not provide capacity for the 2017-2018 forward capacity year.
Without those capacity market revenues, Brayton Point's owners have said it will close by May 2017, according to AP reports. If it does, it will follow Salem Harbor and other coal-fired power plants around the country which have either closed or been converted to natural gas. What will the future hold for Brayton Point's site in Somerset? With transmission lines already in place, will it be redeveloped with other energy infrastructure? What environmental issues will closure or repowering entail?
 |
| The Salem Harbor Power Station in Salem, Massachusetts, scheduled to close in May 2014. |
The forces leading to Brayton Point's closure have been gathering for years. The U.S. energy industry is in the midst of a revolution led by affordable and abundant natural gas supplies. Meanwhile, tighter environmental regulations on air emissions from coal-fired power plants have made these traditionally cheap generators more and more expensive to run. This past March, Brayton Point's previous owner Dominion Resources Inc. announced plans to sell the plant and two other fossil-fired plants to a subsidiary of Energy Capital Partners LLC. That deal was consummated in August.
In an effort to keep the plant economic, Energy Capital Partners reportedly worked with regional electricity grid operator ISO New England Inc. on an agreement under which Brayton Point would have been paid for its ability to be called upon to provide electric generating capacity when needed. But when Brayton Point demanded a higher price for this capacity than ISO New England was willing to offer, the generator submitted papers indicating that it would not provide capacity for the 2017-2018 forward capacity year.
Without those capacity market revenues, Brayton Point's owners have said it will close by May 2017, according to AP reports. If it does, it will follow Salem Harbor and other coal-fired power plants around the country which have either closed or been converted to natural gas. What will the future hold for Brayton Point's site in Somerset? With transmission lines already in place, will it be redeveloped with other energy infrastructure? What environmental issues will closure or repowering entail?
Subscribe to:
Posts (Atom)
