ISO-NE draft report: Market revenues not sufficient for new resource development
The grid operator’s report examines six resource-expansion scenarios for their potential effects on resource adequacy, operating and capital costs for new resources, and options for meeting environmental policy goals.
While renewables are expected to grow, and coal, oil and nuclear energy production all decline, natural gas remains the central resource for the region.
“Although increased renewable production reduces the use of natural gas, natural-gas-fired units remain on the margin most of the time for both study years and are a major source of fuel for electric power generation production,” the report found.
How new gas-fired resources will remain economically viable remains an open question, the grid operator reports.
New resources “will require sources of revenue in addition to the wholesale energy market to remain economically viable,” ISO-NE expects. Gas units show the greatest revenue shortfall as a result of higher costs, but renewable resources also show significant revenue shortfalls.
The grid operator’s draft report includes scenarios where the generation fleet meets existing renewable portfolio standards and natural gas combined-cycle units replace retiring, less-efficient units. In a high renewables scenario, no new gas plants are added as the generation fleet meets existing RPS standards, and the system has additional clean energy resources.