New England’s power grid to change more with policy than with big project
When it comes to New England’s electricity grid, people’s attention might be grabbed by the big hardware proposals – transmission lines, power plants, gas pipelines and the like – but in the near term, the things that will change it are a lot less physical.
That was one takeaway Tuesday from an annual overview of the power system given by Gordon Van Welie, president and CEO of ISO-New England, the independent entity that oversees the six-state power grid.
The wide-ranging discussion covered many topics that have been at the forefront of debate for years, such as difficulty getting natural gas to power plants during cold snaps, when most of the supply is used for heating and prices spike, and the effect of the coming closures of nuclear and coal-fired power plants.
But just as important, if less often in the headlines, are new or proposed changes to some of ISO-NE’s complex rules governing the sale and transmission of electricity.
Take, for example, integrating demand response into the competitive energy and reserve markets. That mouthful will go into effect June 1, the first time it has happened in the country, Van Welie said.
The idea is to let reducing need compete directly with producing more when electricity prices are set at public auctions, which aims to more accurately reflect a party’s impact on the grid.
Demand response has been used on the New England grid for more than a decade. It is a system in which large commercial and industrial customers get a break on rates in return for agreeing to reduce their electricity demand during peak periods, such as during a polar-vortex cold snap or on very hot summer days. It can cut power need by a greater amount than the output of Seabrook Station, but figuring out how to fairly pay for it has been difficult; the hope is that the open auction will provide a real-world price to demand response agreements.
Just as wonky, but still in the works, is something called Competitive Auctions With Sponsored Policy Resources, or CASPR. This policy is designed so that electricity-producing facilities, which get government support because they pollute less, can participate in what is known as the forward capacity market, an auction system that guarantees New England will have enough electricity three years down the road.
These power plants haven’t previously participated in the forward capacity auction because their subsidized prices would skew a market-based system. CASPR seeks to circumvent that problem by creating a follow-up auction for the subsidized plants after prices have been set for the open-market plants, in hopes of better integrating low-pollution and renewable power systems into market pricing of electricity production.