Gas-Heavy ISO-New England Braces for Steep Influx of Wind, Solar, Storage
While it is currently highly dependent on natural gas generation today, about 95% of ISO-New England’s (ISO-NE’s) interconnection request queue—a proposed total capacity of 20.9 GW—comprises wind, solar, and battery projects.
That clearly indicates that developers in New England’s wholesale market “are looking to take advantage of state incentives, declining technology costs, and revenues from wholesale markets,” ISO-NE President and CEO Gordon van Welie said at a press briefing on March 6.
At the briefing, which focused on the grid operator’s recently released 2020 Regional Electricity Outlook, van Welie noted that though “most of these projects are some years away,” the bulk of the proposals—about 14.3 GW—were for wind projects, and about 13.5 GW of these alone were for offshore proposals in Massachusetts, Rhode Island, Connecticut, and Maine.
Solar and battery storage ranked second and third in the queue, surpassing natural gas, driven by technological advances, falling costs, support from the states, and changes to the markets that he said have enabled storage participation. Since 2015, he noted, about 20 MW of grid-scale battery storage projects have come online, but the queue has more than 2.3 GW of new stand-alone storage projects.
In contrast, since 2013, about 7 GW of mostly coal, oil, and nuclear generation in New England have retired or announced retirement. Today another 5 GW of oil and coal only durn during peak demand or periods of gas pipeline constraints—and are “likely to retire soon,” the report says. Only two nuclear plants—Millstone and Seabrook, both propped up with state efforts—remain open, supplying about a quarter of the region’s power.
Subsidies Create ‘Inherent Market Design Tension’
Van Welie lauded the competitive market’s impact on the New England’s reliability since the region restructured its power sector in the late 1990s, noting that it thrives on the “principle that a reliable supply of competitively priced electricity is fundamental to a thriving society and economy.” The overarching policy goals of introducing wholesale competitive markets “were to lower costs, encourage innovation, and shield consumers from unwise investments,” and by all measures, the 1997-established ISO-NE had achieved these measures, he said. “The result has been lower wholesale electricity prices, reduced carbon emissions, and a grid and marketplace ready to transition to an even lower-carbon system.”
To accommodate the evolving market, ISO-NE has worked “steadily and intensively” to integrate “high levels of energy efficiency, demand-response resources, energy storage, wind, and solar into our system operations, wholesale electricity market design, and power system planning.” Among efforts it has launched are the introduction of negative market pricing, full integration of demand-response in the electric energy and reserve market—becoming “the first grid operator in the nation to do so,” van Welie noted—and introducing enhanced rules for energy storage, both for charging and discharging.
But recognizing state initiatives, ISO-NE has also sought to establish a route for subsidized renewable resources to enter the capacity market. “These resources are compensated largely through contracts and are less dependent on wholesale market revenues,” he said. “This has created an inherent market design tension because other needed resources rely only on market revenue.”
While ISO-NE “respects the environmental policy objectives of the New England states,” the entity is convinced that a “strong, competitive wholesale market provides the best structure for achieving those objectives,” he said. “It is cost-effective, ensures system reliability, and does not expose consumers to the risks of long-term contracts.”