The Council of State Governments Eastern Regional Conference Gordon van Welie, President and CEO,...

The Council of State GovernmentsEastern Regional Conference

Gordon van Welie, President and CEO, ISO New EnglandAugust 16, 2010 Portland, Maine

ISO New England’s Core Responsibilities Are Interconnected and Interdependent

Operating the Power SystemMinute-to-minute reliable operation of region’s generation and transmission system

Administering Wholesale Electric Markets Oversee region’s wholesale marketplace for energy, capacity and reserve supplies

Power System PlanningEnsure reliable and efficient power system to meet current and future power needs

2CSG Eastern Regional Conference

© 2010 ISO New England Inc.

3

Regional Planning, Centralized System Operations, Competitive Markets Provide Benefits

• Expanded transmission development

• New generation and demand resources

• Generator availability improvements

• Economic and environmental benefits

CSG Eastern Regional Conference © 2010 ISO New England Inc.

4

Transmission Projects Maintain Reliability $4 Billion invested since 2002, $5 Billion on horizon

4

5

12

7

9

8b

3

6

101. Southwest CT Phase I2. Southwest CT Phase II3. NSTAR 345 kV Project, Phases I & II4. Northwest Vermont5. Northeast Reliability Interconnect6. Monadnock Area7. New England East-West Solution8. Southeast Massachusetts

a. Short-term upgradesb. Long-term Lower SEMA Project

9. Maine Power Reliability Program10.Vermont Southern Loop

In service

Under construction

Under study

DOE highlights progress in New England

In the Energy Policy Act of 2005, Congress directed the U.S. Department of Energy to conduct a study every three years

on electric transmission congestion and constraints.

In its latest (2009) study, DOE dropped New England from its list of “Congestion Areas of Concern” citing the region’s

success in developing transmission, generation, and demand-side resources.

8a


5

Region Adding Efficient Generation Capacity

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010/11

2011/12

2012/13

2013/14

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Annual Additions Cumulative Additions

Capacity (MW)

*FCA 4 (2013/14) based on preliminary information

FCM

■ New Supply Cleared through FCA-1, 2, 3, 4



Represents approximately 45% of 2013-2014 Installed Capacity Requirement

Strong Growth in Regional Demand Resources

CT 771 CT 930

VT 81VT 148

MA 680

MA 1,379NH 104

NH 129

ME 522

ME 444

RI 140

RI 231

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Capacity(MW)

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FCM

2010-2014: Total DR Cleared in FCM 1, 2, 3, and 4

(Includes new and existing DR)DR totals include a cap of 600 MW on real-time emergency generation resources

FCA 4 (2013/14) based on preliminary information

Total DR Enrollment in ISO Programs prior to start of FCM


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Generator Availability ImprovementsWholesale Markets provide strong incentives to improve resource availability

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 200960

65

70

75

80

85

90

95

100

System Average Wood/Refuse Hydro

Pumped Storage

New

Eng

land

Sys

tem

Wei

ghte

d E

quiv

alen

t A

vaila

bilit

y F

acto

rs,

%


Electricity Prices Follow Natural Gas PricesNatural Gas represents approximately 38% and 42% of region’s capacity and energy respectively

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Mar

-03

Sep-0

3

Mar

-04

Sep-0

4

Mar

-05

Sep-0

5

Mar

-06

Sep-0

6

Mar

-07

Sep-0

7

Mar

-08

Sep-0

8

Mar

-09

Sep-0

9

Mar

-10

$0

$20

$40

$60

$80

$100

$120

$0

$4

$8

$12

$16

$20

$24

Real-Time LMP Natural Gas Price

RT

Hu

b L

MP

($/

MW

h)

Gas

Pri

ce (

$/M

MB

tu)


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Many Renewable Projects Proposed 3,400 MW of Renewables in ISO Queue, Majority Wind

CT; 63.5; 2%

MA; 717.5; 21%

ME; 1327.

5; 39%

NH464.514%

RI; 598.2; 18%

VT; 221.7;

7%

Wind; 2879; 84%

Hydro; 34; 1%

Biomass; 444; 13%

LFG 35.51%

Solar; 20; 1%

Includes: Landfill Gas, Hydro, Wind , Solar and Biomass. Pump Storage projects in the ISO Queue are not included.

Renewables in Queue

By Fuel Type

Renewables in Queue

By State


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ISO Preparing Region to Integrate Wind

• Wind Integration Study– Model on- and off-shore

wind capability

– Recommend technical interconnection requirements

– Assess operational impacts of varying wind scenarios

– Target completion date – October 2010

• Preliminary Observations– Region has large amounts of

high quality wind potential

– Regional wind variability is moderate and manageable

– ISO has ability to manage and integrate significant amounts of wind power


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Governors 20-Year Renewable Energy Vision Accessing wind possible but requires investment

States’ Blueprint as guiding policy and regulatory framework

ISO economic study as technical support


12

Renewable Resources Remote from Demand

Wind zones

Electricity Demand

• Population and electricity demand concentrated in southern New England

• Wind resources do not overlap with high demand areas

• Estimated transmission costs to access 5,500 MW of regional wind plus 3,000 MW of additional Canadian imports: ~$7 B to ~$12 B


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1. HQ–New Hampshire LineHQ/Northeast Utilities/NSTAR

2. Northeast Energy LinkBangor Hydro/National Grid

3. Green LineNew England ITC

4. Seabrook-Boston-Cape CableNextEra Energy (formerly FPL)

5. Northeast Energy CorridorMaine/New Brunswick

6. Wind from the Midwest

7. Champlain Hudson ExpressTransmission Developers Inc.

8. Plattsburgh, NY–New Haven, VT

9. Interconnect Northern Maine

2

1

4

3

6

57

8

9 New Brunswick

Nova Scotia

Québec

New York

Transmission Projects Vying to Move Renewable Energy to High Demand Areas

Representative Projects



14

Funding Transmission to Access Renewables Remains a Challenge

• Regional cost allocation methodology well-established and generally accepted for reliability projects

• No agreement as to how to pay for transmission built to access renewables– A regional and national issue

• Long-term Power Purchase Agreements (PPAs) could include the cost of energy and transmission – New England has begun exploring potential for coordinated

procurement


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Coordinated Effort May Help Facilitate Regional Renewable Supply


Excerpt New England States’ Committee on Electricity (NESCOE) report, July 2010

“Renewable power procurement could aggregate demand for renewable power and enhance buying power, stimulate the market for renewable resources; and provide value to renewable project developers by creating larger revenue streams than might otherwise be possible. Using cooperative competitive processes may, therefore, facilitate development in cost–effective, low-carbon renewable electric generation in and around the region.”

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Coordinated Procurement Process Identifies Cost-Effective Projects • Offers states the ability to broadly procure cost-effective

renewables for consumers – Allows use of competitive procurement processes similar to

what the states already utilize– Consistent with authority to site infrastructure, including multi-

state transmission projects – Achieves state public policy objectives

• Focuses ISO planning efforts on broader integration of wind and other resources – Ensures technical feasibility

• Can help resolve cost allocation issues


17

Federal Activity to Address Transmission Planning and Funding

• Department of Energy funds Eastern Interconnection Planning Collaborative (EIPC)

• Senate energy bill links planning, siting and cost allocation • FERC issued Notice of Proposed Rulemaking (NOPR) to

amend transmission planning and cost allocation– Transmission planners required to account for state and federal

public policies in planning – Cost allocation methods for intra- and inter- regional projects to

be based on beneficiary model


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Closing Thoughts … • Region has benefited from a system that combines system

planning, centralized operations and competitive markets

• New England has strong renewable potential– Developers proposing to build renewable generation, particularly wind– See http://www.iso-ne.com/nwsiss/grid_mkts/index.html for recent

article “Where will New England’s electricity come from in 5, 10, and 20 years?”

• Funding transmission to access wind is the outstanding question – but coordinated procurement and regional cooperation may help– Consideration with New England stakeholders underway.


http://www.iso-ne.com/nwsiss/grid_mkts/index.html

The Council of State Governments Eastern Regional Conference Gordon van Welie, President and CEO,...

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