By Rich Heidorn Jr.

ISO-NE and New England Power Pool stakeholders are collaborating to study market and reliability issues the region will face as it seeks to decarbonize power, transportation and heating over the next three decades.

NEPOOL members discussed the outlines of the study — which was prompted by requests last year from the New England States Committee on Electricity (NESCOE), New England Power Generators Association (NEPGA) and other stakeholders — at the Participants Committee meeting Thursday.

“People are generally very supportive of doing a study,” ISO-NE CEO Gordon van Welie said Friday at a news briefing on the RTO’s 2020 Regional Electricity Outlook, which noted states’ “goals to achieve up to 100% renewable resources” and asked “How do we get there from here?”

“I think the general consensus in the room … is it’s a good thing to go off and study the future power system because that’s going to give us a lot of information to then inform the other discussions that people want to have, which is the market design conversation, and ultimately transmission,” added van Welie, who said electrification will transition the region from a summer- to a winter-peaking electric system.

“There was less clarity around what the scope and objective of the study should be. The discussion yesterday was mostly about process and not scope. And that conversation [about scope] will be coming in due course in the next month or two.”

Work on the study will begin in earnest after the RTO’s FERC filing on its Energy Security Improvements (ESI) proposal, expected April 15. ESI will propose new options-based reserve products in the day-ahead markets that compensate for the flexibility of energy “on demand” to manage daily uncertainties, such as natural gas shortages or low production from renewables because of weather. (See “Strike Price Adder Impact,” NEPOOL Markets Committee Briefs: Feb. 11-13, 2020.)

The PC meeting materials included a graphic depicting the study as four bubbles: the objective (assessing the power system needed to meet state energy and environmental policies); study process (identify the resource mix and operational and reliability needs); a gap analysis (to determine whether the current markets plus ESI provide resources and ISO-NE what they need to continue reliable operations); and a discussion of potential market approaches to address any gaps.

Van Welie said that the study’s time frame will be the subject of future stakeholder discussions, but that he expects it to be longer than the next 10 years, when he said electric demand from decarbonization of transportation and heating is projected to increase only slightly.

“When I look at that and the long-term decarbonization goals in the region, I think there will be a hockey stick [rise in demand]. We’re going to have to accelerate — dramatically accelerate — decarbonization of the other sectors, so there will be a steep growth in electric demand over that period,” he said. “It’s important, if we’re going to study the future, that we study that hockey stick because there’s nothing really interesting to study in the next 10 years. The demand’s pretty flat.”

A Brattle Group study released in September predicted that meeting the states’ goals for reducing greenhouse gas emissions by 80% by 2050 will result in a doubling of electricity demand, even with substantial energy efficiency gains.

“I don’t know that we should lock onto specific numbers and multiples at this time,” van Welie said. More important, he said, is how the system will add renewable capacity: through the markets that have served the region for the last two decades, or through long-term power purchase agreements, which would put investment risk back on consumers.

ISO-NE sought to develop a market-based path for renewables to supplant carbon-emitting resources through the substitution auction in the Competitive Auctions for Sponsored Policy Resources (CASPR) program, which allows resources nearing retirement to trade their capacity supply obligations with new state-sponsored resources that did not clear in the primary auction.

The RTO has held two auctions under CASPR. Vineyard Wind, a planned 800-MW offshore wind farm, took over a 54-MW obligation from a retiring resource in Forward Capacity Auction 13 last year. There were no trades this year in FCA 14.

“As we said when we filed CASPR, it’s intended to work over time,” said Anne George, the RTO’s vice president of external affairs and corporate communications. “We still feel like with only two auctions of experience, we need a little more time to see how CASPR works.”

“I think it’s going to take time for those economic pressures to build up” to persuade incumbent generators to retire, van Welie added. “So, we have been very clear about this: We think carbon pricing is a much better solution … which is why you hear us advocating for it.” (See ISO-NE: States Must Lead on Carbon Pricing.)

At a conference in D.C. last week, speakers expressed some doubts about carbon pricing, saying it won’t solve the climate crisis by itself or persuade states to abandon their own clean energy policies. (See related story, Carbon Pricing Gains Popularity — and Doubts.)

“I think it’s going to take time for people to get comfortable with [carbon pricing]. It may take a long time for us to get comfortable with it,” van Welie acknowledged. “Developers are going to be very cautious about trusting the regulatory system around carbon pricing until they see that it’s stable and has longevity.”

The Regional Greenhouse Gas Initiative, which includes all six New England states, “never produced a material carbon price in terms of driving the clean energy transition,” van Welie said. RGGI’s most recent auction in December cleared at only $5.61/ton.

Van Welie contrasted RGGI with Europe, where carbon emissions were trading last week at about 25 Euros/ton ($28), high enough that Royal Dutch Shell, BP and others are willing to build offshore wind on their own balance sheets without long-term PPAs, he said.

Transmission RFP

On an unrelated issue, van Welie said the RTO was “very pleased” with the response to its first-ever competitive transmission solicitation, which resulted in 36 project proposals by the March 4 deadline. (See ISO-NE Issues First Competitive Tx RFP.)

ISO-NE issued the solicitation in December to prepare the transmission system in the Boston area for the retirement of the Mystic Generating Station in Everett, Mass. The proposals will seek to address transmission facility overloads under peak load conditions, as well as system restoration concerns with the underground cable system. ISO-NE hopes to select the finalists for the work by the end of the year.

“We’ve got a lot of work ahead of us,” said van Welie, adding that the RTO will be releasing more details on the responses shortly.

New Member

In addition to its discussion on the futures study, the PC voted Thursday to admit trade group Advanced Energy Economy as a NEPOOL member. AEE, whose members provide energy efficiency, demand response, energy storage and natural gas, renewable and nuclear generation, was admitted as a Fuels Industry Participant.

Operating, Planning Procedure Revisions Approved

Members also approved revisions to the following operating and planning procedures:

• OP-18 (Metering and Telemetering Criteria): adds a requirement to telemeter station frequency; identifies equipment requirements; specifies which requirements apply to existing and new equipment; and revises Section I (Purpose) to reflect current practice.
• OP-23, Appendix I (Resource Auditing): clarifies the asset ID entry for certain reactive resources without an RTO-assigned asset ID.
• OP-3 (Transmission Outage Scheduling): extends the maximum duration for an “opportunity outage” from 96 hours to 108 hours. An opportunity outage is one that fails to satisfy the minimum advance notice time required for planned short-term transmission outage processing and is submitted for RTO approval as a result of an unexpected opportunity to accomplish work that would otherwise require another outage at a less opportune time.
• PP-3 (Reliability Standards for the New England Area Pool Transmission Facilities): replaces the term “governance participant” with the terms “market participant” and/or “transmission owner.”