Four electricity industry CEOs on Monday discussed the “challenges and opportunities,” as former FERC Chair Cheryl LaFleur put it, of decarbonization in the New England power sector over the next three decades.
The panel followed a keynote speech by former U.S. Energy Secretary Ernest Moniz at the virtual New England Energy Summit, hosted by the New England Power Generators Association. Moniz presented a study co-authored by his Energy Futures Initiative (EFI) and Energy and Environmental Economics (E3), which detailed how the electricity system could meet the challenges of growing demand and reducing economy-wide greenhouse gas emissions to nearly zero by 2050. (See Study Outlines Challenges of Decarbonizing New England.)
FirstLight Power CEO Alicia Barton said the study “put some provocative and important ideas on the table for us to consider as market participants, policymakers and thought leaders … about how we transition toward this net-zero target by midcentury.” There are “very difficult conversations ahead” about the evolution of market structures, she said.
“I think we have to acknowledge that neither our market construct nor the set of policies we have on the books at the state or federal level today gets us anywhere near hitting those targets or seeing any of those scenarios that were just presented [in the study] play out,” Barton said. “Our track record has been that it takes us a very long amount of time to implement market rule changes and policy changes actually to facilitate those transitions.”
Moderator LaFleur, now serving on ISO-NE’s Board of Directors, said that while 2050 seems “a long time away,” when it comes to designing new market rules, “it’s not a long way at all in the electric world.”
Great River Hydro CEO Scott Hall said to reach its 2050 decarbonization goals, New England needs to implement regulatory and statutory policies that maintain and enhance existing resources and provide opportunities to put new resources into place. Hall said he supports “a simple, transparent carbon market” that the RTO has suggested because it offers stability from an investment standpoint.
Calpine CEO Thad Hill said that “reliability will matter even more” as the economy decarbonizes.
“The gas fleet in New England today is not an inhibitor of decarbonization; it’s an enabler,” Hill said, echoing comments his company made in FERC’s carbon pricing docket. (See related story, Wide Support for FERC Carbon Pricing Statement.) “We’re going to have a lot more renewables, as the study showed, which is a good thing, and dispatchable assets [will be] run far less, which was also a good thing.”
LS Power CEO Paul Segal said that he “would take the view that on the one hand, we’re talking about the need for all of this incremental dispatchable generation over time. On the other hand, we have the lowest capacity pricing that we’ve probably had since this market was created.” He added that “overly aggressive developers who make certain promises, without adequate penalties on the other side,” can overbuild and suppress prices.
“This is where I think it’s incumbent, whether you look at it as the grid operator or the regulator, to take steps to clean things up in markets, so that folks like us can make good decisions,” he said. “It’s not too long ago that we cleared a multiyear capacity award at around $9.55 … and now we’re looking at situations where between $2 and $4 is clearing, and it is unclear to me how capital will flow into this market in that type of environment.”