A little less than a year removed from a stretch of intense cold that blasted the East Coast and sent natural gas prices skyrocketing in early January, New York’s grid operator said it’s prepared to meet electricity demand this winter.
The New York Independent System Operator (NYISO) anticipates peak demand of 24,260 MW on its system this winter, based on average winter weather conditions, including composite statewide temperatures of 15 degrees. That figure would climb under more extreme temperatures, with peak demand rising to 25,884 MW based on statewide temperatures of about 5 degrees.
During winter 2017/18, NYISO demand peaked at 25,081 MW on Jan. 5, coinciding with the “bomb cyclone” conditions that helped drive day-ahead natural gas prices as high as $175/MMBtu at Transco Zone 6 NY. That came as part of a two-week stretch of intense cold that began in late December 2017.
NYISO’s all-time winter peak was set during the polar vortex conditions in 2014, when demand climbed as high as 25,738 MW.
“While the polar vortex of 2014 did not cause any reliability issues, the NYISO made changes to its market designs to provide stronger incentives for generators to secure fuel and enhance preparations for winter peak demand needs,” the grid operator said. “At the same time, the NYISO took steps to improve situational awareness of natural gas system conditions and enhance procedures for monitoring generator fuel inventories.
“This combination of actions...proved valuable in reliably meeting demand throughout the more recent severe cold snaps experienced in the winter of 2017/18.”
A key difference for natural gas this winter compared to last is historically low storage inventories that have driven Henry Hub prices well above $4/MMBtu and reintroduced volatility into a long dormant futures market. Citing thin margins and limited potential for gas-to-coal switching after recent retirements, analysts have pointed to potentially significant upside price risks for natural gas in the event of an intense cold snap this winter.
NYISO’s total resource capacity this winter, including generation, imports and demand response, is projected at 43,943 MW. This comprises 41,539 MW of installed generation capacity and 1,519 MW of secured external capacity purchases. Projected demand response resources total 884 MW, according to the grid operator.