Unless the price of natural gas falls sharply, New England likely will depend heavily on it as the main fuel for electricity production for the next 20 years, according to an analysis issued on Thursday by ISO New England.
The “region’s lack of indigenous fuel supplies, its dependence on imported fossil fuels and its tightening environmental policies” would make substantial reductions in regional electricity costs “difficult,” even with alternative energy investments, the 82-page report concluded. Regardless of which approach New England’s stakeholders take, natural gas prices will determine the price of electricity for 90% of the time between 2020 and 2025.
Even if most of New England’s electricity needs are met with other technologies, “it’s not going to significantly alter our dependency on natural gas,” said ISO New England CEO Gordon van Welie. “And diversification away from natural gas will have a cost associated with it.”
The analysis, which was developed over the past eight months, is expected to serve as a reference for policymakers and industry when considering how to fulfill future New England energy requirements.
“New England electricity consumers want reliable, clean power and they want it at reasonable and competitive prices,” said van Welie. “This analysis is intended to provide valuable information for regional policymakers and other stakeholders to use as they pursue these goals.”
More than 100 representatives from ISO New England, the New England Conference of Public Utilities Commissioners, the New England Power Pool, consumers, utilities, state regulators and environmental experts were involved in the groundbreaking analysis. Using specific assumptions to determine various technology outcomes, the stakeholders evaluated seven basic scenarios involving different mixes of supply- and demand-side resources.
Along with natural gas remaining the primary fuel for the region, the analysis also found that:
New England also “likely” will need continued transmission improvements, “especially true if the region adds renewable power resources in areas far from major cities, or imports more hydroelectric power from Canada,” the analysis noted. In addition, adding infrastructure in the regional gas supply and delivery systems and lessening gas-sector demands could mitigate price volatility during periods of high demand.
“The purpose of this initiative is to inform policymakers so they can make judgments regarding available outcomes,” van Welie said. “The ISO is eager to continue to work with policymakers and stakeholders to define the next stage of this analysis.”
The analysis envisioned a peak system demand of about 35,000 MW by 2020-2025, and it examined the effect of adding 8,000 MW. Each of seven scenarios assumed that 2,600 MW would reflect the mix of recently proposed power sources, mostly gas power plants. The remaining 5,400 MW represented a large concentration of a certain technology, such as nuclear, new coal, natural gas, imports, demand-side resources or renewables, to assess their impacts.
The report may be downloaded at the ISO New England website at www.iso-ne.com .
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