John Dalton poweradvisoryllc.com Tel: 978 369-2465 Insight Info’s 7 th Annual Atlantic Canada Power Summit Opportunities Offered by the New England Power Market October 5, 2009
Nov 03, 2014
John Dalton
poweradvisoryllc.com
Tel: 978 369-2465
Insight Info’s7th Annual Atlantic Canada Power Summit
Opportunities Offered by the New England Power Market
October 5, 2009
Maritime Electricity Market New England Electricity Market
Need for Capacity Need for Energy Need for Low Carbon and Renewable Generation
Conclusions
Overview of Presentation
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Maritime electricity sector peak load about 5,500 MW Annual peak load growth about 100 MW
Making it harder to integrate major new supply resources Given limited need for capacity and additional energy
Significant opportunity to displace higher carbon emitting resources Uncertainty regarding the value offered
Output for major new generation resources will be offered to more than one province Possibly New England
Maritime electricity market small relative to output of many new large supply resources
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Regional System Plan suggests no need for additional capacity until about 2015
Forward Capacity Market (FCM) auction clearing at floor price $3.6/kW-month Significant amount of demand response being
offered Connecticut contracted capacity through other
mechanism Low FCM prices likely to result in retirements of
capacity Significant portion of capacity over 50 years
New England has little need for new capacity
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Gas-fired units set prices 62% of the time Both constrained and unconstrained periods
Gas-fired generation sets prices during peak periods Natural gas prices critical determinant of energy prices
Value in energy market driven by natural gas prices
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Marginal Fuel Type during Unconstrained Pricing Intervals - 2008
Source: ISO-NE 2008 Annual Markets Report
Load centres are located in Southern New England
Maine has surplus of generation and transmission constraints
LMPs in New Brunswick about 8 to 10% less than at Mass Hub
Energy prices vary given Locational Marginal Pricing
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Nodal LMPs in 2008
Source: ISO-NE, 2008 Annual Markets Report
Future energy value determined by natural gas prices
Declining natural gas pricing reducing value of energy in New England
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Source: ISO-NE, August 2009 Monthly Market Report
This increase in energy prices is driven by anticipated increases in natural gas prices
Key issue development costs for shale gas plays Significant risk prices won’t reach these levels,
particularly near-term
NYMEX Futures prices indicate energy prices will recover
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Source: NYMEX, Power Advisory Analysis
Mass Hub $/MWh
Henry Hub $/MMBtu
2009 44.75$ 4.72$ 2010 56.14$ 6.03$ 2011 62.15$ 6.79$ 2012 64.04$ 7.01$ 2013 65.21$ 7.12$
Prices in US$
Lack of fuel diversity and GHG constraints causing region to seek lower cost, non-carbon generation
New England renewable energy demand driven by Renewable Portfolio Standards (RPS) Regional Greenhouse Gas Initiative Federal CO2 Cap and Trade increasingly likely
RPS require growing fraction of electricity supplied come from renewable resources Most RPS programs use Renewable Energy
Certificates (REC) Renewable power from Maritimes eligible for RPS if
power also delivered
New England offers premium prices for renewable energy
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The RPS requirements are expressed in energy, but converted to a renewable capacity requirement (Blue Line)
New England renewable energy demand driven by RPS requirements
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Demand for Class I Renewable Energy Resources in New England
Capacity Requirement assumes that 60% of the capacity is provided by resources with a capacity factor of 34% (e.g., wind) and that 40% is provided by resources with a capacity factor of 80%.
Constraints on renewable resource availability and siting limiting ability of local renewables to meet RPS Massachusetts RPS had its first surplus in 2007 States are addressing supply constraints
Massachusetts: One Stop Permitting Maine: Designating areas for wind project
development New England Governors’ Conference recently
released a Renewable Energy Blueprint More than 10,000 MW of wind potential in region “Each state seeking aggressive development of
potential”
New England attempting to develop its resource potential
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Value of Renewable in New England from Maritimes = REC value + energy value in market
REC Ceiling value: alternative compliance payment Electricity supplier penalty if not enough RECs
($61/REC in 2009) Floor value of RECs cost of renewable generation
needed to meet RPS less value of energy Estimated to be about $98 per MWh in 2010
All US$
Renewable energy values depends on market conditions
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Limited need for capacity Energy value influence by low natural gas prices Significant growth required in renewable energy market
Market opportunity will be influenced by ability to site and develop projects in region
Rebound in economy will offer increased opportunities
Attractiveness of New England affected by economic conditions
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Thank you for your attention
John DaltonPower Advisory LLC [email protected](978) 369-2465www.poweradvisoryllc.com
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Introducing Power Advisory
Power Advisory specializes in electricity market analysis and strategy, power procurement, policy development, regulatory and litigation support, resource planning and project feasibility assessment. We offer clients insightful analyses based on detailed understanding of
market fundamentals and sources of competitive advantage. We have extensive experience with renewable energy technologies,
having assisted Ontario develop its Standard Offer and Feed-in Tariff Programs and advised numerous clients on renewable energy investment opportunities.
For additional information regarding our services, please contact:John [email protected]
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Introducing Power Advisory
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