New Energy Market Trends Emerge in ISO-NE: What Does This Mean for the Supply Stack?

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06/13/2018 | 08:18 pm

Two natural gas-fueled combined-cycle electric generating facilities entered the ISO-NE supply stack since May 21. Competitive Power Venture's (CPV) 785 megawatt (MW) Towantic facility in Oxford, CT, and the Salem Harbor 674 MW Generating Station in Salem, MA, will no doubt be game changers for general market dynamics. This blog covers their impacts and displays two energy market trends that appear to have a causal relationship with addition of gas-fired generation.

After CPV Towantic's Day-Ahead market (DAM) commitment on May 21, heat rates came in consistently above 10 MW/mmBtu with low import schedules and an absence of the Northeastern Massachusetts (NEMA) baseload generation. Recent day-ahead (DA) cleared heat rates provide little insight into the generator's bidding strategies, however when looking at the DA CT export schedule, it's evident that Towantic was clearing in the DAM consistently since its introduction to the ISO-NE stack.

Based on the data provided in Figure 1, we see the average CT zonal exports in the DAM increased significantly after CPV Towantic entered commercial operation. We expect an increase in CT zonal generation is obvious considering the additional zonal generation, but the changes in intertie flows with neighboring grids tells a more intriguing story.

In Connecticut, there are multiple external ties to New York, specifically NY-1385, NY-CSC, and two NY-AC lines. With the addition of inexpensive CT generation, net exports to NY became more economic since May 21. Considering the NYISO power market often wheels power through Connecticut and into Long Island to avoid congestion between upstate generation and Zone J and K demand, it makes sense that ISO-NE is now more profitable in alleviating this congestion without requiring more imports from NYISO on the AC ties.

Genscape data in Figure 2 shows that exports to NYISO have, on average, picked up 276 MW since the addition of CPV Towantic to the ISO-NE stack. This is interesting when looking at NPX-Roseton spreads, which usually provide insight into flow patterns between the neighboring Independent System Operators (ISOs).

Genscape analysts believe that Salem Harbor's positioning on the Algonquin Gas Transmission (AGT) leaves some cause for concern. As it is the final stop on the I-system, winter fuel security for Salem Harbor could present daunting economic challenges. Without dual fuel capabilities, capacity restrictions on AGT would theoretically threaten the reliability of Salem Harbor generation during winter months. However, where gas flows coming from U.S. supply basins may be restricted, reliable Canadian imports could present a boon to Salem Harbor's gas supply. Despite being connected to AGT, it appears that Salem Harbor's gas supply is sourced from Portland Natural Gas Transmission System's (PNGTs) pipeline imports from Quebec. This gas is then interconnecting with Maritime and Northeast U.S. (M&N) before an interconnection with AGT right next to the power plant's location. This indicates that Salem Harbor is not receiving cheaper Appalachian gas supplies routed from Pennsylvania and New York. It is actually paying a premium for each molecule imported from Canada.

Salem Harbor's efficiency could allow for more consistent flows through PNGTs and M&N on a daily basis. Although additional generation added to AGT would appear to add demand to an already strained pipeline system, imports on the M&N pipeline to feed NEMA generation would add additional fuel security when the AGT system becomes strained. With a low enough heat rate, Salem Harbor could economically clear during periods of pipeline strain albeit paying a higher price for fuel.

The route of gas flows from the U.S.-Canadian border to Salem Harbor is displayed in Figure 4. PNGTS (purple) enters the U.S. gas system from the TransCanada Mainline at the Pittsburg IC location. These imported flows move south to the PNGTS-M&N U.S. (orange) interconnect near Portland, ME. Flows move further south through the Eliot compressor station and to the M&N U.S.-AGT interconnect just north of Boston. Once gas moves onto AGT, it moves a very short distance from the M&N U.S. - AGT interconnect to the Salem Harbor Footprint meter.

Genscape's power and natural gas analysts will continue to watch CPV Towantic and Salem Harbor to identify any trends and market changes. The PowerIQ service allows industry players to discover new opportunities in this market, manage risk, minimize cost, and enhance profitability. Combined with Genscape's natural gas insight, the type of information provided in the service is crucial when new facilities enter the supply stack. To learn more, or to request a trial, please click here.

Disclaimer

Genscape Inc. published this content on 13 June 2018 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 13 June 2018 18:17:03 UTC

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