Tuesday, December 18, 2018

Cooperation, DOE NOPR, State RFPs the Topics at NECBC Meeting

By Michael Kuser

BOSTON — Atlantic Canada, New York and New England are one region geographically, and the jurisdictions will be drawn into ever closer cooperation on energy.

That was the consensus among a dozen or so speakers at the 25th Annual Energy Trade & Technology Conference hosted by the New England-Canada Business Council on Nov. 8-9. Speakers also discussed proposed price supports for coal and nuclear generation and how FERC is likely to treat New England states’ contracting for renewables.

NECBC renewable portfolio standard RPS DOE NOPR

Executive Panel (left to right): Rich Paglia, Enbridge; James P. Torgerson, Avangrid; Eric Martel, Hydro-Québec; and John Reed, Concentric Energy Advisors | © RTO Insider

NECBC President Jon Sorenson emphasized the benefits of cooperating to balance needs and resources across the area and reminded participants that the bilateral energy trade between Canada and the U.S. is already estimated at $130 billion annually.

Battery for New England

Hydro-Québec CEO Eric Martel said that his company last year exported more than 15 TWh of electricity into New England, about 12% of what the region is consuming now. The company has partnered on six different projects being bid into Massachusetts’ recent clean energy procurement. (See Hydro-Québec Dominates Mass. Clean Energy Bids.)

“Our large reservoirs have a combined annual energy storage of 176 TWh,” Martel said. “Today we are producing for the Canadian people 170 TWh/year [and] we are exporting about 30 TWh, which makes our production today at 200 TWh. But today our limit [on exports] is the number of transmission lines.”

Hydro-Québec began developing non-hydro renewable generation in the early 2000s and has since added 3,500 MW of wind capacity in Québec, Martel said.

“We firm up our domestic wind generation using our hydropower resources, so it’s very important that our source for firming is a renewable resource also,” he said. “We’ve been planning for this energy transition that is taking place, but what needs to happen now is to build those transmission lines. At peak periods, hydropower can be adjusted almost in real time, so Hydro-Québec can be the battery for northeastern America.”

FERC DOE PJM Insider PJM 2015 Annual Meeting

Gaëtan | © RTO Insider

NB Power CEO Gaëtan Thomas suggested how to connect the region to that huge battery.

“The only way to do that is more transmission,” Thomas said. “Transmission is king; transmission is going to solve these issues. Our vision should be to tie the whole region together and get to net zero [emissions]. That’s the only way we’re going to avoid the hits [caused by climate change] on the Eastern Seaboard. We’re all connected to it; we have that in common.”


Many speakers agreed that the U.S. Department of Energy’s recent Notice of Proposed Rulemaking in support of coal-fired and nuclear baseload generation wouldn’t amount to much, if anything.

But Concentric Energy Advisors CEO John Reed cautioned about being too optimistic.

“If we have one lesson from this administration, if you look at immigration or health care, the answer is, if at first you don’t succeed, tweet, tweet again,” Reed said. “If this doesn’t go somewhere, and if you look at the initiatives that have occurred in Ohio, Illinois and New York to support baseload generation, what is going to come down as the next mandate, the next executive order on these issues? Because I don’t think the administration’s concerns in terms of supporting coal and nuclear and other baseload generation are going to go away.”

“What I would expect — and PJM is already looking into it — is how to price things perhaps differently,” said Avangrid CEO James Torgerson. “And I think the other organized markets will probably be told to do the same thing. I think each RTO and ISO is going to be looking at it from their perspective, and [if there is] an issue in their area that needs to be dealt with. FERC will probably push it back to the different regions to get it resolved on a regional basis, because you can’t just say it’s a national or international problem at this point; it’s in certain pockets.”

Michael Twomey, vice president for external affairs at Entergy, defended nuclear energy’s role as an emissions-free resource. Nuclear power’s contribution to New England’s energy needs has remained generally unchanged because the retirement of Vermont Yankee was offset by upgrades and increased capacity from other units, he said.

NECBC renewable portfolio standard RPS DOE NOPR

Twomey (left) and Minter | © RTO Insider

“Oil has effectively disappeared from the landscape, coal is reduced significantly, and hydro and renewables honestly haven’t moved that much,” Twomey said. “We’ve seen tremendous gains in carbon emissions reductions in New England over the last 15 years, but that’s mainly been attributable to the substitution of natural gas for oil and coal. Well, the oil and coal is going to be gone — soon — and there’s not going to be any more low-hanging fruit to achieve carbon reductions, so what we’re going to see is probably an increase in carbon emissions from where we are now, going forward, as you see new retirements.”

An Accommodating FERC?

NECBC renewable portfolio standard RPS DOE NOPR

Paglia | © RTO Insider

FERC is entering a much more “state-centric” cycle, according to Rob Minter, vice president for government and regulatory affairs at ENGIE.

“Confidence in the markets for maintaining things like fuel diversity to keep nuclear plants alive, to integrate renewables, to achieve public policy goals like carbon reduction does not fit with the market structure that we now have,” Minter said. “Everyone’s trying to build the type of plants they want for their own objectives, for their own fuel reliability, for economic development, to save stranded assets that are uneconomic and underwater but make sense, like a nuclear plant you need to continue to have low carbon. These are not compatible with the current wholesale market that was created in the 1992 Energy Policy Act.”

“You start wondering how much of this [NOPR] is about reliability and fuel diversity versus some of the generators who have coal and nuclear plants aren’t really making as much as they did in the past,” Torgerson said. “So those are things being debated right now.” He predicted FERC will set a technical conference so industry participants can examine the issue more thoroughly.

To implement different state public policies on clean energy requires out-of-market actions that are fundamentally incompatible with the wholesale market design, Minter said.

“You can find a way to price those attributes into the markets, but my god, you end up putting dozens of pricing mechanisms and algorithms into an already complicated market,” Minter said.

He said although he would prefer fully competitive markets, they have “very little chance of success.”

“I would like for it to work; I would like to see fully competitive wholesale markets,” he said. “But regulators are not willing to accept the risk of very high energy prices that happen during periods of scarcity.”

Leo Desjardins, CEO of Conservation Resource Solutions, said the new, fully staffed commission has arrived at an inflection point for markets.

“Massachusetts probably gets its way on Canadian imports [and] FERC figures out how to accommodate regional and state carbon pricing,” Minter said. “And I think you’ll see that [the] large renewable procurements that states want, that end up being out-of-market, get accommodated. Only for so long can a commission like FERC fend off states. If the number of states [asserting their public policy] grows, and as the frustration level grows, they eventually have to cave in and accommodate.”