NYISO, stakeholders considering gas plant permit denial, resource mix changes

The New York Independent System Operator and its stakeholders are considering how best to proceed with power system planning in the wake of a recent regulatory decision to deny permits for two natural gas-fired power plant upgrades as the state moves toward emissions-free electricity by 2040.

The grid operator has initiatives planned for 2022 that include exploring the potential for dynamic operating reserve procurement, constraint-specific shortage pricing, updating capacity accreditation measures and completing a major "Grid in Transition" study, according to a draft presentation given during a remotely-held Installed Capacity and Market Issues Working Group meeting Dec. 2.

As part of the discussion about important areas of focus in 2022, a stakeholder said that the New York State Department of Environmental Conservation denied Oct. 27 applications for two proposed gas-fired peaker plant upgrades, finding that both would be inconsistent with the state's ambitious climate law.

However, the NYISO's current demand curve is based on that generation technology and the stakeholder asked if the grid operator had plans to address the fact that it appears, based on the regulatory decision, that developers can no longer build that technology in the state.

The DEC decision came after the NYISO had made its plans for what to focus on in 2022, staff said.

Another stakeholder said the DEC decision pertained only to those two specific plants which does not necessarily constitute a blanket ban on the technology. It may be something to consider for the next demand curve reset process but probably is not something that would justify going back into a demand curve process that has already been completed. The demand curve is updated every four years.

The first stakeholder said it is simply important for the NYISO to consider how market participants should proceed because they do not want to proceed with something that can no longer be built in New York.

NYISO staff said they will think through the topic.

Specifically, the DEC denied approval of the required Title V air permits for the 536 net-MW Danskammer Energy Center in Newburgh, Orange County, and the 437-MW Astoria Gas Turbine Power facility in Astoria, Queens County.

2022 priorities

Energy market-related projects for 2022 will focus on balancing power generation intermittency as more renewable resources are added to the grid, according to the NYISO presentation. Part of that initiative will include exploring dynamic procurement of reserves based on the largest source contingency and dynamic allocation of reserves based on available transmission capability.

Regarding energy market price formation, the grid operator plans to work on functional requirements for developing constraint-specific transmission shortage pricing. Additionally, the NYISO has developed a proposal to integrate a carbon dioxide emissions price into its dispatch methodology upon which it is awaiting guidance from the state in 2022.

Regarding capacity market-related projects, the grid operator plans to complete work on the market design for updated capacity accreditation measures along with other capacity market improvements that could support reliability.

In terms of new resource integration projects, the NYISO plans to deploy a distributed energy resource market participation model, develop functional requirements for a hybrid resource aggregation model and improve its modeling around duct firing for combined-cycle gas plants which is used to add capacity.

For the ongoing Grid in Transition project, one stakeholder suggested it will be important to consider that power prices will likely "be very low" as the system transitions to mostly zero marginal cost renewables and storage and what the implications could be for dispatching resources under those conditions.

The grid operator and its stakeholders should consider the market impacts of potentially having near-zero $/MWh prices for a majority of operating hours, the stakeholder said.