Ernest Moniz, former US energy secretary, introduced the results of a study Nov. 16 that found getting to net-zero greenhouse gas emissions in New England will need an incremental 93 GW of generation capacity by 2050, which experts said will require significant market design changes.
Moniz presented the results of the study titled "Net-Zero New England: Ensuring Electric Reliability in a Low-Carbon Future" during a webcast New England Energy Summit. Moniz is also CEO and founder of research non-profit Energy Futures Initiative, which produced the report in partnership with clean energy analysis firm Energy and Environmental Economics (E3).
"Clearly, we have a new [US presidential] administration coming in ... and as they said on day one there will be a rejoining of" the Paris Agreement on climate change, Moniz said.
And while that is positive from a climate change mitigation perspective, a lot has changed in the five years since the agreement was struck when the discussion was about reducing emissions by 80%, he said, but now more US states are adopting net-zero emissions goals that are viewed as essential to combatting the most serious climate impacts.
Despite remaining uncertainty regarding control of the US Senate, Moniz predicted bipartisan political support in two areas: congressional support for a strong innovation agenda and energy infrastructure, which he "finds hard to believe will get kicked down the road again."
Moniz expects New England states will together move toward net-zero emissions goals and the study considers scenarios for getting there.
Demand, fuel mix
Power demand is expected to increase by about 90% by 2050 as the electricity sector takes a bigger load in transportation and space heating, he said, which will shift the power system to winter peaking instead of summer. By 2050, the study envisions 22 GW of offshore wind capacity will be needed, along with 22 GW of utility solar, 13 GW of distributed solar, 13 GW of battery storage, and more.
All forms of wind and solar by 2050 account for roughly 70% of power generation backed up by substantial amounts of storage, Moniz said.
"One also sees that existing [natural] gas capacity gets very small, phasing out as we reach mid-century ... because carbon dioxide emissions would be too high without carbon capture and storage," he said.
CCS at that scale would require major infrastructure to pipe the CO2 out of the region, "which is probably not a very attractive option," but there is also new gas capacity that can be a mixture of natural gas, hydrogen blends and renewable gas, Moniz said.
The gas-fired capacity, along with imported hydropower from Quebec, will be needed to provide significant firm capacity, he said. Considerable infrastructure will also need to be built to enable a hydrogen economy and to support the 22 GW of offshore wind, which will require policy and regulatory support.
This means business model innovation is also needed which provides big opportunities for power producers, but also fuel providers like oil and gas companies that are getting more into the power sector. There will be "dynamic overlap between sectors and early movers will have a big advantage," he said.
Alicia Barton, CEO of FirstLight Power, said during a later panel discussion that neither the existing market construct or laws on the books today get us to these targets the and track record is that market rule changes "take lot of time," so that work needs to start immediately.
With more zero-marginal cost renewables coming in, traditional compensation for firm assets needed for reliability will decline and so paying for capacity will become even more important," Thad Hill, president and CEO of Calpine, said.
And unless New England wants to go back to central planning, "the market structure we put around this is going to be very important," Hill said.
Paul Segal, CEO of LS Power, agreed, saying that New England has the lowest capacity prices since the market was created and the grid operators or regulators should "take steps to clean up" the market design so "overly aggressive developers" do not overbuild and suppress prices.
With the ISO New England capacity market clearing at lower prices, hitting a historical low of $2.00/kW-month in 2020, "it is unclear to me how capital will flow into this market in that type of environment," Segal said.