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ISO New England study says offshore wind can cut energy costs during cold snaps

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ISO New England study says offshore wind can cut energy costs during cold snaps

A theoretical 1,600-MW offshore wind farm during New England's 2017-2018 winter storms could have reduced regional electricity prices up to $13/MWh and cut emissions by 11% over a 16-day cold stretch while avoiding $85 million in production costs, ISO New England estimated in a new "what if" analysis.

The additional 1,600-MW of offshore wind capacity could have also helped relieve New England's fuel supply constraints during the two weeks by reducing generators' consumption of natural gas by 20% and oil by 7%, according to the report.

In response to a request by the Massachusetts Clean Energy Center, or MassCEC, ISO-NE recently published the analysis of the economic and environmental impacts offshore wind generation could have had on the regional wholesale electricity market during a 16-day stretch of cold weather that gripped the region between Dec. 24, 2017, and Jan. 8, 2018. During that cold snap, all major cities in New England averaged temperatures below normal for at least 13 consecutive days, including 10 days with average temperatures more than 10 degrees Fahrenheit below normal.

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The freezing temperatures constrained natural gas pipelines and sent energy prices skyrocketing to above $300/MWh as gas supplies diverted from power generation to space heating and dual-fuel generators switched over to dirtier oil supplies for producing electricity. According to a previous ISO-NE report, oil-fired generation grew from constituting 0.29% of New England's generation mix before the cold snap to supplying 27% of the region's electricity needs during the two-week stretch. In contrast, natural gas-fired generation fell from supplying 46% of the region's power before the snap to 24% during the extreme weather event.

The ISO-NE has warned that the experience may portend future fuel security difficulties and that pipeline constraints, emissions restrictions on oil-fired generation, logistic issues in replenishing oil inventories during snowstorms, and a wave of plant retirements threaten grid reliability in coming winters.

In its latest study, the ISO-NE said the 16-day cold spell "resulted in a temporary, but dramatic spike in the price of natural gas in New England, which in turn triggered heavy use of oil for electricity production and high wholesale electricity prices." According to the regional transmission organization, actual fuel amounts consumed for power production during the period were approximately 144,000 short tons of coal, 9 billion cubic feet of natural gas and 2.4 million barrels of oil.

The ISO-NE's "what-if" offshore wind study specifically focused its assessment on the impact on production costs, environmental emissions, fossil fuel savings and locational marginal prices. The self-proclaimed "high-order-of-magnitude analysis" used "gross assumptions in all calculations" and data provided by MassCEC, including generation production estimates for offshore wind projects with capacity sizes of 400 MW, 800 MW and 1,600 MW and with average capacity factors over the 16-day period of approximately 70% of their nameplate capacity. Based on those estimates, electricity production from the three offshore wind project scenarios would have constituted, respectively, about 2%, 3%, and 7% of New England’s approximately 6.4 TWh of load served during the 16-day period.

The ISO-NE assumed offshore wind would have successfully displaced marginal carbon-emitting fossil fuel-fired generation during the 16-day period and, in turn, avoided production costs. For instance, the RTO estimated that a 400-MW project would have produced nearly 106,900 MWh of power and $20 million to $25 million in avoided production costs, while a 1,600-MW project would have produced nearly 435,300 MWh and $80 million to $85 million in avoided production costs.

Using annual average locational marginal units' carbon dioxide emission rates in New England, ISO-NE estimated that additional offshore wind production of 400 MW, 800 MW and 1,600 MW would have avoided, respectively, about 3%, 5% and 11% of New England's actual emissions during the 16-day period, ranging from 53,800 short tons to 219,200 short tons of avoided CO2 emissions.

The ISO-NE said determining exact avoided fuel use as a result of additional offshore wind is not possible, but a 400-MW offshore wind farm could have displaced 34,900 MWh of natural gas-fired generation and avoided 0.25 Bcf of natural gas, or about 3% of actual consumption during the 16-day period. In comparison, a 1,600-MW offshore wind farm could have displaced 248,000 MWh of natural gas-fired generation and avoided 1.81 Bcf of natural gas, or 20% of actual consumption during the cold snap.

Further, the ISO-NE said offshore wind generation from a 400-MW facility could have displaced 52,700 MWh of oil-fired generation and avoided an estimated 96,300 barrels of oil, or about 4% of actual consumption. A 1,600 MW offshore wind project could have displaced 87,700 MWh of oil-fired generation and avoided an estimated 160,200 barrels of oil, or about 7% of actual consumption.

Finally, the ISO-NE roughly estimated that additional offshore wind production from 400-MW, 800-MW and 1,600-MW projects could have reduced average day-ahead locational marginal prices prices respectively, by $4/MWh to $6/MWh, $6/MWh to $8/MWh, and $11/MWh to $13/MWh.