New York — The New York Independent System Operator's five-year power grid plan sets out six strategic initiatives to guide its projects and resource allocation that include pricing carbon emissions into the wholesale market, which could increase power prices by about $10-$15/MWh, an analyst said Wednesday.
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"Our updated Strategic Plan is a living document that embraces the challenges and opportunities of the grid's ongoing transformation," NYISO interim President and CEO Robert Fernandez said in a statement Tuesday.
"The plan reflects the NYISO's essential role in harmonizing public policy with technological innovation in a manner that delivers economically efficient and reliable energy to consumers," Fernandez said.
Integrating public policy into NYISO-administered wholesale markets often refers to the grid operator's ongoing carbon pricing efforts, an initiative that could go into effect in the second quarter of 2021, NYISO has said.
"The carbon prices being discussed for implementation in New York are significantly higher than the current [Regional Greenhouse Gas Initiative] RGGI prices," Manan Ahuja, senior director of North America power modeling at S&P Global Platts Analytics, said in an email Wednesday.
If implemented, the carbon prices could add significantly to the wholesale power prices, increasing location-based marginal prices "by about $10-$15/MWh (in the proposed carbon price vs the RGGI price) based on our recent modeling," Ahuja said.
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Such changes would also impact decisions about what type of supply resources get built or retire, he added.
The strategic plan is based on the NYISO board of directors' review of financial and regulatory outlooks, as well as the economic and environmental factors affecting market participants and stakeholders, the grid operator said in a statement Tuesday.
It accounts for market and regulatory trends that will shape the industry going forward, positioning NYISO's markets, planning processes, and operational practices for changes in the energy industry landscape, NYISO said.
These are the six initiatives NYISO identified in the plan:
- Grid Reliability and Resilience
- Efficient Markets for a Grid in Transition
- New Resource Integration
- Integration of Public Policy
- Technology and Infrastructure Investment
- Efficient and Flexible Business Model
Recent incremental power generation capacity has primarily come from natural gas-fueled or wind-powered resources. For example, since 2000, nearly 12,000 MW of new generating capacity came online in the state, which represents approximately 30% of New York's generation capacity, according to NYISO's 2018 "Power Trends" report.
The addition of renewable energy resources, energy storage, and distributed energy resources expected as a result of New York's Clean Energy Standard and other policies will create a more dynamic grid, where supply is increasingly comprised of weather-dependent renewable resources, NYISO said in its strategic plan
Flexible resources will be needed to balance intermittent generation, NYISO said. With regard to new resource integration, the grid operator said DERs and energy storage could make load and supply resources "more dynamic and responsive to wholesale market price signals and system needs," which could improve overall system efficiencies.
NYISO said in Power Trends that by 2028, more than 8,300 MW of gas-turbine and steam-turbine based capacity will reach an age beyond which 95% of these types of capacity have shut down. "Technology that can respond rapidly will be key to grid reliability, and our future market enhancements will focus on attracting this capability through the continued formation of proper price signals consistent with the value of products and services required to meet system needs," Fernandez said in the 2019-2023 Strategic Plan.
-- Jared Anderson, firstname.lastname@example.org
-- Edited by Gail Roberts, email@example.com