ISO-NE: Offshore wind can cut costs, reduce grid stress during winter storms
Offshore wind facilities in New England could cut power production costs and reduce stress on the grid during times of extreme winter weather, according to a new study from the regional grid operator.
A 1600 MW offshore wind facility would have reduced energy prices in the ISO-New England market by $11/MWh to $13/MWh during a severe cold snap that hit the region a year ago, the grid operator said in a new report. That translates to more than $80 million in production costs.
The findings show how offshore wind facilities could contribute to fuel security in the region by allowing generators to burn less of their onsite oil and liquefied natural gas (LNG) supplies during periods when gas pipelines are oversubscribed. ISO-NE must file fuel security market reform plans with federal regulators by June.
The recent ISO-NE report, released Dec. 17, shows how renewable resources can contribute to conversations about fuel security in New England and elsewhere, despite not using fuels themselves.
The report modeled the expected production of three hypothetical offshore wind facilities near Massachusetts during the "bomb cyclone," a two-week blast of frigid weather that pushed ISO-NE day-ahead prices above $240/MWh at the start of 2018.
For the largest facility modeled, a 1600 MW plant off the Massachusetts coast, the grid operator said wind speeds would have provided more than 435 GWh over two weeks, translating to more than a 70% capacity factor.
Under those conditions, the wind facility would have reduced natural gas consumption by generators by 20%, the grid operator estimated, and pushed down oil consumption 7%.
The findings are likely to bolster the renewable energy industry’s argument that its resources can help keep the New England grid secure during cold weather, when natural gas is diverted for home heating. So far, the conversation has focused largely on plants with onsite supplies of LNG or oil.
Late last month, the Federal Energy Regulatory Commission approved cost recovery for the 1700 MW Mystic Generating Station in Boston, allowing ratepayer support for the gas- and oil-fired plant through 2022. ISO-NE argued the plant is essential for the grid because it financially supports a nearby LNG import facility that supplies the region with critical fuel.
Fuel security discussions are now spreading to other markets, such as the PJM Interconnection, as large coal and nuclear operators push grid operators to increase their market payments. There and elsewhere, renewable energy advocates say their resources can provide similar services at lower costs.
"Every megawatt-hour out of a wind turbine is saving gas and oil that could be burned later so it's providing that exact product," said Rob Gramlich, a former FERC staffer and wind lobbyist, after the release of a PJM fuel security report in November. "The point is, a megawatt-hour on day four of a [winter] event from one source is the same as a getting a megawatt-hour from another source and they need to be paid the same."
Those debates will likely come to a head in New England this year. Before they approved cost recovery for the Mystic plant, FERC in December directed the ISO to file a new proposal to value generator fuel security by June of this year.
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