Dive Brief:
- Low natural gas prices have kept utilities in New England from burning much oil, Platts reports. Citing data released last week from the region's ISO, the news outlet said oil's share of January generation plunged from 2.3% in 2015 to 0.55% this year.
- Gas prices have remained low for some time now, but Platts points out that historically the levels fluctuate. Next-day natural gas prices at the Algonquin city-gate traded around $3.50/MMBtu earlier this month, compared with $9/MMBtu last year and $73/MMBtu in 2014.
- Last week, the head of ISO-New England said the region is put in a "precarious position" during periods of extreme cold, when utilities must compete for gas supplies with residential heating demand.
Dive Insight:
The focus in New England has been on the region's gas reliance, but as prices remain low, the cheap power is continuing to push out resources. Coal burn is down this year, in part due to gas' low commodity levels, nuclear facilities are struggling, and even though oil isn't a large segment, it too is under pressure.
Platts reports that because of low gas prices, oil's share of New England generation was down significantly. Last week the energy news outlet reported almost 22,000 barrels had been used for power generation in January, compared with more than 100,000 last year.
ISO President and CEO Gordon van Welie said last week in a "State of the Grid" call that reductions in coal, oil and nuclear power have lead the region to lean more heavily on natural gas, alongside the growth of solar and wind power. The shift is "bringing both benefits and challenges to reliable operation of the power system," he said.
In 2000, natural gas supplied just 15% of the grid's power, but since then the total has risen to almost half — some 49%. But weather continues to play a large factor in the region: According to Platts, the Winter Storm Jonas which hit New England in January spiked oil burn to almost 10,000 barrels in a week, compared with roughly 1,500 barrels the week before.
The region's grid operator believes demand for electricity could peak at about 21,077 MW during normal winter temperatures and if temperatures drop to extreme temperatures peak demand could hit 21,737 MW.