Exports To The Us Northeast

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Review of Opportunities for the Sale of Renewable Energy to the US Northeast

Review of Opportunities for the Sale of Renewable Energy to the US Northeast

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  • Do you mean CCGT projects? Do you mean displacement in Atlantic Canada or in New England or both?
  • Do we want to mention transmission constraints in New England, such as northern Maine to southern Maine? (I agree with your not mentioning them)
  • Do we want to mention transmission constraints in New England, such as northern Maine to southern Maine? (I agree with your not mentioning them)
  • Do we want to mention transmission constraints in New England, such as northern Maine to southern Maine? (I agree with your not mentioning them)
  • Do we want to mention transmission constraints in New England, such as northern Maine to southern Maine? (I agree with your not mentioning them)
  • Do we want to mention transmission constraints in New England, such as northern Maine to southern Maine? (I agree with your not mentioning them)
  • Do we want to mention transmission constraints in New England, such as northern Maine to southern Maine? (I agree with your not mentioning them)

Transcript

  • 1.
    • John Dalton
    • poweradvisoryllc.com
    • Tel: 978 369-2465
    Insight Info’s 7 th Annual Atlantic Canada Power Summit Opportunities Offered by the New England Power Market October 5, 2009
  • 2.
    • Maritime Electricity Market
    • New England Electricity Market
      • Need for Capacity
      • Need for Energy
      • Need for Low Carbon and Renewable Generation
    • Conclusions
    Overview of Presentation Power Advisory LLC 2009 All Rights Reserved
  • 3.
    • Maritime electricity sector peak load about 5,500 MW
      • Annual peak load growth about 100 MW
    • Making it harder to integrate major new supply resources
      • Given limited need for capacity and additional energy
    • Significant opportunity to displace higher carbon emitting resources
      • Uncertainty regarding the value offered
    • Output for major new generation resources will be offered to more than one province
      • Possibly New England
    Maritime electricity market small relative to output of many new large supply resources Power Advisory LLC 2009 All Rights Reserved
  • 4.
    • Regional System Plan suggests no need for additional capacity until about 2015
    • Forward Capacity Market (FCM) auction clearing at floor price $3.6/kW-month
      • Significant amount of demand response being offered
      • Connecticut contracted capacity through other mechanism
    • Low FCM prices likely to result in retirements of capacity
      • Significant portion of capacity over 50 years
    New England has little need for new capacity Power Advisory LLC 2009 All Rights Reserved
  • 5.
    • Gas-fired units set prices 62% of the time
      • Both constrained and unconstrained periods
    • Gas-fired generation sets prices during peak periods
    • Natural gas prices critical determinant of energy prices
    Value in energy market driven by natural gas prices Power Advisory LLC 2009 All Rights Reserved Marginal Fuel Type during Unconstrained Pricing Intervals - 2008 Source: ISO-NE 2008 Annual Markets Report
  • 6.
    • Load centres are located in Southern New England
    • Maine has surplus of generation and transmission constraints
    • LMPs in New Brunswick about 8 to 10% less than at Mass Hub
    Energy prices vary given Locational Marginal Pricing Power Advisory LLC 2008 All Rights Reserved Nodal LMPs in 2008 Source: ISO-NE, 2008 Annual Markets Report
  • 7.
    • Future energy value determined by natural gas prices
    Declining natural gas pricing reducing value of energy in New England Power Advisory LLC 2008 All Rights Reserved Source: ISO-NE, August 2009 Monthly Market Report
  • 8.
    • This increase in energy prices is driven by anticipated increases in natural gas prices
    • Key issue development costs for shale gas plays
      • Significant risk prices won’t reach these levels, particularly near-term
    NYMEX Futures prices indicate energy prices will recover Power Advisory LLC 2008 All Rights Reserved Source: NYMEX, Power Advisory Analysis Prices in US$
  • 9.
    • Lack of fuel diversity and GHG constraints causing region to seek lower cost, non-carbon generation
    • New England renewable energy demand driven by Renewable Portfolio Standards (RPS)
      • Regional Greenhouse Gas Initiative
      • Federal CO 2 Cap and Trade increasingly likely
    • RPS require growing fraction of electricity supplied come from renewable resources
      • Most RPS programs use Renewable Energy Certificates (REC)
    • Renewable power from Maritimes eligible for RPS if power also delivered
    New England offers premium prices for renewable energy Power Advisory LLC 2008 All Rights Reserved
  • 10.
    • The RPS requirements are expressed in energy, but converted to a renewable capacity requirement (Blue Line)
    New England renewable energy demand driven by RPS requirements Power Advisory LLC 2009 All Rights Reserved Demand for Class I Renewable Energy Resources in New England Capacity Requirement assumes that 60% of the capacity is provided by resources with a capacity factor of 34% (e.g., wind) and that 40% is provided by resources with a capacity factor of 80%.
  • 11.
    • Constraints on renewable resource availability and siting limiting ability of local renewables to meet RPS
      • Massachusetts RPS had its first surplus in 2007
      • States are addressing supply constraints
        • Massachusetts: One Stop Permitting
        • Maine: Designating areas for wind project development
      • New England Governors’ Conference recently released a Renewable Energy Blueprint
        • More than 10,000 MW of wind potential in region
        • “ Each state seeking aggressive development of potential”
    New England attempting to develop its resource potential Power Advisory LLC 2008 All Rights Reserved
  • 12.
    • Value of Renewable in New England from Maritimes = REC value + energy value in market
    • REC Ceiling value: alternative compliance payment
      • Electricity supplier penalty if not enough RECs ($61/REC in 2009)
    • Floor value of RECs cost of renewable generation needed to meet RPS less value of energy
      • Estimated to be about $98 per MWh in 2010
    • All US$
    Renewable energy values depends on market conditions Power Advisory LLC 2009 All Rights Reserved
  • 13.
    • Limited need for capacity
    • Energy value influence by low natural gas prices
    • Significant growth required in renewable energy market
      • Market opportunity will be influenced by ability to site and develop projects in region
    • Rebound in economy will offer increased opportunities
    Attractiveness of New England affected by economic conditions Power Advisory LLC 2009 All Rights Reserved
  • 14. Thank you for your attention
            • John Dalton
            • Power Advisory LLC
            • [email_address]
            • (978) 369-2465
            • www.poweradvisoryllc.com
    Power Advisory LLC 2009 All Rights Reserved
  • 15. Introducing Power Advisory
    • Power Advisory specializes in electricity market analysis and strategy, power procurement, policy development, regulatory and litigation support, resource planning and project feasibility assessment.
      • We offer clients insightful analyses based on detailed understanding of market fundamentals and sources of competitive advantage.
      • We have extensive experience with renewable energy technologies, having assisted Ontario develop its Standard Offer and Feed-in Tariff Programs and advised numerous clients on renewable energy investment opportunities.
      • For additional information regarding our services, please contact:
            • John Dalton
            • [email_address]
            • 978-369-2465
    Power Advisory LLC 2009 All Rights Reserved
  • 16. Introducing Power Advisory
    • Clients include:
      • Algonquin Power
      • Atlantic Power
      • Bluewater Power Generation
      • Bruce Power
      • Canadian Wind Energy Association
      • Connecticut Resources Recovery Authority
      • Great Lakes Power
      • Manitoba Hydro
      • National Energy Board
      • Natural Resources Canada
      • Northland Power
      • New Jersey Resources
      • Ontario Energy Board
      • Ontario Power Authority
      • Suncor
      • TransAlta
      • TransCanada
      • Vermont Public Service Board
      • Wheelabrator Technologies, Inc.
    Power Advisory LLC 2009 All Rights Reserved