Exports To The Us Northeast

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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)
  • Exports To The Us Northeast

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

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