Maritimes Wind Exports to New England

CanWEA 2009: Infinite Possibilities Evaluation of Opportunities and Barriers to Wind Power Exports from the Maritime Provinces to the US Northeast September 21, 2009 John Dalton poweradvisoryllc.com Tel: 978 369-2465

Overview of Presentation  Maritimes wind power potential  New England’s need for renewable energy  Renewable Portfolio Standard demand  Attempting to develop its resource potential  Value of renewable energy in New England  Transmission barriers to exports  Existing infrastructure  Rate pancaking  Addressing transmission barriers  Integrating electricity systems  Eliminating rate pancaking  Building additional transmission 2 Power Advisory LLC 2009 All Rights Reserved

Significant wind power potential in the Maritime Provinces  5,500 to 7,500 MW of wind economic in Maritimes  Greater than load in region for many hours  Indicating a need to export  Current system can integrate about 2,100 MW without major upgrades  Integrating more wind power requires:  Upgrades of transmission within and between provinces  Increased transmission capacity for exports of wind  Better coordination among system operators 3 Power Advisory LLC 2009 All Rights Reserved

New England likely to need additional renewable energy  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 CO2 Cap and Trade increasingly likely  RPS require growing fraction of electricity supplied come from renewable resources  Most RPS programs use Renewable Energy Certificates (REC)  Wind power from Maritimes can participate in RPS if power also delivered Power Advisory LLC 2008 All Rights Reserved 4

New England demand increases given RPS requirements  The RPS requirements are expressed in energy, but converted to a renewable capacity requirement (Blue Line) Demand for Class I Renewable Energy Resources in New England Capacity Requirement assumes that 5 60% of the capacity is provided by resources with a Power Advisory LLC 2009 capacity factor of 34% (e.g., wind) and that 40% is provided by resources with a capacity All Rights Reserved factor of 80%.

New England attempting to develop its resource potential  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” Power Advisory LLC 2008 All Rights Reserved 6

Renewable energy values depends on market conditions  Value of wind power 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)  Value of energy in New England depends on natural gas prices  $35/MWh (August 2009)  $78/MWh (August 2008)  Floor value of RECs cost of renewable generation needed to meet RPS  Estimated to be about $98 per MWh in 2010  All US$ 7 Power Advisory LLC 2009 All Rights Reserved

Exports from Maritimes likely to go through New Brunswick Québec P.E.I Peak Load: 37,230 Peak Load: 205 Installed Capacity: 38,236* Installed Capacity: 125 720 MW (NB–>QC) 222 MW (NB–>PEI) 1,000 MW (QC–>NB) 124 MW (PEI–>NB) *Excludes 5,428 MW of Churchill Falls capacity New Brunswick Peak Load: 3,000 Installed Capacity: 4,266 N. Maine Peak Load: 120 Installed Capacity: 130 115 MW (NB–>NME) 105 MW (NME–>NB) Nova Scotia Peak Load: 2,261 Installed Capacity: 2,293 New England 300 MW (NB–>NS) Peak Load: 27,993 350 MW (NS–>NB) Installed Capacity: 34,204 1,000 MW (NB–>NE) 550 MW (NE–>NB) Power Advisory LLC 2009 All Rights Reserved

Transmission key market barrier to additional exports  If not originating in New Brunswick, exports pay two transmission tariffs  One in province of origin and in New Brunswick  This is rate pancaking  Analysis suggests exports economic only if one tariff paid  Transfer capacity from New Brunswick to New England limited and under long-term reservations  Capacity often available on a short-term (daily) basis  Proposed New England transmission projects would increase transfer capacity  Maine Power Reliability Project by 400 MW 9 Power Advisory LLC 2009 All Rights Reserved

Strategies to address transmission barriers  System operators should pursue further opportunities for integration and coordination of systems to allow increased electricity interchanges  Allowing more wind or reducing costs of integrating wind  Need to eliminate rate pancaking by adopting uniform transmission tariff in the Maritimes  Would result in cost shifting  Could be part of broader plan that includes transmission investment Power Advisory LLC 2009 10 All Rights Reserved

Strategies to address transmission barriers (cont’d)  Build additional transmission to enable additional wind generation for export  Analysis suggests that ISO-NE market prices need to increase to support transmission investment  Unless costs of facilities are shared with other customers based on broad societal benefits of wind Power Advisory LLC 2009 11 All Rights Reserved

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 jdalton@poweradvisoryllc.com 978-369-2465 Power Advisory LLC 2009 All Rights Reserved

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

Maritimes Wind Exports to New England

by johndalton on Sep 23, 2009

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Maritimes Wind Exports to New England — Presentation Transcript