WaEx: New England is approaching what grid officials and utility executives expect to be a very pricey winter for energy consumers and one that risks a shortage of energy during extended periods of extreme cold.
It’s not an unfamiliar forecast for the region, where cold temperatures and natural gas pipeline constraints have a record of driving supply tightness, and thereby driving prices up, during cold winter months. But this year, those pipeline constraints are overlaid by extremely competitive energy markets globally and fuel commodity prices that are already higher than normal going into winter.
That’s led to warnings that $1,000 monthly utility bills could be in order.
At the heart of the challenge are New England’s power generation and residential heating profile. Natural gas accounted for 53% of the region’s power in 2021, while gas is widely used for home heating. In Massachusetts, more than half of households used gas to heat their homes in 2020.
At the same time, interstate pipeline infrastructure “has only expanded incrementally over the last several decades” to supply gas to New England, said ISO New England, the region’s grid operator. “Even as reliance on natural gas for home heating and for power generation has grown significantly.”
“During cold weather, most natural gas is committed to local utilities for residential, commercial, and industrial heating. As a result, we are finding that during severe winter weather, many power plants in New England cannot obtain fuel to generate electricity,” ISO New England said in an online review of its grid performance in 2021.
Charles Dickerson, president and CEO of Northeast Power Coordinating Council, said the region is struggling to strike the right balance between meeting its various green energy targets and meeting consumer energy needs during winter. Green energy targets prioritize the deployment of wind and solar over new fossil resources and supporting pipeline capacity. But when the weather turns bitterly cold, there’s a need for more traditional fossil fuels.
In New England’s case, where coal accounted for just 0.5% of generation in 2021, that quickly usable resource of choice has largely been gas.
“The renewable energy objectives in New England are laudable, they’re achievable, but they’re challenging,” Dickerson told the Washington Examiner. Dickerson also noted the lack of control power generators have over the wind and the sun.
What utilities and balancing authorities can provide, then, when renewable generation is down, or demand for gas rises significantly, is limited to the diameter of the pipelines.
“It’s a physics issue. The pipe is only so big, so you can only push with so much gas through it,” Dickerson said. When ready-supply goes down, prices go up. more