The Northeast Grid and the Oil

ISO-NE Report on Cold Weather Grid Performance

It was dramatically cold here in the Northeast from late December through January 8.  Temperatures of ten below were common. The grid used amazing (30% or more) amounts of oil, as the power plants could not get gas. (I wrote a couple of blog posts about this, which I reference at the end of this post.)

On January 16, ISO-NE issued a report on the grid behavior during this period. Cold Weather Operations, December 24, 2017 through  January 8, 2018.  This document is worth reading.   Frankly, in my blog posts, I simply did not know how bad things were becoming on the grid. Let me quote viewgraph 11 of the ISO report:

"As gas became uneconomic, the entire season’s oil supply rapidly depleted"

Pictures speak louder than words

This is a story best told in graphics.

As I noted earlier, the generation mix on the grid shifted heavily to oil. On December 24, 2017, oil supplied 2% of grid electricity. On January 6, 2018, oil provided 36% of the electricity. ISO slide 14 shows this very effectively.

Slide 14
from ISO report
Double click to expand
Other illustrations are from the same report

Update:  Ed Pheil pointed something out to me: if I don't explain that demand on the grid was rising between 12/24 and 1/1/, the decline in nuclear's share of the grid electricity (from 39% to 27% etc.) is inexplicable.  Did the nuclear plants go off-line?  No. But there are only so many nuclear plants, and they can make only so much power.

The chart below shows a steady line of "daily generation" for the nuclear plants.  It is the green line near the top of the chart. There's one exception: Pilgrim went off line when a transmission line failed.   You can see the dip.

Thank you to Ed.  This was a necessary clarification.

Slide 13

Local natural gas prices soared, while Marcellus shale prices remained fairly steady.  Electricity prices followed the natural gas prices. However, generators that could switch to oil did the switch. Oil was was less expensive. Natural gas prices rose about 30 fold (from around $3 to around $90, as shown below)

Slide 30

Due to power plants using lower-priced oil, however, prices on the grid rose from around $50 to around to $450/MWh, only a ten-fold rise.

Slide 55

Oil Depletion

The region was burning oil far faster than it was replenishing it.  On December 1, we had 68% (of the maximum oil) available to power plants.   On January 8, we had 19%.

Slide 21

For a more dramatic picture, ISO shows a single power plant's oil supply, which went from an eight-day supply to a one-day supply over the same period.

Slide 22

There are many important slides.  For example, slide 17 shows how the generators that were enrolled in the ISO-NE Winter Reliability Program really picked up the slack, and slide 18 compares the amount of oil burned in the two weeks of cold with the amount of oil burned the previous two years.  (More was burned in the two weeks of cold.)  

And then there was all the scrambling to keep things going. Slides 35 and 36 show that there were emergency conference calls about the grid---pretty much every day.  

What have we learned?

Much as I dislike burning oil for power, I dislike widespread outages even more.  I give ISO-NE tremendous credit for the Winter Reliability Program, and for keeping the lights on.

According to the last slide in the ISO program, replenishment of oil is the key issue for reliable operation during cold weather in New England.  ISO-NE is correct,  according to their charter.

slide 62

However, the ISO-NE charter is limited.  For me, the important thing is to keep Northeastern nuclear plants operating. Nuclear plants are thoroughly reliable.  (Yes, Pilgrim went offline due to a transmission line failure.) Nuclear plants keep making electricity, no matter what the weather might be, as long as there is a transmission line to send out their power. 

In cold weather, we need reliability. In cold weather, we need nuclear. 

----

Earlier blog posts:

Successful encouragement of oil on the New England grid, December 27.

More cold and more oil on the New England grid, December 29

Vermont, Hot Air, and Puerto Rico, January 7

Successful encouragement of oil on the New England Grid.

Cold in New England, and Going to Stay Cold

I decided to tell this blog as a series of pictures.  

I will start with a screen shot that I took of the weather report, at about 5:30 this evening. (Note that "Hartford" refers to the town of Hartford Vermont, where I live.)  It was 7 degrees F at that time, with a drop to minus 16 expected tonight.  The next few days are expected to have single digit high temperatures and minus temperatures of two digits (minus 10, etc)

Weather at 5:30 pm and forecast

So, how is the grid doing? Fairly well, actually.  At 5:30, I took this picture, showing that the LMP (local marginal prices) were running at about 20 cents a kWh. ($200 a MWh translates to 20 cents per kWh.) The graphics below are screen shots from ISO-NE. I took my snaps at 5:30 at this ISO page, which is updated every 5 minutes. https://www.iso-ne.com/isoexpress/

Grid prices and electricity use at 5:30 p.m. and throughout the day

As you can see by the retrospective graphs to the left of the map, prices have been up and down between $100 and $250  (10 cents and 25 cents per kWh) most of the day.

Oil on the Grid

During cold snaps, gas pipelines must supply homes first, and gas-fired power plants get short-changed.  ISO-NE has a Winter Reliability Program which mainly compensates gas-fired power plants for keeping fuel on site: oil or LNG or CNG. (Liquefied or compressed natural gas.) The grid was running about 22% oil at 5:30 this evening.

The current Winter Reliability program is described in an update presentation, given December 7,  2017  by Anne George of ISO-NE. On page 5, Ms. George describes the current winter reliability program, which pays oil and gas fired generators to have fuel on site.  (Page numbers are at the lower right of each viewgraph.) On page 18, she describes how the forward capacity auctions are attracting new generation, even as older plants retire.  Specifically, ISO-NE is attracting new dual-fired natural gas resources: gas turbines that can also burn oil, and therefore can store oil on-site for cold weather.

ISO-NE's attempt to provide winter electricity by encouraging oil use in cold weather is working.  The next picture shows (among other things) the fuel mix at 5:30 on the New England Grid. 

Fuel use at 5:30 p.m. and throughout the day

You can see that 25% of the electricity was supplied by nuclear, 24% by natural gas, 22% by oil, and 11% by renewables.  Usually, the grid runs closer to 50% natural gas and just a few percent oil. If you go to viewgraph 19 of the ISO-NE presentation,  you can see that natural gas is expected to be 55% of normal generation, and oil is the merest sliver on the graph.

The Renewables

In the chart above, renewables are making 11% of the power on the grid.  This is on the high side. (Viewgraph 19 of the ISO presentation shows renewables making 5%, for example.)  The high contribution of renewables is due to the wind.

In my experience of New England, really cold weather is often deathly still.  Not this time.  The wind is blowing, the windchill factor is serious, and the wind turbines are making considerable amounts of energy.  Wind turbines are making 50%  of the renewable power on the grid, as you can see in the chart below.  Basically, the other 50% of the renewable power is being made by burning wood and refuse. That power is pretty steady: the wind contribution goes up and down.

Since wind is making half the renewable power on the grid, and renewables are making 11% of the power on the grid, therefore,  the wind turbines are making 5.5% of the power on the grid. 

 The chart below shows the percentage of renewables on the grid at 5:30 p.m. 

Renewables on the grid at 5:30 p.m. 50% of the renewable power is from wind

The End of the Grid Tour

I am pleased that it is both cold and windy. (Actually, I am not that pleased about it. I have to live here, after all.)  I also know ISO must be fuel-neutral, so dual-fuel gas-fired generators are considered good. However, I can't help but think that using more oil in the winter is a step back for New England, not  a step forward.  

If you want, you can go to the ISO site, and watch the grid.  Or if you don't live in New England, look up your own grid, and do a compare-and-contrast. I would love it if you would comment on this article.

(An article from about four years ago in similar weather: The Cold Truth on the New England Grid.)

Cold Weather Winners and Losers on the Vermont Grid

It's cold outside and it is going to stay cold.

It's not unseasonably cold: last night dipped to about fifteen below. On the other hand, the planting guides tell me that I should only buy trees and bushes that are hardy to thirty below.  So it's not that cold, by regional standards.

Still, it is cold.  Partially because of space heaters and so forth in these northern climes, the electricity  price on the ISO-NE grid is soaring.  The usual wholesale price on the New England grid is between $30 and $70 MWh (3 and 7 cents per kWh).  As you can see from the screen capture I took this morning from the front page of the ISO-NE website, the grid is now running more like  $200 MWh, or 20 cents per kWh.

Who wins and who loses (on the grid), when the temperature dips like this?

Losers:

I would call Hydro Quebec a possible loser at this point. They are selling record amounts of power, as described in this article Hydro Quebec expects to break record for 2nd day in a row.   They are asking people to conserve and reduce consumption.

So, if they are selling so much electricity, why do I call them a loser?  Because they are not exporting as much electricity, and export to the U S is where they make money.  According to a tweet yesterday from Platt's (which I have not been able to verify, but Platt's news service is pretty good):

Hydro-Quebec is seeking voluntary demand cuts during peak hours Wednesday, Thursday; Weds exports to US fall to 800 MW from 1,400-1,500 MW

The lack of HQ power is probably one of the reasons that  the grid price in New England is soaring.

The Vermont contracts with HydroQuebec (HQ) supposedly smooth most of this type of spike in grid prices. Vermont doesn't have to pay top dollar to HQ when grid prices rise suddenly.  Still, HQ expects to make much of its profits from export. If you read the introductions to their annual reports, you can see them apologizing if they don't make enough money on exports.

HQ is exporting about half the usual amount of power right now. So they aren't making as much money as they would like to make. That's why I said HQ is a loser in this situation.

Yes. I know.  I can hear you all reminding me.  HQ did close the Gentilly 2 nuclear station earlier this month,  claiming they had excess power.  Oh well.  To quote Kurt Vonnegut: "So it goes."

Winners: 

Every merchant generator (including Vermont Yankee) is a winner.  Look at those prices compared to their costs.  Wowee!

Losers Again: 

 Most transmission and distribution utilities are losers in this situation   They are paying a lot for power on the grid, but they can't change their price-to-consumers to reflect this.  Months later, in front of their state regulatory boards, the utilities may get some kind of rate increase. For right now, I think they are hurting. They are in the position of losing money on every kWh sold, and trying to make it up on volume.

The more a generator depends on short-term contracts (not committed power) the worse off they are, in terms of the gap between cost of power and what they can charge the end-user for power.  Green Mountain Power boasted that they are able to get good short-term deals on the grid because they don't have too much committed power. That strategy might not look as good today as it does on some other days.

Winners Again:

However, the Vermont utilities are doing well due to the Vermont Yankee Revenue Sharing Agreement.   This agreement requires the plant to pay Vermont utilities half of the amount over 6.1 cents that they receive for power.  So if VY were receiving 18.1 cents/ kWh for power right now, the utilities are getting one half of the difference between 18.1 cents and 6.1 cents.  The difference is 12 cents, and the utilities are getting 6 cents every time VY sells a kWh.

Revenue sharing is a "heads-you-win, tails-I-lose" agreement for VY.  If the price on the grid is low, VY just has to sell the power cheaply.  If the price is high, VY does not get the full benefit: the utilities share the money.

However, it is the agreement that Entergy made when they bought the plant, and they are holding to it.

Irony Time

Kurt Vonnegut

If you listen to the last few minutes of the Federal Appeals Court hearing, you can hear the lawyer for the state say that these Vermont Yankee payments to utilities is a reason that the state needs to close the plant.  The hearing is embedded in my blog post State Claims Economic Reason for Closing Plant,

If Kurt Vonnegut were alive today, he could write something scathingly funny about the Vermont administration's attitude toward Vermont Yankee.  Unfortunately, I do not have his skills as a satirist.

Update

This post has inspired posts on important related topics at other blogs.

At Canadian Energy Issues, Steve Aplin writes: Money down the drain, possibly forever: Hydro Quebec pines for Gentilly 2's revenue generating potential

At Neutron Economy, Steve Skutnik looks at natural gas.  Production price is not the only issue. Pipeline capacity is also crucial, and ultimately, limiting. Where's the real bottleneck for natural gas? Distribution.