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Winter 2013-2014 Energy Needs Assessment

Winter 2013-2014 Energy Needs Assessment. mc/rc meeting april 17, 2013. Presented by: Wayne Coste, Project Manager/Economic Planning Steve Weaver, Manager/Operational Performance, Training and Integration. OVERVIEW: Objective and methodologies. Objective.

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Winter 2013-2014 Energy Needs Assessment

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  1. Winter 2013-2014 Energy Needs Assessment mc/rc meeting april 17, 2013 Presented by: Wayne Coste, Project Manager/Economic Planning Steve Weaver, Manager/Operational Performance, Training and Integration

  2. OVERVIEW: Objective and methodologies

  3. Objective • The objective of this exercise is to calculate the incremental energy needs of the system to serve higher loads during colder weather conditions or more prolonged cold weather conditions than we experienced this past winter • Any incremental procurement to meet these needs will be for the purpose of protecting reliability if those conditions materialize, and not for the purposes of increasing supplemental commitments • That is, the ISO does not expect to change the frequency or quantity of supplemental commitments for a given set of weather conditions compared with past practice • The ISO is also planning to better reflect reserve needs in the market reserve requirements and resulting prices

  4. Methodologies • ISO-NE used two methodologies to calculate needs for the upcoming winter • Both utilize temperatures from Winter 2003-04, which had the coldest weather in the last 10 years • Both assume that the colder weather drives increased electric load and reduced gas availability (per the ICF study) • Methodology 1: 2012-13 generation fleet dispatched against 2003/2004 demand with gas availability reductions based on temperature • Methodology 2: Incremental energy needed to meet system demand calculated based on hourly gas unit output limited by colder temperatures in 2003/2004 compared to 2012/2013 • Additional scenario assumes lower natural gas imports from the north, which represents a more extreme set of circumstances • Both approaches result in additional energy required to serve load during a severe winter • For illustrative purposes only, MWh are converted into barrels of oil

  5. Assumptions

  6. Assumption: Colder Weather Reduces Gas Availability • Colder weather reduces the natural gas available for electric generation • The average temperature in January was ~10°F colder in 2004 than 2013 • 2004: ~20.1°F • 2013: ~30.8°F • Based on the ICF study, natural gas fired generation reductions are assumed to begin at 30°F and these reductions continue to increase as temperatures decrease

  7. Assumption: Colder Weather Leads to Higher System Demand • Colder weather correlates to higher system demand • January 2004 was considerably colder than recent years • Actual peak load very close to 90/10 forecast • 2012-2013 was comparatively mild • Actual peak load less than the 50/50 forecast

  8. Other Assumptions • The energy available from the generation fleet during the winter of 2012-2013 will serve as the baseline • The generation fleet, in aggregate, will have the same level of fuel in December 2013 as it had in December 2012 • Oil and LNG  storage were at very low levels or at times exhausted during the 2012-2013 winter period • For conversion of MWh to barrels of oil it is assumed that, in aggregate, the generation to meet the additional demand for next winter has the following characteristics: • Heat rate of 10,000 Btu/kWh • Fuel heat content of 137,000 BTU/gallon • The procured quantity must meet the incremental needs identified • i.e., it must offset reductions of natural gas availability due to colder weather and higher system demand due to colder weather

  9. METHODOLOGY 1:Results of Dispatching Current Generation Profile Against 2003/2004 Load Curves

  10. Approach • ISO-NE performed the simulation for selected years • Historical loads for each winter season and the current resource fleet were dispatched in the order shown • For the gas-only units: • Temperature vs. gas unavailable curve was used • Driven by hour 18:00 temperatures • Dual fueled gas/distillate oil units were assumed to be using gas unless the temperature dropped to 30 degrees • If this happened, they generated using distillate • Last, if more energy was needed, residual oil was used

  11. Actual is approximately 0.9 Million BBL of oil

  12. 3.2 Million BBL of oil actual (but simplification shows mostly distillate) USING CALIBRATED MODEL

  13. 2.5 Million BBL of oil (but simplification shows mostly distillate) USING CALIBRATED MODEL

  14. Hypothetical Total Oil Inventory Drawdown Winter 2003/04 Winter 2012/13 Ending with 1.0 Million BBL in Inventory Notes: - Inventory means fuel in the tanks or in the delivery “pipeline” - Assumed an ending inventory of 1.0 million BBL of oil

  15. Conclusions • In this exercise, it was determined that a total of 3.2 million barrels of oil will be needed to meet the 2003/2004 demand (the rest of the generation profile being equal to the 2012/2013 winter) • To recognize minimum usable tank capacity, a 1 million barrel inventory is assumed for the end of the season • The total is 4.2 million barrels

  16. METHODOLOGY 2:Results of Reducing Available Natural Gas

  17. Determination of Incremental MWh Needed in Each of Two Scenarios • Two scenarios studied for next winter: • Scenario 1: Reductions of natural gas availability due to increased gas LDC demand as a result of colder weather • Scenario 2: Scenario 1 conditions plus further generator reductions due to lower gas imports from the north • This is an extreme scenario • For each scenario, ISO determined the amount of additional MWh required using the actual hourly temperatures from the 2003/2004 winter

  18. Scenario 1: Gas Assumptions for Design Day • Tennessee at Full Capacity • Iroquois at Full Capacity • Algonquin at Full Capacity • PNGTS - 200,000 Dth/d • Sable Island - 150,000 Dth/d • Distrigas - 50% (includes fulfillment of existing obligations only and some injections into the pipeline) • Canaport - 50% • Deep Panuke – 200,000 Dth/d (latest information indicates DP will be operational by end of Q2, 2013)

  19. Scenario 1: Assumption for Generator Reductions • Slope for natural gas reductions under this scenario

  20. Scenario 1: Energy Required Under this Scenario

  21. Scenario 2: Gas Assumptions for Design Day • Tennessee, Iroquois, Algonquin at Full Capacity • PNGTS - 200,000Dth/d (the average flow for the coldest week of 2012/2013 winter season) • Sable Island - 150,000 Dth/d (the average value for 2012/2013 winter season) • Distrigas - 35% (includes fulfillment of obligations only) • Canaport - 0% • Deep Panuke - 0 Dth/d

  22. Scenario 2: Assumption for Generator Reductions After Taking Into Account Natural Gas Reductions From the North • Slope for natural gas reductions under Scenario 2

  23. Scenario 2: Incremental Energy Required Under this Scenario (in addition to Scenario 1)

  24. Energy Needs Summary

  25. CONCLUSIONS AND NEXT STEPS

  26. Baseline Results from ISO-NE’s Winter 2012/2013 Fuel Survey • The final reported total oil storage capacity in New England is ~278 million gallons or 6.631 million barrels • Survey results over the past few months have shown mild variations in total oil storage capacity • Fuel survey in Fall 2012 reported a normal expected inventory level of 2.348 million barrels of oil, which translates to 35.4% of aggregate inventory • Actual inventories carried from Dec. 2012 – Feb. 2013 averaged 1.594 million barrels of oil, which translates to 24% of aggregate inventory

  27. Summary of Conclusions • Using methodology 1, it was determined that a total of 4.2 million barrels of oil will be needed to meet the 2003/2004 demand (with a 1 million barrel inventory left at the end of the season) • Less the normal inventory of 2.34 million barrels of oil at the beginning of winter 2012-13, the reliability gap is 1.86 million barrels of oil • Less the actual inventory of 1.59 million barrels of oil reported from Dec. 2012 – Feb. 2013, the reliability gap is 2.6 million barrels of oil • Energy is converted into barrels of oil for illustrative purposes only

  28. Summary of Conclusions • Using methodology 2, the reliability gap is 1.079 million MWh in Scenario 1 and 1.496 million MWh in Scenario 2 • This translates to 1.875 - 2.600 million barrels of oil • Energy is converted into barrels of oil for illustrative purposes only

  29. Open Issues and Next Steps • Confirm MWh reliability gap for Winter 2013-14 from range presented • Determine if gap can be offset through other quantifiable measures • Determine procurement mechanism to meet remaining gap • Determine what resources can meet the remaining gap

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