Top officials at several U.S. retail gas companies reveal how they are rethinking their business models and developing new approaches to serve customers in the face of supply concerns and price...
Leaning on Line Pack
Green energy mandates might overburden gas pipelines.
the citygate in order to replenish line pack. Therefore, much more aggressive management of line-pack inventory across a pipeline or a pipeline route segment should be implemented in order to avoid harm to core gas customers. Such an initiative requires an orchestrated effort among gas and electric stakeholders to determine how best to price and manage the use of line pack to accommodate renewable generation.
Communication between the ISO and the pipeline about wind forecasts could enable a pipeline to increase line pack before a low wind event. Even better, routine operating procedures should be developed to ensure pipeline readiness to supply gas in response to abrupt reduction in wind energy production. A pipeline and the suppliers behind it must be compensated for the additional fuel used to replenish line pack in order to offset under-performance when wind conditions are lower than expected. Subject to stakeholder satisfaction, market rules could evolve to compensate gas suppliers for pressurizing pipelines when needed on short notice or no notice. Likewise, market rules could evolve to allow for the socialization of imbalance charges and penalties borne by generators providing the array of ancillary services when intraday gas scheduling restrictions trigger these additional gas-side costs.
Ensuring System Integrity
Ever improved wind forecasting techniques won’t eliminate significant forecast error. The discrepancy between dispatched generation and actual load should be the sum of the wind prediction errors and load forecast errors; they are proportional to the total MW of installed wind and total load. To accommodate the expected heavy penetration of wind to meet RPS targets, ISOs will need to step up their procurement of short time-scale ancillaries, such as 10-minute spinning, non-spinning reserve, as well as longer-duration ancillaries, such as 30-minute reserves. Like AGC, these products can be obtained from pumped storage, pondable hydro, the ramping up and down of thermal plants, and quick-start peaking generation.
As wind gains market share, the 2008 Texas electric-side contingency reminds us that these standard ancillary services need to be bolstered by a complement of sorts, perhaps a new 60-minute or longer ramping service to safeguard against this type of multi-hour event. Wind integration studies point to the increased need of AGC and operating reserves. This is part of the solution, but not the entire solution, per se . Without proper gas supply on a short or no-notice basis, most effective quick-start operating reserves will be unable to provide load following ancillary services in the required magnitude—unless existing environmental permitting restrictions are liberalized to enable many more starts and stops on ULSD or kerosene. However, the liberalization of air permit restrictions to provide for much greater operating flexibility on premium fossil fuels doesn’t appear likely at this juncture.
In the ISO’s centralized role as the provider of balancing services, longer duration ancillaries can be obtained from quick-start units through line pack. While CC plants and quick-start non-spinning GTs have the potential to furnish an affordable, environmentally benign array of ancillary services, price signals should promote the substitution of gas for oil, thereby promoting the use of pipeline line pack and storage withdrawals