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Retirement is Coming

Preparing for New England’s capacity transition.

Fortnightly Magazine - June 2011

reached commercial operation. The next level of analysis should include a review of the impacts of generating resource turnover on the region’s FCM prices, which could rise with the retirement of existing resources and the addition of new ones; such an effect would likely moderate the consumer benefits realized through reductions in marginal energy prices. In addition, many other factors will guide ultimate investment decisions and determine the course of resource development—such as changes to the structures of forward capacity and reserve markets; siting and regulatory risk; the evolution of renewable portfolio standards, greenhouse gas emission programs, and other state and federal policies to support investment in renewables; the progression of state and regional procurement and long-term contracting mechanisms; and the treatment of long-haul transmission for renewables in the regional tariff. While results from the MAPS analysis conducted in combination with a survey of key development factors could be used to characterize the likelihood of development of each of the scenarios evaluated, such a review is beyond the scope of the current analysis.

9. See, for example, the announcement by New England States Committee on Electricity, “Preliminary Responses to Request for Information Identify Over 4,700 MW of Renewable Generation,” Feb. 15, 2011; and Federal Energy Regulatory Commission Docket No. ER11-2377-000, “Order Accepting Transmission Service Agreement,” Issued Feb. 11, 2011, approving a transmission service agreement for a high-voltage transmission line to move power from Hydro Quebec into New England.

10. MAPS is a simulation model developed and licensed by General Electric. The model includes full representation of the ISO-NE, NYISO, PJM and Ontario systems, and a boundary representation of the resources located in Quebec, New Brunswick and Nova Scotia.

11. This may be thought of as building a 1,200 MW-capable transmission interconnection into the Boston/NEMA load area, with only the 1,200 MW of wind capacity connected. The quantity of coal-fired capacity retired is equal to the quantity of coal-fired capacity at Salem Harbor Station (roughly 307 MW, summer rating), the only coal-fired units requesting permanent retirement at this time.

12. This may be thought of as a 400-MW transmission line, to which only the wind and hydro resources are connected.

13. The analysis models only the impact of prices in the energy market; it doesn’t reflect the impact on capacity or reserve market prices associated with either the retirement of Salem Harbor, or the addition of new gas-fired or wind and hydro resources. It also doesn’t reflect the impact on regional transmission pricing should the transmission to interconnect distant wind or hydro resources be collected through the regional tariff (as opposed to being paid for by project developers).

14. Not all emission changes are associated with the New England region. In fact, one effect of increasing low-marginal cost generation in New England is to increase exports to New York, relative to the reference case, and decrease emissions from fossil-fuel generation beyond New England’s borders. The emission results reported here represent changes in total dispatch emissions across the full modeled region ( e.g., NYISO, PJM and Ontario as well as ISO-NE).