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The regional grid operator’s long-term capacity auctions have become key to developers’ state siting applications.
Within the span of a few weeks in June, regulatory officials in Connecticut and Rhode Island came to starkly different conclusions on development proposals for natural gas-fired electric generating plants on sites about 20 miles apart.
The Connecticut Siting Council approved an application by Florida-based NTE Energy for a 650-megawatt facility in the town of Killingly, finding in its written decision that the plant is “necessary for the reliability of the electric power supply” of the New England region.
Rhode Island’s Energy Facility Siting Board reached the opposite conclusion in weighing an application by Chicago-based Invenergy to build a 1,000-megawatt power plant in the town of Burrillville. The board unanimously rejected the application, stating that there was “strong evidence” that the additional energy capacity is not needed.
Why did the two regulatory boards differ so on the need for new capacity? The answer can be found in a “through line” in those decisions, said Dan Dolan, president of the New England Power Generators Association, a trade association representing electric generating companies.
Each of the outcomes “seemed to hinge almost entirely” on whether the plants’ operators had already secured future power generation commitments from the region’s grid operator, ISO New England, he said. NTE had such a commitment — it was approved. Invenergy did not — it was rejected.
That’s new — such commitments have not historically been part of the siting determination but were more a part of the financing discussion, and on a separate track, Dolan said. That the two tracks seem to be merging is indicative of the rapidly changing energy landscape.
“You’ve got Connecticut, Rhode Island and Massachusetts contracting for thousands of megawatts of new resources, including hydro, solar and wind,” Dolan said. “So boards are struggling a little bit with how to define a determination of need, which underlines so many of the siting statutes. And they are falling back on the forward capacity market to help determine that.”
ISO-NE holds what’s called a forward capacity auction every year, and suppliers compete to obtain a commitment to provide capacity in three years’ time.
NTE Energy participated in and cleared ISO-NE’s last auction and was selected to receive a 632-megawatt, seven-year capacity supply obligation between 2022 and 2029. In its written decision, the Connecticut Siting Council explicitly cited that obligation as proof that the Killingly Energy Center is needed.
This was the council’s second decision on the Killingly plant. In 2017, the council voted to deny without prejudice an earlier application from NTE, and at that time noted the absence of a forward capacity obligation, said Jerry Elmer, a senior attorney for the Conservation Law Foundation.
This time, “when NTE did get an obligation, that might have boxed in the board in thinking, ‘we’ve got to be consistent, we’ve got to give it to them,’” Elmer said.
Elmer and other environmentalists argue that a future power commitment doesn’t necessarily justify a new plant. Samantha Dynowski, state director for Sierra Club Connecticut, said the state will not meet its greenhouse gas reduction goals if it continues to approve new fossil fuel-burning power plants.
A 485-megawatt natural gas-fired plant went online in Bridgeport earlier this year; that will enable the future shutdown of a coal-fired facility. And an 805-megawatt gas plant opened last year in Oxford.
“We’ve recommended more investment in energy efficiency measures and electrifying through air-source heat pumps,” Dynowski said. “Instead, the state continues on the same path we’ve been on before.”
Asked whether a forward capacity obligation should signal need, Matt Kakley, a spokesperson for ISO New England, said the authority makes its selections in each auction based on the lowest-cost resources.
“Ultimately, it is up to a state’s siting body to determine what meets the state requirements for ‘need,’” he said.
The New England States Committee on Electricity, a coalition representing the six states in electricity matters, has formally requested that ISO-NE begin studying future market frameworks that would factor in states’ energy and environmental laws.
In Rhode Island, the siting board’s discussion around whether Invenergy’s project was needed made mention that the company had been disqualified from the ISO’s last auction, as well as that an earlier supply obligation obtained by Invenergy had been terminated by the ISO.
The board also discussed the changing grid. Member Janet Coit, director of the state’s Department of Environmental Management, noted that the region had seen “a tremendous uptick” in renewables in recent years. (The board hasn’t yet released an official written decision.)
While natural gas-fired plants currently produce about 40% of the grid electricity consumed in New England in a year, about 65% of the pending proposals for new power projects in the region are for wind power, according to ISO-NE’s 2019 regional electricity outlook.
The Conservation Law Foundation argued against Invenergy’s application, providing the siting board with evidence Elmer said was intended to show that, even if the developer did have a supply obligation from ISO, the plant “was not needed and would not be needed in the future.”
While Invenergy argued that another gas plant is necessary to provide the grid with the reliable baseload generation needed to backstop intermittent renewables, Elmer made a case that “there’s already vastly more gas on the system as is needed for that particular role.”
Invenergy has the right to appeal through the state courts once the board issues its written decision, which is expected within a couple of weeks.