ISO-NE, region’s utilities release call to action on LNG’s role in the clean energy transition

The region’s clean energy transition requires developing and executing a plan to reduce our dependency on imported liquefied natural gas (LNG), while securing and stabilizing the fuel’s supply chain in the shorter term, according to a problem statement and call to action issued today by ISO New England and several of New England’s gas and electric distribution companies. The statement was sent to the New England states and New England Power Pool (NEPOOL) stakeholders for discussion ahead of the Federal Energy Regulatory Commission’s (FERC) New England Winter Gas-Electric Forum, scheduled for September 8 in Burlington, Vt.

“Energy adequacy is an under-appreciated, poorly-understood, but vitally-important component of a successful clean energy transition,” said Gordon van Welie, president and CEO of ISO New England. “By raising awareness of this issue ahead of the upcoming forum, ISO New England and the region’s utilities hope to begin the process of developing a strong, coordinated response with the New England states, NEPOOL, and regional stakeholders to assure that energy adequacy is consciously addressed as the region charts a course toward a clean power system.”

Multiple actions will be needed to ensure energy adequacy in New England throughout the clean energy transition, the ISO and distribution companies say in the statement. Possible actions could include accelerated development of clean energy resources, additional transmission to access electrical energy, increased in-region liquefaction and dual-fuel resources, long-duration storage, and green fuels. 

In the meantime, the region needs to secure and stabilize the imported LNG supply chain to supply customers of natural gas, including ensuring the continued operation of the Everett LNG Facility following the retirement of the Mystic Generating Station in June 2024, the statement says.

“When reliability suffers, the clean energy transition suffers.”

For the region’s clean energy transition to be successful, the power system must remain reliable throughout the evolution. “Simply put, when reliability suffers, the clean energy transition suffers,” the statement reads.

ISO New England has observed that other power systems had to step backward in their environmental goals in response to reliability risks. Germany, for example, moved quickly to retire its nuclear fleet with an aim of replacing those power plants with renewable resources. However, a lag in the development of these resources, coupled with geopolitical concerns prompted by the Russian-Ukrainian war, has led the country to reactivate its once-dormant coal plants. Similar stories have played out elsewhere in Europe, Australia and, closer to home, in California and Texas. 

By learning from these examples, New England can avoid these mistakes and continue on the path toward a cleaner power system.

Regional energy adequacy plan needed

The statement details how New England is further along in developing long-term plans for clean energy investment and related transmission infrastructure, but lacks a “comparable plan to ensure the region has sufficiently robust, long duration, sources of balancing energy.”

The incompatibility of the regulatory framework and associated cost recovery mechanisms between the electric and gas markets poses challenges to a durable, regional energy adequacy solution, according to the statement.

“There is a structural problem that encompasses the gas and electric systems and there is a bifurcated regulatory system for addressing it,” the statement says. “As the clean energy transition progresses, this reliability and regulatory dilemma will become more pronounced.”

Solving these issues will be imperative to the clean energy transition. While these issues currently apply to fossil fuel providers, they will also likely apply to clean, long duration balancing energy providers, such as clean hydrogen or long duration batteries, according to the statement.

A unique regional service

One particular LNG facility in Everett, Massachusetts, provides a unique service to the region, which is simultaneously gas-dependent and gas-constrained. The natural gas pipelines that serve New England operate at maximum capacity during the winter. During extended periods of very cold weather, the pipeline system cannot fully supply heating demand or provide enough fuel to power gas generators without injections of LNG.

The Everett facility is the only LNG import facility in regular use in New England and fuels the neighboring Mystic Generating Station, which the ISO has retained until its scheduled retirement in 2024. The future of the LNG facility remains unclear beyond the retirement of the power plant. The facility has LNG storage capacity equivalent to 3.4 billion cubic feet of natural gas—enough fuel to power more than 4,000 megawatts of generation for several days. The terminal includes equipment for the import, storage, local transportation, and regasification of LNG that comes in by ship. This facility plays a critical role in maintaining power system reliability on the coldest days of the year.

The region is also dependent on the Saint John LNG facility in New Brunswick, Canada, but this facility does not fall under United States jurisdiction.

Regional climate goals call for the electrification of the heating and transportation sectors, which will increase demand for electricity and, consequently, increase the need for long duration balancing energy sources, like LNG. Until the region has fully transitioned to alternate fuel sources to provide this long duration balancing service, we must preserve our existing gas infrastructure, the statement says. 

Next steps

ISO New England and the region’s utilities believe the region should undertake a comprehensive study of the energy adequacy problem. Because of the urgency of this issue, it is incumbent upon the region to move expeditiously forward in developing practical and feasible short-term actions, while studying long-term solutions, according to the statement. 

The ISO will work with the New England states and stakeholders to accelerate actions that will help reduce the region’s long-term dependency on the Everett facility and imported LNG, mitigate the energy adequacy problem, and continue the transition to a clean energy future. Such short-term actions include identifying expedient investments in transmission and ISO tariff-based or market-based solutions. Clear guidance from FERC and the states will be critical for the region to move forward, the statement says.

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