New Report Highlights Huge Role of Natural Gas in New York Energy Plan

The New York Independent System Operator (NYISO) recently released its 2015 Power Trend report, which looked at the long term planning for the state’s electric power system. As EID has noted in previous posts, the Empire State plans not only to continue its use of natural gas for electricity generation, but actually to ramp it up significantly in the coming years.

NYISO is a not-for-profit corporation responsible for operating the state’s bulk electricity grid, conducting long-term planning for the state’s electric power system, and advancing the technological infrastructure of the electric system serving New York state.

The most notable section of the report is the “Growing Reliance on Natural Gas” section, which states:

  • Power projects using natural gas (gas-only and dual-fuel units capable of using either natural gas and/or oil) account for 56 percent of New York’s generating capacity.
  • More than 70 percent of all proposed generating capacity in New York are natural gas or dual fuel power projects.
  • Winter 2014 price spikes, driven by increased cost of natural gas delivered to New York, increased the average wholesale electric energy price to $69.30 per megawatt-hour in 2014, up from $59.13 per megawatt-hour in 2013. Winter 2015 saw less volatility as a result of improved fuel supplies and enhancements to gas-electric coordination.
  • The NYISO and its stakeholders are exploring the creation of additional market-based incentives for fuel supply assurance during periods of summer and winter peak demand that can stress both the electric and the natural gas delivery systems. (emphasis added 6)

With a growing reliance on natural gas for electricity generation it’s interesting to see where other fuel types rank next to natural gas and associated hydrocarbons. The below charts show the generating capacity for New York state and New York City by fuel type in 2015. GenCapacity

GeneratingCapacity

It’s evident from this report, and previous New York State Energy plans, that natural gas will continue to play a huge role in electricity generation for the Empire State for the foreseeable future. That’s a very a very good thing, given the decrease in energy costs. According to the NYISO report:

Power plants fueled primarily by natural gas account for more than half of the electric generating capacity in New York State. Consequently, the price of natural gas and the cost of electricity are closely correlated. The cost of fuel for these units is reflected in their offers. (Emphasis added Pg. 28)

Due to a supply glut of natural gas – fueled by high production from Pennsylvania’s Marcellus Shale, New Yorkers are paying less for energy.

Fig17

Aside from a welcomed decrease in energy costs, the report also highlighted emissions reductions New York has seen since it started using more natural gas for electricity generation. According to the NYISO report:

From 2000 through 2014, New York power plant emission rates dropped by double digits. SO2 emissions rates declined 94 percent. NOX emission rates declined 78 percent. CO2 emission rates declined 39 percent. (Emphasis added Pg. 7)

Fig28Despite a recent ban – albeit an ill-advised one – on hydraulic fracturing in the state, New York continues to reap the rewards of domestic natural gas production. However, these emissions reductions may not be enough for the Empire State, as the Environmental Protection Agency’s new Clean Power Plan may cause reliability issues. According to NYISO:

“As proposed, the Clean Power Plan presents potentially serious reliability implications for New York. A majority of the electric capacity within New York City is dual-fuel oil/gas steam-fired electric generating units. These units are critically important, both due to their location within the transmission constrained New York City area and because they possess dual-fuel capability that provides a needed measure of protection against disruptions in the natural gas supply system.” (Pg. 52)

To sum up: NYISO has voiced concerns about electric system reliability and the lack of recognition of the progress New York has already made in achieving significant Co2 reductions, which are, in large part, thanks to natural gas.

Fortunately for New York, 34 other states across the country are developing and regulating oil and natural gas so New York has the opportunity to utilize these resources to lower emissions and energy costs for its residents.

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