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Assessment of Peaking Gas Service for New Englands Quick Start Generators Planning Advisory Committee March 3, 2005 Herbert Rakebrand III Herbert Rakebrand.

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Presentation on theme: "Assessment of Peaking Gas Service for New Englands Quick Start Generators Planning Advisory Committee March 3, 2005 Herbert Rakebrand III Herbert Rakebrand."— Presentation transcript:

1 Assessment of Peaking Gas Service for New Englands Quick Start Generators Planning Advisory Committee March 3, 2005 Herbert Rakebrand III Herbert Rakebrand and Associates, LLC

2 March 3, Purpose of the Assessment The Peaking Gas Assessment was developed in response to Recommendation #5 of ISO New Englands Management Response to the Final Report on Electricity Supply Conditions in New England during the January 14-16, 2004 Cold Snap

3 March 3, Recommendation #5 states that: The ISO should encourage consideration of the feasibility and usefulness of having the gas utilities provide peaking gas capability on gas pipelines in New England. Under emergency operating conditions, peaking gas might allow the provision of gas to peaking or quick-start units, enabling them to reliably provide critical operating reserves. Many details of operation and implementation would need to be resolved.

4 March 3, Background/Terminology Peaking Service: Is generally associated with a full day of service provided during peak load periods. This type of service may be contracted for between 1 day and a full winter season (Nov-Mar). No-Notice Service: This type of service is typically utilized for periods shorter than one day and does not adhere to the standard gas nomination and scheduling protocols. The service required for quick-start or peaking generation would more accurately fit into this category.

5 March 3, Background (cont.) No-Notice Service Assumptions: The fuel would be available for consumption within a minute period. The service would be required to be available on a firm basis, both off-peak and on-peak for 365 days a year.

6 March 3, Findings The physical and scheduling complexity of providing no-notice services currently limits the sellers in the marketplace to local gas distribution companies (LDCs) and LNG facilities with direct access to an electric generator. Sale of no-notice services by LDCs during peak load conditions may be seen as problematic by regulators under most conditions, especially if the facilities required to provide such service are included in the LDC rate base to support core market requirements.

7 March 3, Findings (cont.) The presumed high cost of a no-notice service would limit the buyers to gas-only intermediate or peaking units who are required to deliver under forward reserve markets. Under the current no-notice service structures, these generating units would also need to be located behind the LDC meters or directly attached to an LNG facility.

8 March 3, Findings (cont.) At this time, New Englands interstate gas pipelines will not support incremental no-notice type services. To significantly increase the number of generating units that could acquire no-notice services, market signals must be present to entice pipelines to enter into these agreements. New LNG deliveries into the New England pipeline grid may hasten the availability of these services later in this decade.

9 March 3, Findings (cont.) ISO-NE should investigate the potential utilization of a new on-site gas storage approach being developed by Distributed Storage Technology (DST). The fact that DST utilizes existing technology for the most part, gives a higher level of certainty that the product could be successful and commercially available in a reasonable timeframe.

10 March 3, Findings (cont.) While propane may support smaller electric quick-start applications from existing sites, the ability to serve larger electric plants or construct new sites may not be economic or feasible from a siting perspective. Most industry experts believe that LNG would be a better alternative for new or larger applications.

11 March 3, Findings (cont.) Gas-fired generators should weigh the value of expanding dual-fuel capability for peaking (no-notice) requirements against the cost of incremental no-notice services from the natural gas industry. This is especially true for larger generating units ( MW) where the substantial fuel requirement would virtually eliminate no-notice service availability.

12 March 3, Current Pipeline Service Offerings No-Notice Services Algonquin (AGT) – AGT currently offers a no-notice service under its AFT-E rate schedule. AGT is not offering any new contracts under this rate schedule and will not provide service to alternate points under existing contracts. Tennessee (TGP) – TGP provides no-notice service through a combination of storage (FS-MA) and transportation (FT-A) rate schedules and employs the same constraints as AGT regarding new contracts and the use of alternate points.

13 March 3, Current Pipeline Service Offerings (cont.) Park and Loan Services (PAL) All pipelines serving the Northeast offer PAL services. These are scheduled services that allow end-use markets to balance their pipeline receipts and deliveries through the use of the pipelines line pack. As scheduled services, they do not meet the strict (short-notice) time criteria for quick start or peaking units.

14 March 3, The Use of LNG for Quick-Start Requirements New Englands LDCs have a well established LNG infrastucture 46 Tanks in 30 Communities (excl. Distrigas) 16 BCF of storage and 1.3 BCF/d of sendout Distrigas – Everett, MA Storage of 3.5 BCF Sendout capability into the pipeline grid is 1 BCF/d Sendout capacity in liquid by truck is 100 MDt/d

15 March 3, The Use of LNG for Quick-Start Requirements (cont.) Issues: Start up times can range from instantaneous to 1 hour and are site specific. While regional capabilities are significant, approximately one half of the sites are too small to support electric power generators over 100 MW (even if the entire output of the LNG facility were dedicated to electric generation). The current absence of no-notice pipeline services require that the generator be behind an LDC meter or directly connected to the LNG facility.

16 March 3, The Use of Propane for Quick-Start Requirements New Englands Propane Storage Infrastructure 274 Tanks in 36 Communities Total propane storage capacity is 1 BCF Sendout capacity is 289 MDt/d

17 March 3, The Use of Propane for Quick-Start Requirements (cont.) Issues Only 13 of the sites identified could accommodate the daily requirements of a 50 MW electric peaker and only 3 could accommodate the requirements of a 100 MW electric generator, even if the entire facility was dedicated to providing service for electric generation. Siting new propane storage would be very difficult. Propane storage requirements to serve electric generation as well as the required trucking delivery is very significant (100 MW would require up to 3 trucks per day to supply it).

18 March 3, Pricing and Regulatory Implications No-notice services provide a very low load factor for the assets required to support them and therefore are priced at a premium with respect to other services where the seller can better manage the utilization of the assets. The implication of regulatory oversight with regard LDC sales of no-notice services will significantly impact the availability of these services.

19 March 3, A Survey of No-Notice Service Offerings - Pipelines Algonquin – AGT has no interest in entering into any new no-notice service contracts. Tennessee - While TGP indicates that some degree of service is available, they stop short of offering a firm no-notice service and indicate that a short-notice service could potentially be structured (1 hour notice). Iroquois – While Iroquois has indicated an interest in offering no-notice services, without storage tied to their system, they would require an upstream pipeline to provide no-notice deliveries into their system.

20 March 3, A Survey of No-Notice Service Offerings - LDCs LDCs Leased Propane Storage – An LDC has indicated that it would be willing to lease space in its propane tanks. This may only work for smaller applications as previously discussed and only be available for one year (subsequent years if conditions permit). LNG – Where an LDC can demonstrate short term excess capabilities, it may be willing (on a short term) to offer no-notice services through the use of its LNG capabilities.

21 March 3, A Survey of No-Notice Service Offerings - Distrigas Distrigas has indicated that it would be willing to offer a no-notice service, but would require the electric generator to be directly connected to its Everett, MA facility. This is due to the lack of no- notice pipeline services.

22 March 3, New Products and Services Distributed Storage Technologies (DST) No-notice capabilities through on-site storage. Existing drilling technology, for the most part, to create high pressure underground vertical storage. DST is currently working with markets in the Northeast to develop test sites.

23 March 3, Questions and Discussion

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