Beruflich Dokumente
Kultur Dokumente
Flushing, NY 11373-5108
Prepared By: Charles River Associates 200 Clarendon Street Boston Massachusetts 02116 www.crai.com Date: July 5, 2011 CRA Project No. D16322
Disclaimer
This internal draft document is supplied for the purposes of facilitating discussions with the NYCDEP. It is not a final work product, may not have been reviewed or data managed, and may have factual or other errors. It is therefore not to be further reproduced or distributed without express permission from CRA. Neither the author(s), nor CRA make any representation or warranty as to the accuracy or completeness of this document, or accept any liability for any errors or omissions, or for statements, opinions, information, or matters arising out of, contained in or derived from this document, or related communications, or for any actions taken on such a basis.
Charles River Associates and its authors make no representation or warranty as to the accuracy or completeness of the material contained in this document and shall have, and accept, no liability for any statements, opinions, information or matters (expressed or implied) arising out of, contained in or derived from this document or any omissions from this document, or any other written or oral communication transmitted or made available to any other party in relation to the subject matter of this document.
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Table of Contents
1. EXECUTIVE SUMMARY ................................................................................................ 1
1.1. 1.2. 1.3. 1.4. INTRODUCTION .................................................................................................................... 1 OPTIONS EVALUATED .......................................................................................................... 2 KEY FINDINGS ..................................................................................................................... 4
1.3.1. Implications for policymakers ............................................................................................. 9
2.2.
3.2.
4.2.
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4.3.
4.4.
TABLE OF FIGURES
Figure 1 - New York Transmission System (Source: NYISO)
.................................................... 22
Figure 2 - Typical New York Energy Prices ........................................................................... 23 Figure 3 - NYISO MARS Topology...................................................................................... 25 Figure 4: New York State Capacity Demand Curve for May 2011 April 2012 Capability Period ...... 27 Figure 5: New York City Capacity Demand Curve for May 2011 April 2012 Capability Period ........ 27 Figure 6 - Base Case NYCA IRM Summary .......................................................................... 29 Figure 7 - Base Case NYC IRM Summary ............................................................................ 29 Figure 8 - Change in NYC Load Forecast ............................................................................. 36 Figure 9 - Long Term Trend of Load Growth ......................................................................... 37 Figure 10 - Change in 2016 NYC Peak Load ......................................................................... 37 Figure 11 - Forecast Peak Load Reductions from Energy Efficiency (MW) ................................... 38 Figure 12 - Model Calibration - Zone J Prices ........................................................................ 48 Figure 13 - Model Calibration - Load Pocket Prices
................................................................ 49
Figure 14 - Reference Case Market LMPs in NYC for All-Hours (2010$/MWh) .............................. 50 Figure 15 - Reference Case Market LMPs in NYC for All-Hours (2010$/MWh) .............................. 51 Figure 16 - Reference Case Implied Heat Rates in NYC for All-Hours (Btu/kWh) ........................... 51 Figure 17 - Average Seasonal UCAP Prices Base Case .......................................................... 53 Figure 18 - Status Quo Market LMP (2010$/MWh) ................................................................. 61 Figure 19 - NYC ICAP Resources....................................................................................... 67
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Figure 20 - Comparison of High Case and Reference Case Status Quo Market LMP ...................... 82 Figure 21 Comparison of High Case and Reference Case Status Quo Implied Market HR............. 83 Figure 22 - Comparison of Low Case and Reference Case Status Quo Market LMP ...................... 90 Figure 23 - Comparison of Low Case and Reference Case Status Quo Implied Market HR .............. 91
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TABLE OF TABLES
Table 1 - NYCA LOLE, Base-Case Load Forecast .................................................................. 12 Table 2 - NYCA LOLE, 2011 Gold Book Forecast
.................................................................. 12
Table 3 - NYS Total Consumer Cost ($million)....................................................................... 13 Table 4 - NYC Total Consumer Cost ($million)
...................................................................... 13
Table 5 15-Year NPV of Electricity Market Consumer Costs, NY ($million) ................................ 14 Table 6 15-Year NPV of Wholesale Consumer Costs, NYC ($2010million) ................................ 14 Table 7 15-Year NPV of Contractual Support Required for Replacement Options ($million) ........... 15 Table 8 - NYS Air Emissions Impact .................................................................................... 15 Table 9 - NYC Air Emissions Impact
................................................................................... 16
Table 10 - Base Case NYCA IRM Summary ......................................................................... 28 Table 11 - Base Case NYC IRM Summary ........................................................................... 30 Table 12 - Pro-Forma Financial Analyses Assumptions ........................................................... 31 Table 13 - Scenarios and Options Analyzed .......................................................................... 33 Table 14 - ICAP Market Reference Point at 100% on Demand Curve
......................................... 35
Table 15 - New York Non-Coincident Summer Peak (MW) ....................................................... 38 Table 16 - New York Annual Energy (GWh) .......................................................................... 39 Table 17 - High Load New York Non-Coincident Summer Peak (MW) ......................................... 39 Table 18 - Low Load New York Non-Coincident Summer Peak
................................................. 40
Table 19 - Base Case Gas Prices ($/MMBTU) ....................................................................... 41 Table 20 - High Scenario Gas Prices ($/MMBTU)................................................................... 42 Table 21 - Low Scenario Gas Prices ($/MMBTU) ................................................................... 42 Table 22 - Base Case Oil Prices ($/MMBTU)......................................................................... 43 Table 23 - High Case Oil Prices ($/MMBTU) ......................................................................... 43 Table 24 - Low Case Oil Prices ($/MMBTU) .......................................................................... 44 Table 25 - Emissions Price ($/Metric Ton) ............................................................................ 45 Table 26 - Planned Capacity Additions ................................................................................ 46 Table 27 - New Capacity Additions for Base Case .................................................................. 46 Table 28 - Planned Capacity Retirements ............................................................................. 47 Table 29 - Capacity Additions for High Case ......................................................................... 47 Table 31 - Reference Case Capacity Market Prices (Nominal)
.................................................. 54
Table 32 NYS Consumer Cost of Energy (2010$M).............................................................. 54 Confidential Draft Report Page v
........................................................... 54
Table 34 NYS Total Consumer Cost (2010$M) .................................................................... 55 Table 35 - NYC Consumer Cost of Energy (2010$M) .............................................................. 55 Table 36 NYC Consumer Cost of Capacity (2010$M) ........................................................... 56 Table 37 - NYC Total Consumer Cost (2010$M) .................................................................... 56 Table 38 - Base Case Resource Adequacy ........................................................................... 57 Table 39 - No New Generation Resource Adequacy ............................................................... 57 Table 40 - Reference Case with 320 MW Firm HTP Capacity .................................................... 58 Table 41 - NYCA LOLE with 2011 Gold Book Forecast............................................................ 58 Table 42 - NYCA LOLE with 2011 Gold Book Forecast and 320 MW HTP Capacity ....................... 58 Table 43 - MW Necessary to Maintain LOLE ......................................................................... 59 Table 44 - LOLE with One Unit Retired ................................................................................ 59 Table 45 - Status Quo Market LMP for NYS (2010$/MWh) ....................................................... 60 Table 46 - Status Quo Market LMP for NYC (2010$/MWh) ....................................................... 60 Table 47 - Status Quo Implied Market Heat Rate for NYS (Btu/kWh) .......................................... 61 Table 48 - Status Quo Implied Market Heat Rate for NYC (Btu/kWh) .......................................... 61 Table 49 - LOLE for LHV and NYC CCs ............................................................................... 62 Table 50 - NYS Environmental Impact, 500 MW LHV .............................................................. 63 Table 51 - NYC Environmental Impact, 500 MW LHV .............................................................. 63 Table 52 - NYS Environmental Impact, 500 LHV + 500 MW NYC............................................... 63 Table 53 - NYC Environmental Impact, 500 MW LHV +_500 MW NYC........................................ 63 Table 54 Delta in NYS Market LMP, 500MW CC in LHV (2010$/MWh) ..................................... 64 Table 55 - Delta in NYS Market LMP, 500MW CC in NYC + 500MW CC in LHV (2010$/MWh) ......... 64 Table 56 - Delta in NYC Market LMP, 500MW CC in LHV (2010$/MWh)...................................... 64 Table 57 - Delta in NYC Market LMP, 500MW CC in NYC + 500MW CC in LHV (2010$/MWh) ......... 65 Table 58 - Delta in NYS Implied Market HR, 500MW CC in LHV (Btu/kWh) .................................. 65 Table 59 - Delta in NYS Implied Market HR, 500MW CC in NYC + 500MW CC in LHV (Btu/kWh) ..... 65 Table 60 - Delta in NYC Implied Market HR, 500MW CC in LHV (Btu/kWh) .................................. 66 Table 61 - Delta in NYC Implied Market HR, 500MW CC in NYC + 500MW CC in LHV (Btu/kWh) ..... 66 Table 62 NYS Economic Impact, 500 MW CC in LHV, 2010$ ................................................. 67 Table 63 NYS Economic Impact, 500 MW CC in NYC + 500 MW LHV, 2010$ ............................ 68 Table 64 - NYC Economic Impact, 500 MW CC in LHV, 2010$ .................................................. 68 Table 65 - NYC Economic Impact, 500 MW CC in NYC + 500 MW LHV, 2010$ ............................ 68 Table 66 - Two CCs Project Economics - LHV ....................................................................... 69
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Table 67 Transmission Line Incremental Bid Curve (BTU/kWh) ................................................. 72 Table 68 - Low Carbon Case LOLE Summary ....................................................................... 72 Table 69 - NYS Environmental Impact, Low Carbon................................................................ 73 Table 70 - NYC Environmental Impact, Low Carbon ............................................................... 73 Table 71 - Delta in Market LMP for NYS, Low Carbon (2010$/MWh)
.......................................... 73
Table 72 - Delta in Market LMP for NYC, Low Carbon (2010$/MWh) .......................................... 74 Table 73 - Delta in Implied Market HR for NYS, Low Carbon (Btu/kWh) ....................................... 74 Table 74 - Delta in Implied Market HR for NYC, Low Carbon (Btu/kWh)....................................... 74 Table 75 NYS Economic Impact - Low Carbon 2010$ ........................................................... 75 Table 76 - NYC Economic Impact - Low Carbon 2010$ ........................................................... 75 Table 77 - Delta in Market LMP for NYS, One for One (2010$/MWh) .......................................... 78 Table 78 - Delta in Market LMP for NYC, One for One (2010$/MWh) .......................................... 78 Table 79 - Delta in Implied Market HR for NYS, One for One (Btu/kWh) ...................................... 78 Table 80 - Delta in Implied Market HR for NYC, One for One (Btu/kWh) ...................................... 79 Table 81 Increase in Peak Load for High Case Scenario ....................................................... 79 Table 82 - Increase in Natural Gas Prices for High Case Scenario ............................................. 79 Table 83 - Increase in New York Harbor Oil Prices for High Case Scenario .................................. 80 Table 84 - High Case NYS Consumer Impact ........................................................................ 80 Table 85 - High Case NYC Consumer Impact........................................................................ 81 Table 86 - High Case Status Quo LMP for NYS (2010$/MWh)
.................................................. 81
Table 87 - High Case Status Quo LMP for NYC (2010$/MWh) .................................................. 82 Table 88 - High Case Status Quo Implied Market Heat Rate for NYS (Btu/kWh) ............................ 82 Table 89 - High Case Status Quo Implied Market Heat Rate for NYC (Btu/kWh) ............................ 83 Table 90 - Delta in NYS Market LMP, High Case Conventional Thermal (2010$/MWh) ................... 84 Table 91 - Delta in NYC Market LMP, High Case Conventional Thermal (2010$/MWh) ................... 84 Table 92 - Delta in NYS Implied Market HR, High Case Conventional Thermal (Btu/kWh)
............... 84
Table 93 - Delta in NYC Implied Market HR, High Case Conventional Thermal (Btu/kWh) ............... 85 Table 94 - Delta in Market LMP for NYS, High Case Low-Carbon (2010$/MWh) ............................ 85 Table 95 - Delta in Market LMP for NYC, High Case Low-Carbon (2010$/MWh)............................ 85 Table 96 - Delta in Implied Market HR for NYS, High Case Low-Carbon (Btu/kWh) ........................ 86 Table 97 - Delta in Implied Market HR for NYC, High Case Low-Carbon (Btu/kWh) ........................ 86 Table 98 - Decrease in Peak Load for Low Case Scenario ....................................................... 86 Table 99 - Decrease in Natural Gas Prices for Low Case Scenario............................................. 87 Table 100 - Decrease in New York Harbor Oil Prices in Low Case Scenario ................................. 87
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Table 101 - NYS Consumer Cost Impact - Low Case .............................................................. 88 Table 102 - NYC Consumer Impact - Low Case ..................................................................... 88 Table 103 - Low Case Status Quo LMP for NYS (2010$/MWh)
................................................. 89
Table 104 - Low Case Status Quo LMP for NYC (2010$/MWh) ................................................. 89 Table 105 - Low Case Status Quo Implied Market Heat Rate for NYS (Btu/kWh) ........................... 90 Table 106 - Low Case Status Quo Implied Market Heat Rate for NYC (Btu/kWh) ........................... 90 Table 107 - Delta in NYS Market LMP, Low Case Conventional Thermal (2010$/MWh) .................. 91 Table 108 - Delta in NYC Market LMP, Low Case Conventional Thermal (2010$/MWh) .................. 92 Table 109 - Delta in NYS Implied Market HR, Low Case Conventional Thermal (Btu/kWh)
.............. 92
Table 110 - Delta in NYC Implied Market HR, Low Case Conventional Thermal (Btu/kWh) .............. 92 Table 111 - Delta in Market LMP for NYS, Low Case Low-Carbon (2010$/MWh) ........................... 93 Table 112 - Delta in Market LMP for NYC, Low Case Low-Carbon (2010$/MWh)........................... 93 Table 113 - Delta in Implied Market HR for NYS, Low Case Low-Carbon (2010$/MWh) .................. 93 Table 114 - Delta in Implied Market HR for NYC, Low Case Low-Carbon (2010$/MWh) .................. 94
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1.
EXECUTIVE SUMMARY
Greater reliance on nuclear power for the Con Edison service area in the 1990s, while perhaps compelling by economic, and to a lesser extent, environmental logic, will require the endorsement of society. The future societal judgment concerning nuclear power constitutes the largest uncertainty in long-range electric energy planning.
Strategic Planning for Electric Energy in the 1980s for New York City and Westchester County, MIT Energy Laboratory, 1981. MIT report MIT-EL-81-008
1.1.
INTRODUCTION
The Indian Point Energy Center (IPEC) is a nuclear powerplant consisting of two active and one retired reactors, sited in Buchanan, New York, in Westchester County. Unit IP1 was retired in 1974. Units 2 and 3 (IP2 and IP3) each generate approximately 1,020 MW of electrical energy, or 2,040 MW combined. This makes IPEC one of the largest powerplants in New York State, and its location on the grid near New York gives it substantial impact in engineering, environmental, and economic contexts.1 Recent events in Japan have renewed calls for a thorough examination of the safety and environmental issues surrounding the continued operation of IPEC, and various proposals have been put forth, at least in general terms, to replace some or all of IPECs generating capacity. IPECs two federal operating licenses expire in September 2013 and December 2016 respectively, and recent debate has centered on the question of whether the reactors should continue to operate. Charles River Associates (CRA) was retained by the New York City Department of Environmental Protection (NYCDEP) to develop an analysis of the impact of an IPEC retirement from economic, environmental and reliability perspectives. The purpose of this analysis is to help the City of New York and other key energy stakeholders understand the
Various sources have stated that IPEC supplies anywhere from five to twenty percent of NYCs energy. Statements such as these are inaccurate and stem a fundamental misunderstanding of the operation of the power system. The physical transmission network is constrained by transmission lines and the location of the electric load. The contribution of any given powerplant to the system is a function of its size, its position relative to transmission constraints, and the location of load on the system. IPECs physical generation output cannot be directed to any specific location on the grid; its physical output flows over the network to the broader New York and regional energy markets, affecting the prices and flows of energy over a very wide area, beyond New Yorks borders. Part of IPECs output is economically contracted to load-serving entities (e.g..ConEdison and NYPA) in NYC and Westchester. This contracted percentage, however, is purely an economic construct, and has little relevance to actual physical flows of energy on the system and IPECs effect on the power market.
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implications of IPECs potential retirement. This is not an analysis intended to answer the question of whether IPEC should retire, but rather to systematically examine the implications of such a retirement if it should occur. IPECs retirement will exert measurable net economic and environmental costs, which we have quantified in part here. Broadly speaking, the question is how the different nuclear safety2 risks and water quality effects at IPEC compare to the costs which would be incurred by the public in its retirement. Numerous parties have opposed the continued operation of IPEC because of claimed effects on the Hudson River and its marine life. The benefits of altered risk and environmental impact (e.g. Hudson River effects vs. deleterious effects on air quality) resist simple quantification, and properly lie within the realm of public policy. We conducted our study with both the participation and input of multiple stakeholders, including ConEdison, the New York Independent System Operator (NYISO), the New York Power Authority (NYPA), the City of New York and the New York State Department of Public Service (DPS).3 We worked with stakeholders to develop appropriate methodologies and assumptions so that our analysis was as accurate, comprehensive, and unbiased as possible. Our analysis is not exhaustive, nor is it intended to be, in considering all possible reliability, economic or environmental perspectives. We have quantified what we reasonably can given the constraints of finite schedules and resources, and we have identified those less-obvious costs which must be given full treatment in a comprehensive accounting. We have not attempted to quantify all these costs; many of them are well beyond the scope of this analysis. The inclusion of conceptual projects is intended to help decision-makers identify and evaluate options that have not previously been analyzed, and to provide guidance as to potentially valuable initiatives which might warrant further consideration. Despite the similarity of some conceptual projects to actual proposals that have been put forth or discussed, the intent is not to analyze specific commercial proposals for projects.
1.2.
OPTIONS EVALUATED
An IPEC retirement means that new generating capacity will be required at some point; we framed our analysis around this basic concept. We evaluated three distinct options for replacing the prospect of IPECs lost capacity, selected through a consensus process with
2 It is critical to remember that the retirement of IPEC will still mean indefinite storage of spent nuclear fuel at the Buchanan site. There is currently neither long-term storage site for spent nuclear fuel (e.g. the proposed Yucca Mountain site in Nevada), reprocessing facilities for spent uranium, nor regulations which would permit the transport of the spent fuel off the Buchanan site. 3 The plants owner, Entergy Nuclear, was neither a stakeholder nor a participant in this analysis, although the company did verify some technical details regarding IPEC, for which we express our thanks. No private project developers were engaged in this study.
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our stakeholder group. They are not intended to represent the best options, but rather those that are commercially feasible and plausible in a regulatory context. In addition to the three replacement options we evaluated, we also evaluated a scenario in which no new generation was added to replace IPEC. Such a scenario is not feasible from a reliability standpoint, but it represents a bounding scenario for our analysis.4
Conventional Thermal
In the Conventional Thermal scenario, we assumed that 500 MW of capacity was constructed at the IPEC site upon IP3s retirement, followed by an additional 500 MW of capacity constructed in New York City in 2018. In addition to this basic scenario, we also modeled a scenario in which 500 MW of gas-fired combined cycle (CC) capacity was developed at the IPEC site, with no additional capacity in New York City (NYC), upon IPECs retirement. The consensus of the stakeholder group was that this represented a feasible build pattern.
Low-Carbon
The low-carbon scenario consists of the construction of a 1,000 MW High-Voltage Direct Current (HVDC) line to New York City, combined with a 400 MW offshore-wind farm interconnected into Brooklyn. This scenario was chosen to investigate the possibility of a conscious policy decision to implement a low-carbon replacement plan that takes into account the beneficial greenhouse gas effects of IPEC.
One-for-One
The one-for-one scenario consisted of replacing IPECs capacity with an equivalent amount (2,000 MW) of gas-fired combined cycle capacity.
Status Quo
The status quo scenario consists of federal relicensing of the reactors for an additional twenty years. This is our base case for comparisons. We did not assume that cooling towers were installed at the site.5
4 It can also function as a very rough approximation of a scenario in which just enough energy efficiency measures are implemented to avoid a reliability crisis. (The approximate amount of energy efficiency measures are shown in Table 42.) While aggressive energy efficiency can avoid some reliability issues, prices will still rise for consumers because of the net removal of capacity from the market. 5 One current issue surrounding IPEC is whether cooling towers would need to be installed to be compliant with the NYC Department of Environmental Conservation (DEC) decision to deny IPEC a Clean Water Act permit. Entergy is contesting the need for such towers, and that issue is now being addressed in a DEC administrative proceeding. It is unclear whether Entergy could or would stage the installation of the cooling towers so that both reactors were not offline simultaneously, avoiding a reliability violation. Had we developed a status quo base case in which cooling towers were retrofit, it may have reduced the economic impact to consumers, as the base case would have higher energy prices. In very broad terms, it would transfer the economic burden from consumers to Entergy. Entergy has stated that the both reactors could need to be closed simultaneously for 42 weeks to retrofit the cooling towers, and that these costs could exceed $1b. (http://www.nytimes.com/2010/04/04/nyregion/04indian.html)
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1.3.
KEY FINDINGS
IPECs retirement will measurably increase the cost to New Yorks consumers under every feasible scenario
Every replacement option studied, and every option thought to be feasible by our stakeholder group which could replace IPECs capacity, including aggressive energy conservation, will result in a cost increase to energy consumers throughout the state. The state market would see wholesale cost increases of approximately $1.5 billion per year6, or roughly a 10% increase under most scenarios. NYC consumers would pay approximately $300 million per year more for wholesale energy, or approximately a 5-10% increase.7 IPECs retirement will also force greater reliance on fossil-fueled generation resources, increasing the sensitivity of electricity prices to fluctuations in natural gas prices. This does not include additional financial support which would be necessary to construct projects which would otherwise be uneconomic, nor does it include other costs which would be necessary to reinforce the grid to support new generation. It is likely, given our analysis, that public support would be necessary to develop these new generation resources, in which case these costs would be passed on to utilities, and eventually on to consumers. Our analysis indicates that the additional costs to consumers from the various options range from a total NPV of $408 million for a combined cycle thermal replacement option to over $2.1 billion for a low-carbon solution. These costs are in addition to increased costs for energy. IPECs retirements may have far-reaching ancillary economic impacts. IPEC is a major employer in the region, employing approximately 1,100 people, with many more jobs created through indirect and induced economic activity. We have focused our analysis on the electricity market impacts of a potential IPEC retirement, but the ancillary economic impacts may be substantial. We have not attempted to calculate these induced and indirect benefits in this analysis, although other studies have been conducted on this topic.8
IPECs retirement without new generation or transmission system additions will compromise the reliability of the electricity grid
The grid must meet multiple criteria to be considered reliable. These include resource adequacy, transmission system limits, and dynamic stability. We only analyzed the first of these items. Proprietary analyses by stakeholder group members strongly suggest that that there are other factors relating to transmission system limitations, transmission system contingencies, local (i.e. in-City) reliability, and dynamic stability which will still remain a problem even if sufficient generation capacity is available to meet resource adequacy criteria upon IPECs retirement. The system cannot be considered to be reliable until these other issues are analyzed and the results shared and understood.
6 All dollar amounts in this report, unless otherwise stated, are expressed in real 2010 dollars. 7 Consumers saw cost increases in neighboring regions, such as PJM, but those effects are not summarized here. 8 Economic Benefits of Indian Point Energy Center, Nuclear Energy Institute, April 2004
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A common metric used to assess the reliability of power systems is the level of resource adequacy. A highly simplified definition of resource adequacy is that there must be enough powerplants, and transmission lines to connect them to consumers, to avoid an unacceptable probability of blackouts. This probability is defined as the Loss of Load Expectation (LOLE), and by federal and state regulations can be no greater than experiencing an event one day in every ten years, or an LOLE of 0.1. Lower LOLEs indicate greater resource adequacy and a more reliable system, while higher LOLEs indicate a less reliable system. Using the base-case load forecast in our analysis, the retirement of IP3 in 2015 will cause the grid to fall short of minimum standards in 20169, with an LOLE for New York of 0.14. Using the most recent load forecast10 from the NYISO, the system meets resource adequacy standards until 2020, when new capacity is required. The reliability impact of IPECs retirement is highly dependent on the load forecast assumed, which has changed substantially over time.11 Small changes in energy consumption (on the order of 1-2%) determine whether the system will meet reliability standards upon IPECs retirement. Our study used a load forecast that is higher than the NYISOs most recentlyreleased forecast of energy demand12, and assumes future achievement of energy efficiency targets are similar to historical achievement. A 2009 analysis by the NYISO13 found that reliability criteria would be violated upon the retirement of the first of IPECs reactors in 2013 and that approximately two gigawatts (GW) of new generating capacity would be necessary to maintain reliability. A 2010 NYISO analysis found that the retirement of the second (i.e. IP3) reactor would violate reliability criteria14 in 2016, as did we in our analysis. Conducting our analysis using the NYISOs recently-released base-case load forecast indicates that reliability criteria will be satisfied through 201915. The NYISO has not yet released a 2011 assessment of the reliability impact of IPECs retirement based on its most recent load forecast. Load forecasts are axiomatically
9 The presence of the Hudson Transmission Partners (HTP) cable, does not change the resource need date under either scenario. New generation capacity is still needed in 2020 or 2016, respectively. 10 The NYISOs 2011 Load & capacity Data Gold Book forecast contains a markedly lower load forecast than the 2010 Gold Book, on which our load forecast was based. 11 The presence of the proposed HTP transmission line and the planned link from the Bayonne Energy Center to Brooklyn would, of course, contribute toward system reliability, but they are not by themselves sufficient to make the system meet minimum standards. 12 The most recent NYISO load forecast, showing lower loads, was released in April 2011, after the bulk of analytical work had been completed on our study. Our study is based on 2010s load forecast. Our load forecast is very similar to the base case for 2010, and roughly equivalent to the high load case from the 2011 Gold Book. 13 NYISO 2009 Comprehensive Reliability Planning Process (CRPP) 14 NYISO 2010 Reliability Needs Assessment (RNA) 15 The NYISOs high-case load forecast from 2011 is higher than our base-case forecast; it is reasonable to conclude that this would cause reliability violations.
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imprecise; reliability analyses, conducted with the best available data by the System Operator over the last two years, have shown a range of seven years in the need date for new capacity. Resource adequacy is only one component of overall system reliability, and meeting the resource adequacy criterion alone will not make the system reliable. We emphasize that independent analyses from stakeholder group members indicate that there are reliability issues raised by the loss of IPEC, principally related to transmission system stability, which go beyond resource adequacy and would need to be addressed even if minimum resource adequacy standards were met. Simply adding capacity or reducing load cannot be assumed to ensure a reliable system. More analysis is necessary on this topic.
Each option for replacement of IPECs capacity would measurably increase air emissions
IPEC is able to provide approximately 2 GW of generation with no direct16 air emissions. Its retirement will cause a substantial increase in the air emissions from powerplants. Our analysis indicates that both the City and State would see approximately a 15% increase in carbon emissions under most conventional replacement scenarios, with roughly a 7-8% increase in NOx emissions. NYC would see similar carbon emissions increases. Even lower-carbon scenarios such as hydropower imported from Canada combined with offshore wind would cause carbon and NOx increases of between 5-10% in NYC and statewide. This is because the imports from Canada we modeled were insufficient to totally replace IPECs capacity; additional generation from conventional thermal powerplants would be required. A similar if not more dramatic effect would be seen with offshore wind, which as noted below at footnote 17 will require fossil-fuel based supplementation. Developing a solution in which there is no net emissions increase would be extraordinarily expensive. The largest commercial-scale projects currently proposed amount to slightly more than half of IPECs generating capacity.17 Retirement of IPEC would substantially reduce the possibility of reaching PlaNYCs goals of reducing NYCs carbon emissions from todays levels.
16 There is a considerable amount of embedded life-cycle energy in the enriched uranium fuel and the construction of plant itself, but the latter is a characteristic of all plants, not just IPEC. 17 It is critical to remember that renewable resources must be de-rated to account for their intermittent nature. For instance, the best-performing offshore wind farms proposed for the NYC region would have a capacity factor of approximately 40%, with a capacity de-rate for reliability purposes of approximately 35%. This means that in order to generate the equivalent amount of energy from a 500 MW thermal plant, 1,500 MW of offshore wind would be required. Onshore wind is derated to approximately a 10% capacity factor, meaning that approximately 5,000 MW of terrestrial wind capacity would be required to replace the capacity of one combined-cycle gas-fired plant.
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New replacement options may not be fully supported by market revenues; subsidies or contracts may be required
For the purposes of our electric market simulation, we assumed that new capacity enters the market without regard to its funding source to ensure system reliability. If that new capacity does enter the market, it is unclear that the revenues from the wholesale markets will provide a sufficient return for investors for these projects, meaning that consumers will partially bear the costs of these projects. In recent years, many projects have entered the market (Astoria Energy II, HTP, the Neptune Cable) with some form of contract with a consumer (or off-taker) of the projects output. The role of this power-purchase agreement, or PPA, is often critical to these projects development. Construction of generation and transmission projects is highly capital-intensive, and securing a PPA allows developers to seek financing to construct their projects because of revenue certainty. We developed high-level estimates of project costs and representative pro-forma financial analyses for each project. These analyses indicate that these projects would not be supported by market revenues, and would need additional financial contractual support from the City or other off-takers (e.g. NYPA, LIPA). In the lowest-cost option, the development of new replacement capacity in NYC and the LHV could require $408 million of subsidies, while developing a low-carbon solution could require approximately $2.1 billion of contractual support, in addition to the cost impacts on consumers. It is not clear precisely how this contractual support may be reflected in end-user rates, but because the support would come from an off-taker who would presumably serve end-use customers, the costs would have to flow through in some manner. There is uncertainty about the capital cost of these projects themselves, as well as the engineering system upgrades (e.g. interconnection upgrades) necessary to actually construct them. In general however, the consumer effects that are seen through increased energy prices and contractual support for projects dominate the calculation of cost impact. New resources will be necessary to replace IPECs lost capacity the only question is when they would be required. When considering how to weigh different costs under different scenarios, it is important to remember that if energy prices and revenues are lower (through lower demand, greater energy efficiency, reduced gas prices, or other factors), then the subsidies or financial support necessary to support such projects will be higher.
Optimal replacement options for IPECs capacity may not be available upon IPECs scheduled retirement
The critical date is the summer of 2016, the first summer peak following IP3s scheduled retirement in December of 2015. Our analysis indicates that given the current prospects for new capacity in New York, resource adequacy will fall below acceptable levels at that point. For planning purposes, the critical piece of information is not when the IP3 unit is scheduled to retire, but rather when Entergy (IPECs owner and operator) announces its intention, or a final regulatory decision concerning the fate of the plant is made. It is unlikely that a private market participant would commit capital and resources to the development of new resources without knowing with certainty if and when IPEC would retire. Similarly, a public or quasiConfidential Draft Report Page 8
public (e.g. NYPA) entity cannot reasonably be expected to seek new sources of energy and capacity necessary to maintain reliability without definitive knowledge of IPECs future status. If Entergy were to announce its intentions at the latest possible date18, there would be insufficient time to put a solution in place. In reality, Entergy can be expected to explicitly or implicitly signal its intentions well before then, and IPECs status would be known to all relevant parties. Development and construction of large capital projects can take many years however, and a duration of 4-5 years for development of a major (500 MW or larger) project is not unusual.19 Working backwards from the scheduled IP3 retirement date of December 2015, this means that development on its replacement should be well underway now. Several new generation and transmission projects (some of which have been evaluated in this study) have been proposed or discussed, but it is not certain that they could be operational upon IPECs retirement. Time is a valuable commodity; solutions are available which can act as an interim reliability measure, but more sustainable and economically beneficial solutions will take considerable time to be planned and implemented.
18 Entergy could submit a delist notice as late as 180 days prior to actual unit retirement 19 Astoria Energy Phase II, entering service this year, resulted from an RFP in 2006. The HTP cable was originally proposed in response to that same RFP.
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be responsible for proposing solutions to maintain the grids reliability20 If and when that occurs, the debate over the relative merits, economics and costs of each option will be similar to the discussion today, with the only difference being there would be less time to make critical decisions.
20 It is our understanding that the NYS PSC is currently conducting a study describing and analyzing this process. 21 There are ongoing discussions regarding the creation of a LHV ICAP zone in the NYISO, but there is no concrete plan to implement this zone at present. It is reasonable to assume that IPECs retirement might precipitate the formation of this zone, but the consensus among the stakeholder group was that we should analyze the market as it exists today. Formation of such a zone would reduce, but not eliminate, the effect on upstate consumers.
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1.4.
SUMMARY OF RESULTS
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Table 1 displays the LOLE for the New York Control Area (NYCA). Shaded and bold-text cells indicate those years in which the standard of 0.1 days/year is violated, indicating the system does not meet minimum reliability standards.
Table 1 - NYCA LOLE, Base-Case Load Forecast
Base
Case
No New Generation 0.002 0.001 0.018 0.016 0.14 0.175 0.197 0.297 0.434
LowCarbon 0.002 0.001 0.018 0.016 0.017 0.027 0.027 0.044 0.068
LHV & NYC CCs 0.002 0.001 0.018 0.016 0.063 0.085 0.089 0.072 0.107
No New Generation w/ Firm HTP 0.002 0.001 0.011 0.01 0.113 0.151 0.173 0.27 0.41
We also analyzed the LOLE of the system based on the most recent 2011 Gold Book forecast, as described in section 1.3. Table 2 displays the results of using the new load forecast with 320 MW of firm capacity on HTP. Resource adequacy is violated in 2020 for the NYCA, four years later than last years analysis.
Table 2 - NYCA LOLE, 2011 Gold Book Forecast
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
G 0.000 0.001 0.000 0.001 0.001 0.010 0.015 0.014 0.024 0.032
H 0.000 0.000 0.000 0.001 0.001 0.024 0.033 0.037 0.062 0.091
I 0.001 0.002 0.000 0.002 0.002 0.025 0.037 0.041 0.067 0.099
J 0.000 0.002 0.000 0.002 0.002 0.019 0.028 0.029 0.051 0.080
K 0.000 0.000 0.000 0.000 0.000 0.003 0.001 0.000 0.000 0.001
NYCA 0.001 0.002 0.000 0.002 0.002 0.030 0.042 0.046 0.075 0.113
22 The results of our analysis indicate that consumer costs also increased in New Jersey and surrounding states, although they are not summarized in this report.
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to several different metrics. In this analysis, however, we have focused on the wholesale energy and capacity price impact rather than on retail price increases. Table 3 and Table 4 summarize the impact of IPECs retirement on wholesale energy23 prices for consumers. The amounts shown in these tables indicate the aggregate sum of increased cost for consumers on a State and City level. The gray columns indicate those solutions which are likely not feasible from a system reliability perspective.
Table 3 - NYS Total Consumer Cost ($million)
NoNewGen. CCinLHVonly CCsinLHVandNYC $2,059 $2,123 $2,216 $2,256 $2,291 $2,349 $2,309 $2,239 $2,229 14% 13% 13% 12% 12% 11% 11% 10% 9% $1,501 10% $1,611 10% $1,688 10% $1,650 9% $1,698 9% $1,774 9% $1,757 8% $1,680 7% $1,692 7% $1,371 $1,436 $1,510 $1,535 $1,524 $2,031 $1,871 $1,040 $913 9% 9% 9% 8% 8% 10% 9% 4% 4%
LowCarbon $1,685 $1,707 $1,814 $1,740 $1,820 $2,159 $1,787 $1,259 $1,078 11% 11% 10% 9% 9% 11% 8% 5% 4%
NoNewGen CCinLHVonly CCsinLHVandNYC LowCarbon $485 $524 $523 $579 $595 $636 $620 $571 $571 8% 9% 8% 8% 8% 8% 8% 7% 6% $327 $390 $391 $376 $433 $478 $474 $421 $408 6% 6% 6% 5% 6% 6% 6% 5% 5% $254 $289 $292 $316 $313 $556 $512 $82 $39 4% 5% 4% 4% 4% 7% 6% 1% 0% $271 $276 $304 $284 $339 $504 $348 $82 $14 5% 4% 4% 4% 5% 7% 4% 1% 0%
The wholesale energy and capacity price impact is roughly proportional, but not equivalent to, the consumer bill impact. Retail consumers are served by load serving entities; these entities procure power on the wholesale market to serve their customers, but it is only a portion of their cost of service. Generally speaking, the bill impact to consumers is less than the wholesale price impact, although performing a detailed analysis of this impact requires information specific to each individual utility (e.g. Con Edison) and its cost structure. Note
23 Defined here as the sum of energy (e.g. MWh) and installed capacity (e.g. MW) for simplicity.
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that the percentage changes expressed here will be less when applied to bill impact, but the absolute impacts in dollars remain constant, as those costs are passed directly through. Table 5 and Table 6 show the net present value (NPV) of the cost of each replacement option to consumers for both NYS and NYC, calculated at a real 6% discount rate.
Table 5 15-Year NPV of Electricity Market Consumer Costs, NY ($million)
NYS 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 NPV
NoNewGen CCinLHVonly CCsinLHVandNYC LowCarbon $2,059 $2,123 $2,216 $2,256 $2,274 $2,291 $2,320 $2,349 $2,329 $2,309 $2,274 $2,239 $2,234 $2,234 $2,229 $16,256 $1,501 $1,611 $1,688 $1,650 $1,674 $1,698 $1,736 $1,774 $1,765 $1,757 $1,719 $1,680 $1,686 $1,686 $1,692 $12,179 $1,371 $1,436 $1,510 $1,535 $1,530 $1,524 $1,778 $2,031 $1,951 $1,871 $1,455 $1,040 $976 $976 $913 $10,822 $1,685 $1,707 $1,814 $1,740 $1,780 $1,820 $1,990 $2,159 $1,973 $1,787 $1,523 $1,259 $1,168 $1,168 $1,078 $12,262
NYC 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
NoNewGen CCinLHVonly CCsinLHVandNYC LowCarbon $485 $524 $523 $579 $587 $595 $616 $636 $628 $620 $595 $571 $571 $571 $327 $390 $391 $376 $405 $433 $455 $478 $476 $474 $447 $421 $415 $415 $254 $289 $292 $316 $314 $313 $435 $556 $534 $512 $297 $82 $60 $60 $271 $276 $304 $284 $312 $339 $422 $504 $426 $348 $215 $82 $48 $48
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2030 NPV
$571 $4,156
$408 $3,012
$39 $2,209
$14 $2,018
The analysis indicates that through 2030, NYC consumers will pay between $2 to $3 billion dollars in higher energy costs, while NYS consumers will pay between $10-$12 billion in higher energy costs. The costs for NYC consumer are included are included in the costs for the state as a whole. Table 7 displays the necessary contractual support for each proposed replacement option. These costs represent the amount of additional revenue from the projects consumers which would be required for a private investor to develop the project at a commercially feasible rate of return.
Table 7 15-Year NPV of Contractual Support Required for Replacement Options ($million)
NYC 2016
We have not allocated these costs to consumers, as it is not clear how these costs might be passed on. They could be recovered through higher energy prices, or by another mechanism. Assuming they were allocated to NYS as a whole, however, this indicates that the overall cost to consumers from retiring IPEC could be $11.2b for a combined-cycle solution, and $14.3b for a low-carbon solution.
NoNewGen
LHVCCOnly
24 Changes in SO2 emissions for NYC are not shown in this table; the percentage changes in NYCs very small SO2 emissions can appear disproportionate to their importance. 25 Air emissions here are defined here as the change in emissions from all powerplants physically sited in New York State. Our analysis indicates that emissions also increase in adjoining areas such as PJM and ISO-NE, although those higher emissions are not included in this report.
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7% 0% 15% 5% 0% 7%
8% 0% 15% 4% 1% 7%
8% 2% 14% 5% 2% 6%
7% 2% 14% 5% 1% 6%
8% 3% 14% 6% 4% 7%
8% 3% 14% 6% 1% 7%
8% 4% 14% 6% 5% 7%
8% 5% 13% 6% 1% 7%
7% 5% 11% 5% 2% 5%
NoNewGen
Year
NOx CO2 LHVCCOnly NOx CO2 CCsinLHVand NOx NYC CO2 LowCarbon NOx CO2
The retirement of IPECs 2,000 MW of capacity results in a substantial increase in air emissions for the City and State. Even in the low-carbon scenario in which Canadian hydropower is coupled with wind energy, CO2 emissions increase by 7% above todays levels.
2.
2.1.
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The NYISO daily energy markets are liquid and heavily traded. While load serving entities (LSEs) often purchase a significant portion of their energy obligations through bilateral forward transactions, they also make significant spot market purchases. Additionally, many bilateral transactions are financial rather than physical, meaning the forward obligations are met through spot market purchases and the underlying generation supporting the transactions is still scheduled by the NYISO. In New York City and Long Island, approximately half of the generation to meet load has been scheduled through the spot markets. Generators participating in the NYISO market submit three-part bids consisting of: start-up costs, minimum generation costs, and prices for each incremental dispatch point. Additionally, operating parameters such as minimum run times, minimum down times, and ramp rates are provided. Based on these bids and unit operating parameters, the NYISO solves for the least-cost, security-constrained dispatch and provides schedules for each generator.
26
The NYISO locational installed capacity requirements are reviewed before each capability year, and thus could be adjusted for future capability periods. In a similar fashion, the NYSRC has responsibility for establishing the Statewide Installed Reserve Margin (IRM).
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Capacity from external resources can also be sold into the NYISO Statewide capacity market as ROS resources.27 Imports from adjoining regions are limited both by the capacity of the transmission inter-ties as well as an overall import limit for the NYISO. The ROS zone of the NYISO system is directly connected with ISO New England, Inc. (ISO-NE), the PJM Interconnection L.L.C. (PJM) and the Ontario Independent Electric System Operator via AC transmission lines. Additionally, it is connected with Hydro Quebec (HQ) via HVDC cables. The New York City and Long Island zones also have interconnections with external areas. Long Island is connected to Eastern PJM through the HVDC Neptune Cable and to the ISONE by way of the HVDC Cross Sound Cable. New York City is connected to eastern PJM via the Linden VFT. Because each of these external connections in New York City and Long Island involves a controllable transmission line, the imports on the lines count towards the regional LCR, rather than ROS capacity. The NYISO capacity market has been implemented as a UCAP market, in which payments to generators account for both rated capacity and unit availability. In the UCAP market, statewide and locational ICAP requirements are converted to UCAP levels by multiplying the required ICAP by one minus the average forced outage rate among all ICAP resources. Likewise, the quantity of capacity for which an individual resource is paid is determined by its UCAP, which is equal to the units rated capacity (ICAP) adjusted by the units forced outage rate. Hence, units with above average reliability (lower forced outage rates) are able to sell a proportionately larger quantity of UCAP and will have higher revenues than they would in an ICAP market that doesnt account for availability. Conversely, units with high outage rates receive lower payments than they would if the payments were determined on the basis of ICAP. For intermittent resources, such as wind units, the level of their available UCAP is determined by historical operating levels during peak conditions rather than the forced outage rate. In other words, payments are made based on the level of output for each facility that can reasonably be expected during the highest load periods. UCAP is determined seasonally, for summer and winter, based on historical average output for that season. LSEs can self-supply UCAP to meet their requirements or can procure capacity through either bilateral transactions or NYISO administered UCAP auctions. Capacity requirements have to be met on a monthly basis. The NYISO conducts a series of three auctions in which LSEs can procure capacity to meet their monthly requirements. In the first auction, held in advance of each capability period (i.e., the summer period from May through October, and the winter period from November through April), LSEs that have not fully met their requirements through self-supply or bilateral purchases can submit offers to purchase a sixmonth strip product for the full capability period. In the second auction, held on a monthly basis, LSEs can purchase capacity for the upcoming month or any subsequent month within the same capability season. Participation in the strip and monthly auctions is voluntary. The
27
External resources directly connected to New York City or Long Island (e.g. generator leads) may qualify as capacity in those zones.
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final auction is a monthly spot deficiency auction. All outstanding LSE capacity obligations must be purchased at the clearing price from this final auction.
2.2.
28 There is no guarantee that Entergy would choose to retire its units according to the schedule shown here. Because of their orientation towards multi-reactor sites, refueling schedules and other factors, it is possible that they could choose to retire IP3 at the same time as IP2. 29 http://www.nyiso.com/public/webdocs/newsroom/current_issues/nyiso_planning_process_ferc_presentation07162008.pdf, accessed June 2011
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3.
3.1.
PROJECT OVERVIEW
PROJECT APPROACH
GE MAPS
We used the GE MAPS model to simulate the interconnected power system. GE MAPS is a detailed economic security-constrained dispatch and production-costing model for electricity networks. It was originally developed by General Electric and is currently used by over twenty major utilities in the U.S. GE MAPS determines the least-cost secured dispatch of generating units to satisfy a given demand, on the assumption that the units are dispatched according to their variable costs. The major advantage of GE MAPS is its ability to simulate the hourly operation of generating units and transmission systems (e.g., transformers, lines, phase shifters, buses) in significant detail. For example, it accurately represents generator capacity constraints and minimum up and down time limitations, thermal constraints on the transfer capability of transmission lines, line and unit contingencies, and scheduling limitations of hydro-plants. GE MAPS provides a highly accurate, detailed simulation of the hourly operation of the individual generating units and transmission system that constitute the wholesale market. Among the key outputs of the GE MAPS model is a set of Locational Marginal Prices (LMPs, referred to in New York as Location-Based Marginal Prices, or LBMPs), computed for each bus in each hour, as well as the hourly production cost. Such a detailed representation of the physical part of power markets makes GE MAPS an ideal tool for conducting a precise analysis of them.
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The standa in use for system plann ard ning by the N YISO is 0.01, or one day i every ten in 30 years. o on he not Because of transmissio constraints throughout th network, n all generation capacity can serve load in all regions A shortage of generatio n on Long Island, for insta s. e ance, cannot necessarily be served by adding load in Buffalo. y b d IPEC is loc cated at an im mportant point in the New Y t York system. The New Yo City region is a ork n net consum of electric mer city, and so most electricity flows toward NYC, cros m y ds ssing several constraints in the system such as the Central-Eas and UPNYs m e st -SENY constr raints. IPEC is located on the downstr ream side of these constra aints and so p provides gene eration which h cannot eas be replace by transmission. sily ed
Figur 1 - New Yor Transmissio System (So re rk on ource: NYISO) )
In particula it provides a source of local generatiion for the LH and NYC a ar, HV areas. In add dition to providing active powe generation, the reactive power and re er e eserves provided by IPEC C e cessary to kee the transm ep mission system secure. Sim m milarly to the issue support the voltage nec of resource adequacy, it is not easy to replace the reserves by transmission. e i ese rk Figure 2 sh hows typical price contours for New Yor State. Pric are gener p s ces rally low in the e eastern an northern po nd ortion of the state, with tran s nsmission constraints caus sing higher prices in the sout theastern port tion of the sta ate. The disti nct boundarie in the figur below clear es re rly
30 The Installed Reserv Margin is set by the working backwards from the LOLE to de e ve m etermine the amo ount of excess c capacity necessary to ensure that the LOLE stays abov the specified value. ve
Pa 22 age
highlight th Central-Ea interface, the UPNY-SE he ast t ENY interface (the blue/ora e ange boundar ry south of Albany), and th UPNY-Con interface (the orange/r boundary in Westches he nEd red y ster). hysically locat in Westch ted hester County on the dow y, wnstream side of the UPNY e YIPEC is ph SENY and Central-East constraints, making its en d t nergy output s sited at a par rticularly impo ortant location.
Figure 2 - Typical New Y York Energy P Prices
In addition, an often-ove erlooked com mponent of en ergy security is the securit of the interstate ty gas transm mission system Given the current envir m. ronmental, re egulatory and policy environme it is likely that any repla ent, acement capa acity construc cted would be natural gase -fired. While the interstate gas transmission system has a great deal of capacity, it is a finite lim i s n t mit, and the us of large am se mounts of gas at the IPEC s would int site troduce gas system reliabil lity concerns. It has often been proposed that new gas-fired gen n neration be siited at the IPE site. Apar EC rt from the lo ogistical difficu ulties of const tructing new g generation at the site of an existing and t n d operationa nuclear pow al werplant, there is a further, less-obvious issue. NRC regulations p e , s C place limits on th proximity of high-pressu gas lines t nuclear rea he o ure to actors. We conduc cted a resour adequacy analysis of th NYISO sys rce he stem using G MARS.31 T GE The analysis st tarted from the NYISOs 20 RNA data 010 abase.32 The NYISOs 20 RNA data e 010 aset
31 The actual operation of the GE MAR model was pe e n RS erformed by Gene Electric, GE MARS develop eral per.
Pa 23 age
was modified to adjust for the load forecast used in this study, and the capacity additions which differed from those in the NYISO 2010 RNA, including the HTP cable. The modifications made to the NYISO database are detailed in section 3.2. The transfer limits, unit forced outage rates, and other inputs were identical to those used in the 2010 RNA. The principal change in the resource mix was the inclusion of the HTP cable. We modeled it as 320 MW of non-firm capacity, with a sensitivity where we modeled it as 320 MW of firm capacity. 33 The retirement of IPEC would likely change the transfer limits employed in resource adequacy analyses (shown in Figure 3), meaning that our analysis would have to be adjusted for this fact. While we have not analyzed the change in the transfer limits, our expectation (and the expectation of stakeholder group members) is that transfer limits would decrease, meaning that the actual amount of capacity necessary to maintain minimum reliability may be higher than reported here, meaning that LOLEs could be higher than analyzed here. Given project schedule and resource constraints, we conducted the resource adequacy analysis only under our base set of assumptions with the exception of an additional analysis of the impact of the NYISOs 2011 Gold Book load forecast, released during our study. Capacity additions sufficient to maintain reliability under the base case would, of course, be sufficient to maintain reliability under a low-load forecast. Figure 3 displays the system topology from the most recent NYISO RNA. .
32 The NYISO, a stakeholder and participant in our study, supplied the data for our analysis and confirmed that no confidential data were released, but has neither reviewed or endorsed the result presented here, except to confirm that no confidential data was disclosed to any parties. 33 HTP is capable of transferring up to 660 MW of electrical energy into NYC, but it has only 320 MW of Firm Transmission Withdrawal Rights (FTWRs) from PJM, meaning that the maximum capacity it could reliably export to NYC would be 320 without grid reinforcements in New Jersey. The lines operator would need to purchase the right to use a powerplants output in PJM to supply NYC, delisting that capacity.
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Source: NYIS SO
GE MARS S
The Multi-A Area Reliability Simulation program (MA ARS) enables the electric utility planner to s r quickly and accurately assess the ab d a bility of a pow system, co wer omprised of a number of any f interconne ected areas, to adequately satisfy custo mer load requ o uirements. Based on a full sequent Monte Ca simulation MARS perf tial arlo n, forms a chron nological hour rly simulation of the system comparing the hourly loa demand in each area to the total m, ad n o g account for pla anned available generation in the area, which has been adjusted to a maintenan and rando nce omly occurring forced outa ges. Areas w excess ca g with apacity will pro ovide emergency assistance to those areas that are def y t ficient, subjec to the trans limits betw ct sfer ween the areas. Typical MA ARS applications include: Re esource adeq quacy assessm ments Lo ocational capa acity requirem ments Eff ffective Load Carrying Cap C pability (ELCC calculations C) s Be enefits of load diversity d Tie e-line effectiv veness
Pa 25 age
A sequential Monte Carlo simulation forms the basis for MARS. The Monte Carlo method provides a fast, versatile, and easily-expandable program that can be used to fully model many different types of generation and demand-side options. MARS calculates, on an area and pool basis, the standard indices of daily and hourly Loss of Load Expectation (LOLE, days/year and hours/year) and expected unserved energy (LOLE in MWh/year). The use of sequential Monte Carlo simulation allows for the calculation of timecorrelated measures such as frequency (outages/year) and duration (hours/outage). To model the impact of emergency operating procedures, the program also calculates the expected number of days per year at specified positive and negative margin states. In addition to calculating the expected values for the reliability indices, MARS (through a separate post-processor program) also produces probability distributions that show the actual yearly variations in reliability that the system could be expected to experience. MARS provides for the detailed representation of the utility system required to accurately assess the reliability of the generation system. In addition, the program has been written so its dimensions (number of areas, pools, units, etc.) can be easily changed to fit the program to the system being studied.
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Figure 4: New York Stat Capacity De N te emand Curve f May 2011 April 2012 C for Capability Peri iod
Figure 5: New York City Capacity Dem N y mand Curve fo May 2011 April 2012 Ca or apability Perio od
The expec cted spot market clearing price should a p also be reflect in bilatera markets and strip ted al d and month auctions, meaning that the demand c hly m curve should influence cap pacity prices f for bilateral tra ansactions as well as all th s hree capacity market auctio ons. In addition to the deman curve, esti nd imating marke clearing pr et rices requires a supply curv ve. CRA obtained unit ratings for all exis sting capacity resources fro the 2011 NYISO Gold y om Book. Ass sumptions reg garding new capacity resou c urces are det tailed elsewhe in this rep ere port. The offer curves modele for New York City reflec the NYISO rules for mitigation of buy c ed ct O yer and seller market power; existing res sources are o offered on a p price-taking ba asis, and new w y ubject resources sponsored by a net buyer (such as the projects evalluated in this study) are su to an offer floor at 75 pe ercent of the NYISO estima N ated cost of n new entry (CO ONE). There was considerable discussion in our stakeho s e older group re egarding the a appropriate reserve ma argin, or surp plus, to use in determining capacity addiitions for NYC and NYS. C Electricity markets in NY are in a su YC urplus conditiion right now. In the next s . several years this s, surplus is expected to grow as new generation re sources (Asto Phase II, Bayonne En e g g oria nergy
Pa 27 age
Center, HTP) are added to the market. Table 10 shows the base-case IRM summary for the NYCA. The important column is the one at the right: it indicates the ICAP as a percentage of the requirement. A figure of 100% would indicate that the ICAP is at the requirement. Our capacity additions assume the market tightens with respect to installed capacity. This is in part due to a fundamental view among the stakeholder group that current installed capacity and energy prices may not be sustainable for a long-term competitive market. It is important to note that if one assumes that a greater surplus continues to exist in the base case (i.e. the market does not tighten), then the costs of an IPEC retirement would be even higher.
Table 10 - Base Case NYCA IRM Summary
Capability Year 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
PeakLoad Forecast 33,025 32,699 33,615 33,985 34,345 34,642 34,991 35,273 35,646 36,042 36,503 36,869 37,279 37,694 38,113 38,537 38,966 39,399 39,838 40,281 40,729
ICAPRequire ment 38,970 37,767 39,035 39,677 40,312 40,878 41,289 41,622 42,062 42,530 43,074 43,505 43,989 44,479 44,974 45,474 45,980 46,491 47,009 47,531 48,060
AvailableICAPRe sources 42,037 42,946 43,408 42,814 43,902 44,703 44,703 44,703 44,703 44,728 44,730 44,730 44,980 44,983 44,985 45,513 46,015 46,518 47,520 47,523 48,050
ICAPasPctof Req. 108% 114% 111% 108% 109% 109% 108% 107% 106% 105% 104% 103% 102% 101% 100% 100% 100% 100% 101% 100% 100%
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60,000 50,000 40,000 M 30,000 W 20,000 10,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Figure 7 - Base Case NYC IRM Summary
14,000 12,000 10,000 M W 8,000 6,000 4,000 2,000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 ICAPRequirement AvailableICAP Resources
Table 11 displays a summary of our IRM for the NYC region. The columns are defined a in Table 10. In our capacity addition pattern, we add capacity to maintain the market surplus at a level similar to 2010s, approximately 3%.
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Capability PeakLoad ICAPRequire AvailableICAPRe ICAPasPctof Year Forecast ment sources Req. 2010 11,725 9,380 9,675 103% 2011 11,514 9,326 9,956 107% 2012 11,752 9,519 10,826 114% 2013 11,915 9,651 10,826 112% 2014 12,056 9,765 11,338 116% 2015 12,173 9,860 11,338 115% 2016 12,299 9,962 11,338 114% 2017 12,473 10,103 11,338 112% 2018 12,663 10,257 11,338 111% 2019 12,861 10,417 11,338 109% 2020 13,046 10,567 11,338 107% 2021 13,224 10,711 11,338 106% 2022 13,419 10,869 11,588 107% 2023 13,616 11,029 11,588 105% 2024 13,817 11,192 11,588 104% 2025 14,020 11,356 12,088 106% 2026 14,227 11,524 12,088 105% 2027 14,436 11,693 12,088 103% 2028 14,649 11,865 12,588 106% 2029 14,864 12,040 12,588 105% 2030 15,083 12,217 12,588 103%
We modeled capacity benefits in this study using our proprietary model of the NYISO Installed capacity market. The model estimates results of the NYISO spot auctions using the demand curves for each NYISO location along with the available supply of ICAP resources. The parameters for demand curves have already been set through April 30, 2011. After April 2011, CRA has assumed that the annual revenue requirement used to set the demand curve will increase at the rate of general inflation.
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It is important to understand what the quantity we have identified as additional support represents. Powerplants and transmission lines earn revenue through sales of energy and capacity into the New York markets. These revenues, however, may not be sufficient to support capital recovery for the project at a level to earn a sufficient financial return for investors. Put simply, the project may be in the red. In the simplest case, a project which does not recover its capital and supply an adequate return to its investors would not be built by a merchant investor. In the case of a project whose output is contracted for by an off-taker (e.g. NYPA, ConEdison, LIPA), the additional support required would be supplied in the form of above-market contract payments.34 The precise analysis of any individual projects finances is beyond the scope and data of this study. There are invariably generalizations in the financing assumptions which may not be entirely accurate for any given project. Nevertheless, we believe the assumptions and methodology we have employed here represent suitable general assumptions to yield an approximate answer. Table 12 displays our financing analysis assumptions.
WorkingCapital(%ofFOM) FederalIncometax NYstateincometax NYCincometax Compositetaxrate Insurancerate Propertytaxrate Assessmentrate Propertytaxrate Equitypercent Debtpercent Riskfreerate EquityBeta Equityriskpremium Costofequity(nominal)
12.50% 35.00% 7.10% 8.85% 45.37% 5.00% 5.000% 45.00% 2.25% 50% 50% 4.72% 1.2 6.47% 12.48%
34 As indicated in Table 12, the hurdle rate implied in our calculations is the cost of equity, or 12.5% in our analysis.
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Costofdebt(nominal) DebtAmortization(years) Taxdepreciation(MACRS) BookDepreciation EquityRecoveryPeriod Inflationrate NominalWACC Costofequity(real) Costofdebt(real) BeforeTax(real)WACC AfterTax(real)WACC
In approaching the problem, we had two principal options. The first was to use a capacity expansion model to determine a single economically optimal system expansion, taking into account reliability constraints. The second was to develop a range of feasible replacement
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scenarios reflective of actual market conditions and relevant to actual proposed projects. We chose the latter approach and collaboratively developed with the stakeholder group a set of replacement options which could conceivably be developed upon IPECs retirement. These options were then winnowed through analysis of their reliability impact to a set of options analyzed here.
3.2.
Table 13 shows a summary of the scenarios and the replacement options we analyzed.
Table 13 - Scenarios and Options Analyzed
Status Quo No New Generation One-for-One CCs in LHV and NYC Low Carbon
High Case X
Low Case X
1,000 MW X
1,000 MW X
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current industry consensus forecasts, although it is lower than estimates from several years ago. We have assumed that the Hess Bayonne Energy Center (BEC) is online and operational by 2013. We utilized a modified 2008-series Eastern Interconnection Reliability Assessment Group (NERC ERAG) power flow case for our production cost simulations. We did model strategic bidding behavior (i.e. bid adders) and transmission outages, detailed below. We assumed that the Hudson Transmission Partners cable (HTP) is in service in 2013.
We modeled the following years: 2016-2019, 2021, 2023 2025, 2027 and 2030. Interpolated values between these modeled years are shown in some tables and calculations. All dollar values are shown in real 2010 dollars unless otherwise noted.
Capacity market mitigation assumptions were the topic of a great deal of discussion in our stakeholder group. The state of capacity market mitigation rules is highly fluid. There have been numerous changes in these rules over the last several months, and predicting what these rules may be fifteen years from now with any certainty is nearly impossible. At a high level, we have included in our analysis the assumption that a capacity market offer floor exists in the market for the foreseeable future, and that new entrants who enter when a surplus exists (as is assumed for all NYC replacement options in our analysis) are compelled to offer a the offer floor until such time as they clear for a pre-determined number of months in the market. Given the current market surplus in New York City, and the fact that several new entrants (HTP, Astoria Energy Phase II, BEC) may be mitigated, it is likely that any new entrant would be compelled to offer at the offer floor and would not clear in the market for many years. Given a reasonable discount rate, the amount of capacity that clears near the end of the study timeframe would not likely have a material impact on the overall project economics and market effects.
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Capability Year
NYC
NYLI
SENY
NYCA
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
32.93 33.59 34.26 34.94 35.64 36.36 37.08 37.82 38.58 39.35 40.14 40.94 41.76 42.60 43.45
10.75 10.96 11.18 11.40 11.63 11.86 12.10 12.34 12.59 12.84 13.10 13.36 13.63 13.90 14.18
10.15 10.36 10.56 10.77 10.99 11.21 11.43 11.66 11.90 12.13 12.38 12.62 12.88 13.13 13.40
10.15 10.36 10.56 10.77 10.99 11.21 11.43 11.66 11.90 12.13 12.38 12.62 12.88 13.13 13.40
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14,000 13,500 13,000 12,500 12,000 11,500 11,000 10,500 10,000 9,500 9,000 GB2005 GB2006 GB2007 GB2008 GB2009 GB2010 GB2011 Actual
Figure 8 is included show how a forecast performed by the system operator with the best available data can change substantially over time. Figure 9, from a recent NYISO presentation, shows the load growth of the system compared to the forecast load. Forecasts over the path decade have neither consistently under- nor over-estimated load.
Page 36
So ource: NYIS SO
Figure 10 shows how th load foreca for 2016 h evolved o s he ast has over time in su ucceeding Go old Books, sho owing a subst tantially-decre easing peak lload forecast. .
Figure 10 - Change in 20 NYC Peak Load 016 k
13,400 13,200 13,000 12,800 12,600 12,400 12,200 12,000 11,800 11,600 11,400 11,200 GB200 06 13,003 3
13,140 1 12,755
12,665
GB2007
GB2008
G GB2009
GB20 010
GB2011 1
Figure 11 displays the data taken fro the 2011 G d d om Gold Book wh hich details en nergy efficien ncy impacts on peak load fo NYC and fo the State a a whole. F n or or as Forecasts from the NYISO show m growing en nergy efficiency impacts, both as an abs b solute numbe and as a p er, percentage of load,
Confid dential Draft Re eport Pa 37 age
over the coming ten years. The Gold Book indicates that EE initiatives are forecast to comprise approximately 1% of NYCs peak load in 2011, rising to 8% by the end of the study period.
Figure 11 - Forecast Peak Load Reductions from Energy Efficiency (MW)
3,500 3,000 2,500 2,000 1,500 1,000 500 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 The table below shows the annual zonal and aggregate NYISO demand and peak load.
Table 15 - New York Non-Coincident Summer Peak (MW)
Year A B C D E F G H I J K NYCA
J NYCA
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
2,670 2,695 2,724 2,766 2,781 2,786 2,775 2,772 2,773 2,785
2,029 2,059 2,075 2,090 2,104 2,123 2,132 2,150 2,170 2,201
2,892 2,941 2,953 2,997 3,016 3,034 3,035 3,043 3,058 3,085
660 870 879 885 897 915 916 922 926 935
1,395 1,394 1,383 1,380 1,394 1,412 1,417 1,423 1,433 1,450
2,253 2,294 2,310 2,328 2,347 2,371 2,355 2,410 2,432 2,468
2,294 2,342 2,362 2,385 2,407 2,432 2,444 2,465 2,492 2,526
732 746 762 772 778 788 798 803 809 817
1,468 1,504 1,526 1,847 1,559 1,567 1,584 1,596 1,613 1,629
11,555 11,752 11,915 12,056 12,173 12,299 12,473 12,663 12,861 13,046
5,477 5,600 5,686 5,731 5,783 5,867 5,913 6,004 6,081 6,173
32,870 33,615 33,985 34,345 34,642 34,991 35,273 35,646 36,042 36,503
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2021
2,784
2,219
3,097
939
1,457
2,488
2,551
829
1,651
13,224
6,158
36,869
2011
15,589
10,027
16,516
4,802
7,927
11,343
10,542
2,977
6,184
54,631
22,694
163,229
2012
15,681
10,125
16,713
6,337
7,895
11,470
10,702
3,022
6,273
55,411
23,076
166,697
2013
15,801
10,155
16,730
6,424
7,817
11,485
10,719
3,037
6,293
55,592
23,357
167,408
2014
16,002
10,194
16,919
6,450
7,780
11,521
10,764
3,057
6,262
55,939
23,552
168,508
2015
16,046
10,218
16,969
6,552
7,831
11,551
10,793
3,075
6,302
56,202
23,760
169,357
2016
16,046
10,274
17,019
6,675
7,923
11,626
10,853
3,102
6,410
56,625
24,122
170,672
2017
15,951
10,291
16,979
6,698
7,941
11,653
10,872
3,117
6,437
56,863
24,361
171,160
2018
15,893
10,344
16,982
6,732
7,971
11,704
10,917
3,146
6,501
57,432
24,659
172,279
2019
15,875
10,425
17,036
6,768
8,016
11,788
10,997
3,174
6,567
58,009
24,969
173,610
2020
15,929
10,556
17,148
6,828
8,102
11,927
11,135
3,215
6,651
58,757
25,369
175,614
2021
15,901
10,633
17,184
6,846
8,140
12,002
11,216
3,238
6,699
59,130
25,647
176,684
ISO-NE, PJM and Ontario load forecasts were based on the most recent published forecasts of each respective system operator. For modeling years beyond each system operators forecast horizon (2011-2021 for NYISO), the last-five-year average annual growth rate was be projected to continue into the future. For modeling of New York, we will add capacity as necessary out to 2030 (as described later in this memo). For adjacent areas, such as ISO-NE, PJM, and IESO, we froze load and generation growth post-2025. Our high and low demand scenarios consist of the following peak load forecasts.
Table 17 - High Load New York Non-Coincident Summer Peak (MW)
Year A B C D E F G H I J K NYCA
2011 2012
2,680 2,728
2,037 2,085
2,903 2,977
664 884
1,400 1,411
2,261 2,322
2,303 2,372
738 763
1,477 1,533
11,649 12,052
5,522 5,689
33,070 34,215
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2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
2,665 2,679 2,692 2,717 2,715 2,702 2,680 2,669 2,666 2,677 2,674
2,025 2,046 2,050 2,053 2,053 2,059 2,059 2,071 2,087 2,116 2,132
2,886 2,922 2,918 2,944 2,945 2,943 2,932 2,931 2,941 2,965 2,975
658 862 866 870 878 889 887 891 893 901 905
1,392 1,386 1,367 1,355 1,360 1,369 1,368 1,371 1,377 1,393 1,400
2,248 2,279 2,283 2,287 2,290 2,300 2,274 2,321 2,338 2,372 2,390
2,290 2,327 2,334 2,342 2,349 2,359 2,361 2,375 2,397 2,430 2,453
730 737 749 755 760 768 775 779 784 791 803
1,463 1,489 1,503 1,813 1,527 1,533 1,545 1,553 1,568 1,583 1,604
11,508 11,602 11,656 11,739 11,809 11,905 12,024 12,176 12,348 12,523 12,690
5,454 5,555 5,614 5,626 5,646 5,696 5,714 5,780 5,834 5,911 5,891
32,769 33,315 33,460 33,635 33,756 33,942 34,070 34,334 34,653 35,076 35,413
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Gas Prices
Natural gas prices are based on NYMEX traded futures (March 25, 2011 trade date) and the EIA AEO 2011 forecast (Early Release, December 2010). Delivered gas prices are calculated using CRAs GASCAST forecasting software. The GASCAST forecast is based on the historic relationships of local prices to hub prices. Prices are forecasted monthly, accounting for seasonal differences in supply and demand. For New York City, we have assumed that the Spectra pipeline project in New Jersey is placed into service, and have incorporated its effects on basis differentials.35 Average annual gas prices for the base case are shown below in 2010 $ per mmBTU.
Table 19 - Base Case Gas Prices ($/MMBTU)
Henry Hub
Transco Zone 6 NY
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
4.60 4.95 5.13 5.30 5.51 5.69 5.86 6.01 6.14 6.24 6.33 6.42 6.51 6.54 6.56 6.58 6.61 6.63 6.66 6.68
5.41 5.57 5.68 5.82 6.05 6.24 6.42 6.59 6.73 6.83 6.94 7.04 7.13 7.10 7.14 7.18 7.22 7.25 7.28 7.31
6.00 6.08 6.05 6.10 6.35 6.55 6.74 6.92 7.06 7.18 7.29 7.39 7.50 7.43 7.48 7.53 7.57 7.61 7.65 7.68
We also ran cases with high gas and low gas prices. To derive these prices, the AEO 2010 high fuel price and low fuel price forecast have been used to adjust the base case figures from the AEO 2011 report. The gas prices in these two scenarios are shown in the table below.
35 In the context of another project, CRA performed an independent analysis of the effects of Spectras pipeline on NY and NJ basis differentials. The results of that analysis are incorporated here.
Page 41
Henry Hub
Transco Zone 6 NY
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
4.84 5.21 5.40 5.58 5.81 6.00 6.17 6.33 6.46 6.57 6.67 6.76 6.86 6.89 6.91 6.94 6.97 7.00 7.03 7.05
5.65 5.83 5.95 6.10 6.34 6.55 6.73 6.91 7.05 7.16 7.27 7.38 7.48 7.45 7.50 7.54 7.58 7.61 7.65 7.68
6.25 6.35 6.33 6.38 6.64 6.86 7.05 7.24 7.39 7.51 7.62 7.73 7.84 7.78 7.84 7.89 7.93 7.97 8.01 8.05
Henry Hub
Transco Zone 6 NY
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
4.23 4.55 4.71 4.88 5.07 5.24 5.39 5.53 5.64 5.74 5.82 5.91 5.99 6.01
5.04 5.17 5.27 5.39 5.61 5.79 5.95 6.10 6.23 6.33 6.43 6.52 6.61 6.58
5.64 5.69 5.64 5.68 5.90 6.10 6.27 6.44 6.57 6.68 6.78 6.88 6.97 6.91
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New York Harbor 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 1% FO6 11.67 12.06 12.44 12.79 13.12 13.42 13.70 13.96 14.21 14.44 14.64 14.82 15.00 15.13 15.26 15.37 .3% FO6 14.22 14.70 15.16 15.60 16.00 16.36 16.71 17.03 17.34 17.62 17.87 18.09 18.31 18.47 18.62 18.77 FO2 20.41 21.08 21.72 22.32 22.88 23.38 23.86 24.31 24.73 25.12 25.46 25.76 26.06 26.29 26.49 26.69
Our high and low fuel price scenarios will include adjustments to oil prices, using the same methodology as described for natural gas. Resulting oil prices are shown in the table below.
Page 43
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
18.49 19.16 19.80 20.40 20.96 21.47 21.96 22.41 22.84 23.24 23.60 23.92 24.23 24.48 24.70 24.92
22.60 23.41 24.20 24.93 25.63 26.25 26.84 27.40 27.93 28.42 28.86 29.25 29.64 29.94 30.22 30.49
32.26 33.41 34.51 35.54 36.51 37.39 38.22 39.00 39.74 40.43 41.04 41.58 42.13 42.55 42.93 43.31
New York Harbor 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 1% FO6 6.88 6.83 6.79 6.74 6.70 6.66 6.61 6.58 6.55 6.52 6.49 6.46 6.45 6.43 6.41 6.41 .3% FO6 8.35 8.29 8.23 8.18 8.12 8.07 8.02 7.97 7.93 7.90 7.87 7.83 7.81 7.79 7.77 7.76 FO2 12.15 12.06 11.97 11.89 11.81 11.72 11.65 11.58 11.52 11.46 11.41 11.36 11.33 11.28 11.25 11.23
Environmental Assumptions
The future of federal carbon policy remains highly uncertain. Although a national carbon policy appears unlikely in the next few years, there remains a possibility for some type of
Page 44
federal price on carbon in the longer term. With regard to CO2 regulation we will model a $15 per metric ton federal carbon price starting in 2018.36 For NOX and SO2, CRA will model the current CAIR policy, plus a Hazardous Air Pollutants (HAPs) policy requiring the maximum achievable control technology (MACT) for uncontrolled coal units by 2015. CRA suggests modeling a HAPs policy that requires all uncontrolled coal units to install a wet scrubber along with a fabric filter and sorbent injection.37 Estimated allowance prices based on recent results of CRAs North American Electricity and Environment Model (NEEM) for CAIR and HAPs are shown in the table below. CRA expects that the combination of a national carbon price with a HAPs policy will cause substantial coal retirements. The remaining coal-fired facilities will need to install significant abatement technology to comply with the HAPs policy. These required environmental retrofits (combined with the economic retirement of older coal-fired power plants) are expected to marginalize provisions under a CAIR/CATR program resulting in prices for NOx and SO2 allowances approaching $0 per ton.
Table 25 - Emissions Price ($/Metric Ton)
CO2 2015 2018 2020 2023 2025 2030 $0 $15 $16.53 $19.14 $21.10 $26.93
NOx $0 $0 $0 $0 $0 $0
Sox $0 $0 $0 $0 $0 $0
36 While there is a possibility that the federal government will not implement a nationwide CO price until after 2018, 2 there is also a possibility that the national CO2 price will exceed $15 / metric tonne. We believe that an estimate of $15 per metric tonne starting in 2018 represents a reasonable forecast for national carbon policy. 37 While it is widely expected that a HAPs policy will require additional controls on coal units, the EPA has not yet proposed the rule; thus a HAPs policy could also require selective catalytic reduction.
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HTP transmission line is assumed to enter service in 2013, including 320 MW of firm capacity into New York City (Zone J).
Table 26 - Planned Capacity Additions
Plant Name Astoria Energy 2 Gilboa (Uprates) Gilboa (Uprates) Bayonne Energy Center Montgomery Biomass NYSERDA Biomass NYSERDA Wind Generic Wind Generic Wind
Unit Type CCGT Pumped Storage Pumped Storage Gas Turbine Steam Turbine Steam Turbine Wind Wind Wind
Effective Date June 2011 May 2010 May 2011 Jan 2014 Jan 2011 2011 2011 2012-2019 2020-2030
Summer Capacity (MW) 550 30 30 512 100 100 260 250/yr 25/yr
The following generic capacity additions will be added to meet the Installed Capacity Requirement of 115.5% in the rest-of-state NYCA area. Capacity is added in New York City to meet the 81% Installed Capacity Requirement, while capacity is added to Long Island to maintain the 101.5% Installed Capacity Requirement. Note that these capacity additions reflect net changes. For example, in the case of a one-for-one repowering, the net capacity addition would be zero. Note particularly the addition of 500 MW on Long Island in 2018 this capacity is assumed to result from LIPAs recent RFP.
Table 27 - New Capacity Additions for Base Case
Zone K J G F J K G
Summer Capacity (MW) 500 500 500 500 500 500 500
Capacity Retirements
The introduction of HAPS rules in 2015 is likely to require expensive retrofits on many older coal-burning plants. Based on recent results from CRAs NEEM model, the following upstate coal plants in New York are likely to be retired.
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Zone A A A C C
Unit Type Steam Turbine Steam Turbine Steam Turbine Steam Turbine Gas Turbine
For the high demand scenario, the following capacity additions will be added to meet the Installed Capacity Requirements in each of the NY capacity zones. (The same generic CCGT capacity additions will be applied in the low demand scenario as shown above for the Base Case.)
Table 29 - Capacity Additions for High Case
Effective Date 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Zone G J K F J G F G J K F J G F J K G
Unit Type CCGT CCGT CCGT CCGT CCGT CCGT CCGT CCGT CCGT CCGT CCGT CCGT CCGT CCGT CCGT CCGT CCGT
Summer Capacity (MW) 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500
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Model Calibration
In order to better align model outcomes with actual market outcomes, we have modified our model to account for actual market conditions. One method we have used to accomplish this is to use bid adders for certain types of generation. This allows units that are dispatched out of merit to capture reasonable margins in the energy markets. We also modeled reductions in the transfer limit of the Dunwoodie-South interface, based on analysis of historical interface transfer capabilities We conducted a simplified back-cast simulation to calibrate NY Zone J outcomes against 2010 actual market results. Historical heat rates were calculated based on 2010 hourly NYISO DAM prices and 2010 daily ICE natural gas prices Figure 12 and Figure 13 show the results of our model calibration, comparing actual 2010 implied heat rates to our modeled results. Our model is likely to slightly understate peak prices when the system is constrained.
Figure 12 - Model Calibration - Zone J Prices
NYZoneJ
ImpliedHeatRate(Btu/kWh)
Model
Historical
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Gowanus138kV
ImpliedHeatRate(Btu/kWh)
Model
Historical
4.
4.1.
ANALYSIS RESULTS
SUMMARY OF FINDINGS
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110.00 100.00 90.00 80.00 70.00 60.00 50.00 40.00 2006 2007 2008 2009 2010 <> 2016 2017 2018 2019 2021 2023 2025 2027 2030 Historical CCinLHV StatusQuo LowCarbon CCinNYC+LHV OneforOne
NYCMarketLMP(2010$/MWh)
110.00 100.00 90.00 80.00 70.00 60.00 50.00 40.00 2006 2007 2008 2009 2010 <> 2016 2017 2018 2019 2021 2023 2025 2027 2030 Historical CCinLHV StatusQuo LowCarbon CCinNYC+LHV OneforOne
NYCMarketLMP(2010$/MWh)
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110.00 100.00 NYCMarketLMP(2010$/MWh) 90.00 80.00 70.00 60.00 50.00 40.00 2006 2007 2008 2009 2010 <> 2016 2017 2018 2019 2021 2023 2025 2027 2030 Historical StatusQuo CCinNYC+LHV LowCarbon OneforOne
Figure 16 - Reference Case Implied Heat Rates in NYC for All-Hours (Btu/kWh)
12,000 NYCImpliedMarketHR(2010$/MWh) 11,500 11,000 10,500 10,000 9,500 9,000 8,500 8,000
Historical CCinLHV
StatusQuo LowCarbon
CCinNYC+LHV OneforOne
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cost of new entry to account for expected oversupply, as discussed earlier in this report. The order specified that the appropriate value of Net CONE should instead be the price level on the demand curve that corresponds to the expected level of surplus in the market, which corresponds to approximately 65 percent of the Reference Level under the current demand curve.
AverageSeasonalUCAPPrices($/kWMonth)
45.00 40.00 35.00 30.00 25.00 20.00 15.00 10.00 5.00 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
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NYCASummer
NYCAWinter
NYCSummer
NYCWinter
NYCA Calendar Year 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 NYCA Summer 5.26 6.86 6.74 7.54 8.61 9.46 9.88 11.24 12.63 12.82 13.08 13.37 12.46 13.99 14.28 NYCA Winter 0.95 1.87 2.59 2.48 3.23 4.15 4.81 5.53 6.84 7.70 7.66 7.76 7.42 7.10 8.08 Annual 3.10 4.37 4.66 5.01 5.92 6.80 7.35 8.38 9.74 10.26 10.37 10.56 9.94 10.55 11.18 NYC Summer 25.16 26.80 27.33 27.88 28.44 29.01 24.96 28.92 32.97 26.89 31.09 35.39 29.40 33.87 38.44
NYC NYC Winter 9.02 11.16 12.29 12.54 12.79 13.04 11.97 10.77 14.68 14.93 11.51 15.66 16.09 12.81 17.21 Annual 17.09 18.98 19.81 20.21 20.61 21.02 18.47 19.84 23.83 20.91 21.30 25.53 22.75 23.34 27.83
NoNewGen CCinLHVonly CCsinLHVandNYC LowCarbon $620 $686 $740 $794 $911 $997 $977 $986 $974 6% 7% 6% 6% 7% 7% 7% 7% 6% $422 $516 $552 $524 $634 $762 $749 $714 $725 4% 5% 5% 4% 5% 6% 5% 5% 5% $292 $341 $374 $409 $460 $547 $521 $471 $516 3% 3% 3% 3% 4% 4% 4% 3% 3% $246 $270 $338 $278 $440 $377 $532 $402 $393 2% 3% 3% 2% 3% 3% 4% 3% 3%
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NoNewGen CCinLHVonly CCsinLHVandNYC LowCarbon $2,059 14% $1,501 $2,123 13% $1,611 $2,216 13% $1,688 $2,256 12% $1,650 $2,291 12% $1,698 $2,349 11% $1,774 $2,309 11% $1,757 $2,239 10% $1,680 $2,229 9% $1,692 10% 10% 10% 9% 9% 9% 8% 7% 7% $1,371 $1,436 $1,510 $1,535 $1,524 $2,031 $1,871 $1,040 $913 9%$1,685 11% 9%$1,707 11% 9%$1,814 10% 8%$1,740 8%$1,820 9% 9%
Table 34 through Table 36 summarizes the total consumer cost of energy and capacity for NYC.
Table 34 - NYC Consumer Cost of Energy (2010$M)
NoNewGen CCinLHVonly CCsinLHVandNYC HQHVDC&OffshoreWind $297 8% $342 9% $335 8% $394 8% $183 $248 $243 $230 5% 6% 6% 5% $110 $147 $145 $170 3% 4% 3% 4% $82 $94 $116 $99 2% 2% 3% 2%
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6% 7% 7% 5% 5%
4% 4% 4% 3% 3%
4% 3% 4% 2% 2%
NoNewGen CCinLHVonly CCsinLHVandNYC HQHVDC&OffshoreWind $188 $182 $188 $185 $164 $167 $175 $136 $140 9% 8% 8% 8% 7% 7% 7% 5% 4% $144 $142 $148 $146 $130 $117 $128 $109 $111 7% 6% 6% 6% 5% 5% 5% 4% 3% $144 $142 $148 $146 $130 $328 $280 ($69) ($144) 7% 6% 6% 6% 5% 13% 11% 2% 4% $188 $182 $188 $185 $164 $357 $138 ($42) ($116) 9% 8% 8% 8% 7% 15% 5% 1% 4%
The negative numbers in Table 35 indicate a reduced cost to consumers as capacity in the NYC market clears as it is no longer subject to the mitigation floor.
Table 36 - NYC Total Consumer Cost (2010$M)
NoNewGen
CCinLHV CCsinLHVandNYC $254 $289 $292 $316 $313 $556 $512 $82 4% 5% 4% 4% 4% 7% 6% 1%
$485 8% $327 6% $524 9% $390 6% $523 8% $391 6% $579 8% $376 5% $595 8% $433 6% $636 8% $478 6% $620 8% $474 6% $571 7% $421 5%
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2030
$571 6% $408 5%
$39
0%
$14
0%
G 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 0 0.001 0.001 0.001 0.001 0.001 0.002 0.001 0.002 0.004
H 0 0 0 0 0 0 0 0 0 0
I 0.001 0.002 0.001 0.001 0.001 0.002 0.005 0.004 0.008 0.013
K 0 0 0 0 0 0.001 0.001 0 0 0
NYCA 0.001 0.002 0.002 0.002 0.002 0.003 0.005 0.004 0.009 0.015
Table 38 displays the results of our resource adequacy analysis in which both IPEC units retire. Upon the retirement of IP3, minimum resource adequacy standards are violated. In this scenario, the HTP cable is in service and has 660 MW of capacity available for flow, but no firm capacity available in PJM to serve NYC load. Zones which do not meet minimum reliability standards are shown in bold.
Table 38 - No New Generation Resource Adequacy
H 0 0 0 0.003 0.002
K 0 0 0 0.001 0.001
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We also analyzed the impact of HTP securing 320 MW of firm capacity in PJM (equal to the amount of its firm transmission withdrawal rights from PJM) on LOLE, shown in Table 39.
Table 39 - Reference Case with 320 MW Firm HTP Capacity
G 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 0 0.001 0 0.004 0.004 0.041 0.056 0.059 0.09 0.134
I 0.001 0.002 0.001 0.01 0.008 0.096 0.134 0.154 0.24 0.354
NYCA 0.001 0.002 0.001 0.011 0.01 0.113 0.151 0.173 0.27 0.41
The results indicate that 320 MW of firm capacity from PJM over HTP is not sufficient to maintain system reliability, although the violation of LOLE standards is small. Slightly more capacity or slightly less load might postpone, but not avoid, a resource violation. In addition to analyzing the LOLE using our base-case load forecast, we also undertook an analysis using the most recent 2011 Gold Book forecast from the NYISO, shown in Table 40.
Table 40 - NYCA LOLE with 2011 Gold Book Forecast
G 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 0.001 0.002 0.002 0.014 0.020 0.018 0.028 0.037
I 0.001 0.002 0.001 0.004 0.004 0.038 0.053 0.057 0.088 0.120
0.003 0.001
0.001
NYCA 0.001 0.002 0.001 0.005 0.005 0.045 0.059 0.064 0.096 0.134
Table 41 displays the same analysis with the addition of 320 MW of firm capacity on the HTP cable. The need date is the same in both cases, 2020.
Table 41 - NYCA LOLE with 2011 Gold Book Forecast and 320 MW HTP Capacity
2011 2012
G 0.000 0.001
H 0.000 0.000
I 0.001 0.002
J 0.000 0.002
K 0.000 0.000
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In order to determine the amount of capacity necessary to maintain system reliability in the event of an IPEC retirement, we calculated the amount of new capacity necessary in the LHV to meet minimum standards, shown in the rightmost column in Table 42.
Table 42 - MW Necessary to Maintain LOLE
G 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 0 0.001 0.001 0.007 0.006 0.032 0.035 0.031 0.033 0.031
I 0.001 0.002 0.001 0.017 0.014 0.081 0.085 0.086 0.088 0.086
NYCA 0.001 0.002 0.001 0.018 0.016 0.095 0.096 0.098 0.096 0.095
MW Necessary
Upon the retirement of IP3, 250 MW of new capacity would be necessary to maintain system reliability, with a total need of 950 MW by 2020. Note that minimum capacity additions may be greater than those indicated here to maintain voltage support on the system these figures should be taken as a minimum. New generating capacity in NYC can be a partial, but not total, substitute for new generating capacity in the LHV. It cannot be assumed that the capacity indicated here could be sited in NYC with the same effect on system reliability. An illustration of this is shown in Table 48. We know from Table 42 that 950 MW of capacity in the LHV would be sufficient to maintain system reliability, but the scenario in which 900 MW is added, split between the LHV and NYC is insufficient to meet reliability standards, violating them (albeit by a small amount) in 2020. While the consensus in the stakeholder group was that a scenario in which one reactor retired and one stayed online was unlikely, given Entergys trend towards multi-reactor sites, we did analyze this scenario, shown in Table 43. In this scenario, system reliability is maintained until 2020.
Table 43 - LOLE with One Unit Retired
H 0 0 0
J 0 0.002 0.001
K 0 0 0
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4.2.
2016 54.14
2017 54.99
2018 62.59
2019 64.10
2021 66.40
2023 68.80
2025 69.64
2027 71.40
2030 73.49
57.74 50.03
58.61 50.80
65.98 58.67
67.67 59.98
70.33 61.88
73.04 63.89
73.63 65.02
75.74 66.42
77.52 68.84
2016 63.89
2017 65.23
2018 73.48
2019 76.02
2021 77.99
2023 80.89
2025 81.94
2027 85.92
2030 86.04
69.05 58.01
70.61 59.01
78.88 67.23
82.09 69.00
84.41 70.62
87.79 72.92
88.75 74.07
94.34 76.27
93.12 77.85
Figure 18 shows the historical and forecasted market LMPs for New York City, Long Island, and the Lower Hudson Valley. The forecasted market LMPs are based off of CRAs GE MAPS analysis.
Confidential Draft Report Page 60
120.00 AverageMarketLMP(2010$/MWh) 100.00 80.00 60.00 40.00 20.00 0.00 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2006 2007 2008 2009 2010 2030 2030 10,021 10,565 9,392 2030 10,732 11,623 9,703
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<>
NYC
LI
LHV
The tables below show the implied market heat rates for the status quo case.
Table 46 - Status Quo Implied Market Heat Rate for NYS (Btu/kWh)
2016 8,597
2017 8,497
2018 9,450
2019 9,476
2021 9,529
2023 9,609
2025 9,654
2027 9,826
9,174 7,940
9,055 7,853
9,957 8,863
9,992 8,879
10,098 8,878
10,198 8,928
10,204 9,019
10,427 9,137
Table 47 - Status Quo Implied Market Heat Rate for NYC (Btu/kWh)
2016 9,303
2017 9,249
2018 10,155
2019 10,313
2021 10,265
2023 10,368
2025 10,412
2027 10,827
10,069 8,429
10,018 8,361
10,900 9,294
11,135 9,362
11,132 9,271
11,261 9,337
11,285 9,403
11,916 9,578
Reliability Impact
Table 48 shows our calculation of the LOLEs for the LHV and NYC CCs. The analysis shows that system reliability is violated for the NYCA as a whole in 2020, albeit by a very small amount. Because of a slight inconsistency in input assumptions between our reliability and economic analyses, this table shows the results for a 400 MW CC in NYC instead of a 500 MW CC. It is reasonable to assume that an additional 100 MW of capacity (or 100 MW reduction in forecast load) in NYC might avoid a reliability violation in the final year of the study.
Table 48 - LOLE for LHV and NYC CCs
G 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 0 0.001 0.001 0.007 0.006 0.021 0.031 0.029 0.026 0.036
I 0.001 0.002 0.001 0.017 0.014 0.053 0.075 0.079 0.064 0.093
NYCA 0.001 0.002 0.001 0.018 0.016 0.063 0.085 0.089 0.072 0.107
Note that as shown in Table 42, the scenario in which one 500 MW CC is installed in the LHV is not sufficient to maintain system reliability additional capacity would be necessary to meet minimum reliability standards.
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Environmental Impact
Table 49 through Table 52 show the emissions impact results for different pollutants for NYS and NYC.
Table 49 - NYS Environmental Impact, 500 MW LHV
Year 2016 2017 2018 2019 2021 2023 2025 2027 2030
SOx (tons) 0% 0% 2% 1% 4% 4% 4% 6% 6%
CO2 (tons) 14% 14% 13% 13% 13% 14% 14% 12% 11%
Year 2016 2017 2018 2019 2021 2023 2025 2027 2030
CO2 (tons) 13% 14% 12% 12% 14% 15% 16% 12% 10%
Year 2016 2017 2018 2019 2021 2023 2025 2027 2030
NOx (tons) 7% 8% 8% 7% 8% 8% 8% 8% 7%
CO2 (tons) 15% 15% 14% 14% 14% 14% 14% 13% 11%
Year
NOx (tons)
CO2 (tons)
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Economic Impact
The following tables show the delta in market LMP between the Conventional Thermal scenario and the Status Quo scenario.
Table 53 Delta in NYS Market LMP, 500MW CC in LHV (2010$/MWh)
2016 2.63
2017 2.87
2018 3.01
2019 2.92
2021 3.22
2023 3.71
2025 3.63
2027 3.55
2030 3.43
2.86 2.37
3.26 2.42
3.61 2.32
3.34 2.44
3.66 2.72
4.10 3.25
4.28 2.86
4.30 2.70
4.40 2.31
Table 54 - Delta in NYS Market LMP, 500MW CC in NYC + 500MW CC in LHV (2010$/MWh)
2016 1.96
2017 2.13
2018 2.19
2019 2.35
2021 2.54
2023 2.84
2025 2.66
2027 2.76
2030 2.64
2.18 1.72
2.34 1.88
2.67 1.64
2.72 1.94
2.87 2.17
3.22 2.40
3.19 2.04
3.32 2.11
3.39 1.79
Year All
2016 3.14
2017 3.98
2018 3.80
2019 3.55
2021 4.59
2023 5.52
2025 5.16
2027 4.53
2030 3.90
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Hours Peak Off Peak 3.42 2.83 4.65 3.21 4.58 2.91 4.10 2.91 5.21 3.87 6.18 4.76 6.04 4.13 5.28 3.68 5.07 2.54
Table 56 - Delta in NYC Market LMP, 500MW CC in NYC + 500MW CC in LHV (2010$/MWh)
2016 1.90
2017 2.41
2018 2.27
2019 2.53
2021 2.78
2023 3.48
2025 3.44
2027 2.24
2030 2.35
2.09 1.69
2.67 2.11
2.80 1.66
2.98 2.00
3.04 2.48
3.96 2.93
4.04 2.74
2.32 2.15
3.07 1.51
The following tables show the delta in implied market heat rate between the Conventional Thermal scenario and the Status Quo scenario.
2016 408
2017 431
2018 442
2019 427
2021 455
2023 510
2025 498
2027 492
2030 470
445 367
490 363
530 341
489 356
519 382
567 445
588 394
595 374
601 318
Table 58 - Delta in NYS Implied Market HR, 500MW CC in NYC + 500MW CC in LHV (Btu/kWh)
2016 306
2017 322
2018 323
2019 346
2021 359
2023 389
2025 365
2027 385
2030 363
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339 268
354 284
394 241
401 284
406 305
441 328
439 280
465 293
464 246
2016 439
2017 546
2018 529
2019 470
2021 585
2023 692
2025 658
2027 575
2030 493
482 389
640 438
641 400
547 380
669 488
782 589
774 524
670 466
638 326
Table 60 - Delta in NYC Implied Market HR, 500MW CC in NYC + 500MW CC in LHV (Btu/kWh)
2016 266
2017 317
2018 305
2019 329
2021 361
2023 428
2025 425
2027 317
2030 306
295 233
352 277
380 218
393 254
401 316
492 354
504 334
340 291
401 196
NYC has a surplus of installed capacity (see Figure 19), and despite its importance to NYCs energy security, IPEC is located in the RoS capacity zone. Its retirement has limited effect on the supply and demand balance in NYC. The RoS ICAP zone extends from Westchester through all areas in the state except NYC and Long Island. Removing 2 GW of capacity from the ICAP market in this region has a substantial effect on the price. The change in price is spread across a large region and a large number of megawatts, resulting in substantial economic impact.
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There is at least one potential regulatory change which might mitigate this impact, the creation of a new LHV ICAP zone in the NYISO markets. This would reduce the impact of IPECs retirement on the ICPA market outside of the LHV, and likely reduce the overall impact. This change in the NYISO markets has been discussed, but not agreed upon. It is plausible that the retirement of IPEC may be the catalyst for the creation of this new zone, but it was the collective decision of the stakeholder group to model the market rules as they exist today. The tables below show the impact of the replacement of IPEC with these two projects on NYS and NYC wholesale prices. These two scenarios represent a proportionally larger impact on energy prices in NYC, and capacity prices in NYS. The reason for this is the relative shortage and surplus in each region for each product.
Energy Capacity Total $1,079 $1,438 $1,476 $1,462 $1,380 $1,352 $1,331 $1,501 $2,123 $2,216 $2,256 $2,291 $2,349 $2,309 $2,579 $3,561 $3,692 $3,718 $3,672 $3,701 $3,640
Percentage 9% 9% 9% 8% 8% 10% 9%
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2027 2030
$1,253 $1,255
4% 4%
Energy Capacity Total $1,371 $1,436 $1,510 $1,535 $1,524 $2,031 $1,871 $1,040 $913 $1,079 $1,094 $1,137 $1,126 $1,064 $1,484 $1,349 $570 $396 $2,450 $2,530 $2,647 $2,661 $2,588 $3,515 $3,220 $1,610 $1,309
Percentage 9% 9% 9% 8% 8% 10% 9% 4% 4%
Energy Capacity Total Percentage $144 $182 $188 $185 $164 $167 $175 $136 $140 $327 $524 $523 $579 $595 $636 $620 $571 $571 $471 $707 $710 $764 $759 $803 $795 $707 $711 4% 5% 4% 4% 4% 7% 6% 1% 0%
Energy Capacity Total $254 $289 $292 $316 $313 $556 $512 $82 $144 $142 $148 $146 $130 $328 $280 ($69) $398 $430 $440 $461 $443 $884 $791 $13
Percentage 4% 5% 4% 4% 4% 7% 6% 1%
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2030
Project Economics
$39
($144) ($106)
0%
The question of whether these projects might be supported by market revenues was one which was discussed by our stakeholder group. Based on the results of our energy and capacity market simulations, we created highly simplified pro-forma analyses of each project to look at the overall project gross margins. Table 65 and Table 68 show partial results (for ease of display and brevity) for one unit in the LHV and one in NYC. For the purposes of this analysis, we assumed an all-in capital cost of $1,500 per kW to construct a CC in the LHV, and $2,000 per kW to construct a CC in NYC.38
Table 65 - Two CCs Project Economics - LHV
Calendar Year Market Details Capacity Price ($/kW year) SO2 Price ($/ton) NOx Price ($/ton) CO2 Price ($/ton) Operations Revenue Generation (MWh) Energy Revenue Capacity Revenue Energy & Capacity Revenue Costs SO2 Emission Costs NOx Emission Costs CO2 Emission Costs VOM FOM Fuel Costs Operating Costs EBITDA
38 The purpose of this study was not to conduct a detailed project cost estimate, but rather an economic evaluation. development of detailed cost estimates were beyond the intended scope of this study.
The
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Capital Structure Loan Balance start of year Principal Interest Balance at end of year Book Value of Equity Rate Base Tax Depreciation Rate Tax Depreciation Accumulated Tax Depreciation Net PP&E (Tax) Book Depreciation Rate Book Depreciation Accumulated Book Depreciation Net PP&E (Book) Deferred Tax Assets (Liabilities) Working Capital Requirement Rate Base Net Income Energy & Capacity Revenue Operating Costs Insurance Property Taxes Interest Expense Depreciation of PP&E Pre-Tax Net Income Income Tax Expense Net Income Cash Flow from Operations Net Income Depreciation Decrease (Increase) in Deferred Tax Assets Change in Working Capital Net Cash Flow from Operations Change in Debt Capital Free Cash Flow to Equity
3.75% $28,125,000 $28,125,000 $721,875,000 5.00% $37,500,000 $37,500,000 $712,500,000 $4,253,203 $1,449,106 $718,202,309
7.22% $54,142,500 $82,267,500 $667,732,500 5.00% $37,500,000 $75,000,000 $675,000,000 ($3,297,083) $1,478,088 $673,181,005
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94% $21,040,410
84% $35,983,497
The results indicate that on a levelized cost basis, a CC constructed in the LHV would not require contractual support, supported largely by revenues from the ICAP market. If a LHV ICAP zone were created, revenues would be lower for the generating unit contractual support may be required, but consumers would see lower cost increases from IPECs retirement. A CC constructed in NYC would require approximately $408m in present value support over fifteen years, largely because the unit would be mitigated in the ICAP market. These costs are in addition to increased costs to consumers for energy and capacity.
39 We analyzed an HVDC line which connected into NYC principally because it is similar to a project (TDIs CHE) which has been proposed. Based on the results of our analysis, it may be that the projects economics are altered by interconnecting at or near the Buchanan substation; it could capitalize on the higher installed capacity prices there with lower construction costs. We did not explicitly analyze this project configuration.
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strategies. The line operated at a capacity factor of approximately 89%, with its energy supply being inframarginal the majority of the time.
Table 66 Transmission Line Incremental Bid Curve (BTU/kWh)
The transmission line was coupled in this scenario with a 500 MW offshore wind farm with an interconnection to the Gowanus substation. This 400 MW wind farm was chosen to be similar to recent proposals for the ConEd/LIPA/NYPA consortium project, as well as commercial proposals from private market participants.
Reliability Impact
For the purposes of our reliability analysis, we assumed that the line was a constant 1,000 MW flow into New York City. This assumption considerably simplified the LOLE analysis, and would likely not materially affect the basic results. Table 67 shows the result of our analysis for the Low Carbon case. The combination of 1,000 MW of transmission and 400 MW of wind power into NYC is sufficient to maintain minimum reliability standards during the study timeframe.
Table 67 - Low Carbon Case LOLE Summary
G 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 0 0.001 0.001 0.007 0.006 0.007 0.011 0.011 0.018 0.025
I 0.001 0.002 0.001 0.017 0.014 0.015 0.024 0.024 0.039 0.059
NYCA 0.001 0.002 0.001 0.018 0.016 0.017 0.027 0.027 0.044 0.068
We reiterate that meeting resource adequacy criteria alone is not sufficient to meet overall reliability standards, but the import of 1,000 MW of hydropower and 400 MW of wind is sufficient to maintain minimum LOLE standards.
Environmental Impact
Table 68 and Table 69 show the impact of the combination of transmission and wind on NYS and NYC respectively.
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Year 2016 2017 2018 2019 2021 2023 2025 2027 2030
NOx (tons)
SO2 (tons)
CO2 (tons)
4% 4% 4% 4% 6% 5% 5% 5% 4%
0% 1% 2% 1% 4% 1% 4% 0% 1%
6% 5% 5% 5% 6% 5% 6% 5% 4%
Year 2016 2017 2018 2019 2021 2023 2025 2027 2030
NOx (tons)
CO2 (tons)
3% 1% 4% 3% 3% 2% 6% 2% 2%
4% 4% 4% 4% 5% 5% 9% 4% 3%
As with the results for the Conventional Thermal solution, we have omitted the effect on SO2 emissions in NYC, as percentage changes in very small numbers can be appear disproportionate to their importance. The combination of wind and Canadian hydro imports may be among the lowest-carbon options available to replace IPECs capacity, but a measurable increase in emissions is still observed because of increased output from conventional thermal powerplants.
Economic Impact
The following tables show the increase in market LMP between the Low Carbon scenario and the Status Quo scenario.
2016
2017
2018
2019
2021
2023
2025
2027
2030
1.80
1.93
2.05
1.82
2.41
2.29
2.71
2.44
2.23
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1.77 1.84
2.02 1.82
2.34 1.71
1.98 1.64
2.62 2.17
2.29 2.29
3.21 2.13
2.85 1.96
2.76 1.62
2016
2017
2018
2019
2021
2023
2025
2027
2030
1.58
1.77
1.95
1.93
2.69
2.55
3.14
2.08
1.87
1.26 1.95
1.67 1.90
2.16 1.71
1.97 1.88
2.79 2.56
2.29 2.83
3.62 2.58
1.97 2.19
2.27 1.40
The following tables show the increase in implied market heat rate between the Low Carbon scenario and the Status Quo scenario.
Table 72 - Delta in Implied Market HR for NYS, Low Carbon (Btu/kWh)
2016
2017
2018
2019
2021
2023
2025
2027
2030
282
290
300
271
340
311
371
335
305
279 285
303 274
345 248
298 239
371 305
314 308
442 289
394 267
376 223
2016
2017
2018
2019
2021
2023
2025
2027
2030
223
232
277
260
343
301
394
256
233
181
215
317
273
360
273
462
245
283
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Off Peak
270
250
231
244
324
333
315
269
176
The following tables show the economic impact of the Low Carbon scenario.
Table 74 NYS Economic Impact - Low Carbon 2010$
Energy Capacity Total Percentage $246 $270 $338 $278 $440 $377 $532 $402 $393 $1,439$1,685 $1,438$1,707 $1,476$1,814 $1,462$1,740 $1,380$1,820 $1,782$2,159 $1,255$1,787 $857$1,259 $685$1,078 11% 11% 10% 9% 9% 11% 8% 5% 4%
Energy Capacity Total Percentage $82 $94 $116 $99 $175 $147 $210 $124 $188 $271 $182 $276 $188 $304 $185 $284 $164 $339 $357 $504 $138 $348 ($42) $82 5% 4% 4% 4% 5% 7% 4% 1%
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2030
$130
($116)
$14
0%
Project Economics
The capital cost of transmission cable such as the one analyzed here is highly uncertain. Developers of projects proposed similar to the one analyzed here have communicated estimated capital costs of $3,500/kW to stakeholder group members, so we have used a capital cost of $3,500 here. If project capital costs and capital recovery requirements are lower, the amount of support necessary would be lower. Our analysis indicates that an all-in capital cost of $1,305/kW would be necessary to break even on market revenues over 15 years given our energy and capacity market analysis. A longer timeframe for capital recovery might reduce the necessary contractual support, although this is not a foregone conclusion, as a longer debt amortization period could outweigh the costs of a longer investment time horizon. It is important to understand exactly what the results represent. This financial analysis represents a highly simplified view of financing assumptions as well as project structure. It represents the project from the viewpoint of a project developer who must finance their investment for the transmission line only through revenues from merchant sales of power into the NYC market. This hypothetical developer purchases power at the lines origin from an independent generation shipper and sells it into NYC. If new hydropower resources are presumed to be developed to supply the line, the investment in new generation capacity would also have to be recovered by the generation supplier. We have made the fundamental and important assumption that any power supplied from the lines terminus in Canada has an opportunity cost, and is not truly free. Our average arbitrage value between the costs of supply on the line and the sale price into NYC averages $36 in real 2010 dollars. Our hypothetical purchase price over the same time period is $44. Using the same financing assumptions as applied to the transmission line, this implies that in order for the generation developer to recover their costs to the same level of return, the development cost of 1,000 MW of generation resources should not exceed $1,665/kW. Stakeholder group members have expressed the view that the cost of new hydropower development in North America is on the order of $3,000/kW. In order to not have the results of the financial analysis skewed by the presence of offshorewind in NYC, the pro-forma analysis of the HVDC project was conducted using market prices from a special run we conducted in which only the HVDC line was present, and not the wind. Had we modeled the financial performance of the transmission project with the off-shore wind present, the off-shore wind would have reduced market prices for energy in NYC, decreasing the margin for the transmission line and increasing the needed contractual support. We emphasize that this represents neither an exhaustive nor complete financial analysis; it is intended only to establish rough guidelines for the cost of potential replacements. Our analysis indicates that the NPV of additional support required will be approximately $2.1b in 2010 dollars based on a capital cost of $3,500/kW. This project, however, represents a
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conscious policy decision to develop low-carbon supplies of electricity, and to pay abovemarket rates for that energy. The ancillary benefits of such a project must be weighed in this context. We did not explicitly analyze the project economics of the wind project. The decision to develop offshore wind in New York was thought to be driven by factors other than overall project economics (e.g. RPS standards, clean energy mandates). It is likely, however, that an offshore wind project may require contractual support through above-market rates.
4.2.4. One-for-One
Project Description
The one-for-one scenario, suggested by stakeholders, consists of 2,000 MW of gas-fired generation installed in the LHV. For the purposes of this analysis, the capacity was installed at the Buchanan bus interconnection point. These units were modeled with a heat rate of 7,500 Btu/kWh and operational parameters similar to other modern combined cycle units. There are numerous questions which must be addressed regarding how these notional units could be constructed or built. It is not clear where they could physically be located, as developing them at the existing site while IPEC was in operation would not be feasible. Additional transmission system reinforcements may be necessary to support them. The intent of our analysis was not to conduct an engineering-level study of these projects.
Reliability Impact
We did not explicitly analyze the resource adequacy impact of this scenario. It can be reasonably assumed, based on other components of our analysis that an equivalent amount of gas-fired capacity will have a similar reliability impact to nuclear capacity. The often-overlooked reliability impact is not on the electric system, but rather the gas pipeline system. We have not explicitly analyzed the impact on the gas transmission system, but some stakeholder group members have conducted their own analyses. Anecdotal information from gas pipeline operators and a cursory review of gas nomination data indicate that the amount of gas necessary to support 2,000 MW of gas-fired generation may not feasible given current pipeline and pressure support constraints.
Economic Impact
The economic impact is relatively limited. This is because the replacement capacity technology chosen, gas-fired combined cycles have a heat rate sufficiently low heat rate that they are inframarginal in the generation stack the majority of the time, similar to IPECs position in the dispatch stack. Because both units are inframarginal, the marginal price is still set by another resource, and so the end-user prices are little-changed, although generator margins are affected. This does not mean, however, that the economic impact can be dismissed as immaterial. The most important point is that the marginal generating cost of these units is now highly correlated to the price of natural gas, whereas the marginal cost of IPEC is not.
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The following tables show the delta in market LMP between the One for One scenario and the Status Quo scenario.
Table 76 - Delta in Market LMP for NYS, One for One (2010$/MWh)
2016 0.28
2017 0.35
2018 0.37
2019 0.20
2021 0.35
2023 0.40
2025 0.41
2027 0.36
2030 0.23
0.21 0.36
0.29 0.41
0.45 0.26
0.11 0.30
0.31 0.39
0.29 0.52
0.50 0.31
0.37 0.35
0.24 0.23
Table 77 - Delta in Market LMP for NYC, One for One (2010$/MWh)
2016 0.37
2017 0.40
2018 0.30
2019 0.19
2021 0.65
2023 0.70
2025 0.39
2027 0.06
2030 -0.46
0.42 0.30
0.35 0.47
0.36 0.23
0.13 0.27
0.53 0.78
0.55 0.88
0.34 0.44
-0.11 0.25
-0.57 -0.33
The following tables show the delta in implied market heat rate between the One for One scenario and the Status Quo scenario.
Table 78 - Delta in Implied Market HR for NYS, One for One (Btu/kWh)
2016 44
2017 49
2018 54
2019 36
2021 50
2023 54
2025 60
2027 50
2030 34
33 57
38 61
68 38
25 48
45 55
39 71
75 44
50 50
34 34
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Table 79 - Delta in Implied Market HR for NYC, One for One (Btu/kWh)
2016 55
2017 40
2018 46
2019 31
2021 76
2023 86
2025 59
2027 33
2030 -35
64 44
28 55
57 32
24 39
58 96
66 109
58 61
16 54
-43 -26
Project Economics
Using parameters similar to those used for other generation projects analyzed here, with an all-in overnight capital cost of $1,500/kW, the necessary support for each 1,000 MW unit would be $298m and $271m over fifteen years. (The difference results from the fact that one unit is in operation for a slightly longer period.)
4.3.
Table 81 shows the percentage increase in natural gas prices at Henry Hub, Transco Zone 6 Non-NY, and Transco Zone 6 NY for the High Case. Table 82 shows the percentage increase in oil prices at New York Harbor for the High Case. The increase in both natural gas and oil prices is based on the high fuel scenario in the EIAs Annual Energy Outlook and CRA analysis.
Table 81 - Increase in Natural Gas Prices for High Case Scenario
Year Henry
2016 5.4%
2017 5.3%
2018 5.3%
2019 5.2%
2021 5.4%
2023 5.4%
2025 5.3%
2027 5.4%
2030 5.5%
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Hub TZ6 NonNY TZ6 NY 5.0% 4.8% 4.9% 4.8% 4.8% 4.9% 5.0% 5.0% 5.1%
4.7%
4.6%
4.6%
4.7%
4.5%
4.5%
4.8%
4.8%
4.8%
Table 82 - Increase in New York Harbor Oil Prices for High Case Scenario
2016 59%
2017 59%
2018 59%
2019 60%
2021 60%
2023 61%
2025 61%
2027 62%
2030 62%
59%
59%
59%
60%
60%
61%
61%
62%
62%
59%
59%
59%
60%
60%
61%
61%
62%
62%
The High Case was also broken down into a series of different scenarios similar to the Reference Case. We used the same fuel prices, the same load, and the same regulatory regime for emissions in all the High Case scenarios. The High Case is made up of the following scenarios: 1) High Case Status Quo: IP2 and IP3 remain online and in service 2) High Case Conventional Thermal: IP2 and IP3 are retired a 500 MW CC unit in NYC plus a 500 MW CC unit in the LHV come online 3) High Case Low-Carbon: IP2 and IP3 are retired a 1000 MW HVDC line interconnects to NYC from HQ and a 400 MW offshore wind farm also interconnects to the City Table 83 indicates the overall consumer impact to NYS consumers for the cases analyzed. Note that the impacts are relative to the high case status quo, and that build patterns are adjusted to account for increased demand.
Table 83 - High Case NYS Consumer Impact
CCsinLHVandNYC LowCarbon $1,456 $1,417 $826 $1,055 $1,619 8% $1,543 8% 7% $1,461 7% 4% $813 4% 4% $1,209 5% 7% $744 3%
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Table 84 displays the relative impact for the high case on NYC consumers. The change from a consumer cost to a consumer benefit is driven principally by the increased amount of installed capacity clearing in the ICAP, and depends a great deal on the assumptions used for the capacity market mitigation.
Table 84 - High Case NYC Consumer Impact
CCsinLHVandNYC LowCarbon $296 $274 $47 $146 $394 $371 $419 $334 $324 4% $159 2% 4% $129 2% 1% ($145) 2% 2% $97 1% 4% ($90) 1% 4% $90 1% 4% ($47) 0% 3% $28 0% 3% $121 1%
The annual average market LMP for NYS and NYC is shown in the tables below.
Table 85 - High Case Status Quo LMP for NYS (2010$/MWh)
2016 58.69
2017 59.87
2018 68.98
2019 70.22
2021 71.26
2023 72.90
2025 72.84
2027 74.33
2030 77.10
62.86 53.93
64.32 54.72
73.61 63.62
74.95 64.74
76.03 65.78
77.79 67.24
77.37 67.59
78.94 69.04
81.89 71.57
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2016 70.64
2017 72.93
2018 83.10
2019 83.14
2021 85.84
2023 88.68
2025 88.52
2027 94.42
2030 100.95
77.33 63.01
80.36 64.35
91.40 73.50
90.64 74.46
94.29 76.14
97.77 78.16
97.23 78.45
104.85 82.45
112.96 87.07
Figure 20 shows the comparison of all-hours market LMP between the High Case Status Quo scenario and Reference Case Status Quo scenario in NYC and NYS.
Figure 20 - Comparison of High Case and Reference Case Status Quo Market LMP
AllHoursMarketLMP(2010$/MWh)
120.00 100.00 80.00 60.00 40.00 20.00 0.00 2016 HighNYC 2017 2018 2019 2021 2023 2025 2027 2030 ReferenceNYC HighNYS ReferenceNYS
The implied market heat rates for the High Case Status Quo scenario is shown in the tables below.
Table 87 - High Case Status Quo Implied Market Heat Rate for NYS (Btu/kWh)
2016
2017
2018
2019
2021
2023
2025
2027
2030
8,883
8,815
9,910
9,885
9,739
9,702
9,618
9,742
9,987
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9,470
10,569
10,542
10,393
10,352
10,215
10,352
10,600
8,060
9,148
9,125
8,989
8,950
8,928
9,042
9,278
Table 88 - High Case Status Quo Implied Market Heat Rate for NYC (Btu/kWh)
2016
2017
2018
2019
2021
2023
2025
2027
2030
9,834
9,905
11,006
10,778
10,801
10,871
10,758
11,366
12,070
10,929
12,120
11,753
11,891
12,006
11,835
12,656
13,524
8,742
8,722
9,719
9,651
9,550
9,558
9,513
9,887
10,388
Figure 21 shows the comparison of all-hours market LMP between the High Case Status Quo and Reference Case Status Quo in NYC and NYS.
Figure 21 Comparison of High Case and Reference Case Status Quo Implied Market HR
AllHoursImpliedMarketHR(Btu/kWh)
14,000 12,000 10,000 8,000 6,000 4,000 2,000 2016 HighNYC 2017 2018 2019 2021 2023 2025 2027 2030 ReferenceNYC HighNYS ReferenceNYS
MW CC plant was added at the Gowanus substation upon IP2s retirement. Another 500 MW CC plant was added at the Buchanan substation upon IP3s retirement. The following tables show the delta in market LMP between the High Case Conventional Thermal scenario and the High Case Status Quo scenario.
Table 89 - Delta in NYS Market LMP, High Case Conventional Thermal (2010$/MWh)
2016 2.42
2017 2.74
2018 2.88
2019 2.73
2021 3.00
2023 2.99
2025 2.72
2027 2.58
2030 2.78
2.75 2.06
3.02 2.42
3.39 2.29
3.23 2.16
3.58 2.33
3.60 2.28
3.43 1.90
3.27 1.79
3.59 1.83
Table 90 - Delta in NYC Market LMP, High Case Conventional Thermal (2010$/MWh)
2016 2.52
2017 2.73
2018 3.39
2019 2.99
2021 3.12
2023 2.90
2025 3.01
2027 1.61
2030 1.47
3.06 1.90
2.99 2.43
4.06 2.63
3.78 2.08
3.89 2.24
3.50 2.22
4.16 1.68
2.15 0.99
2.18 0.66
The following tables show the delta in the implied market heat rate between the High Case Conventional Thermal scenario and the High Case Status Quo scenario.
Table 91 - Delta in NYS Implied Market HR, High Case Conventional Thermal (Btu/kWh)
2016 366
2017 393
2018 417
2019 388
2021 413
2023 395
2025 359
2027 341
2030 369
417 308
436 344
495 327
461 304
496 317
478 299
453 251
433 236
479 242
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Peak
Table 92 - Delta in NYC Implied Market HR, High Case Conventional Thermal (Btu/kWh)
2016 360
2017 337
2018 452
2019 382
2021 384
2023 347
2025 352
2027 244
2030 175
447 261
377 290
550 340
492 255
488 264
423 258
497 185
325 151
264 73
2016 1.84
2017 2.14
2018 2.20
2019 2.24
2021 2.60
2023 2.61
2025 2.40
2027 2.44
2030 2.63
1.85 1.82
2.07 2.23
2.27 2.11
2.29 2.19
2.91 2.24
2.97 2.19
2.81 1.93
3.12 1.67
3.29 1.87
Table 94 - Delta in Market LMP for NYC, High Case Low-Carbon (2010$/MWh)
2016 0.84
2017 0.99
2018 1.31
2019 2.45
2021 3.02
2023 2.53
2025 2.58
2027 1.63
2030 2.24
0.19
0.14
0.60
2.40
3.51
2.87
3.21
2.23
3.19
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Off Peak
1.59
1.97
2.13
2.50
2.46
2.13
1.84
0.95
1.14
The following tables show the increase in implied market heat rate between the High Case Low-Carbon scenario and the High Case Status Quo scenario.
Table 95 - Delta in Implied Market HR for NYS, High Case Low-Carbon (Btu/kWh)
2016 273
2017 306
2018 320
2019 308
2021 355
2023 345
2025 319
2027 324
2030 342
274 270
296 318
335 303
316 299
401 303
395 288
374 255
416 219
430 240
Table 96 - Delta in Implied Market HR for NYC, High Case Low-Carbon (Btu/kWh)
2016 118
2017 94
2018 147
2019 284
2021 367
2023 296
2025 315
2027 199
2030 267
27 222
-27 233
48 262
274 295
436 288
341 244
399 218
275 111
387 128
4.4.
Year NYC
2016 -3.2%
2017 -3.6%
2018 -3.8%
2019 -4.0%
2021 -4.0%
2023 -3.8%
2025 -3.6%
2027 -3.4%
2030 -3.1%
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NYCA
-3.0%
-3.4%
-3.7%
-3.9%
-4.0%
-4.1%
-4.2%
-4.3%
-4.4%
Table 98 shows the percentage decrease in natural gas prices at Henry Hub, Transco Zone 6 Non-NY, and Transco Zone 6 NY for the Low Case. Table 99 shows the percentage decrease in oil prices at New York Harbor for the Low Case. The decrease in both natural gas and oil prices is based on the low fuel scenario in the EIAs Annual Energy Outlook and CRA analysis.
Table 98 - Decrease in Natural Gas Prices for Low Case Scenario
2016 -7.9%
2017 -8.0%
2018 -8.0%
2019 -8.1%
2021 -8.1%
2023 -8.0%
2025 -7.9%
2027 -7.9%
2030 -7.8%
-7.2%
-7.3%
-7.4%
-7.4%
-7.3%
-7.3%
-7.3%
-7.3%
-7.1%
-6.9%
-7.0%
-6.9%
-6.9%
-7.0%
-7.1%
-7.0%
-6.9%
-6.8%
Table 99 - Decrease in New York Harbor Oil Prices in Low Case Scenario
2016 -43%
2017 -45%
2018 -47%
2019 -49%
2021 -52%
2023 -54%
2025 -56%
2027 -57%
2030 -58%
-44%
-46%
-48%
-49%
-52%
-54%
-56%
-57%
-59%
-43%
-45%
-47%
-48%
-51%
-53%
-55%
-57%
-58%
Like the High Case, the Low Case was also broken down into a series of different scenarios. We used the same fuel prices, the same load, and the same regulatory regime for emissions in all the Low Case scenarios. The Low Case is made up of the following scenarios: 1) Low Case Status Quo: IP2 and IP3 remain online and in service 2) Low Case Conventional Thermal: IP2 and IP3 are retired a 500MW CC unit in NYC plus a 500MW CC unit in the LHV come online
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3) Low Case Low-Carbon: IP2 and IP3 are retired a 1000 MW HVDC line interconnects to NYC from HQ and a 400 MW offshore wind farm also interconnects to the City Table 100 displays the price impacts for NYS consumers under the Low Case. Note that the impacts are relative to the Low Case Status Quo, and that build patterns are adjusted to account for increased demand.
Table 100 - NYS Consumer Cost Impact - Low Case
CCsinLHVandNYC $1,027 $1,149 $1,302 $1,367 $1,438 $1,520 $3,079 $2,681 $402 9% 9% 9% 9% 9% 9% 18% 14% 2%
LowCarbon $1,347 $1,423 $1,608 $1,701 $1,757 $1,887 $2,852 $2,912 $594 12% 11% 11% 11% 11% 12% 17% 16% 3%
Table 101 displays the consumer impact to NYC consumers under the Low Case scenario relative to the Low Case Status Quo.
Table 101 - NYC Consumer Impact - Low Case
CCsinLHVandNYC $207 $234 $245 $259 $278 $318 $1,014 $836 ($158)
LowCarbon
5% $244 5% 5% $241 5% 4% $257 5% 4% $297 5% 5% $295 5% 5% $371 6% 16% $804 13% 12% $835 12% 2% ($192) 2%
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Table 102 - Low Case Status Quo LMP for NYS (2010$/MWh)
2016 49.76
2017 50.32
2018 58.88
2019 59.85
2021 61.14
2023 63.21
2025 64.09
2027 66.40
2030 69.66
52.80 46.29
53.34 46.84
61.96 55.32
62.89 56.33
64.33 57.50
66.47 59.44
67.21 60.47
69.94 62.34
73.40 65.34
Table 103 - Low Case Status Quo LMP for NYC (2010$/MWh)
2016 58.03
2017 59.10
2018 68.01
2019 69.13
2021 71.01
2023 73.78
2025 74.31
2027 77.39
2030 81.80
62.54 52.88
63.56 53.93
72.78 62.49
73.92 63.59
76.13 65.14
79.31 67.39
79.62 68.17
83.57 70.30
88.49 74.06
Figure 22 shows the comparison of all-hours market LMP between the Low Case Status Quo scenario and the Reference Case Status Quo scenario in NYC and NYS.
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Figure 22 - Comparison of Low Case and Reference Case Status Quo Market LMP
AllHoursMarketLMP(2010$/MWh)
100.00 90.00 80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 2016 2017 2018 2019 2021 2023 2025 2027 2030 ReferenceNYC LowNYC ReferenceNYS LowNYS
The implied market heat rates for the Low Case Status Quo scenario is shown in the tables below.
Table 104 - Low Case Status Quo Implied Market Heat Rate for NYS (Btu/kWh)
2016
2017
2018
2019
2021
2023
2025
2027
2030
8,883
8,815
9,910
9,885
9,739
9,702
9,618
9,742
9,987
9,470
10,569
10,542
10,393
10,352
10,215
10,352
10,600
8,060
9,148
9,125
8,989
8,950
8,928
9,042
9,278
Table 105 - Low Case Status Quo Implied Market Heat Rate for NYC (Btu/kWh)
2016
2017
2018
2019
2021
2023
2025
2027
2030
9,834
9,905
11,006
10,778
10,801
10,871
10,758
11,366
12,070
10,929
12,120
11,753
11,891
12,006
11,835
12,656
13,524
Page 90
8,742
8,722
9,719
9,651
9,550
9,558
9,513
9,887
10,388
Figure 23 shows the comparison of all-hours market LMP between the Low Case Status Quo scenario and the Reference Case Status Quo scenario in NYC and NYS.
Figure 23 - Comparison of Low Case and Reference Case Status Quo Implied Market HR
AllHoursImpliedMarketHR(Btu/kWh)
12,000 11,000 10,000 9,000 8,000 7,000 6,000 2016 2017 2018 2019 2021 2023 2025 2027 2030 ReferenceNYC LowNYC ReferenceNYS LowNYS
2016 1.79
2017 1.90
2018 1.79
2019 1.76
2021 2.05
2023 2.20
2025 2.35
2027 2.48
2030 2.46
1.97 1.58
2.02 1.77
2.03 1.52
2.03 1.44
2.42 1.62
2.53 1.83
2.73 1.91
2.82 2.08
2.77 2.10
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Table 107 - Delta in NYC Market LMP, Low Case Conventional Thermal (2010$/MWh)
2016 1.88
2017 2.19
2018 1.91
2019 1.95
2021 2.19
2023 2.51
2025 2.93
2027 2.90
2030 3.17
1.82 1.95
2.29 2.08
2.11 1.69
2.12 1.77
2.50 1.83
2.68 2.31
3.27 2.54
3.18 2.58
3.50 2.78
The following tables show the delta in the implied market heat rate between the High Case Conventional Thermal scenario and the High Case Status Quo scenario.
Table 108 - Delta in NYS Implied Market HR, Low Case Conventional Thermal (Btu/kWh)
2016 297
2017 309
2018 284
2019 278
2021 320
2023 333
2025 351
2027 371
2030 361
326 264
326 290
321 242
321 228
378 253
382 276
408 285
422 312
405 309
Table 109 - Delta in NYC Implied Market HR, Low Case Conventional Thermal (Btu/kWh)
2016 273
2017 306
2018 263
2019 274
2021 306
2023 328
2025 390
2027 386
2030 423
261 286
315 296
290 231
296 249
352 254
349 303
436 338
421 347
468 371
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2016 1.55
2017 1.58
2018 1.58
2019 1.61
2021 1.90
2023 2.04
2025 2.12
2027 2.09
2030 2.04
1.55 1.54
1.51 1.66
1.69 1.44
1.74 1.47
2.14 1.62
2.19 1.86
2.33 1.88
2.25 1.92
2.20 1.84
Table 111 - Delta in Market LMP for NYC, Low Case Low-Carbon (2010$/MWh)
2016 1.53
2017 1.65
2018 1.55
2019 1.91
2021 1.84
2023 2.30
2025 2.60
2027 2.50
2030 2.39
1.20 1.92
1.48 1.85
1.54 1.57
1.87 1.96
1.93 1.75
2.24 2.36
2.67 2.53
2.47 2.53
2.40 2.39
The following tables show the increase in implied market heat rate between the Low Case Low-Carbon scenario and the Low Case Status Quo scenario.
Table 112 - Delta in Implied Market HR for NYS, Low Case Low-Carbon (2010$/MWh)
2016 256
2017 254
2018 249
2019 253
2021 292
2023 302
2025 316
2027 312
2030 294
255
240
269
274
331
326
348
336
318
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Off Peak
257
270
227
230
247
275
280
285
267
Table 113 - Delta in Implied Market HR for NYC, Low Case Low-Carbon (2010$/MWh)
2016 225
2017 231
2018 215
2019 272
2021 254
2023 304
2025 351
2027 333
2030 302
172 284
203 263
216 215
271 273
270 235
299 309
361 338
330 338
299 306
5.
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Draft Report
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