Very soon, a brand new source of power will be entering the New England electricity network at a substation in Lewiston Maine. Not that the technology is new. It will be an old tried and true method of generating electricity, hydroelectric power. But, unique to this new power is the fact it will deliver power 24/7/365, a magnificently needed baseload power that New England needs.
Known as NECEC, the contract for this power "an annual amount of electricity equal to approximately 9,450,000 megawatt-hours" (Massachusetts Department of Energy Resources) and according to " Utility Dive ":"Utilities owned by Eversource, National Grid and Unitil will pay a total levelized price of $0.059/kilowatt hour for power from the Canadian hydro.Utilities owned by Eversource, National Grid and Unitil will pay a total levelized price of $0.059/kilowatt hour for power from the Canadian hydro."
The 9,450,000-megawatt hours are 8% of the 116,719 gigawatt-hours (GWh) total annual energy served in 2024 (ISO-NE). Wind and solar accounted for7%
of the total annual energy served in 2024(ISO-NE).
No doubt, the existing New England generation and imported generation from New York and Canada will be affected. How this actually materializes probably will depend a lot on contract arrangements made outside of the ISO-NE wholesale market.
The Power Purchase Agreement between Hydro-Quebec and Utilities owned by Eversource, National Grid and Unitil describes this power as "firm power", in other words, it must be delivered in the annual amount of 9,450,000 megawatt hours or penalties to HQ will ensue.
As has happened with most Power Purchase Agreements (PPA) the payment amount per kilowatt-hour is higher than the wholesale market price, which is why these PPAs are favored by generators and public utilities commissions. Not necessarily favored by ratepayers of the utilities assigned to these PPAs.
What normally happens with PPAs is the generator will bid its contracted amount of power as a non-price setter, meaning it will accept whatever the ISO-NE wholesale market determines the price is based on generators who do actually bid prices. The PPA contract pays if the generator's output makes it into the ISO-NE wholesale market. Accepting whatever the actual bidding settles on allows all the PPA contracted generation to enter the market and receive all the PPA contracted payments. If the wholesale market price is lower than the PPA price, the ratepayers of the PPA utilities pay the difference. The ratepayers of New England who are not in the PPA pay the lower wholesale price. All ratepayers pay retail prices, always a markup of wholesale prices, whether any part is in the form of a PPA or not. PPAs normally boost retail prices through the differences in prices occurring in the wholesale market as compared with the PPA wholesale payment amount.
The new generation from NECEC will replace the generation already in place. It has been assumed most of the replaced generation will be from natural gas-fired plants as their output generally sets the wholesale price by virtue of being able to supply "dispatchable" power when needed. Solar, wind cannot provide this "dispatchable" power and because they are usually part of a PPA, they tag along as a non-price setter or bid at much lower prices. The power from solar and wind are typically lower in "value of application" because they are neither "baseload" as NECEC is nor "dispatchable" as natural gas-fired plants are.
It is a shame that wind and solar can probably remain untouched by the 8% of new generation because their value is so much inferior to baseload and dispatchable generation and the PPAs and other State policies like "Net Energy Billing" are frequently force ratepayers to pay much more than the $0.059 per kilowatt hour that Hydro-Quebec will receive.
New England electric customers would be better served if the 8% of new generation replaced the 7% of wind and solar generation.
New England electric customers would be better served if the 8% of new NECEC generation replaced the 7% of wind and solar generation.
by Dan McKay
on Friday