Note: The Ethan Allen Institute sent Rob Roper to the recent ISO meeting to report back on the region’s energy plans, particularly how regional administrators are anticipating the passage of S.5, the Affordable Heat Act.

By Rob Roper

ISO New England is the entity responsible for ensuring your lights go on when you flip the switch. It does not own, operate, regulate, maintain, or have a stake in any power generating or delivery business. What it does do is oversee all of the entities to ensure they that operate in a coordinated fashion and are in a position to meet the electricity needs – from generation to delivery — of all the consumers in the region.

On March 30, ISO New England (ISO-NE) convened its quarterly Consumer Liaison Group Meeting in Portsmouth, New Hampshire. EAI was in attendance. The meeting consisted of two parts: An overview of what happened in 2022, and a panel discussion about where we are headed in 2023 and beyond, especially as it relates to the policy decisions throughout New England to transition away from fossil fuels.

Part 1 – Overview

ISO NE just completed its seventeenth Forward Capacity Auction, securing contracts for future anticipated electricity demand in 2026-27 amounting to 31,370 MW of capacity for $964 million. Interestingly, given renewable energy mandates, new and existing solar and wind accounted for only 16% of that capacity.

One question — a good one — from the audience asked if A) there was enough generation capacity to handle the expected growth of electricity use in the transportation and thermal sectors, and B) if the electrical grid was capable of handling the added load. The answers in the short term were yes and yes, but beyond 2030 there is uncertainty and work that needs to be done on both counts. There is considerable anticipation that offshore wind will come online in order to meet the renewable energy generation mandates associated with state policies. While there was a nod to local (aesthetic) and environmental (danger to whales and other sea life) opposition to these projects, it didn’t seem to be a factor to the presenter that these projects may not happen.

EAI’s question to the presenter was if ISO-NE’s future capacity estimates were based on market trends (expected consumer demand for electricity) or based on meeting the mandates of state policies, which may not be realistic. For example, Vermont’s policy per our Climate Action Plan calls for increasing the number of EVs on our roads from about 7000 today to 126,000 by 2030. Similarly, it calls for the installation of 140,000 heat pumps, and 120,000 heat pump water heaters. That’s a lot of new electricity demand and need for new infrastructure!

There are two issues at stake here. If the future capacity estimates are based on unrealistic government policy goals, ISO-NE is contracting for more power than the region will need. On the other hand, if ISO-NE is not contracting for that amount of future electricity, it is a strong signal that the real world does not take these policy targets seriously. Perhaps not surprisingly, EAI did not receive a direct answer to our question, nor did we receive a response to our email follow-up asking for clarification as of this writing allowing a week for ISO-NE to respond.

Another question from the audience that didn’t get a straight answer was what impact will “going green” have on retail electric rates? Though the presenter did admit capacity market costs might have to rise as a result of that policy decision.

The topic of most interest to the assembly was about what happened with the Christmas power outage of 2022. The gist of the explanation was that there was not a lack of grid of capacity or fuel supply, particularly natural gas, but a poorly forecast allocation of where the fuel needed to be. (However, there was considerable mumbling at this writer’s and neighboring tables that this didn’t sound quite right.) To resolve the crisis, it was oil that ultimately saved the day and got people’s lights back on for the holiday.

Part 2 – Panel Discussion

The Panel Discussion featured diverse viewpoints on climate change from New Hampshire Rep. Michael Harrington, Susan Muller of the Union of Concerned Scientists, Dan Dolan of the New England Power Generators Association, and Robert Ehier of ISO-NE.

Harrington described himself as a climate realist and began his presentation with a list of doomsday predictions gone wrong from the likes of Al Gore and Greta Thunberg. He asked that we all pay more attention to what climate activists do rather than what they say, noting that Barack Obama says he’s worried about rising sea levels while buying a multi-million coastal, island home. He also pointed out that while renewable energy advocates are looking to rely heavily on offshore wind in the future, and there are a number of offshore wind projects under development, none of them are being financed by people with their own money. “That should tell you something,” said Harrington.

Harrington acknowledged that renewable energy will be built. There is public demand at present, and so much money is being thrown at these projects from federal programs such as the IRA that this is inevitable. The question is how are we going to develop this renewable energy in the most strategic, intelligent way as part of meeting the estimated doubling of electricity demand by 2050?

Renewable energy is not a panacea, and it is fraught with technical and political challenges. Land based wind: there is so much opposition to these projects it takes years to bring them online for very little actual electricity generation. Solar: it is intermittent and least effective in New England’s cloudy, snowy weather. Nuclear: traditional nuclear is politically “radioactive” in New England, and the small modular projects happening in our West are running into some cost challenges. It’s not going to happen here. Fusion: we’ve been twenty years away from a breakthrough on fusion since 1970, and we’re still twenty years away today.

The biggest challenge for building up electricity capacity in the region is siting. Nobody wants power lines in their back yard. The overall message New England is sending to the business world with our energy policy is “don’t come and build anything here because we don’t want anything built.”

The fuel that works and has been working for the region is natural gas — if we can get it. CO2 has gone down in New England because of the transition from coal and oil to natural gas. However, we had many days this past winter we’ve had to rely on oil back up because our politicians refused to build more gas capacity. The future is gas. There will be growth in renewables only because of the subsidies. Transmission is going to cost a ton, and first it has to be sited.

Harrington concluded with the statistic that as a nation we have spent $5 trillion to reduce our dependence on fossil fuels, and it has dropped from 86 to 84% as a share of our energy usage.

Sam Evans-Brown of Clean Energy New Hampshire opened his presentation by agreeing with much of what Rep. Harrington said. “What the solutions are depends upon where you stand. If you want the transition to take place, it is going to have to be affordable for all, low emitting for all, reliable for all, and resilient for all. We have to solve all of these things. Where we may disagree on how solvable these challenges are.”

Evans-Brown pointed out that New Hampshire’s emissions have decreased at the same time GDP has grown — evidence growing our economy and lowering emissions and energy usage are not mutually exclusive.

Speaking from a uniquely New Hampshire perspective, he noted that his state is surrounded by other states, including Vermont, that are going full bore on renewables and clean energy. Evans-Brown seems to think this puts New Hampshire at a disadvantage going forward and not at a competitive advantage. It doesn’t seem to occur to him that the reason for New Hampshire’s economic growth, cited earlier, could be the result of not following in the footsteps of its neighbors.

Evans-Brown noted that the price of renewable energy has come down, and that unlike fossil fuel electricity generation, the cost of which is tied up in the fuel itself, renewable energy costs are tied up in the location of the generation sites. “These are different technologies that need a different market structure.”

Susan Muller of the Union of Concerned Scientists told the audience that ISO recognizes the need to reduce carbon emissions. Again, with a uniquely New Hampshire focus, she claimed, “We need to replace 482 megawatts in NH with wind and solar.” She expects a lot of that to come from offshore wind. The challenge, she said, is can we match the power generation to the demand times. The wind blows when the wind blows, not necessarily at the same times people need power.

Muller insisted that we have the tools to build a carbon free system. She agreed with other panelists that siting of projects is going to be the problem, saying “We environmentalists have to adopt a ‘building’ mentality, which might not come naturally.” This insight highlights the rift within the environmentalist community between ecological environmentalists who prioritize preserving and conserving natural ecosystems (ie., don’t blow the tops off of ridgelines for wind towers, exterminate whales to accommodate offshore wind, etc.) and climate activists who see reducing carbon emissions as the overriding priority. Muller placed herself in the latter camp.

Muller concluded that there is a lot of good news to point to, but sounded an alarm that we don’t have a lot of time. “We have ten years to get this done.…” And she chastised ISO-NE for not recognizing this time constraint.

Dan Dolan of the New England Power Generators Association represents the vast majority of every kind of energy generating resources in the field today. He said that we all believe in an open, competitive marketplace where everyone has an opportunity to weigh in.

Dolan claimed to be one of the first and loudest voices in favor of a carbon tax.

He noted that New England’s overall emissions are down 16.5% since 1990, but over this same period, transportation emissions have gone up. Buildings and transportation are the two big contributors to emissions.

As such, Dolan argued that policy focused on decarbonizing the electric sector was misplaced.  When we focus on decarbonizing the electric sector, we are disincentivizing electrifying those two other areas (thermal and transportation) by building the price of carbon into the price of the energy. This, he asserts, is a mistake.

As we electrify everything, said Dolan, we need to be able meet the reliability and affordability needs of consumers. And he thinks our goal should be to lead and show states like Ohio we can do this.

(Good luck! We are more likely to end up providing a cautionary tale for Ohio.)

The final speaker on the panel was Robert Ehier of ISO-NE. Ehier’s focus was on the importance of reliability. “Reliability is our mission. At our core. We are tech neutral. We operate the grid, we operate the wholesale electricity markets, and we plan the power system.”

New England states have a lot of renewable energy goals. ISO-NE is focused on meeting those goals with wind, solar, and battery technology. ISO-NE’s job, said Ehier, is to plan to accommodate the expected amount of renewables which policies intend to bring online by 2040.

According to Ehier we can accommodate 70% renewables before things get problematic. We can’t get to 100% now, but the hope is that technology will develop as we move forward that will allow us to get to 100% renewables. “What are we doing?” Eiher asked rhetorically. “A lot of studies looking into weather, transmission, operations, markets, reliability.”

Ehier warned that the grid is going to have to be a lot bigger than it is now. “If we don’t expand the system, over half the lines in NE will be overloaded by 2050.” It’s impossible to square doubling the peak load demand with low infrastructure costs. We have a lot of old transmission infrastructure in NE that needs to be rebuilt. The states have the central role for building this in advance of need. How much will this build-out cost? Ehier said we don’t know yet.

Ehier echoed others that siting a critical issue, but also added financing as a challenge. “Stuff is not getting built.”

Questions & Answers

There were two main insights that came out in the Q&A with the panelists. Multiple questions had to do with what future costs will be and where future supply will come from.

What is the cost of future electricity bills? Is there any chance they will go down in the near future?

New England has become hooked on foreign markets. Europe is now on a competing with us for US produced natural gas to replace what they used to get from Russia. This is driving up the price of our natural gas. New England is the last region of the US that imports liquid natural gas, so we are much more beholden to that international price.

Reasons for optimism: October on the European market storage levels were filling up and they had a mild winter. Reasons to worry: we are beholden to that market, and Europe still gets a lot of LNG from Russia. If that source is further curtailed for any reason, we will be in trouble. This is a big reason why we should not be hitching our wagon to a volatile fuel source.

Can you give some examples of how the goals set by the NE states are possible? And what does it cost?

We don’t necessarily have those answers. Some states have detailed plans in place. In terms of cost, we don’t know. But cost is a problem now. This stuff in history is never planned. None of us has a crystal ball.