America s Future Natural Gas Economy: Promoting the Next Energy Breakthrough

Transcription

1 America s Future Natural Gas Economy: Promoting the Next Energy Breakthrough Hudson Institute April 6, 2016 Washington, D.C. Michelle Bloodworth Executive Director, External Affairs

2 Introduction / Executive Summary Gas-fired generation is becoming increasingly prominent in MISO due to economics and continuing environmental pressures The MISO region has unique attributes, compared to other RTOs, which position it favorably for future gas industry growth Fuel assurance and flexible gas product offerings are a priority and will become even more important with the changing generation mix More than coal-to-gas baseload replacements Expect much higher variability with growth in renewables MISO is taking actions to support growth of gas-fired generation in MISO s regional operations, markets, and planning Future gas infrastructure will play a critical role Opportunities exist to deepen our collaboration for the benefit of both industries 1

3 Geographically, MISO is the largest of the nine Regional Transmission Organizations and Independent System Operators in North America MISO s Mission: Drive value creation through efficient reliability, market operations, planning and innovation Midcontinent ISO High Voltage Transmission 66,000 Miles Installed Generation 180,000 MW Installed Generation Peak System Demand 1,600 Units 127,000 MW MISO has unique attributes among other RTOs that position it well for future gas growth: Generators have approaches to recover costs beyond revenues in wholesale power markets Regulatory frameworks facilitate cost recovery for fuel-related expenses for vertically-integrated utilities Access to many low-cost shale basins Pipeline crossroads large number of pipelines and many bi-directional Historically supportive of pipeline development 2

4 There are over 200 gas-fired generators in MISO with connections to 30+ pipelines and 20+ local gas distribution companies MISO South MISO North/Central 1 1 ~40% of MISO South gas-fired capacity is connected to two or more pipelines (including intrastate pipelines) Over 50% of MISO North/Central gas-fired capacity is connected to interstate pipelines and the remainder is connected to local gas utilities Source: Eastern Interconnect Planning Collaborative, Draft Target 1 report for gas-fired generators over 15 MW. 1 Designations of generators having firm pipeline capacity by EIPC is dated per the 2013 study s timeframe. See results of MISO December 2015 Generator Survey for more information 3

5 Gas-fired generation is growing in MISO, and this trend will continue even if EPA s Clean Power Plan is derailed by litigation Gas Share (%) of MISO Electric Generation (MWH) 25% MISO North/Central 23% 20% MISO Total (including MISO South) 17% 15% 10% 5% 6% 11% 8% 7% 12% 0% Henry Hub $/MMBtu (YTD) $4.00 $2.76 $3.73 $4.37 $ significantly eclipsed prior gas utilization Increase of +35% since 2014 and +70% for MISO North/Central due to supportive gas pricing and changes in fleet composition Though MISO South historically has high gas reliance, gas increased appreciably from 46% in 2014 to 54% in 2015 How much further can gas grow in MISO? Historicals per MISO Data Services group 2015 it YTD October 4

6 Because gas-fired generation can ramp up and down so quickly, it is well-suited to support the growth of intermittent wind energy in MISO GWH 160, ,000 80,000 40,000 Actuals Wind was 9% of total generation in 2015; 15,000 MW Capacity MISO Wind Generation: Past and Future Projections Growth Scenario (3X Wind Capacity of Today) States RPS requirements (existing) 0 5

7 As gas-fired generation continues to grow in the MISO region, MISO and its stakeholders are considering factors such as: New infrastructure: transmission or pipe? How much pipe do we need in MISO? Importance of pipeline services and terms Intraday ramping and no-notice variations Interaction with move toward baseloading Implications of gas generation in winter 6

8 Conclusions / key take-aways Gas-fired generation is becoming increasingly prominent in MISO due to economics and continuing environmental pressures The MISO region has unique attributes, compared to other RTOs, which position it favorably for future gas industry growth Fuel assurance and flexible gas product offerings are a priority and will become even more important with the changing generation mix More than coal-to-gas baseload replacements Expect much higher variability with growth in renewables MISO is taking actions to support growth of gas-fired generation in MISO s regional operations, markets, and planning Future gas infrastructure will play a critical role Opportunities exist to deepen our collaboration for the benefit of both industries 7