Still No Crisis: Pilgrim’s Retirement Does Not Mean We Need Large New Gas Pipelines

When the only tool you are selling is a large natural gas pipeline, every problem you encounter (or can scare up) looks like a lack of pipeline capacity. So it is no surprise that, over the past year and a half, we’ve heard pipeline companies (and their supporters) offer up rationale after rationale to scare New England states into building big new pipelines into the region. But the fact is, none of their scare tactics stand up to the facts.

Last winter, the pipeline companies cried wolf over winter price spikes, claiming increasingly high electricity prices were inevitable and that we faced the (imminent) threat of power outages during the coldest months of the year. Their solution: new pipelines subsidized by ratepayers (you and me). However, CLF debunked that rationale, and, since then, spikes in wholesale electricity prices have already been tempered at the regional market level.

This past summer, CLF brought more reason to the pipeline debate – along with substantial analysis and data – with a white paper by Skipping Stone, LLC, which proposed specific solutions to the winter price spike issue, including better use of existing liquefied natural gas infrastructure already on hand in the region.

retirements_redactedThe Latest “Crisis” Debunked

Now the pipeline companies are working hard to fuel their next crisis rationale: that a large portion of the New England electric generating fleet will be retiring soon, and we’ll need new natural gas plants to replace them. And, to power those new plants, big new pipelines must be built across the region.

Once again, the pipeline companies and their supporters simply have it wrong. And here’s why:

The pipeline companies would have us believe that all of those retiring plants have always run at their maximum power-generating capacity, every hour of the day, every day of the year. So, when they retire, pipeline proponents claim that thousands of megawatts of electricity will disappear from the grid, with nothing lined up to replace them, leaving many of us literally in the dark at times throughout the year.

But the reality is that many of those soon-to-retire plants run at only a fraction of their maximum capacity now. In fact, they contribute barely 20% of the electricity that they could to New England’s power grid. So, while the grid will indeed lose some power when these plants shut down, it’s not nearly at the crisis level that the pipeline companies claim – even when you factor in the recently announced closure of Pilgrim Nuclear Power Station. The cheapest and most efficient way to replace that power isn’t by building expensive new plants and pipelines fueled by carbon-polluting natural gas – but by bringing online more clean, renewable sources.

Want to Go Deeper? Here’s How the Numbers Break Down

In 2010, the Independent System Operator-New England (ISO-NE) identified 8,300 megawatts (MW) worth of coal- and oil-fired power plants that were/are “at-risk of retirement” by 2020. The key to understanding this “at-risk of retirement” concept rests on two ideas: how you measure the size of a power plant, and why these plants are “at-risk.”

1. What does “8,300 MW” mean? As an introduction for those who don’t spend their days marinating in energy industry jargon, a megawatt (MW) is a unit for measuring the electrical output of a power plant. The New England electric grid, managed by ISO-NE, currently contains a total of 32,647 MW of generation capacity (put another way, if they were all turned on, all of the 1,137 power generators currently linked to the region’s electric grid could theoretically produce a total of 32,647 MW of electricity instantaneously).

Power plants provide two primary services, capacity and energy. Capacity refers to the total amount that a plant could generate in any hour whereas energy refers to the total energy that a plant in fact delivers. The capacity of these 28 “at-risk” power generating units adds up to approximately 8,300 MW. Since 2010, the Vermont Yankee nuclear plant (which wasn’t on the original at-risk list) shut down at the end of 2014, and the Pilgrim Station nuclear plant announced that it would shut down by June of 2019 (likely by 2017). Those would bring the 8,300 MW figure up to 9,600 MW. But with Bridgeport Harbor Unit 2, Mount Tom, Norwalk Harbor, and VT Yankee already closed by 2015, that 9,600 MW figure comes back down to 8,200 MW still at-risk of retirement by 2020. For simplicity’s sake, we’ve rounded this up to 8,300 MW. The total energy generated by the plants – the amount that they have actually been contributing to the operating grid to “keep the lights on” – varies widely depending on economic and environmental factors.

2. What Does it Mean to Be At-Risk of Retirement? In our regionwide electricity system, power plant owners have to compete in the market to stay afloat. The plants ISO-NE considers to be at-risk of retirement are those whose economics are in the worst shape – those plants that are least likely to be able to keep up with the expense of meeting safety and environmental requirements long term and/or whose fuel is more expensive than their competitors’ fuel, among other factors. The fact that these plants are at risk of retirement shows us that the market is working! Older and dirtier plants are being driven out of the market by newer and cleaner technologies (especially renewables like wind, which can bid into the market at negative prices since their fuel is free). The most important thing to understand is that for most of these at-risk plants (all but the two nuclear plants, in fact), these same economic factors already keep the plants from operating – and actually delivering energy – on a day-to-day basis now.

3. So How Much Generation Are We Really Losing? The short answer is: not all that much, and only a fraction of the 8,300 MW identified as “at risk.” Remember, the MW figures used by ISO-NE to represent these at-risk plants equal the theoretical maximum capacity of the plants to generate power during one hour (their “capacity”). Looking at energy delivered, though, we see the main contribution these plants have been making. Even taking the nuclear Vermont Yankee and Pilgrim plants into consideration (which, for nuclear safety reasons, were, or are, operated almost all the time), the at-risk and retiring plants altogether generated electricity at an average rate of only 2,013 MW of generation in 2014 and just 1,750 MW in the first half of 2015. That is, these plants have been providing only about 20% of the power that they could theoretically have been generating! (In the industry, “capacity factor” is a term to describe how much a plant is actually used.) The numbers below, then, are much more representative of what the at-risk plants mean to New England’s power grid than 8,300 MW.

2015-10-19 Utilized Capacity Chart

Why is this important? Because it means that we do not need to replace 8,300 MW-worth of full time electric generation with 8,300 MW-worth of full-time gas-fired generation, and so in turn, don’t need a large amount of new natural gas pipeline capacity to supply those plants. The coal and oil plants on this list largely operate only in the winter now, when natural gas deliverability issues make it economically practical to run the more expensive coal and oil units. If we continue to fix the winter natural gas peak demand/price issue without new pipelines, the amount of actual power generation we need to replace goes down even further.

The Real Solution: Clean, Renewable Energy

So what power do we need to replace the 2,000 MW of generation identified by ISO-NE as “at risk” of retirement, including the Pilgrim plant? Cheap, clean renewables for a start. The Massachusetts energy procurement bill that CLF has proposed with our coalition partners would bring renewables and hydropower onto our system to replace this generation, and do so without burdening businesses and families – and climate – with more unneeded natural gas infrastructure.

In future blog posts, we’ll delve further into this issue, looking at the effect that Pilgrim’s retirement will have in its electric generating region of the grid, the resources that are lined up to replace Pilgrim and the other retiring units (hint: it’s not all natural gas), and addressing other pro-pipeline arguments that will inevitably pop up. For now, we’d appreciate it if you would spread the word about these facts.


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