'We keep the lights on'
ISO-New England plays electric-grid gatekeeper
In terms of an analogy, ISO New England falls somewhere between a stock market and an air traffic control tower, and acts like a hybrid of both.
The non-profit corporation, headquartered in Holyoke, oversees New England’s wholesale electricity market, and strives to do three things:• Ensure that the region’s power needs are met;
• Keep the price of bulk electricity as low as possible;
• Help the region plan for future energy needs.
It’s a fairly complicated agenda. The New England power grid contains roughly 350 generators, 8,000 miles of transmission line, and roughly 900 substations. The energy flowing through the system ends up in 4 million homes and businesses across the grid.
Throughout the day, the operators that staff ISO’s control room 24/7monitor the failures, problems, surges, and viability of the grid. In addition, they ensure that – every five minutes – the lowest-priced source of energy is powering the demands of the grid.
Says CEO Gordon van Welie: "We keep the lights on."
Creating a market, lowering prices
The federal government in 1997 created ISOs, or Independent Service Operators, as independent entities that could oversee interstate transmission of electricity. The goal was to ensure that generators and distributors bought and sold electricity at the best price. This evolved into the current bid market for electricity where, everyday, generators submit bids for how much they will produce and at what price.
Typical wholesale prices right now are between $50 and $60 per Megawatt hour currently.
The market opens at midnight and closes at noon. At midnight the following day, the electric begins functioning on the previous day’s bids. The price is based on the marginal cost of supplying electricity, and excludes capital costs of building the plant. Nuclear and hydroelectric are on the less expensive end, gas- and oil-fired plants are more expensive. But throughout the year, particularly the summer, all are firing to some degree.
Conservation programs ease electric grid burdensDemand Response programs, contractual agreements where consumers earn credits for temporarily reducing or ceasing the electrical use, are one means ISO is using to help reinforce calls for energy efficiency. UMass Medical School in Worcester is one of about 90 participants region-wide in the program. The school has three steam-turbine generators that can make up to 10 Megawatts of electricity for the campus, but typically, supply only about half of the roughly 10 Megawatts needed, with National Grid supplying the rest, says Joseph Collins, director of energy resources for the school. |
After Hurricane Katrina hit the Gulf Coast last year, ISO and National Grid offered incentives for the school to join the demand response program. Under the arrangement, the school agreed to be on-call to quickly reduce what it draws from the grid by nearly 1 Megawatt, supplying the difference in power by itself. The credits it receives more than make up for the cost of the extra gas to power the turbines, Collins says.
Demand Response programs cater mostly to large commercial or industrial groups, which consume a lot of energy and have the capacity to make their own. But another conservation option, called "price response" programs, is also gaining a foothold in the region, says Bob Laurita of ISO-NE. Under that program, customers sign up to be notified a day in advance to reduce the energy they use at certain parts of the day. They earn credits for doing so. In December, ISO-NE hopes to create the first inkling of a market for energy conservation, and per kilowatt payments for conservation will jump from $1 to $3.05. Laurita says he expects a lot more residential customers, particularly in Worcester- and Boston-metro areas, will sign up when the price goes up.
–K.J.S.
ISO creates a market for bulk energy and helps to smoothly run the system. It does this by optimizing the grid every five minutes so that the electricity used throughout New England comes from the least expensive suppliers. As demand rises, and more electricity is used, the next most expensive generators are used, and so on. Lowering the wholesale number ultimately lowers consumers’ electric bills.Dispatching the grid
As it fixes electricity prices through a daily bidding system, ISO must also monitor the grid to ensure that the power flowing throughout the system is adequate. If voltage gets too high, power can back up and cause power failures and black-outs. If voltage falls too low, brown-outs occur. A major part of ISO’s role is to avoid both by ensuring electricity flows from generators into distribution networks correctly, says Michael Taniwha, operations manager of the control room.
It’s called "dispatching" the grid, a complicated process whereby a computer nerve center within ISO monitors voltage flows between the major substations and generators, and displays them on a roughly 25-foot wide, 12-foot tall screen at the control room’s center.
"We can see transmission lines that are in-service, out of service, power flow, and the direction the power is flowing," Taniwha says. "We can also see how much power that plants are generating, and how much electricity is imported."
Filling the energy gapWhat are the region’s options in solving tomorrow’s energy needs? ISO-New England CEO Gordon van Welie shares his views on the key issues. |
• LNG infrastructure
“On top of LNG being a really expensive commodity these days, New England is experiencing higher relative prices for natural gas because we’re paying higher transportation costs. That’s why we need more LNG infrastructure. It’s a way of bringing more gas into the region and relieving those supply problems. It will lower the price of natural gas, which will lead to lower energy prices.”
• Energy diversity
“As we build new power-generation in New England, we also need to be very conscious of fuel diversity. We need sources of generation that use fuels other than natural gas and oil, since their prices fluctuate together. That includes building nuclear power stations, coal-powered stations, hydroelectric plants, and wind power.”
• Energy imports
“New England imports about 1,200 Megawatts a day from hydroelectric plants in Canada, and that’s one of the potential solutions going forward. It’s a mixed blessing because you are relying on power coming from somewhere else, rather than have it under your own control. But given the reluctance of people to build new facilities here, it’s an option we have to look at.”
• Conservation efforts
“We are very energy-inefficient as a society, so what requires investment and continued focus is to become more efficient in using what we already have built and paid for. And that doesn’t mean reducing activity levels. If everyone switched to fluorescent lights, which use half the energy of a regular light bulbs, it would make hundred of Megawatts of difference in the amount of energy we consume. If we made buildings more efficient, we could reduce our consumption, and lessen the infrastructure needed to meet our demands”.
—K.J.S.
A number of tasks are involved. At one console, an operator constantly watches weather indicators and other data used to forecast the hourly and daily demand on the system. At another, an operator checks to see that generators will be able to produce enough electricity should a failure occur. Still another operator constantly eyes whether the wires and infrastructure carrying the power is secure, so that in the event of failure or downtime, enough power can be transferred from some other part of the grid to meet the need.
"A lot of it is automated," says Taniwha. "But we need to be here to make sure it’s working properly."
Summer 2006: Record-breaker
On this early September afternoon, with temperatures in the high mid-70s, the New England grid is humming away at the rate of around 18,000 Megawatts an hour. One Megawatt, the basic unit of big picture power planning, is the equivalent amount of energy needed to run somewhere between 500 and 1,000 homes an hour. A decent-sized power plant will put out about 500 Megawatts.
But some days are harder on the system than most. The18,000 Megawatts currently buzzing through the grid is a far cry lower than early August, when air conditioning turned on during an extended heat wave created a massive energy demand. During that near-triple-digits day on August 2, New England consumed more power than it ever has, 28,021 Megawatts, pushing the envelope of the 32,000 Megawatts the region can produce at maximum output.
"Anything that could generate electricity, we had going that day," recalls van Welie.
It was the third time this summer that New England broke its own record for consumption. August 2 beat a record of 27,401 Megawatt set the previous day. August 1 broke the 27,395-Megawatt record set July 18. The previous record of 26,885 Megawatt was set July 27, 2005.
Anecdotally, the numbers tell an important tale, one of ever-increasing demand for electricity to power air conditioners during summer heat waves, says van Welie. "If you look at the numbers now versus August 2, what happened is the weather. The economy didn’t change, it was the heat."
Meeting that new challenge – keeping the air conditioners on – may be the most difficult, he says.
Unlike other commodities, electricity cannot be stored, so generators must constantly supply it to consumers. With record-breaking summer days becoming an all-too-common, annual event, van Welie says the need to improve the grid and increase the amount of power is a critical goal. Demand is growing at about a power station a year, and the region must find ways now of planning for the future.
There are three choices, van Welie says: Build more, import more, and conserve more. All three will help.
The region is on its way, he says. In the last year, plans have been announced for at least three new power plants in Mass., although the region is still too heavily dependent on gas- and oil-fired power plants, he says. Imports of less expensive power, such as the 1,200 Megawatts a day coming in from HydroQuebec, may help offset some need for more power, he says.
One of the easiest measures might be the most difficult to adopt – finding a way to reinforce conservation and energy efficiency, he says. Through a program called Demand Response (See sidebar, page 41), ISO and the regional distributor were able to save more than 500 Megawatts – equivalent to a power station – through an arrangement where larger power-consumers temporarily detached themselves from the grid.
Still another option is to improve the transmission system itself by upgrading or adding more lines to carry electricity between substations, he says.
But at the rate New England is consuming power, those efforts may not be enough in years to come, he says. And that’s why it’s important to begin exploring new options for improving the grid now.
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