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Winter in New England – How this year is different from last

This time last year, many in New England were understandably nervous. The war in Ukraine was entering its first winter, retail electricity prices were higher than some had ever seen in their lifetimes, and the grid operator was expressing concern about reliability. Taken together, it was probably the most uncertainty that many of us have ever felt heading into a winter heating season.

But looking forward to this coming winter, the situation feels different. While every problem hasn’t been fixed, and the world has been rocked by a shocking and horrific new wave of violence in the Middle East, there is a sense in New England energy circles that our region is entering a new, relative stable, energy-normal.

New England is starting the winter season with retail electricity prices below those of last winter, when price shocks hit consumers across the region. These standard offer retail prices are still expected to be higher than the record lows from the last several years, but growing segments of customers are also seeing relief through retail competition, community aggregation, and other services.

So, what’s changed over the last twelve months? In general: Commodity prices have stabilized; inflation has eased; and the grid operator is signaling an increased comfort level about reliability.

But there’s more to it, of course.

It is still hard to overstate the impact of the Covid-19 pandemic and the Russian invasion of Ukraine. Because so much of Europe relied on Russia for energy, the prices not only of many fuels increased, but so did the prices of all the commodities that relied on those fuels for production and transport.

Nevertheless, in the last year, many businesses and governments have adjusted. Commodities prices are easing, and we therefore are not seeing such wild swings in energy prices. Moreover, inflation has eased (thought certainly not as much many would prefer).

Last year, we also worried about a variety of “worst-case scenarios” (which contributed to price risks and volatility) that did not actually come to pass. These included fears regarding an energy price war of sorts, in which Russia or some other major player withheld its supply, with impacts ranging from even higher prices to reliability challenges. These were largely averted as many European countries stocked up on natural gas supplies before the winter heating season began. Because last year was the first year this early stock up occurred, its impact on the global energy market was significant. But, this year European LNG inventories are already full several months before winter even begins – with comparatively less strain on both global and U.S. markets.

Regarding reliability, ISO New England told federal regulators this June that they were able to enhance their analytical tools and that the reliability risks they feared in the immediate and mid-range future are less concerning than what they originally believed. These conclusions are supported in part by the fact that 2023-2024 will be the first of two winters in which the ISO will run the Inventoried Energy Program (IEP). While the IEP is not anyone’s first choice, it offers some additional operational certainty to drive energy optimization during the most extreme circumstances on the grid.

This is all undoubtedly positive news. But we also know that there are still many improvements that need to be made to the grid’s planning, markets, and operations.

For example, there is work to be done on capacity accreditation – which is essentially how the grid operator accounts for the way each type of generating resource contributes to the reliability of the grid. Getting this right is critical to the reliable and efficient clean-energy transition. Within that project, a major outstanding vulnerability is the role that imported electricity plays in our grid, and the way ISO New England accounts for them in reliability planning.

Such vulnerabilities were on full display several times this past year, such as on Christmas Eve of 2022 and July 2023, when pullback from committed electricity supplies from Quebec triggered very challenging situations for New England. These efforts are all taking place as ISO New England is also trying to make major changes to the way it operates its Forward Capacity Market.

And as New England works on its unique challenges, it’s important to remember that we are not operating in a vacuum. Throughout the country, changing circumstances are being dealt with as the grid evolves to incorporate additional renewable resources and navigating the interdependencies between natural gas and electricity.

It sometimes feels like winter is always coming in New England, perhaps because so many different stakeholders, from generators to utilities to the ISO, prepare for it most of the year. But that’s also part of why we’re optimistic that the region is working toward long-term solutions. New Englanders are good at winter and hard work. And with dramatic changes coming to the electric grid, there will be ample opportunities to demonstrate these capabilities for years to come.



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