Analysis: New York grid eyes natgas constraint fix

OREANDA-NEWS. New York's grid operator has come up with a novel concept for scheduling generating capacity when pipeline constraints require natural gas and oil-fired power plants to closely manage their fuel supplies.

This "fuel-constrained bidding concept" would for the first time allow power plants to attach a price in the day-ahead market to their incremental costs of generating varying volumes of megawatt-hours the next day. This would mean that if a generator's fuel costs double after running for 12 hours, the grid would not dispatch that unit for longer unless doing so became cost-effective.

New York's state electric grid heavily depends on natural gas, with 55pc of its capacity coming from gas and dual-fuel units, but pipelines supplying the state can become constrained in winter. Grid operators during tight conditions in recent winters sometimes had to place telephone calls to power plants to find out how much gas they could buy and how much fuel oil they have left in their tanks.

The bidding concept, to be discussed at a grid committee meeting this week, would allow the market to determine how long to run generators with a limited supply of fuel oil or that are having difficulty buying gas. The idea could also extend to oil-fired units that are limited in their daily run times under their air pollution permits.

Power plants would submit a demand curve showing the costs of generating incremental volumes of power, along with hourly bids, to optimize units' running time. New York grid officials are considering how to create a similar function in the day-ahead market to account for natural gas pipelines' operational flow orders that restrict withdrawals. The grid wants feedback on the concept by 30 April.