NEW ENGLAND POWER plants are burning a lot more oil to generate electricity, apparently because the cost of natural gas is so high.
In January last year, oil accounted for just 0.2 percent of the fuel mix used to generate power across the region. This month, starting around January 7, oil began accounting for 20 to 25 percent of power generation, behind only natural gas and nuclear. Coal even popped up in the fuel mix, at about 3 percent.
The higher use of oil and coal means greater carbon emissions across the region and underscores how far the region has to go to trim and eventually eliminate its use of fossil fuels in electricity production.
Matthew Kakley, a spokesman for ISO-New England, the region’s power grid operator, said power generators using oil are gaining a larger market share right now because their fuel costs are lower.
“I don’t have a direct overlay of temperatures and the fuel mix, but what we’re seeing is that natural gas prices are much higher this year than last year, which is making gas plants more expensive than oil units,” Kakley said in an email. “Part of this higher cost is driven by cold weather limiting the amount of gas available to power generators, but it is also affected by higher natural gas prices nationally. For context, the average price for natural gas in Massachusetts last January was $4.97 per MMBtu. It’s only half a month, so it’s not exactly an apples-to-apples comparison yet, but what we’ve seen so far this month is prices averaging $12.39 per MMBtu.”
Dan Dolan, president of the New England Power Generators Association, said natural gas prices are higher internationally and domestically than they have been in years. He said supplies of natural gas have stagnated but demand has been picking up, leading to the sharp increases in price.
December was a fairly mild month, but colder weather hit the region in the second week of January. In colder weather, more natural gas goes to homes for heating and there is less available for power generators. With natural gas prices spiking, power generators using oil as their fuel jumped into the breach, successfully bidding into the region’s wholesale electricity market for a much greater share of the region’s power generation.
Dolan said the current situation illustrates the need for keeping a diverse fuel mix in place even though portions of it will be rarely used. He said oil and coal typically account for less than 1 percent of the region’s fuel mix for producing electricity, but the two fuels have been needed lately with natural gas in short supply and its cost skyrocketing.
As Massachusetts and the other states in New England move to embrace offshore wind, solar, and other renewable sources of electricity, Dolan said reserve fuels will continue to be needed for those times when the wind doesn’t blow or the sun doesn’t shine.
