Ohio Energy Markets - Assembling the Puzzle Pieces
Federal Energy Regulatory Commission (FERC) Chairman Neil Chatterjee delivered a congratulatory message at the FERC's most recent Open Meeting, announcing that the non-quorum backlog has been cleared. But various developers, including those still waiting on certificates, are still feeling the impact, especially as they look to match up their timing in order to serve growing gas generator needs.
Since 2013, Ohio has decommissioned 10,003 MW of coal generation, and other economically challenged coal (NRG's Avon Lake) and nuclear (FirstEnergy's Davis Besse) plants are threatened. This may change, as we discussed last Friday, if FERC throws them a lifeline on December 11, when it is expected that FERC will respond to the Department of Energy's recent Notice of Proposed Rulemaking on Grid Reliability and Resilience Pricing. The demand for natural gas-fired generation and electric transmission in Ohio is acute, but so is the competition. What's the current state of power markets in t he Buckeye State ? Will greenfield pipelines, such as Nexus, have an impact on the market?
Getting Nexus's Gas to Market
For months, arguments for expeditious approval of gas pipelines hinged on threats to the availability of fuel for winter heating or smothering takeaway capacity constraints. But the uncertainty limits prospects for natural gas pipelines as they attempt to secure shippers. One example is the Nexus Pipeline Project, which began construction a couple of weeks before the company had anticipated being placed in-service. And while much of the capacity on the pipe has been secured by precedent agreements, the line is not fully committed.
Nexus not only intends to serve shippers at major points of interconnection, but also at tee-taps, connection points intended to serve local markets, which will service generators and utilities distributing natural gas throughout Ohio. The installation of the tee-taps will facilitate access to gas supplies without interruption to transportation services provided to the existing shippers.
The market connections represent approximately 1.4 million Dth/d of market interconnectivity, according to Nexus, which it is in discussions for up to 630,000 Dth/d of additional interconnectivity. This increased accessibility to natural gas supplies throughout Ohio has spurred additional development of natural gas combined cycle facilities.
Capacity to Clean Energy Future's Gas Generator
One such option for Nexus may involve Clean Energy Future's Oregon Energy Center (the Energy Center), a natural gas-fired combined cycle electric generating facility located in the City of Oregon, Lucas County, Ohio. Approval is currently being sought for a net capacity up to 955 MW from the Ohio Power Siting Board (OPSB). And, of course, electric transmission lines (0.5-mile 345-kV and 0.2-mile 138-kV) will also be sited and approved by the OPSB in order to ensure that this new power can get to market.
Clean Energy determined that based on a firm gas transportation plan and the abundant, low-cost natural gas in proximity to the Energy Center, including Utica shale gas, a back-up fuel such as fuel oil is not required. As such, a lateral to the Energy Center may seem like a logical solution for Nexus, but there are three other options for gas supply to the generator. And, notably, all of the potential gas suppliers, with the exception of the yet-to-be-built Nexus line, are expected to have sufficient pressure available without the need for an on-site natural gas compressor.
When the Energy Center submitted its application to the OPSB in April 2017, it was considering securing natural gas from the Nexus Pipeline. But with continued delays and existing Dominion and Columbia systems, Nexus faces competition and appears to be at a disadvantage. Clean Energy Future aims to have its generating facility online by the summer of 2020.
Power Generation in Ohio
