There is no question that New England’s energy infrastructure is clearly constrained, lacking resources that are both reliable and cost competitive. The region has limited local natural resources and energy must be transported long distances. With the increasing amount of variable generation such as wind and solar coming online, as well as the retirement of older coal and oil-fired units, the importance of natural gas as a reliability factor will likely continue to rise. These fast-responding units are a necessity in order to balance the other somewhat unreliable systems.
This has led to a continued focus on the importance of expanding natural gas pipelines. Pipeline expansion projects have been a topic of debate among politicians, activists and the public. Regardless of opinion, there are pipeline expansions in the works looking to come online in the next few years, such as the Algonquin Incremental Market (AIM) Project. Denny Yeung, Principal with the Natural Gas and Power Fuels Group of Black & Veatchstates “It is important to note, however, this incremental capacity will not completely alleviate the pipeline capacity constraints in the region, and additional capacity is still necessary.” Meaning, although there are projects in the works and others proposed, they will likely not be enough to meet future peak demand needs.
In order to ease the impact on reliability and price, significant expansion of pipelines and liquefied natural gas storage is required. We will continue to monitor what impact these scheduled and proposed projects have on future pricing models and keep you informed of what this means for your business.