Natural Gas Long-Term Capacity Report for Brooklyn, Queens, Staten Island and Long Island (“Downstate NY”) February 2020 NATURAL GAS LONG-TERM CAPACITY REPORT FOR DOWNSTATE NEW YORK Contents 1 Introduction ....................................................................................................................... 6 2 Executive Summary ........................................................................................................... 7 3 Report Methodology......................................................................................................... 18 4 Background – An Overview of the Natural Gas System and National Grid’s Role, Our Downstate NY Service Territory, and Our Service Obligations ........................................ 20 5 Projected Natural Gas Demand Through 2035 in Downstate NY ........................................... 28 6 National Grid’s Downstate NY Natural Gas Supply Capacity ................................................. 39 7 The Gap Between Downstate NY Projected Natural Gas Demand and National Grid’s Supply Capacity .................................................................................. 43 8 Low-Carbon Opportunities: How Renewable Natural Gas (RNG), Hydrogen and Geothermal Heat Pumps Can Help Reduce the Projected Gap Between Demand and Supply, While Significantly Reducing Greenhouse Gas (GHG) ......................................................... 43 9 Assumptions for Evaluating Cost and Environmental Impact ................................................. 49 10 Description and Evaluation of Specific Options .................................................................... 53 11 Approaches to Close the Remaining Projected Gap Between Demand and Supply ................. 89 12 Long-Term Capacity Report Conclusions and Summary ..................................................... 101 13 Acronyms ..................................................................................................................... 102 14 Appendix ...................................................................................................................... 104 1 NATURAL GAS LONG-TERM CAPACITY REPORT FOR DOWNSTATE NEW YORK List of Tables Table 1: Level of Attractiveness of Different Options to Close the Gap Between Downstate NY Gas Demand and Supply ....................................................................................................12 Table 2: Permitting, Policy, Regulatory and Implementation Requirements for Different Options to Close the Gap Between Downstate NY Gas Demand and Supply ....................... 13 Table 3: Summary of Supply and Demand Approaches and Implications to National Grid Supply Stack . 16 Table 4: Downstate NY Customers and Their Gas Demand ...................................................................... 24 Table 5: Change in Design Day Demand, 2010-2019 ................................................................................ 28 Table 6: Annual Change in Customer Count, 2010-2019 ........................................................................... 29 Table 7: Macroeconomic factors in Downstate NY ..................................................................................... 30 Table 8: National Grid Energy Efficiency Efforts and Their Effect on Design Day Demand, 2010-2019. .. 32 Table 9: Key Drivers of Baseline Demand .................................................................................................. 33 Table 10: Energy Efficiency and Demand Response Assumptions Used for Demand Forecast ............... 36 Table 11: Projected Impact of Energy Efficiency and Customer Demand Response Programs in Downstate NY ......................................................................................... 36 Table 12: Electrification Assumptions Used in Constructing Demand Forecast......................................... 38 Table 13: Projected Incremental Impact of Electrification Under Current Programs and Policies ............. 38 Table 14: A Description of National Grid’s Current Downstate NY Natural Gas Supply Capacity ............. 40 Table 15: National Grid Downstate NY Additions to Supply Capacity, 2009-2019..................................... 42 Table 16: Potential Incremental Renewable Natural Gas Plants in Downstate New York ......................... 45 Table 17: Summary of Low-Carbon Opportunities ..................................................................................... 48 Table 18: Impact of RNG, Hydrogen and Incremental Geothermal Heat Pumps on Gap Between Downstate NY Projected Natural Gas Demand and National Grid’s Supply Capacity ............................... 49 Table 19: Criteria for Assessing the Environmental Impact ........................................................................ 50 Table 20: Assumptions for the Annual GWP Emissions Figures ................................................................ 53 Table 21: Summary of Offshore LNG Deepwater Port Option.................................................................... 57 Table 22: Summary of LNG Import Terminal Option .................................................................................. 60 Table 23: Summary of NESE Project Option .............................................................................................. 62 Table 24: Summary of Peak LNG Facility Option ....................................................................................... 65 Table 25: Summary of LNG Barges Option ................................................................................................ 68 Table 26: Summary of Clove Lakes Transmission Loop Option................................................................. 70 Table 27: Summary of Gas Compression on the IGTS Option................................................................... 73 Table 28: Existing Downstate NY Gas Heating Customers (January, 2020) ............................................. 74 2 NATURAL GAS LONG-TERM CAPACITY REPORT FOR DOWNSTATE NEW YORK Table 29: A Comparison of Energy Efficiency (EE) Achievement Relative to Annual Heating Needs (2017 actual unless otherwise noted) .................................................................... 75 Table 30: Summary of Incremental Energy Efficiency Option .................................................................... 78 Table 31: Summary of Incremental Demand Response Option ................................................................. 81 Table 32: Summary of Incremental Electrification Option ........................................................................... .85 Table 33: Level of Attractiveness of Different Options to Close the Gap Between Downstate NY Gas Demand and Supply .......................................................................................................... 86 Table 34: Permitting, Policy, Regulatory and Implementation Requirements for Different Options to Close the Gap Between Downstate NY Gas Demand and Supply ....................... 87 Table 35: Incremental EE, DR and Electrification Requirements to Close Gap Between Demand and Supply if Large Scale Infrastructure Comes On-Line in 2026/27 ........................................................ 90 Table 36: Incremental EE, DR and Electrification Requirements to Close Gap Between Demand and Supply Under Different Distributed Infrastructure Solutions ................................................................ 92 Table 37: Summary of No Infrastructure Solution to Have Impact Starting in 2021/22 .............................. 95 Table 38: Summary of Supply and Demand Approaches and Implications (note: ranges are a function of the timing and scale of the options, and the differences between Low and High Demand forecasts) ... 97 3 NATURAL GAS LONG-TERM CAPACITY REPORT FOR DOWNSTATE NEW YORK List of Figures Figure 1: Historic and Projected Design Day Natural Gas Demand in Downstate New York, 2009 – 2035..8 Figure 2: National Grid Natural Gas Supply for Downstate NY, 2009 - 2022 ............................................... 9 Figure 3: Comparison of Downstate NY Forecast Natural Gas Demand and Existing Supply, 2021 – 2035 .............................................................................................................. 10 Figure 4: NPV of Net Costs for Different Alternatives to Close Demand-Supply Gap – High Demand Scenario ............................................................................................................................ 17 Figure 5: NPV of Net Costs for Different Alternatives to Close Demand-Supply Gap – Low Demand Scenario ............................................................................................................................. 17 Figure 6: United States Natural Gas Supply Chain .................................................................................... 20 Figure 7: Map of National Grid Natural Gas KEDNY and KEDLI (“Downstate NY”) Service Area ............. 22 Figure 8: National Grid Downstate NY Transmission Network ................................................................... 23 Figure 9: Downstate NY Customer Base as of January 2020 .................................................................... 24 Figure 10: Downstate NY Natural Gas Annual Consumption by Customer and Usage Type, 2019 .......... 25 Figure 11: Downstate NY Natural Gas Design Day Consumption by Customer and Usage Type, 2019/20 ....................................................................................................