The Midcontinent ISO sees that out of 66.2 GW of coal capacity in its region, 49.2 GW is impacted by the federal Mercury and Air Toxics Standards (MATS) and 6.2 GW of that capacity has been deemed by plant owners as uneconomic.
In a Sept. 30 draft report for its 2013 Transmission Expansion Plan, MISO staff outlined a number of transmission projects and developments, and also outlined some of the stats for coal-fired generation losses.
MISO, with advice from the Planning Advisory Committee (PAC), is modeling 12.6 GW of coal retirements in all future scenarios except the Environmental scenario, which models 23 GW, and the Generation Shift future, which includes age-related retirements in addition to the 12.6 GW assumed in the other futures. Future capacity expansions include demand response (DR) and energy efficiency (EE) programs, as well as natural gas combustion turbines, natural gas combined cycle units, wind and solar.
In 2016, MISO expects a total of 102,258 MW of Anticipated Capacity Resources to be available on-peak. MISO’s Existing-Certain Capacity Resources of 106,091 MW, which is the total summer-rated capacity of its existing generation fleet that is eligible to participate in the annual Planning Resource Auction, is the baseline from where MISO projects future resources expected on-peak in the out-years.
MISO’s current registered capacity (Nameplate) of 127,963 MW steps down to Existing-Certain Capacity Resources of 106,091 MW by accounting for summer on-peak generator performance, transmission limitations and energy-only capacity (Existing-Other Capacity Resources), and current units on suspended operations (Existing-Inoperable Capacity Resources).
“MISO anticipates the potential retirement and suspended operation of its older base load generation fleet largely driven by new U.S. Environmental Protection Agency (EPA) rules,” the report noted. “Over the last two years, approximately 1 GW of summer rated capacity has retired, and MISO is projecting 10,383 MW of Existing-Certain Capacity Resource retirement and suspended operation by 2016.”
Through the Generator Interconnection Queue (GIQ) process, MISO anticipates up to 3,004 MW of future capacity additions to be in-service and expected on-peak during the 2016 summer. This is based on a snapshot of the GIQ as of July 1, 2013 and is the aggregation of active projects with either a signed Interconnection Agreement, in Facilities Studies, or in Definitive Planning Phase (DPP) Studies.
Based on MISO’s current visibility of projected retirements and the resource plans of its membership, MISO forecasts reserve margins will erode over the course of the next three years causing a shortfall by 2016 of 3 GW to 7 GW. A no load-growth scenario equates to a 3 GW shortfall; a mid-load growth scenario equates to a 5 GW shortfall; and a high-load growth scenario equates to a 7 GW shortfall for 2016.
Survey shows which way generators likely to go on MATS compliance
In 2013, MISO continued its quarterly survey of asset owners for information on their compliance plans with EPA regulations, particularly the Mercury and Air Toxics Standards (MATS). Currently, 10.7 GW of additional capacity has a potential to be either retired or suspended in the crucial compliance timeframe of 2015 to 2016. That amount of retirements and suspensions will have a negative impact on the reserve margin in 2015 to 2016. If compliance plans do not consider greenhouse gas regulations and additional resulting retirements; the reserve margin could be even more severely impacted, the report pointed out.
Going forward, the MISO surveys may evolve to include new questions, based on President Barack Obama’s broad plan to reduce climate-changing emissions, announced in June. The most recent asset owner compliance survey was complete before this announcement. While the outlined plan from the President did not contain specific reduction targets, the uncertainty on how climate-changing emissions will be addressed continues to put pressure on coal assets on the margin of the retire/retrofit decision.
In the second quarter 2013 survey, the majority of coal resource asset owners are choosing to retrofit their units with some type of emission reduction equipment. There is a total of 66.2 GW of coal generation in MISO at 295 units. Out of that, 17 GW (48 units) are not affected by MATS. Out of the 247 coal resources (49.2 GW) impacted by the MATS regulations, 114 resources (39.4 GW) are installing emission equipment. The remaining 133 resources, amounting to 9.8 GW, are either retiring/suspending or under evaluation for how to comply. Since an initial survey in 2011, 2.0 GW of actual coal resources have retired.
Each retrofit technology has different implementation and outage characteristics. MISO’s survey requests information on the progress of the planning and implementation phases of the emission equipment retrofits. The more expensive technology choices – flue-gas desulfurization (FGD) and selective catalytic reduction (SCR) – require similar durations to implement. “Choosing one of these technologies would be quite risky to begin at this time,” MISO added about getting such projects built by the initial MATS deadline of April 2015. “In fact, all but two technology choices may not meet the compliance deadline, even the one-year extension deadline.”
ACI and DSI have the advantage of quick installation times
Two technology choices, activated carbon injection (ACI) and dry sorbent injection (DSI), are the only remaining technologies that allow enough time to implement within the compliance deadlines. Each type, if engineering and then construction started now, could be operating around 2015. Therefore, ACI and DSI are the technologies of choice for a vast majority of the resources in MISO.
Most resources installing FGD, SCR and baghouse technologies are in the design, permit and construction phases and should have time to meet the compliance deadline, the report said. However, there are a few that are not as far along. These resources could require extensions of the compliance deadline. MISO said if engineering and design started around now, wet FGD couldn’t be operating until about 2019, and that SCR, dry FGD and baghouses couldn’t be operating until about 2017.
A third of the coal resource asset owners in MISO are looking to get a one-year extension, bringing the MATS compliance date for them to April 2016. MISO sees the possible one-year extensions as 24.1 GW at 84 units. About 11.8 GW of resources have received approval from individual state environmental authorities with 4.1 GW in the process of submitting their request. Also 8.2 GW of resource asset owners have not yet decided if a one-year extension is needed. In addition to the one-year extensions, 2.1 GW of coal resource owners have stated that an Administrative Order (AO) could possibly be needed. An AO is part of the Clean Air Act that allows for extra time where the EPA will not seek penalties for non-compliance.
Looking at total retirements and suspensions for all fuel types going forward, there is a potential for 10.7 GW of additional retirements and suspensions. This amount of additional resources unavailable during the critical compliance timeframe, 2015-2016, will negatively impact reserve margins in MISO.
The total cumulative retirement and suspension forecast for all fuel types begins to drop after 2015 because of the suspensions coming back online. The treatment of suspended coal resources is of particular importance. Right now, it is not clear if these resources will continue to run after suspension.
Abundant natural gas supplies in the U.S., along with the coming retirement or retrofit of a large amount of coal-fired electric generation capacity, are transforming natural gas into a competitive fuel for electric power generation. In MISO Midwest, the contribution from natural gas-fueled generation resources to total energy served has increased over the past few years, while coal resource contributions have declined.