MISO looks toward future with changing fleet; smaller reserve margin

The Midcontinent Independent System Operator (MISO) said in a draft resource document issued March 5 that its traditional ways of overseeing the electric grid are going to have to change with the times.

The 16-page draft on “Facilitating Resource Adequacy in the MISO Region” makes it clear that changes are necessary in a system with a smaller reserve margin, less coal-fired resources, more reliance on natural gas and load reduction measures.

MISO will conduct a series of workshops as part of this process. The workshop schedule and associated plan will be made available to stakeholders by April 1.

The biggest adjustment is that MISO’s coal backbone is growing smaller in favor of more natural gas and intermittent renewable energy, the document noted.

Coal-fired resources in MISO are expected to decrease from 46% of total installed capacity in 2013, to 36% in 2020.

“In the near term, not every coal unit is being immediately replaced with an equivalent resource,” MISO said. “As a result, the MISO footprint is forecasted to drop below its target Planning Reserve Margin Requirement—meaning peak demand plus the Planning Reserve Margin— by as early as 2016.”

Current projections indicate that the planning reserve margin might drop from more than 17% in 2015 to just over 13% in 2016. It could drop less than 5% in 2024, according to data in the document.

The impact of shrinking reserve margins could be more serious if too many generators do maintenance outages during times of high demand, as was the case in the winter of 2013-2014, MISO said.

The higher-than-normal outage rate during that winter was caused in part by several plants needing to install new pollution controls prior to imposition of the Environmental Protection Agency (EPA)’s Mercury and Air Toxics Standards rule (MATS), MISO noted.

To date, MISO has not issued any type of fuel-procurement directives for either natural gas-fired units or coal plants. MISO is now surveying asset owners in an effort to gauge how confident they are about fuel deliveries and inventories.

“However, because the survey is voluntary in nature, asset owners are under no obligation to participate,” MISO said. “Moreover, it is unclear whether the survey will continue on a regular basis going forward. And perhaps most importantly, there is no guarantee that this voluntary survey process will adequately address fuel reliability concerns going forward.”

Likewise, MISO said it is pursing various stakeholder efforts designed to improve the way that the electric and gas sectors interact with each other.

MISO currently uses a voluntary survey every quarter to gain insight into how generation asset owners intend to comply with environmental regulations that affect their generating units.

These quarterly surveys categorize the various types of pollution control equipment that asset owners intend to install for compliance purposes, as well as how much coal power they intend to switch to burning gas or other fuels.

These surveys also provide an updated total of planned generation retirements for economic reasons. MISO shares the aggregate survey results publically with stakeholders.

“But because the survey is voluntary, there is no guarantee that all generation asset owners will continue to participate in it,” MISO said in the document. “MISO believes it is appropriate to develop a strategy to ensure that transparency about the impacts of environmental requirements is achieved through the normal course of business.”

MISO also said that because it did not historically create forecasts, it had limited insight into the consistency and accuracy of the forecasts that are provided by load serving entities (LSEs), transmission owners and others.

MISO has retained a consulting firm to conduct independent load forecasts through 2017. “As reserve margins decline, it is now more critical than ever to have confidence that demand forecasting is consistent and accurate,” the system operator said.

MISO ponders wind, transmission issues

The studies that MISO conducts of the transmission system are geared towards ensuring that there are adequate resources to meet peak demand conditions in the summer months. “But due to MISO’s declining reserve margins, those summer-oriented studies may no longer ensure that there will be adequate transmission capacity for resources to serve peak load in the winter and other non-summer periods,” MISO said.

“This is the case, in part, because wind resources in the MISO footprint typically produce more energy in the winter months compared to summer,” MISO said. “And because wind-supplied energy is not always characterized consistently in MISO’s models, MISO may impose limits on other types of generation that keeps them from being used as capacity due to study assumptions. MISO believes this issue will grow larger as more coal plants retire.”

MISO also needs better data on increased reliance on “seldom-used capacity” including Load Modifying Resources (LMRs). These resources reduce load on the system by curtailing energy use at factories or by adjusting air-conditioning levels in commercial buildings, among other things.

Because MISO has used LMRs so infrequently in the past, there may be less confidence that they will perform as needed going forward. Some retail customers signed up to be LMRs may believe that their service would be interrupted no more frequently than has occurred in the past.

“However, because declining reserve margins may require interruptions to occur more frequently, some retail customers may no longer want to participate in an LMR program,” MISO said.

MISO has four major goals

MISO is seeking to catalogue many of the issues associated with resource adequacy, and what actions it can take to address these issues.  MISO said it has four key goals:

•MISO’s first goal, regional assessment and transparency, revolves around assessment tools and processes that MISO and stakeholders use to bring forward-looking, long-term visibility to resource adequacy.

•The aim of the second goal, industry influence, monitoring and coordination, is to identify and address issues that are partly or entirely outside of MISO’s direct control, but which nevertheless pose challenges and opportunities to resource adequacy.

•The third goal, evolving resource adequacy requirements evolving resource adequacy requirements, is designed to identify emerging issues related to MISO’s Resource Adequacy construct that facilitates and enables LSEs to demonstrate Resource Adequacy.

•The objective of the fourth goal, process alignment, is to identify and eliminate any inconsistencies or barriers within the various processes and procedures that MISO uses to facilitate, and LSEs use to demonstrate, resource adequacy.

These issues and others will all be hashed out with stakeholders as the planning process continues, MISO said.

MISO administers wholesale electricity markets in parts of 15 states and one Canadian province.

 

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.