NEW ORLEANS — The Gulf Coast Power Association’s seventh annual MISO South Regional Conference drew 175 attendees to the Crescent City last week for panel discussions on resource needs, transmission cost allocation and planning and other key initiatives.

MISO CEO John Bear keynoted the event Wednesday, addressing the “significant challenges” the RTO and its members face.

The bottom line? RTOs and ISOs can no longer incrementally move themselves forward.

“We have too much coming too fast,” Bear said.

Attendees listen to a presentation during GCPA’s annual MISO South regional conference. | © RTO Insider

He pointed to a slide that showed coal’s portion of the generation mix falling from 76% in 2005 to 47% in 2018. The same period saw gas grow from 7% to 27% of the generation mix and renewables from very little to 8%. Retirements have been a major factor, with MISO approving 24.3 GW of retirements — 95% of that fossil-fueled — since 2005.

“[Coal-fired] retirements have caused us to step back and look at things,” Bear said. “These big machines have been online for a long time, providing attributes that we took for granted. They were just there. We didn’t know we needed them or where we needed them.”

MISO, like almost everyone else, continues to add more renewable energy. Wind, solar and other renewables account for 75 GW of the 89 GW in MISO’s interconnection queue, Bear said. Solar interconnection requests increased from 34 GW in 2018 to 51 GW last year.

The RTO’s proposed future planning scenarios reflect the expectation that considerably more wind and solar energy will be added. (See related story, MISO Outlines Electrifying Tx Planning Futures.) The three futures range from a scenario where the footprint develops in line with utility announcements and plans, state mandates and goals, to one of sharply increasing demand because of heavy electric vehicle adoption and residential and commercial electrification driven by policies supporting substantial reductions in carbon emissions.

GCPA Executive Director Kim Casey chats with MISO CEO John Bear before his keynote presentation. | © RTO Insider

“If we’re going from where we are today, with what’s been announced, we’re going to have to add twice as much intermittent generation twice as fast. Can we increment our way there?” Bear asked.

Complicating the equation, he said, is that MISO’s most recent stressful system situations did not take place during the summer, but during January and September of 2018 and January 2019. No longer can the RTO use Aug. 1 as the benchmark for determining the need and value for capacity.

“It’s an interesting exercise, but we’re going to have to change that,” Bear said. “How do we accredit this capacity? Is it seasonal? Is it monthly? Our goal is to have those discussions with the stakeholder community over the next few months and move those forward.”

Bear said the questions need to be answered to inform the policy and resource investment decisions being made by member utilities, but the answers must also be flexible as MISO learns more about changing generation fleets and technologies.

“If we sit still, it’s not going to work very well,” he said. “It won’t be a journey where we take one step and look back and say, ‘That was easy.’”

Transmission Needed to Unlock South’s Solar Energy

A panel of MISO’s southern members stressed the importance of solving the north-to-south constraint between the RTO’s legacy footprint and its South region. The constraint has been blamed for energy shortages and hampering the flow of renewable energy.

While not wind-rich, the Gulf Coast is a hotbed of solar power. About 80% of the 13.4 GW of interconnection requests in the region are for solar-powered resources.

“We believe there’ll be an increase in intermittency,” said Cooperative Energy COO Nathan Brown, whose Mississippi co-op runs a 52-MW solar facility that can ramp up to 96% capacity in two hours. “We see resources somewhere will have to respond to this. Fifty-two megawatts is not that big, but with 9,200 MW in the queue, you’re going to have to have operational flexibility to handle those resources.”

“Resource availability [and] resource needs are not a new problem. We’ve dealt with this well before MISO came along,” Cleco Power President Shane Hilton said. “We’re seeing an aging fleet across Louisiana and across MISO in general. We have several older units, 40 to 50 years old, and we’re seeing increased outages. Cleco and others are having to make decisions around retirements.

“Louisiana is not advancing fast with renewable technology, but it’s coming and it’s coming fast,” he continued. “There’s going to be an increased reliance on solar, wind and battery technology in Louisiana. We’re going to have to figure out that right mix of resources, and the market signals to incent those resources to respond. Technology is advancing faster than I’ve seen in my 30 years with Cleco. We have to be thinking about this soon, and we have to be developing plans soon.”

EDP Renewables’ David Mindham, a self-described recovering transmission planning engineer, offered an answer: “Spoiler: Transmission will be part of the solution.

“MISO has a significant footprint with a lot of geographic diversity. The north could really benefit from solar energy, and the south could really benefit from wind energy in the north,” Mindham said. “Transmission has to be part of the consideration. With higher renewable penetrations across the footprint, geographical diversity is going to matter even more. We need proactive transmission build.”

MISO, Stakeholders Chart Path Forward

Scott Wright, MISO’s executive director of market strategy and design, explained how the RTO is leveraging its system design to address the megatrends reshaping the industry’s landscape.

“MISO has to be all about availability, flexibility and visibility,” he said. “The availability of the transmission system and energy resources to get their attributes where they’re needed. Flexibility … not just adapt when we see things change, but let’s anticipate. Let’s look ahead. MISO wants to be able to enable those sorts of things.”

Wright is currently updating MISO’s Forward report, which uses stakeholder input to address what he called the “three Ds” — demarginalization, decentralization and digitalization — that are changing the industry. Forward 2020 is due to be released in March, with a focus on high wind penetration and distributed generation, among other topics.

Gregg Dixon, CEO of demand response consulting firm Voltus, said he fully expects distributed energy resources to play a major role.

“We think the growth of DERs will surprise you. Solar, EVs … five years hence, you’ll see that today’s estimates were too low,” he said. “Whether EVs or data centers, these are massive customers that dwarf the stakeholders in our industry. They’re making billions of dollars’ worth of investments every year. They see issues with the changing environment, with record hurricanes and California wildfires, and they will have a great voice in these arenas. I think they will shock us all.”

Transmission, Costs Pose Sticky Issues

A diverse stakeholder panel debated two key subjects dominating the discussion in MISO: transmission planning and development, and the applicable cost allocation and rate-recovery design.

GridLiance CEO Calvin Crowder set the stage by asking, “Why is consensus on regional transmission so hard?

“You would think the regionality of RTOs and the independence of ISOs would follow along with cost allocation, but it didn’t, because it tends to get messy when you have winners and losers,” he said, responding to his own question. “Because we’ve had disparities in pricing, looking at things in a regional sense and the impact to players is a big deal. A lot of transmission is integrated with generation and retail services, so there are competing interests.”

Charles Long, vice president of transmission planning and strategy for Entergy Services, echoed Crowder’s comments on competing interests.

“It’s really hard because uncertainty is broader than it’s ever been in the industry,” Long said, pointing to “widely divergent” futures. “Still, there are some strong business cases out there for transmission. We’ve built a lot of transmission over the last 15 years, and it’s getting to the point where we have diminishing returns. These are long-term investments. Customers pay for them over a long time. We want those benefits to be robust, and we want robust business cases.”

Former Missouri Public Service Commissioner Daniel Hall, now with the American Wind Energy Association, said MISO’s most recent significant transmission buildout in 2011 has been recognized as a success to ratepayers. Unfortunately, he said, that additional capacity is pretty much spoken for.

“That congestion is preventing cheaper electricity from flowing to certain parts of the footprint, including MISO South,” Hall said. “It’s widely understood that renewable energy is about the cheapest energy around … and most people understand that new transmission needs to be built. Where this consensus breaks down is the extent and timing of this increase in demand for renewable energy. There’s not a consensus on which benefit metrics to use or how to determine which regions benefit from new lines. The MISO footprint has changed. It’s larger and its membership is more diverse than 2011.”

David Carr, special counsel to the Mississippi Public Service Commission, put the cost-allocation challenge into starker terms: “It’s going to be difficult to go into the Mississippi Delta and convince someone their light bill needs to go up so Minnesota or Google can meet their corporate environmental goals.”

Saying he was no “fan of socialism” — “except when you socialize transmission rates” — Crowder said the most efficient model would be a national, FERC-mandated postage stamp rate, where costs are allocated equally across the system, regardless of the geographical region. However, he’s not optimistic.

“Politically, that’s never going to happen, because you would have huge winners and losers,” Crowder said, noting the elimination of arbitrary barriers, such as voltage levels or cost thresholds, as incremental steps that can be taken now.

“The status quo is unacceptable,” Hall said. “Our ratepayers are being harmed by the current situation. Cheaper energy is not flowing and new generation is not interconnecting. It’s a problem that’s not sustainable. We don’t know exactly what the future holds, but we know damn well it will include a lot more demand for renewables.”