MISO said it plans to subdivide its annual capacity auction by seasons so it can better manage budding reliability risks brought on by renewables’ growing share of the resource mix.
Jessica Harrison, the RTO’s senior director of research and development, said leadership is leaning toward a four-season capacity auction, though two or three seasons is still possible. (See MISO Nearing Decision on Seasonal Capacity Auction.)
“There’s still a range of preferences on the number of seasons,” Harrison said during a Resource Adequacy Subcommittee (RASC) meeting Jan. 6.
The grid operator intends to conduct the independent seasonal auctions simultaneously.
“It’s a proposal we’ll put forward and then monitor the need to hold more auctions in a year,” Harrison explained.
MISO’s decision will bring manifold implications and have it crunching separate planning reserve margins and local clearing requirements based on seasons.
The RTO will conduct the loss-of-load expectation (LOLE) study on a seasonal basis to determine how risk is spread across the year. Senior Manager of Resource Adequacy Coordination Lynn Hecker said it will assign seasonal reliability requirements based on the study results.
Stakeholders asked what MISO will do if it can’t detect loss-of-load risk within a particular season.
“That’s a question we’re discussing,” Hecker said. She said staff is considering assigning seasons with a 0.01 LOLE risk target to determine resource adequacy requirements for those seasons.
“The idea that resources are fully available year-round with only some small outages is frankly being tested by the industry,” Harrison said. “We are getting requests to operate resources during [only] portions of the year.”
MISO will impose a must-offer requirement on planning resources only for the seasons they clear in the capacity auctions.
Stakeholders asked whether the RTO will establish separate seasonal capacity import and export limits for its 10 local resource zones.
“That’s another design element to consider that we haven’t spent a lot of time on yet,” Hecker said.
Some attendees urged MISO to make sure its model can handle multiple reserve margin requirements and that the new seasonal requirements work with state integrated resource planning.
Minimum Capacity Requirement for LSEs
The grid operator also proposed a minimum capacity requirement for load-serving entities participating in the seasonal auctions. The LSEs would be expected to procure at least half of their planning reserve margin requirement before the auctions.
Entities could be faced with a “penalty mechanism” for not meeting the 50% requirement, MISO said.
The proposal seemed unpopular with stakeholders. Several appeared taken aback at the rule, with some saying it was only mentioned in passing in stakeholder meetings before being unveiled.
MISO’s Independent Market Monitor also expressed its displeasure.
“We don’t support this 50% requirement. We think it’s a bad idea,” Monitor staffer Michael Chiasson said.
But a few stakeholders said the requirement will end an overreliance on the MISO capacity auction and the free ridership some utilities enjoy.
“This might be scaled to the size of the utility,” Customized Energy Solutions’ Ted Kuhn suggested, adding, “If you’re a 10-MW utility, I don’t think anyone cares where you procure. But if you’re DTE Energy, it’s a different story.”
Minnesota Public Utilities Commission staff member Hwikwon Ham said the requirement might tread on states’ jurisdiction in RA matters.
“MISO can limit its auction to an LSE, but it cannot tell an LSE what to procure,” he said.
Staff said they would reconsider language around the requirement.
Availability-based Accreditation, Too
The grid operator will unsurprisingly pivot to a seasonal capacity accreditation for planning resources, matching the capacity auction. It is also proposing to adopt the Monitor’s recommendation to pivot to an accreditation based on resource availability.
While MISO will adopt an availability-based resource accreditation (ACAP), it will still establish seasonal reliability requirements on an unforced capacity (UCAP) basis. It said it will use a conversion calculation to align the ACAP-based capacity accreditation with UCAP-based planning reserve margins.
The Monitor’s David Patton pressed MISO to rework its capacity accreditation, pitching an accreditation that relies on the system’s megawatts on hand during the operating year’s tightest hours. MISO leadership said it will adopt some — but not all — design elements from the Monitor’s availability-based accreditation recommendation.
Patton said resources that have long startup times and expensive startup costs aren’t able to provide the reliability that fast-ramping and online resources will. He said that currently, MISO’s market doesn’t properly value more agile resources and suggested the RTO could adopt a “sliding scale” of capacity accreditation based on a rolling, three-year average of the resources’ response time.
“The uncertainties around the output of intermittent resources are going to expand the tightest hours of the year beyond those that are easy to see coming,” Patton warned.
He argued that it’s becoming more important for conventional resources to prove availability as the fleet adds more renewable energy. However, he said conventional generation’s availability is shrinking and its undeclared outages are becoming commonplace.
“In theory,” Patton said, “compared to an energy-only market, capacity payments should reflect elements of shortage pricing,” where the units that help most are appropriately compensated.
He said MISO’s current UCAP-based accreditation overlooks facility derates and unreported outages.
“A lot of the lost megawatts come from outages that are not reported, so they wouldn’t be reflected in UCAP,” he said.
Patton said he also took issue with MISO’s current construct that effectively assumes no planned outages happen during summer peak conditions. He said the assumption does a disservice to reality.
“When you look, we have 10-plus GW of outages in the hottest conditions of the year. You wonder how they occur because we seemingly have enough capacity,” he said.
Some stakeholders complained about the suddenness of MISO’s pivot to an availability-based accreditation.
“I feel like our conversations [in] spring, summer have been grounded in availability. That’s exactly what we’ve been trying to get at all year,” MISO RASC liaison Scott Wright said.
Harrison and Hecker asked for written stakeholder opinions and said more details and analyses will be shared in future RASC meetings.
Mississippi Public Service Commission consultant Bill Booth asked whether MISO hadn’t already taken care of some of the availability problems with 2019’s stricter outage-scheduling rules and its recently approved short-term reserve product.
Patton responded by drawing a distinction between energy and capacity and said capacity revenues should naturally decline when “more of the heavy lifting” of providing reserves is handled by shortage products.
Wright said MISO needs to employ tactics in both its operating and planning horizons to address the footprint’s changing risk profile.
“We’ve got to be on all sides of it,” Wright said, adding that an effort to more accurately measure capacity is a valuable planning tool.
CEO John Bear warned members early last year that MISO is pivoting from on a summer loss-of-load emphasis to an “all-hours-matter focus” because of the generation fleet’s “increasingly distributed and intermittent nature.”
