By Amanda Durish Cook

Plant retirements could cause a generation shortfall in MISO as early as 2018, two years earlier than previously expected, according to the RTO’s 2016 survey with the Organization of MISO States.

The survey, released Friday by MISO and OMS, forecasts a narrow surplus in 2017 but concludes that “action is required in the near term to ensure sufficient resources in future years.”

For 2017, MISO is forecast to exceed the projected 15.2% reserve requirement by 0.9 GW (0.7% above the requirement), although multiple zones will be below their resource requirement and will have to rely on imports. Southern Illinois’ Zone 4 could have a 0.5-GW surplus or a deficit as large as 1.2 GW. Zone 5 in Missouri is forecasted to have a 0.8-GW deficit, and Zone 7 in Lower Michigan could have 0.3-GW shortfall.

By 2018, the survey says, MISO will face a 0.4-GW shortfall if no “low certainty” generation — projects in the interconnection queue that have not signed interconnection agreements — are completed. Under the same worst-case scenario, the gap rises to 0.5 GW in 2019, 1.9 GW in 2020 and 2.6 GW in 2021.

Half of MISO zones are predicted to experience a shortfall by 2021, with only the Dakotas (Zone 1), Wisconsin and Upper Michigan (Zone 2) and MISO South (zones 8, 9 and 10) showing sufficient capacity. Zone 4 could have the largest shortage at 1.7 GW.

Under a best-case scenario that assumes all low-certainty resources go into commercial operation, the 15.2% planning reserve margin could be met throughout 2018-2021, reaching 16.9% in 2018, 17.1% in 2019, 16.1% in 2020 and 15.5% in 2021.

Worsening Forecast

Last year’s survey predicted a 2.6-GW regional surplus in 2017, a 1.7- to 2.3-GW regional surplus in 2016 and a deficit by 2020. (See MISO Survey: No Shortfall Until 2020.)

Jennifer Curran, MISO vice president of system planning and seams administration, said the worsening forecast resulted solely from increased retirements, including those in Southern Illinois. (See Dynegy to Shutter 3 Ill. Coal Plants; Blames MISO Market Design.) The new survey appeared to be on track with last year’s forecast, pegging the 2017 regional surplus at 2.7 GW, but calculations were adjusted to reflect recently announced retirements.

According to MISO staff, the survey took into account all recently announced retirements, including DTE Energy’s planned retirement of eight coal-fired units in Michigan beginning in 2020 and the 2017 closure of Exelon’s Clinton Nuclear Generating Station in Illinois. For the first time, the survey included merchant generators in addition to load-serving entities.

Time to Get to Work

During a Friday conference call, both Curran and Sally Talberg, OMS president and chair of the Michigan Public Service Commission, stressed that state officials and regulators and load-serving entities should be working on resource adequacy plans.

“I would note that the load-serving entities in Zone 4 can take action any time using bilateral contracts,” said Curran, who also noted MISO’s plan to change the capacity auction design for the zone. (See MISO Moves Forward on Auction Design; Seasonal Filing Delayed Again.)

“This is a crucial period given the amount of resources that have retired and will retire during the survey horizon,” Talberg said.

MISO CEO John Bear said the RTO will continue to support “state regulators and members as they take necessary actions to ensure continued resource adequacy in 2018 and beyond.”

Curran said MISO’s flood of retirements is partially offset by lower demand, but that retirements are still outpacing new resource additions. She said while the number of projects in the generator interconnection queue has increased, the number of projects that complete the process and begin producing power “has remained flat.” For 2017, the survey predicted 0.7 GW of high-certainty new resource additions.

“Firming up those planned generation interconnections is going to be important,” Curran added.

In 2017, the survey shows zonal transfer limitations keep some projected capacity from serving load elsewhere. Curran said the constraints in Zone 1 are being addressed with transmission construction and that MISO is in talks to identify a solution to the transfer limits between the North and South regions.

Disparity

During the conference call, multiple stakeholders questioned the survey’s forecast, asking why the capacity auction results showed a larger surplus than the survey results for the second year in a row. (See MISO’s 4th Capacity Auction Results in Disparity.)

“It’s a survey and we have made certain assumptions,” Curran responded. “This is a reflection of 2017, not the current year auction results.” She said the survey is not the “end-all, be-all” in future capacity.

MISO plans to hold a detailed breakdown of survey results at the June 29 Resource Adequacy Subcommittee meeting.