By Amanda Durish Cook

INDIANAPOLIS — MISO used its first-ever Market Symposium last week to ask industry leaders how a low-carbon environment will influence the electricity market.

Although the discussions produced few specific suggestions on what new rules should be proposed, there was wide agreement that the markets need to become more flexible to accommodate the increase in renewables and distributed resources. The Department of Energy’s Advanced Research Projects Agency-Energy (ARPA-E) partnered with the RTO in the sold-out event Aug. 18-19.

“We’re basically heading off to a situation where there’s no trail, and we’re going to have to cut through the wilderness for a while,” said Michael J. Curran, chairman of the Markets Committee of the Board of Directors. “This [symposium] is a coming together of the community where we’re going to have to share ideas. … I look forward to cutting the trail together.”

“We have people saying the system cannot do this; the system was not designed for this,” said CEO John Bear, commenting on incorporating distributed resources. “That reminds me of what people used to say about wind. … We can solve these problems. We can look at what we’re doing in the control room.”

MISO’s wind generation has grown exponentially since 2005, when it totaled only 500 MW. A decade-plus later, the RTO has 15 GW of wind.

Gas the ‘New Coal’

Tom Doughty, vice president of customer and state affairs at CAISO, spoke about the challenge of meeting California’s mandate of 50% renewables by 2030.

Doughty said wind and solar will be a “massive element” by then. He also said natural gas has become the “new coal” in California.

“We’re in a race now to meet the mandates and accomplish our state’s objectives,” he said. “But that race must be run carefully to avoid placing additional costs on consumers.”

Eric Schubert, regulatory affairs advisor at BP Energy, said the growing role of natural gas will require investments in firm transport, storage and long-term contracts.

With gas-fired generation having to manage peak loads in the morning before the sun rises high and in the evening before the wind picks up, measures are needed to optimize the use of intermittent resources throughout the day, said Scott Harvey of FTI Consulting.

But time-of-use pricing is not the answer, said Cathy Woollums, senior vice president and chief environmental counsel at Berkshire Hathaway Energy. “How are you going to tell someone not to do their laundry at 10 in the morning or they’re going to pay more?” she said. “We can’t switch overnight to looking at something brand new.”

Paul Mitchell, CEO of Energy Systems Network, said the transition could be eased by Internet-connected devices, which can receive signals to temper energy use when demand is high.

Roles for Energy Storage

Mitchell also touted the “endless” applications of energy storage, which can be integrated into the grid “at all different layers and levels.”

“The markets are going to have to realize that energy storage is not a renewable-based asset like wind and solar,” Mitchell said.

Richard Tabors, co-director of the Massachusetts Institute of Technology’s Utility of the Future Project, said markets will have to be value-driven instead of cost-driven, so that 200 MW in storage will be compensated based on the energy price when it’s consumed. “We’re not quite there yet,” he said.

“I think the trick for storage and renewables is to have really good forecasting in place so you know when to fill the storage and empty the storage,” said Michael Milligan, principal researcher at the National Renewable Energy Laboratory.

Milligan said for wind and solar to be integrated, systems have to be geographically large with very responsive markets — a recognition that has resulted in CAISO expanding beyond state borders with its Energy Imbalance Market.

“It’s my sumo wrestler theory of wind and solar integration,” Milligan said. “You have to be big and you have to be fast.”

‘Unguided Missile’

Doughty said consumer participation in the grid will continue to rise, and CAISO has responded by rolling out two products allowing consumers to enter their solar generation into the market through aggregators.

“On our … 70,000-MW grid, we have 5,000 MW of solar that’s invisible to us and undispatchable,” he said. “We are very, very much bullish about involving the consumer. Because if we don’t involve them, they can become an unguided missile.

“My electric bill last month was $800,” Doughty continued. “And I don’t have a large home. In California, [highest electric rates are more than] $0.40/kWh. There’s a huge opening for solar. We have a tremendous responsibility to inform customers about their ability to participate in markets.”

BP’s Schubert said as more wind and solar are added, reserves need to be priced efficiently, or else MISO could find itself in a “binary position” where the marginal cost of wind will be $0/MWh then jump to an offer cap once the breeze stops.

“The beauty of pricing is if you price it right, it will all fall into place because everyone has an incentive,” Schubert said.

Research and Development

Several speakers talked about the need to increase research and development.

“The RTO creates value,” said David Sun, chief scientist at The Glarus Group. “It’s an economic platform that allows us to do things we previously could not. But that platform needs to change. It will do well in the future,” but “today we’re not doing enough innovative research. We’re doing embarrassingly little.”

Tim Heidel, program director at ARPA-E, called for a “no-regrets” approach to research and development, in which even failures are celebrated.

“One of the tough technical questions is how do we do that aggregation while respecting the constraints of the market. I think we’ll solve that and I think it’ll work, but there’s a possibility that we uncover another showstopper,” Heidel said. He predicted optimization algorithms will be a large part of distributed resource research.

Terry Oliver, chief technology innovation officer at Bonneville Power Administration, said he does not recommend MISO conduct basic research, but it could use its members to collaborate on narrower research topics. He also said the RTO should “free the data” to researchers and pointed out other sources of harvestable data, such as Nest thermostats.

Mitchell said the regulatory structure needs to expand to reflect the electrification of transportation and the role of microgrids and distributed resources. “Industry needs to be defined far more broadly than just RTOs and utilities,” he said.

Heidel said the scale of change in the electric system is going to be “huge,” pointing out how quickly the industry grew after Thomas Edison built the first central power plant on New York City’s Pearl Street in 1882.

“We’re going through that magnitude of change again,” he said. “Climate change is going to accelerate the rate of this change, and we’re going to be playing catch up for years. We’re going to get our feet wet in R&D again.”