MISO’s Independent Market Monitor debuted five new recommendations this week as part of his annual State of the Market Report, with multiple suggestions aimed at maximizing transmission utilization by clamping down on wind-related congestion.
“This is going to be one of the most central topics. Congestion is the single most significant operating factor we have to manage,” IMM David Patton told the Markets Committee of MISO’s Board of Directors Wednesday in a meeting to detail the 2022 report.
Patton said the footprint experienced a record $3.7 billion in real-time congestion over 2022, with most of that occurring in the Midwest.
He has said wind generation accounts for almost half of MISO’s transmission congestion and that wind resources often aren’t motivated to follow MISO’s dispatch instructions to reel in output to manage transmission constraints.
He suggested MISO ratchet up its excess and deficient energy deployment penalty charges, which he said are currently not high enough to dissuade generators from deviating from MISO’s dispatch instructions.
He said the recommendation stands to address reliability and economic concerns, considering that MISO’s unit dispatch system assumes that generators follow instructions and that flows will match dispatch instructions. He said penalties should be based on generators’ congestion component of their locational marginal pricing.
“Currently, generators do not accrue excess or deficient energy penalties until they exhibit such deviations for four consecutive intervals. Even after this time, the current penalties do not ensure that generators will benefit by following MISO’s dispatch instructions. This is particularly concerning when resources load binding transmission constraints,” Patton wrote, adding that if generators are not inclined to follow dispatch instructions, flows over constraints can “substantially exceed” transmission limits.
“We need our markets to motivate people to follow their dispatch instructions,” Patton previously said at a June 13 Markets Committee meeting. “If this improves dispatch, it would remove a lot of headaches in the control room.”
Patton said MISO has increasingly relied on manual redispatch of resources to manage transmission constraints.
Patton also recommended that MISO expand its transmission constraint demand curves so that its market dispatch system has better control over network flows.
Patton said MISO required “extraordinary operator actions” to manage network flows during storms in 2021 and 2022. He said the current transmission constraint demand curves restrict MISO’s market dispatch from managing transmission congestion because the RTO’s operating reserve demand curve can prevent the dispatch model from reducing output to manage network flows when transmission and capacity emergencies strike MISO simultaneously. Patton said the value the constraint curve places on managing transmission limitations isn’t high enough.
He said MISO operators having to manually dispatch generation to reduce flows on overloaded constraints is “costly and distorts market outcomes.”
Patton also said MISO could improve its near-term wind forecasting to recognize inherent principles of wind generation output. He said currently, MISO uses a “persistence” forecast that assumes wind resources will produce the same amount of output as it most recently observed.
“The downside of this approach is that the forecasted output will be predictably lower when output has been increasing and will be predictably higher when wind output is dropping,” Patton wrote. He said MISO would cut down on forecast errors if its forecasting recognized recent movement in wind output.
LRTP Doubts
Patton’s State of the Market report took an unprecedented foray into transmission planning. He recommended MISO re-examine its future energy mix assumptions behind its ongoing long-range transmission plan (LRTP). Patton said he’s concerned that the second of MISO’s three, 20-year transmission planning futures includes “unrealistically high levels of intermittent resources and unrealistically low levels of dispatchable, hybrid and battery storage resources.”
“The reality is you can’t separate transmission planning and markets. … There’s an interplay between the decisions resource owners are making on the generation side and the decisions MISO is making on the transmission side,” he told MISO board members, who expressed confusion and concern that the IMM would advise MISO on system planning.
Patton said “inefficient investment in transmission” will cause MISO to overlook other solutions to address transmission congestion, including more efficient siting of clean energy resources and investment in new generation, energy storage and grid-enhancing technologies.
MISO is anticipating its members will add 369 GW of mostly wind and solar generation over the next two decades, resulting in a 466-GW system total of nameplate capacity. MISO today operates with about 194 GW. (See MISO Modeling Line Options for 2nd LRTP Portfolio.)
Patton said MISO should reconsider its anticipated fleet evolution in its second future, use the most informed capacity expansion and generation retirement assumptions it can, evaluate energy storage alternatives to new lines, and ensure that “any estimated benefits include all of the costs incurred to realize the benefits.”
He told board members that if MISO assumes members add overwhelmingly intermittent resources, it will conclude reliability will suffer unless it adds dramatically more transmission. Patton said MISO should recognize that members will likely add energy storage components to renewable energy additions and continue to build natural gas facilities.
“I think we need to take a hard look at Future 2 as the basis before we begin this planning,” he said.
Markets Committee members said they must discuss whether it’s appropriate for them to consider MISO transmission planning decisions. The System Planning Committee of the MISO Board of Directors typically oversees MISO’s transmission planning choices.
Annual Offers in the Seasonal Capacity Market
Finally, Patton turned his attention to MISO’s first seasonal capacity auction and said MISO should establish a way for suppliers to submit annual offers and rework some of its 31-day outage limit.
He said an auction that uses only seasonal offer parameters “raises substantial challenges for participants that have annual going forward costs they must cover.”
“Suppliers with a resource that requires a capital investment to remain in operation would find it difficult to offer such costs since it will not know how many seasons in which the resource will clear,” he explained.
Patton also said MISO’s 31-day limit on non-exempt generation outages is causing some distortion in the capacity market because “a number of suppliers” this year deliberately adjusted their longer unit outages, so they straddled seasons, thereby dodging penalties.
“This can be problematic for outages that are shifted from shoulder seasons into higher-demand winter and summer seasons,” Patton said. He said MISO should figure out how it can motivate better outage scheduling.
MISO leadership will respond to Patton’s State of the Market report in December.
