MISO successfully opened its wholesale markets to electric storage resources last week in compliance with FERC Order 841, the grid operator said Tuesday.
Effective Sept. 1, storage resources can participate in the RTO’s energy and operating reserves markets as supply or demand. MISO said the resources have the “operational characteristics that support reliability and resilience as the industry continues to transition the resource fleet.”
“We are excited to see this space grow with increasing member interest and participation, particularly as we continue to adapt to the accelerating resource transition,” Jessica Lucas, executive director of system operations, said in a statement. “With the introduction of electric storage resources to our market portfolio, we will continue to position MISO’s grid and its members as the grid of the future.”
Staff has developed a method that implements new storage-specific offer parameters required by FERC in a way that recognizes their unique physical and operational characteristics. The technology earned MISO its first patent last year from the U.S. Patent and Trademark Office.
The RTO said the participation model’s near-term benefits are “modest due to the small volume of storage resources.”
“However, the new model positions MISO ahead of the increased storage participation anticipated with higher penetration of renewables and distributed energy resources over the next five to 10 years,” it said.
MISO debuted the storage participation on its legacy market platform. It had originally requested that it be given until 2025 to fully incorporate storage on its new market platform. However, FERC ordered the grid operator to build the participation models on both of its market platforms. (See MISO: No Choice but to Double Up on 841 Compliance.)
The RTO said that that integrating storage offers into its markets would be better served under its new market platform and argued that being forced to put together two participation models to meet the deadline would stretch its resources.
CEO John Bear wrote to FERC in May to support a deferral, saying a 2022 launch could delay and “severely” compromise MISO’s “efforts to address growing reliability and resilience concerns and meet members’ carbon-reduction goals.”
The RTO reported over the summer that it was testing its new energy-storage participation software. Its electric storage model uses eight commitment statuses, including injecting, withdrawing or toggling between the two. Resources can also designate themselves as emergency injecting, emergency withdrawing, available, not participating or on outage.
New York Gov. Kathy Hochul on Sept. 1 announced $6.5 million in funding to support research of innovative insurance policies or products that will promote the adoption of clean technologies.
The Insurance Innovation for Climate-Technology Solutions program will target insurance for residential and commercial renewable energy products that will both develop new business models and enable future climate technology solutions and be funded through the state’s 10-year, $5.3 billion Clean Energy Fund, according to the New York State Energy Research and Development Authority (NYSERDA).
A new program administrator will be awarded up to $1.5 million to create the program by working with insurance management experts to develop, fund and test innovative risk models that better address climate change. The remaining $5 million will be used for competitive grants expected to be announced in 2023.
The program will help overcome barriers to bringing new insurance products to the market in the face of increasingly costly extreme weather events. It is another step by the Hochul administration in support of New York’s 2019 climate and energy legislation, the Climate Leadership and Community Protection Act (CLCPA), the sweeping climate and energy initiative that calls for 70% of the state’s electricity to be generated through renewable sources by 2030 (70×30) and 100% through zero-emission means by 2040.
Many businesses have significantly re-evaluated their risk model projections to factor in the potential costs of coverage associated with climate change, especially the natural disasters that seem to be coming with greater frequency and cost. New York estimates that Hurricane Sandy caused $19 billion in damages and lost economic activity in New York City alone.
State Sen. Neil Breslin, an Albany Democrat who chairs the Senate Insurance Committee, said in a news release that the Innovation for Climate-Technology Solutions program “is critical for economic stability” because it will “enable businesses to better manage risk and prepare for the negative impacts climate change may have on them.”
NYISO Climate Vulnerabilities
NYISO recently assessed the impacts that climate change would have on the resilience and reliability of New York’s power grid.
The study found that climate disruptions could significantly reduce resource output during the winter, replacing fossil fuels would make meeting peak electricity demands more difficult, and better planning would make identified vulnerabilities more manageable.
Specifically, NYISO found that utility-scale battery storage would fill many of the reliability gaps created when carbon-fueled power generation is taken offline, which tracks closely with recent findings from Potomac Economics’ “Outlook” review.
Greater transmission capacity also will be needed to maximize renewable energy access, while dispatchable emission-free resources, such as green hydrogen, will be needed to act as load failsafes when intermittent renewable generators are taken offline because of meteorological disruptions.
Application Process
NYSERDA will competitively select a program administrator and is accepting applications from qualified organizations through Oct. 12. Applicants are asked to demonstrate economic benefits, and their proposals will be evaluated by a scoring committee.
Applicants must show how they can promote the research and development needed to bring new insurance products and services to market, including soliciting new insurance ideas, managing the development and growth of the program, and reducing risk for climate technology services.
NERC has not yet issued its annual Winter Reliability Assessment, but it is already clear that it is concerned about the electric industry’s readiness to withstand severe and unpredictable weather this winter.
“We’re requesting early adoption of some of our cold weather standards,” said John Moura, director of NERC’s reliability assessment and performance analysis, at the start of the ERO’s annual winter preparation webinar on Thursday.
John Moura, NERC | NERC
Moura said that in 2021 the industry experienced 70 hours of unplanned load shedding because grid operators had no other options.
“This is a trend we have seen over the last couple of years: more times where the system is under duress and has to initiate energy alerts [that] has led to operator-initiated load shed,” he said. “This is kind of a trend that we really need to reverse.”
A NERC analysis of outages from 2013 through 2021 shows that all generation types other than nuclear have experienced an increase in forced outages during cold weather, he said. That includes traditional baseload coal and gas plants, said Moura, adding that gas storage is currently at the low end of the five-year average and coal inventories are lower than they should be at some power plants, making them vulnerable to railroad worker strikes or other events that could reduce resupply.
NERC is urging “cross industry engagement” to ensure gas and coal plants do not experience fuel shortages this winter.
“Even if we were to winterize all our units, and we had perfect reliability, we will still have in some places concerns with the availability of fuel and the reliability either of the pipeline system or other energy delivery systems. I think that that only can be fixed … when we work and plan together,” Moura said.
Mark Olson, NERC | NERC
Mark Olson, manager of reliability assessment at NERC, said the organization will soon release a cold weather alert with recommendations for this winter. He added that “coal stockpiles have been at a historic low level.”
Explaining that the goal of Thursday’s webinar was “to help get the ball moving” before NERC publishes its 2022/23 Winter Reliability Assessment in November, Olson acknowledged that the industry is already preparing for winter.
“I know there’s a lot being done, and so we’re not really initiating action here as much as we’re emphasizing and sharing the insights from the past,” he said, acknowledging that NERC is aware that “generators are taking steps and need to continue those steps to be proactive and prepare for the winter.”
Olson also said that “grid operators need to prepare and do drills for cold weather plans and for things like load shedding so that they can be efficient and minimize disruption as much as possible to end users while preserving the reliability of the overall system.”
David Lemmons, Greybeard Compliance Services | NERC
Two areas of special concern are the MISO footprint and Texas, he said.
In MISO, “our preliminary data indicates there’s about 7 GW of coal generation and 1 GW of nuclear generation that has retired from last winter. And that’s led to a declining reserve margin,” he said, which could become a serious problem in an extremely cold winter.
David Lemmons, an independent analyst and co-founder of Greybeard Compliance Services, stressed the importance of detailed information sharing and close cooperation between generators and grid operators, particularly during extraordinary weather events.
Examples North and South
Webinar participants also heard about extreme weather preparations from Canada’s largest electric utility, Hydro-Quebec, and El Paso Electric. Both utilities experienced severe weather-related service disruptions in the past and had to develop practices and technologies that have enabled them to function in extreme weather.
Anne-Marie Fournier, a regulatory affairs expert and reliability coordinator at Hydro-Quebec, said annual reliability assessments that begin in May have helped the company develop strategies to deal with potential weather catastrophes when demand normally peaks.
“A very important part of preparing for winter and improving the way we prepare is by looking back at how we have performed,” she said.
“We learn a lot from past events, and sometimes we learn the hard way,” she said. “That was the case with the 1998 ice storm that hit south of Quebec. We received more than 3 inches of freezing rain spread over five days. That freezing rain was very heavy and made 24,000 utility poles and 900 steel poles collapse.”
Anne-Marie Fournier, Hydro Quebec | NERC
Nearly 1.4 million customers lost power, for up to four weeks in some areas. Montreal was without power for two days, crippling the metro transit system and the water filtration system as well, she said. Then temperatures dropped into a “deep freeze,” she said, leaving most customers without heat because homes and businesses are heated electrically.
The company has since built “anti-cascading” transmission towers to limit the extent of line damage if a tower collapses, built additional lines and installed de-icers on certain lines. Hydro generators are located inside heated buildings with backup auxiliary heating; spillways are heated electrically; and dams are designed to withstand ice formations.
Fournier said the annual spring assessment moves to a load forecast in July and an updated inventory and “formal identification” of all available internal resources in August. Another resource adequacy check, including potential power imports and exports, gets under way in September, as well as the running of several scenarios simulating the coming winter’s projected peak demand.
In October, a planning team validates available interruptible loads and the amount of power available that those customers could provide the company if needed. Final equipment checks and operator training happens in November, she said, before demand begins to surge in early December.
“During the peak period, we have a cross-functional team that meets daily to make sure everything is handled. And this team is constituted of people from the transmission side, the generation side and the distribution side. Our teams of meteorologists and load forecasters are very busy also at wintertime as they sometimes monitor load and weather closely for 24 hours a day, seven days a week,” she said.
Kyle Olson, director of generation and asset management at El Paso Electric, said a major reason the company survived the February 2021 storm is that it did not do well in a major storm 10 years earlier.
That storm knocked out one of the company’s aging power plants, leading to rolling blackouts. The utility turned to Black and Veatch for recommendations on how to improve its performance.
“We invested over $4.5 million in freeze protection upgrades at what were only two local plants at the time. These upgrades included heat tracing insulation and other winterization tools,” he said.
The company also developed hot and cold winterization checklists, procedures and preventative maintenance strategies, and “new design criteria” for construction of new power plants capable of operating at temperatures as low as -10 degrees Fahrenheit and as high as 105 F.
“We also factored in wind and humidity. It tends to be the high wind and the humidity that ends up biting us during the cold events more than just the actual cold temperatures,” Olson added.
In the decade between the two storms, the company replaced its coal generation with gas turbines, the newest of which it plans to run on 30% hydrogen by 2045 through an agreement with turbine maker Mitsubishi Power. The utility is also aiming to build large solar arrays backed up by Mitsubishi gas turbines.
Olson said the company installed freeze-protection equipment for critical controls at its new gas turbines plants. That included the use of “O’Brien Boxes,” protective, often heated, enclosures designed to keep controls, instruments and even tubing warm and operable at low temperatures.
The company has opted to build simple cycle gas turbine plants rather than the more efficient combined cycles, which require water heated by the waste heat of the gas turbines to run secondary steam turbines.
“We are in a desert,” Olson explained, “but also because [simple cycles] perform well during severe winter events,” such as the 2021 storm when temperatures in the region fell to 14 F.
The company’s newest plant has dual-fuel capability, he said, another strategy to make certain the plant can stay online during emergencies.
The company also contracts for more than 600 MW from the Palo Verde nuclear plant in western Arizona. “During the 2021 storm, Palo Verde was essential to meeting our customer loads and avoiding price spiking,” said Olson.
Four Arizona electricity providers have joined seven Pacific Northwest entities to support the next phase of SPP’s Markets+ development.
SPP announced Tuesday that Arizona Electric Power Cooperative, Arizona Public Service, Salt River Project and Tucson Electric Power said in an Aug. 31 letter that they intended to work with the RTO to build a Western market that includes “both a workable governance framework and a robust market design.”
“This will be an important milestone that will enable us to collectively move forward to the next phase,” the entities said.
“Adding the desert southwest region to the development of this market adds more value for all participants, and we very much appreciate the contributions from these entities thus far” SPP CEO Barbara Sugg said in a statement.
The four companies serve more than 20 GW of combined peak demand. The Pacific Northwest group accounts for 50 GW of combined peak demand.
SPP plans to have the Markets+ draft service offerings, based on stakeholder input, available for comment by the end of September; the final service offering is scheduled to be distributed Nov. 18. Participants will make financially binding commitments in the first quarter of 2023, at which point the market protocols and tariff language can be drafted.
Markets+ is a conceptual bundle of services that centralize day-ahead and real-time unit commitment and dispatch, provide hurdle-free transmission service across its footprint and pave the way for the reliable integration of a rapidly growing fleet of renewable generation. It is designed for utilities that aren’t ready to pursue full RTO membership.
CAISO CEO Elliot Mainzer said the state’s grid is facing its biggest challenge yet this summer as record temperatures bake large areas of California in a prolonged heat wave this week.
“This multiday event is going to get much more intense,” Mainzer said in a call with reporters Sunday. “We’re facing energy deficits between 2,000 to 4000 MW for tomorrow, and the highest likelihood of rotating outages that we’ve seen so far.
“As a result, we are going to need significant additional consumer demand reduction during the hours of 4 to 10 p.m. and access to all of the tools that the state and the utilities have established for conditions like this in order to avoid broader interruptions of service. So, it is game on and time for continued focus.”
The National Weather Service predicted high temperatures on Monday and Tuesday in the state’s Central Valley of up to 115 degrees Fahrenheit, a level of extreme heat more often associated with areas such as Death Valley. The forecast for Sacramento called for high temperatures on Monday of 112 F and 113 F on Tuesday.
In Southern California, home to 24 million residents, Downtown Los Angeles would see temperatures of over 100 degrees on Monday and again on Thursday, the weather service said.
Even San Francisco, normally cool in the summer, was expected to top out at 88 F on Monday and 87 F on Tuesday. The weather service said parts of the heavily populated San Francisco Bay Area would be much hotter, with some cities nearing 105 degrees.
The heat will continue throughout most of this week, the weather service said.
On Monday, CAISO issued a level 1 energy emergency alert (EEA), a signal that the “real-time analysis shows all resources are in use or committed for use, and energy deficiencies are expected. Market participants are encouraged to offer supplemental energy and ancillary service bids. Consumers are encouraged to conserve energy.”
CAISO is predicting demand of 51,145 MW on Tuesday. That would beat the record of 50,270 MW from July 2006.
Though several large fires were burning in Northern and Southern California, none had impacted the transmission system.
Mainzer said the ISO was monitoring for new wildfires with the potential to derate high-voltage lines and limit imported hydroelectricity from the Pacific Northwest, an essential supply source for California during summer months.
A massive wildfire in southern Oregon severely derated the Pacific AC and DC interties during a Western heat wave last July, shutting off power from hydroelectric dams in Washington and Oregon to California.
Extreme Weather
This week’s extended period of record heat is the latest in a series of extreme weather events that have troubled California and other areas of the West in recent years. A heat dome over the usually mild, rainy Pacific Northwest in June 2021 pushed temperatures to 115 F in Portland, Ore., and 107 F in Seattle, with some inland areas hitting 118 F.
West-wide heat waves and supply constraints struck the Western grid in August and September 2020, causing CAISO to order rolling blackouts in mid-August of that year and to declare energy emergencies over Labor Day weekend. The August blackouts affected more than 2 million residents for periods ranging from roughly 30 minutes to three hours.
Since then, CAISO has interconnected several thousand megawatts of lithium-ion batteries to its grid, almost all with four-hour discharge capabilities. The batteries are intended to make up for shortfalls during hot summer evenings and have performed according to expectations so far. How the batteries will perform in more extreme conditions is being tested this week.
Until now, California’s summer has been relatively mild this year with the exception of a less severe heat wave in mid-August, when CAISO issued a “flex alert” asking customers to reduce usage.
In anticipation of hotter weather this week, California Gov. Gavin Newsom on Wednesday proclaimed a state of emergency aimed at temporarily increasing energy production and reducing demand in response to an extreme heat wave forecast to hit the state this weekend. (See Newsom Declares Emergency as Heat Stresses Calif. Grid.)
Newsom’s emergency proclamation will allow gas-fired power plants to generate additional electricity by loosening air quality requirements and restrictions on fuel use. The proclamation relaxes restrictions on the use of backup generators from 2 to 10 p.m. on days in which CAISO has declared a level 2 or 3 EEA. Ships berthed at California ports also won’t be required to use shore power during such times.
“We are anticipating this extreme heat to be of a length and duration the likes of which we haven’t experienced in some time,” Newsom said in announcing the declaration.
Expanding public transportation and reducing industrial emissions are keys to Maryland meeting its climate goals, the Maryland Climate Change Commission Greenhouse Gas Mitigation Working Group was told Aug. 23.
“The best thing we can do if we want to reduce greenhouse gases is get people on transit,” Maryland Transit Administration CEO Holly Arnold said.
At present, there are more than 1 million weekly riders on the “core system,” a number Arnold said can be increased by making the system frequent, reliable and easy to use.
Last fall, MTA launched the $43 million Fast Forward program, which seeks to improve service reliability, reduce travel times, and increase safety and access. The program includes more dedicated bus lanes, real-time bus tracking and — starting later this year — real-time rail tracking and information on bus crowding.
Most significantly, MTA is also transitioning to zero-emission buses, committing not to buy any more diesel buses after fiscal 2023 and seeking to make 50% of the fleet zero-emission by 2030. The regional transit plan’s goal is a 95% zero-emission fleet by 2045, but “it will be a lot of work to accomplish this transition,” Arnold said.
She cited concerns that battery electric buses may not be appropriate for all locations, saying, “We have to make sure it doesn’t run out of charge in the middle of a route.”
In a pilot project, MTA will get seven battery electric buses and five overhead chargers early next year. The agency is working with Baltimore Gas and Electric on infrastructure. MTA has a six-year $4 billion capital budget for this and other projects, Arnold said.
Cement Leading Source of Industrial Emissions
The Mitigation Working Group also heard a presentation from the University of Maryland School of Public Policy’s Center for Global Sustainability (CGS), which is conducting a study due to the governor Oct. 1 on the economic impact of regulating greenhouse gas emissions from the manufacturing sector. The study was required by the 2016 amendments to the state Greenhouse Gas Reduction Act.
The sector presents a unique challenge for the state’s emission-reduction goals, even though it is not a major component of emissions, said Ryna Yiyun Cui, an assistant research professor at CGS.
Following the 2011 closure of RG Steel’s Sparrows Point plant, the state’s biggest industrial emitter of greenhouse gas is the Lehigh Hanson cement plant in Union Bridge, followed by Holcim, a building materials manufacturer in Hagerstown, according to Kathleen Kennedy, a postdoctoral associate at CGS.
CGS’ Jared Williams said the greatest potential for reducing greenhouse gas emissions in this subsector is in the manufacture and mixing of cement, specifically, the production of clinker, the primary source of process emissions generated in cement manufacturing.
“Substituting clinker with decarbonated materials reduces process emissions from cement manufacturing,” he said. “Replacement of ordinary portland cement with portland limestone cement [PLC] reduces emissions and is also less costly.” Limestone cement may dominate the cement market as early as next year, he said.
Lehigh Hanson announced in July it will transition to limestone cement at the Union Bridge plant by January 2023, which is expected to cut its emissions by 18%. Holcim plans to switch to PLC after the installation of new equipment, with expected reductions of 11%.
Further reductions will come from Lehigh’s plan to switch from coal to natural gas by 2028. Hydrogen is a potential long-term alternative fuel for cement manufacturers but requires further research.
Because process emissions from cement manufacturing are unavoidable, carbon capture, utilization and storage may be needed to address the final 50% of emissions to get to net zero.
Industrial greenhouse gas emissions in Maryland were reduced by more than 30% from 2006 to 2020, Cui said. The main reduction has been in the electricity and road transport sectors, although they remain the major emitters in the state. Industrial processes using fossil fuels constituted a little less than 10% of the state’s emissions in 2020, a slight decline since 2006.
Kennedy added that the manufacturing sector’s contribution to state GDP has stayed relatively constant around $20 billion, or 6 to 7% of the total, over the past few years. Manufacturing employment — about 120,000, or 3 to 4% of the state’s total jobs — has also stayed fairly constant recently. The economically significant computer and electronics sector is responsible for a low percentage of energy consumption. On the other hand, food, which is responsible for a relatively large proportion of energy consumption, is not a particularly high emitter because it uses mainly natural gas and electricity, as opposed to heavy industries that still use coal.
The 30% decline in the manufacturing subsector’s emissions was driven primarily by reduced fuel combustion after RG Steel shut down, Kennedy said. But “process and product use emissions” have gone up since 2017; by 2020, these constituted 69% of total industrial emissions, although they have declined in absolute terms by about 25% since 2006, she said. Emissions are still growing in cement, up 21% since 2006, and ozone-depleting substances or substitutes are also up 42%. Union Bridge’s emissions have been growing because of increased production.
CAISO kicked off a series of stakeholder meetings last week on its revised straw proposal to add a day-ahead market to the real-time Western Energy Imbalance Market (WEIM), a major expansion push for the ISO in the West.
Potential participants in the extended day-ahead market (EDAM) were able to ask questions of CAISO planners and offer their thoughts on the plan’s specifics, including a proposed resource sufficiency test and resource participation, during the Aug. 29 meeting.
Carrie Bentley, an energy consultant representing the Western Power Trading Forum, asked why CAISO’s proposal would require that all resources in a participating balancing authority area (BAA) take part in EDAM when that’s currently not the case in the WEIM.
“I was hoping you could provide more color on why the CAISO was removing the option for resources to be nonparticipating?” Bentley said. “It was my understanding that in WEIM, the amount of nonparticipating resources [as a percentage of capacity] is pretty high. So perhaps if you could tell me … why you’re removing that option? And then whether you’re going to then remove it from WEIM as well? It just seems to remove a lot of optionality.”
CAISO Executive Principal George Angelidis said the “reason why we eliminated the option for the nonparticipating resource concept that we’re using in the Western Energy Imbalance Market is that we don’t see the value for it, in the sense that it doesn’t give you anything different than a normal resource that participates in the market with a self-schedule and not submitting bids. The submission of bids is voluntary in EDAM, with the exception, of course, of resource adequacy, [so] we just didn’t see any difference between participating and nonparticipating resources.”
Bentley said she understood but still saw possible benefits to having the option of nonparticipating resources.
Resource Sufficiency
On the topic of resource sufficiency, Powerex Director of Power Jeff Spires said CAISO’s proposal to use “e-tags” to track the fulfillment of firm energy contracts in EDAM was essential but that a second proposal to allow participants to backfill capacity at the last minute undermined the process.
The EDAM revised straw proposal introduced the “tagging mechanism,” or e-tag, a means of electronically monitoring and recording energy transactions for firm energy contracts. The proposal requires “all non-source-specific forward supply contracts [to] be tagged within three hours following publication of the day-ahead market results.”
“This will increase confidence that this non-source-specific forward supply will be delivered in real time because submitting a tag requires resource and transmission identification.” (See CAISO Updates EDAM Straw Proposal.)
Spires said, “We all know by this point … that resource sufficiency is one of the fundamental elements of the EDAM and that really is one of the first steps that we need to get right before the remaining market design elements can fit together and work. You know, it all kind of starts with an assumption that there’s enough supply across the footprint and that everyone’s bringing their fair share.”
“That requires ensuring that the [resource sufficiency] test is representative of both the supply and the obligations of each BA and in the context of imports,” he said. “In our view, that means that imports that are being used to meet the resource efficiency evaluation need to be real; they need to be deliverable to the BA that’s counting on them. And a day-ahead e-tag is a critical element to be able to demonstrate that the import is supported by a resource and that there’s transmission to deliver it.”
CAISO, however, is also proposing that “non-tagged schedules will be required to submit e-tags, or otherwise cure shortfall, by the start of the STUC [short-term unit commitment] horizon for the hour in which the failure occurred,” a slide in the ISO’s presentation said.
The revised straw proposal says that when an EDAM participant is short on supply in the day-ahead time frame, “it can backfill the deficiency with supply” in the short-term horizon “ending in the hour” of the shortage.
That part is a challenge, Spires said, “because it essentially renders that day-ahead e-tag requirements as optional. And what it really leads to is enabling an entity to point to an import that isn’t supported by identifiable supply or transmission and essentially says that ‘that’s OK,’ as long as that participant is able to successfully find supply or transmission or both in real time. And that’s very problematic in our view. It erodes confidence in the test itself because it effectively says that an entity can pass [the EDAM’s resource sufficiency test] even though they are going into real time short of resources and or transmission.”
In reply, CAISO Market Design Sector Manager Danny Johnson said, “I think we do understand your position and Powerex’s position on this. I think what we’re trying to explore here is, ‘Is there a model that deviates from [the day-ahead e-tag] that also provides confidence to all of the interested BAA partners in this?’ And that’s what we’re exploring in this proposal. And I do think there are some teeth to this. We will be reporting out if this doesn’t occur regularly. If an EDAM BAA does eventually fail to tag by [the start of the hour in the STUC horizon for which the failure occurred], they would get kicked out of [a pooled resource sufficiency evaluation], and I think we even have provisions that the export transfers into that EDAM BAA would get a lower priority if it came to manual curtailments if the market was unable to solve. So, I do think this has some teeth” and provides confidence level in the EDAM’s resource sufficiency evaluation.
The EDAM stakeholder meetings resume this week with sessions on Wednesday and Thursday, including an in-person option in downtown Sacramento.
A long-simmering dispute over PJM’s capacity accreditation of renewable resources is threatening to boil over, with some stakeholders calling for FERC intervention.
At issue is PJM’s grant of capacity rights to wind and solar resources at levels that some stakeholders say have not been proven deliverable under peak conditions. The stakeholders say the practice is a reliability risk and is suppressing capacity prices. Fixing the problem could require transmission upgrades costing load up to $2 billion or more.
At a special Planning Committee meeting on capacity interconnection rights (CIRs) for effective load-carrying capability (ELCC) resources Aug. 23, stakeholders accused PJM of improperly attempting to engineer a solution in favor of lower capacity prices, while RTO officials insisted they were only trying to offer “transparency” on the impact of potential rule changes.
Economist Paul Sotkiewicz, of E-Cubed Associates, cited PJM’s presentation at the meeting that summarized the solution proposals that had resulted from 18 prior meetings. “Some packages can delay availability of higher accreditation, which causes increased capacity costs borne by load,” PJM said.
“PJM taking a market position for lower capacity costs is inappropriate at best. At worst it’s begging a referral to the FERC [Enforcement] Hotline,” said Sotkiewicz, who formerly served as PJM’s chief economist.
“This is not a PJM position,” PJM attorney Pauline Foley responded. “It’s simply a statement of fact.”
Vice President of Planning Ken Seiler said the RTO is “squeezed.”
“We’re trying to be as transparent as possible about the potential impact” of proposed changes, he said. “We get accused of not being transparent, and we get accused of taking a position.
“We don’t care what capacity prices are,” he insisted. “We care about the reliability of the system. We’re not taking a position on capacity prices at all.”
Seiler opened the meeting — the first by the special committee in two months — by saying the RTO had decided to “recalibrate and reset where we are” in response to stakeholder feedback in prior meetings and is not currently endorsing any package. “We as an organization are not married to any one particular package,” he said.
Marji Philips of LS Power said stakeholders are frustrated that PJM has insisted there is no over-accreditation problem even as it proposes spending billions to fix it. The RTO’s position “reminds me of George Orwell,” she said. “I’m trying to be respectful, but that was the weirdest explanation and disinformation I’ve heard in a while.”
But Gregory Carmean, executive director of the Organization of PJM States Inc. (OPSI), said PJM had done nothing wrong.
“It’s perfectly appropriate in a cost-benefit analysis for PJM to reflect” the impact on capacity prices, he said.
Sotkiewicz told Seiler that stakeholders were reacting to PJM staff taking “very definitive position [at a] very ugly meeting” June 24. “So what I think you’re hearing is that blowback,” he said.
That blowback has included at least one referral to the FERC hotline, according to a stakeholder who asked not to be identified. The stakeholder said two other stakeholders have also contacted the commission about what they see as tariff violations.
Problem Statement
PJM initiated the special meetings in early 2021 with a problem statement calling for discussions on: “the appropriate amount of capacity interconnection rights required for existing and planned generation capacity resources; the interrelationship between CIRs and the amount of capacity offered into the capacity market; the role CIRs should play in resource adequacy considerations; and CIR retention policies that strike a proper balance between continuing to support the reliable output of the resource while not resulting in unnecessary baseline upgrades.”
The initiative was proposed while PJM awaited FERC’s response to its proposed ELCC construct, which the commission approved on July 30, 2021 (ER21-2043). (See FERC Accepts PJM ELCC Tariff Revisions.) PJM uses probabilistic modeling to evaluate the contribution that ELCC resources — those such as wind and solar that are unable to maintain a stated output continuously without interruption — make to meeting PJM’s loss-of-load expectation (LOLE) standard of one day in 10 years.
Letters to Board
Economist Roy Shanker, who has represented LS Power during the committee sessions, says PJM has knowingly violated its tariff, the Reliability Assurance Agreement (RAA) and its interconnection service agreements (ISAs) by allowing renewables to sell capacity at levels above those for which they’ve qualified as deliverable.
The ISAs state that any output above an ELCC resource’s CIRs — determined by the amount that can be delivered during peak conditions — is considered an energy resource and not eligible as capacity, Shanker and others say.
But they say PJM has knowingly allowed energy output to be sold as capacity by accrediting based on units’ maximum output.
In February 2022, after a dozen meetings of the special PC committee, the PJM Power Providers Group (P3) sent a letter to the Board of Managers alleging the RTO was “knowingly allowing resources that cannot deliver all of their accredited capacity to acquire a capacity obligation greater than what is deliverable” at peak times.
P3 President Glen Thomas said the RTO could fix the problem by enforcing the RAA requirements with no need for a FERC filing. Instead, Thomas said, PJM proposed in the stakeholder process building transmission upgrades to increase the deliverability of the resources and to socialize the costs of the improvements.
‘Extreme and Unjustified Intervention’
Renewable supporters, including the Solar Energy Industries Association and American Clean Power Association, responded that P3 was seeking an “extreme and unjustified intervention in the market” that would “circumvent the stakeholder process” based on “unproven assertions about the deliverability impact of changes in PJM’s process that were made long after those resources were interconnected.”
The groups countered that the board should take action “to address the profound disparate treatment in which some resources in the capacity market are now accredited recognizing fuel and weather-related correlated outage risk (ELCC resources), and the remainder (thermal resources) are not.”
“To the extent that there is discrepancy between the deliverability determined through CIRs at the time resources interconnected and the ELCC capacity accreditation methodology that was adopted later, we note both that (1) this discrepancy did not take place due to any action taken by existing resources, and (2) is instead the result of adopting ELCC only for some of PJM’s generation fleet,” they said.
While PJM applies ELCC to wind, solar and storage, they said, thermal resources are given capacity rights up to their nameplate capacity — reduced only by the unit’s equivalent forced outage rate (EFORd).
“This effectively subjects wind, solar, and storage resources to an ever-shifting capacity value based upon fleetwide entry and exit decisions,” they said.
“PJM’s current approach treats 93% of PJM’s fleet — thermal generators — as near perfect capacity resources with no correlated outage risk. … As recent events such as Winter Storm Uri have demonstrated, this implicit assumption is demonstrably false.”
At the committee’s Feb. 23 meeting, PJM insisted its implementation of ELCC complies with the RAA, contending that only 5 MW of renewable generation with signed ISAs that are not yet in service may not be deliverable under proposed, higher deliverability standards. The RTO said it would cost $7 million in transmission upgrades in the 2026 Regional Transmission Expansion Plan to increase CIRs for those resources. The board echoed that position in its March 4 response to P3 and the environmental groups.
Upcoming Meetings, Nonbinding Poll
PJM’s Brian Chmielewski said stakeholders will be asked in a nonbinding poll to choose a solution proposal after special PC meetings scheduled for Tuesday and Sept. 23. At the Tuesday meeting, PJM will present a comparison of the six current proposals, whose cost implications depend on how they are implemented in regards to the transition plan the RTO included in its June tariff filing proposing to change its interconnection process from a serial “first-come, first-served” approach to a clustered “first-ready, first-served” cycle (ER22-2110). (See FERC Issues Deficiency Letter on PJM Queue Overhaul.)
PJM says two alternative proposals before stakeholders that would not introduce the higher CIRs for wind and solar ISA holders until transition cycle 2 would result in $2 billion in baseline upgrades that would be allocated to load.
Four other proposals would result in about $700 million in costs to load by introducing the higher CIRs for wind and solar ISA holders in cycle 1 instead of cycle 2. The $1.3 billion difference would be paid by cycle 1 resources as increased network upgrade requirements, PJM said.
Shanker and others say PJM is pushing to allow existing wind and solar resources their CIRs at no cost by giving away 7,300 MW of existing “headroom” and allowing them to jump ahead of resources already in the interconnection queue. Shanker said PJM’s $2 billion estimate “is clearly a lower bound.”
The Independent Market Monitor said in February that PJM has given wind and solar resources an installed capacity (ICAP) of 3,393.8 MW when they should only claim 2,260.3 MW, based on CIR levels — an excess of 1,133 MW. Based on the Monitor’s estimate, Shanker said he believes the practice suppressed prices in the 2022/23 Base Residual Auction by $200 million.
PJM estimated a slightly larger impact in June, saying that capping wind and solar at their current CIR level in the ELCC studies would reduce their capacity by about 1,300 MW. A sensitivity simulation found that removing the 1,300 MW would have cost load $230 million for the 2022/23 BRA, PJM said.
PJM has appointed Vickie VanZandt, the owner of a energy consulting firm, to its Board of Managers, according to a Friday statement from the RTO.
The president of VanZandt Electric Transmission Consulting, VanZandt will take the place of Sarah Rogers, who resigned from the board Sept. 2 after more than 10 years of service. VanZandt will begin her term Oct. 1 and will serve until at least May 2023, when she will stand for election at the RTO’s Annual Meeting.
Rogers, who had been re-elected in 2021, announced her intent to retire in May. PJM’s Operating Agreement stipulates that the board itself fills any vacancies until the next Annual Meeting, where members will vote on the appointment. PJM’s Nominating Committee recommended VanZandt for the appointment.
In addition to her consulting work, VanZandt currently serves on the ISO-NE Board of Directors, where she chairs the System Planning and Reliability Committee. She is serving her third consecutive three-year term on that board, the maximum allowed, and it will end the same day she begins her term at PJM. (See LaFleur Elected to ISO-NE Board.) Her departure will bring the ISO-NE board back down to its normal 10-person membership, after having 11 for one year. (See ISO-NE Elects Melvin Williams Jr. to Board.)
VanZandt has previously worked at the Bonneville Power Administration as a senior vice president and chief engineer of transmission services, overseeing transmission planning, construction, operation and management. She then worked at WECC as synchrophasor program manager.
FERC last week approved a dozen CAISO tariff amendments meant to streamline the ISO’s generator interconnection process, deal more swiftly with its large interconnection queue and help California meet its grid reliability challenges. (ER22-2018).
The changes were the result of the first phase of a two-part stakeholder initiative that CAISO fast-tracked starting last year. The second phase is underway with a final proposal due Sept. 13.
FERC found that the Phase 1 revisions will “facilitate management of CAISO’s interconnection queue, clarify the tariff, and establish a just and reasonable process for CAISO to study emergency interconnection requests on an expedited basis.”
The 12 amendments included a proposal to align the ISO’s transmission plan deliverability allocation process with procurement by consolidating the current seven interconnection customer deliverability allocation groups into four, making it easier for CAISO to track the process and providing clearer criteria for developers and off-takers.
“Additionally, the new groups are reordered to emphasize success in the bilateral capacity markets and de-emphasize a project’s queue status and history,” FERC said in its unanimous Aug. 31 order.
The amendments also would allow interconnection customers to downsize their interconnection requests.
“CAISO’s proposed revisions to the transmission plan deliverability allocation process and to the downsizing rules simplify CAISO’s administration of the interconnection queue and the process through which interconnection customers may request to downsize their interconnection requests, as well as help to reduce unused deliverability,” FERC said.
Another change affects CAISO’s requirement that customers show they have “site exclusivity” through options, leases, or purchases on private land or permits for public lands. Customers can submit deposits in lieu of initially demonstrating site exclusivity.
CAISO proposed requiring projects show that they have site exclusivity earlier and increasing the “in lieu deposits” from $100,000 for small generators of 20 MW or less and $250,000 for large generators of more than 20 MW to $250,000 for small generators and $500,000 for large generators, with half the deposits nonrefundable “should the customer withdraw before demonstrating site exclusivity.”
FERC said the site-exclusivity provisions will “improve the likelihood that commercially feasible interconnection requests can move forward in the queue without encountering delays due to the withdrawal of interconnection requests that have not demonstrated site exclusivity and are thus less likely to reach commercial operation.”
The 10 other categories of tariff amendments dealt with matters such as enabling interconnection studies of new generation under last year’s emergency declaration on grid reliability by Gov. Gavin Newsom and reducing CAISO’s downsizing rules and procedures to help interconnection customers downsize more efficiently.
FERC allowed the changes to take effect Sept. 1, per CAISO’s request.
