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November 8, 2024

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Changing Dynamics of Clean Energy Transition Debated at Aurora Energy Conference

NEW YORK — Despite some recent hiccups with supply chains and higher interest rates, the clean energy transition is set to accelerate with long-term policy support, panelists said Oct. 24 at the Aurora Energy Transition Forum. 

The offshore wind industry in the U.S. has had issues with project delays and cancellations and the recent construction accident at Vineyard Wind 1, but the industry has moved projects through the permitting process, and construction is due to pick up soon, Vineyard Offshore CEO Alicia Barton said. 

“We’ve seen setbacks, no doubt about it,” Barton said. “When we look ahead, though, over the next — and I’m not talking like the 10 years; I’m talking about 2025 — we are going to see something like 8 GW of projects actively under construction in the United States.” 

The industry is starting to put steel into the Outer Continental Shelf, but it already has gotten eight to 10 projects through the permitting process, and it will start sending significant power to the grid in two to three years. 

“We actually are seeing this industry, I think, at a very different scale,” Barton said. “And I think that actually does get lost, even on people that are spending all their time on energy, because you hear so much negative news about offshore wind.” 

Some projects have had to cancel their initial contracts, but they have been able to sign new ones for higher returns because many of the East Coast states supporting offshore wind need the power, Barton said. 

“In New England, increasingly, there is a recognition that offshore wind is the resource that will address long-term winter reliability,” she added. “But of course, we need to start showing up sooner … in terms of the number of years that it has taken thus far to get projects done.” 

Solar and batteries have come to dominate interconnection queues, but the economic issues of the past few years have impacted them as well, as 2022 and 2023 saw slight price increases because of the supply chain, said Samuel Scroggins, managing director of Lazard’s Global Power, Energy & Infrastructure Group, which tracks the levelized cost of energy (LCOE) for different generation technologies in annual reports.

The latest LCOE numbers declined slightly, though the days of regular cost declines are in the past. 

“The costs have come down so much for wind and solar in particular that we’re at a point now where there needs to be some incremental technology advancement to see continued cost decline,” Scroggins said. “The model is relatively straightforward. The inputs are pretty clear.” 

Bringing down capital expenditure is getting difficult because the industry already has used many of the best sites, so those that remain are not the “nice, flat, square” pieces of land that are easy to develop, he added. 

The Inflation Reduction Act has given financers and developers a long enough runway to get projects with 10 years of certainty for tax subsidies, which in the past sunsetted much sooner than that, said Allan Marks, a partner with law firm Milbank. It has spread the money around enough that the policy likely will survive regardless of what happens in the elections Nov. 5. 

“If you look at congressional districts, two out of the three jobs created in the manufacturing plants are in red or red-leaning congressional seats,” Marks said. “So, there are good reasons why 18 Republican members of Congress wrote a letter to the speaker and said, ‘Please do not repeal IRA.’” 

While the money likely still will flow from tax credits, the White House switching parties would lead to changes on how the law is implemented with changes at federal agencies, he added. 

Nora Mead Brownell, co-founder of consultancy Espy Energy Solutions and a former FERC commissioner, also noted the IRA’s funding of major projects in conservative states gives it staying power, but she also argued that other policies need changes. 

“We did not change the regulatory model at the federal and the state level,” Brownell said. “We are not rewarding the right things. We have evasive utilities who are terrified of change, who are not introducing their own solutions [and] adding technology efficiency that would give more transparency.” 

That can change with the rate structure of utilities, with Brownell saying performance-based rates should be widely adopted to encourage utilities. 

“We reward great, honking projects that may or may not solve the solution,” Brownell said. “We do not reward innovation. We do not allow people to take risks. We do not enforce data to be shared with people who could create those demand response programs, both at the commercial and retail level, that could make a huge difference.” 

Ideally, more power over the industry would be shifted to the federal level, and states would have more uniform rules because a patchwork makes things harder, she said. 

“I think we have to have a larger conversation about, ‘Yes, this is going to be expensive, but we’re making it more expensive,’ and we need to speak in terms that real people can understand,” Brownell said. 

The Rapid Growth of Batteries in the 2020s

Just a few years ago, the grid hardly had any storage capacity, but now it makes up about 40% of the queues across the country, with significant deployments in CAISO and ERCOT, Jupiter Power CEO Andy Bowman said. 

“It’s become the kind of firm dispatch that we have traditionally looked for natural gas plants to provide,” Bowman said. “And I think the growth opportunity for storage increasingly is not as some kind of ancillary renewable technology; it is for firm clean power. Firm clean power that can be dispatched very quickly. Firm green power that can provide a lot of valuable grid services.” 

Years ago the price for batteries was $4,000/kW, which made them irrelevant, but by 2019 that came down to $400/kW, said Spearmint CEO Andrew Waranch. With tax subsidies and plenty of financing available, the price of a 100-MW, two-hour battery in Texas is down to just $10 million. 

“I’ve always said that batteries will be as prevalent as cell phone towers,” Waranch said. “They will be everywhere. They’ll be on every corner. Because even if they’re big or they’re small, they’re affordable. And when you look at how they compete with other assets, relative to CTs [combustion turbines], they’re cheaper, faster, cleaner and stronger and a lot quicker to build.” 

So far, batteries have had major impacts in California and Texas, Bowman said. 

“California, as with just about every new energy technology, leads the way,” he said. “Texas comes in close behind, surpasses them, and I think we’ll be doing that shortly with batteries.” 

But with how quickly the grid is changing and how disruptive batteries have become, Bowman expects energy storage assets will start to grow in every market eventually. Jupiter is working in MISO, ISO-NE, NYISO and PJM on changes that will help grow and integrate batteries into their systems. 

Spearmint is building 1,200 MW of batteries in ERCOT, but its largest development portfolio is in MISO because it and SPP have the most acute needs for the technology now. 

“If they’re telling you that they’re unsolvable in a few years from now, you usually want to listen,” Waranch said. “But at the same time, in between 1997 and 2002, we did build 225 GW of gas in five years, and so you can solve problems with building quickly.” 

The supply-and-demand picture always is important, but EnCap Investments Managing Partner Kellie Metcalf said that to really roll out the technology, the right market designs are needed. 

“That’s what’s so good about California: The resource adequacy charge is huge,” Metcalf said. “In ERCOT, it’s been the ancillary services and the volatility top to bottom that [cause] revenue.” 

MISO does not have anything like those revenue streams, and other markets like ISO-NE have clean peak programs, but that still is in its early days, she added. 

While MISO is not quite ready to see major investments in batteries because it lacks any real construct that can make storage profitable, Waranch argued that could be solved quickly. “Even if they don’t have a construct yet, when the need arises and they are deficient, they will have to create a construct that works.” 

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Mass. Clean Energy Permitting, Gas Reform Bill Back on Track

After negotiations extending well past the end of the formal legislative session, Massachusetts lawmakers are nearing passage of a wide-ranging climate and energy bill including provisions to expedite clean energy siting and permitting, reform gas utility regulation and authorize the procurement of 5,000 MW of energy storage resources.

The 139-page bill, dubbed “An act promoting a clean energy grid, advancing equity and protecting ratepayers,” passed in the Senate on Oct. 24. The bill now sits in the House, where Republicans have stalled its passage by calling for a roll-call vote. Gov. Maura Healey (D) has indicated her support for the bill.

The major focus of the legislative session — and one of the key components of the resulting bill — has been the overhaul of the state’s energy permitting and siting processes.

The bill would consolidate state and local permitting for renewable energy projects and grid infrastructure into a single review process and would cap the review timeline at 15 months for large projects and 12 months for smaller projects.

The permitting reforms “are taking a process that has gone seven to 10 years and bringing it down to 12 to 15 months,” said Rep. Jeff Roy (D), the lead House negotiator on the bill.

Long permitting and siting timelines have slowed the development of clean energy in the state, and reforming the process has been a key priority for a broad coalition of interests.

Following the publication of recommendations from the Massachusetts Commission on Energy Infrastructure Siting and Permitting, top legislators and Healey’s administration reached a general agreement on the permitting language, which was included in separate bills passed in the Senate in late June and House in mid-July. (See Mass. Commission Issues Recs on Energy Project Siting, Permitting.)

In the updated process, the state’s Energy Facilities Siting Board (EFSB) would coordinate and issue consolidated permits for all large projects, which would encompass all required state and local permits. For smaller projects not in the EFSB’s jurisdiction, the bill would allow developers to challenge the denial of a local permit to the EFSB, which could overrule the local decision. (See Mass. Legislature Faces Looming Deadline to Pass Permitting Reform.)

Dan Dolan, president of the New England Power Generators Association, expressed strong support for the bill’s siting and permitting provisions.

“I appreciate that siting remains the centerpiece of this legislation,” Dolan said. “It is a testament to the commitment from the governor to get this done that the legislature is taking extraordinary procedural steps to bring this over the finish line.”

While the permitting and siting agreement largely was in place in time for the end of formal session on July 31, the Senate and the House could not overcome their differences on several key issues prior to the deadline. (See Mass. Lawmakers Fail to Pass Permitting, Gas Utility Reform.)

However, lawmakers continued to work behind the scenes to reach a compromise throughout the summer and into the fall and now say they are happy with the bill that has emerged.

The Senate reconvened a formal session to pass the bill 38-2 on Oct. 24. While the House leadership has attempted to pass the bill via informal session, House Republicans have stalled its passage by challenging the presence of a quorum. Despite the short-term challenges, House leaders have expressed optimism they eventually will send the bill to Healey.

Gas Utility Reform

One of the key disagreements that held up the bill in July centered around how aggressively the state should move away from natural gas.

“We had some differences in opinion as to what should happen with the decommissioning of the gas system,” Roy told RTO Insider. “We thought that the Senate was moving too quickly to decommission gas, so we had differences there that we eventually ironed out. Once we ironed out those differences, it made it easier to come together on everything else.”

Throughout the negotiations, Sen. Mike Barrett (D), the lead Senate negotiator on the bill, emphasized that the permitting and siting reforms could lead to an expensive expansion of the electrical system and therefore must be coupled with efforts to rein in costs from the gas system.

Ultimately, the Senate and House agreed to add language amending the definition of a gas distribution company, explicitly authorizing gas utilities to “make, sell or distribute utility-scale non-emitting thermal energy, including networked geothermal and deep geothermal energy.”

The bill also would update the state’s gas system enhancement program (GSEP), which is intended to reduce leaks from the gas system. GSEP costs have increased in recent years — with an expected total price tag of about $34 billion according to one consultant — spurring concerns from climate and consumer advocates that the new pipes installed under the program will become stranded assets.

While the existing GSEP statute centers around pipe replacement, the bill would authorize pipe retirement as part of the program.

Barrett added that the legislation would amend the “right to gas” in state law, which allows customers to petition for gas service.

This right “was the primary tool used to keep gas infrastructure in place, even as people have started to migrate to cleaner alternatives like heat pumps,” Barrett said, noting that right could enable a single customer to hold up the retirement of an entire segment of the gas distribution system.

“We’ve changed that,” Barrett told RTO Insider. “You can no longer be the hold-out on your block — if you do hold out, you could keep the entire block’s worth of natural gas infrastructure in place at great expense to ratepayers, even if everyone else has migrated to something better.”

The statutory changes were developed in coordination with the Massachusetts Department of Public Utilities (DPU), which ruled in 2023 that the decarbonization of the state’s gas network should center around electrification. (See Massachusetts Moves to Limit New Gas Infrastructure.)

Under the new rules, the DPU would be able to consider the public interest, “including the public interest in reducing greenhouse gas emissions,” when evaluating petitions for gas service.

Cumulative Impact Analysis

The bill would require project developers to submit a cumulative impact analysis, which would consider “any existing environmental burden and public health consequences impacting a specific geographical area in which a facility, large clean energy infrastructure facility or small clean energy infrastructure facility is proposed.”

This requirement was a key priority of environmental justice advocates in the state, who said it is a necessary safeguard to ensure the new permitting and siting process does not exacerbate existing energy infrastructure burdens on vulnerable communities in the state.

While advocates previously expressed concern that the cumulative impact analysis definition included in a prior iteration of the bill fell short, the new bill features “a robust definition of a cumulative impact analysis,” said Claire Karl Müller, coordinator of the Mass Power Forward coalition.

“We got to a good definition through really persistent, thoughtful advocacy,” Müller said. “We’re excited about the bill — it has some really good pieces.”

Clean Energy Procurement

The legislation would authorize a massive procurement of energy storage resources — it directs the state’s electric utilities to contract for 5,000 MW of storage by mid-2030, including 750 MW of 10- to 24-hour storage and 750 MW of storage with a duration greater than 24 hours. The minimum storage duration for the procurement would be set at four hours.

For offshore wind, the legislation would increase the potential length of long-duration contracts, allowing contracts from 15-30 years. Offshore wind contracts currently are capped at 20 years in the state.

It also would enable the state to coordinate with other New England States “to consider competitive solicitations for long-term clean energy generation,” including generation from the region’s two existing nuclear plants.

This provision comes during ongoing discussions about Massachusetts buying power from the Millstone Nuclear Power Plant, which is propped up by Connecticut, in exchange for the state buying power associated with the recent multistate offshore wind solicitation. (See Multistate Offshore Wind Solicitation Lands 2,878 MW for Mass., RI.)

This language also would enable the state to contract for onshore renewable energy in northern Maine. Government officials in Maine are preparing to issue procurements for renewable generation and associated transmission in the northern part of the state. Massachusetts previously committed to buying power from an onshore wind solicitation which later was terminated by Maine. (See Long Road Still Ahead for Aroostook Transmission Project)

While the Senate advocated for a more expansive procurement proposal to give the Department of Energy Resources significant latitude to procure clean energy as needed, these changes ultimately were left out of the compromise bill.

“That’s a compromise in which the House won some important concessions,” Barrett said.

Electric Vehicles

Regarding electric vehicles, the bill directs state agencies to conduct a 10-year forecast of EV demand, enabling the evaluation of sites for charging hubs. After the assessments are complete, the electric utilities would be required to submit infrastructure plans to meet demand.

The legislation would authorize municipalities to buy chargers and electric vehicles, including electric school buses.

It also would direct the state Division of Standards, which regulates gas stations, to develop regulations for electric vehicle chargers “to make sure these charging stations are delivering what they say,” Roy said.

Odds and Ends

The wide-ranging bill includes several other notable provisions, including:

    • Requiring electric utilities to consider advanced transmission technologies (ATTs) and other non-wires alternatives when planning new infrastructure and directing the DPU to investigate the use of ATTs.
    • Adding fusion energy to the state’s definition of clean energy.
    • Creating a commission to study how the clean energy transition is impacting the fossil fuel workforce.
    • Authorizing regulators to update appliance standards “to facilitate the deployment of flexible demand technologies.

There are several key proposals not included in the bill, including regulations targeting predatory competitive electricity supply companies, updates to the state bottle bill and a requirement for commuter rail electrification.

While the Senate and the state Attorney General’s Office have pushed for a full ban on retail third-party electricity suppliers, the House has argued for a more scaled-back reform package.

Larry Chretien, executive director of the Green Energy Consumers Alliance, expressed disappointment about the lack of action regarding competitive retail suppliers, and said reform will be a key priority for the next session.

“Every day that goes by there are more people that are going to be overcharged,” Chretien said.

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Data Center Load Uncertainty Tied to Broader Economy, Google Rep Says

SAN DIEGO — The volume of data center load growth in the U.S. will depend on how things play out in the broader economy, a Google representative told a gathering of Western state energy officials Oct. 23. 

“You should really think about data center demand as sort of an aggregation of the demand for digital services throughout the economy, and this demand is large and growing,” Dylan Sullivan, energy market development strategic negotiator at Google, said during a panel discussion on large loads at the fall joint meeting of the Committee on Regional Electric Power Cooperation and Western Interconnection Regional Advisory Body (CREPC-WIRAB) in San Diego. 

Sullivan kicked off his comments by asking audience members to raise their hands if they’d worked on a shared document or streamed video in the past week — or checked email within the past 15 minutes. 

“That’s everybody,” he said to laughter. “Well, then you used a data center.” 

Sullivan ticked off a list of Google’s online services, from Maps to YouTube to Gmail. He said Google Cloud provides computing services to hospitals, local governments, schools and “some of America’s fastest-growing companies” — including 70% of generative artificial intelligence companies, valued at more than $1 billion. 

As a result, Google’s global electricity consumption reached 25 TWh in 2023 — “equivalent to a North Dakota-sized state” and more than double its 2019 consumption. But he didn’t provide specific figures for Google’s demand in the U.S. or the West. 

And utility commissioners couldn’t pin him down on the company’s projections for future growth in data center load. 

Washington Commissioner Milt Doumit noted the share of U.S. electricity consumption from all data centers is expected to grow from 4% today to 9% by 2030. 

“What is your modeling [showing]? What is growth going to look like beyond 2030, if you can tell us?” Doumit asked Sullivan. 

“There’s some things that we just don’t know the answer to, and I think putting more provisions in place to put more of this forecast uncertainty onto large users is an important way to understand how much we can expect over time, but we don’t know the path of [the use of data] visualization and artificial intelligence in our economy,” Sullivan said. 

Sullivan noted that Google has three operating data centers in the West, including in The Dalles, Ore., and Storey County and Henderson, in Nevada, with another under construction in Mesa, Ariz., near Phoenix.  

Colorado Public Utility Commission Chair Eric Blank, the panel moderator, asked why companies such as Google are locating data centers in an increasingly heat-stressed area like Arizona, which has seen two straight summers of recording-breaking averages for daytime and overnight temperatures. 

Sullivan said the decision largely comes down to the location of its growing segment of cloud-based computing customers. 

“Basically, you click the mouse on a laptop, [and] you see the impact of that right on your screen,” he said. “If that computer were 200 miles away from you, you would notice the difference and not like it. And cloud customers are the same, so that they have certain requirements for latency [in computing]. They want ‘compute’ to be close to where they are.” 

In working with electricity and water utility Salt River Project (SRP) to supply the Mesa data center, Sullivan said Google determined its draw on the local water supply would be unsustainable, so it instead chose to air-cool the facility, which caused “a bit of an energy penalty.” 

“But we have a mix of resources through SRP that gets us to a very high percentage of renewable energy around the clock now, on a 24/7 basis,” he said.  

Real or Hype?

A recurring question during the panel and among attendees who spoke with RTO Insider at the CREPC-WIRAB meeting was whether the extreme projections for data center load growth are “real” or a speculative overestimate stemming from either hype or the fact that data center companies could be shopping multiple utility service areas for the same proposed facility, causing double-counting across utility load forecasts. 

“We don’t know how much the demand is real,” Sullivan said. He explained that when Google developed its first data center in The Dalles, the company was growing at a time when it was “soaking up” excess energy capacity on the grid, just as overall economic growth in the U.S. was decoupling from its historical connection with parallel increases in electricity use. 

“But now, with the onshoring of manufacturing, electrification [and] with data center demand, capacity is now tight, and that creates a problem for the industrial site selectors, where the time it takes to energize a site is lengthening,” he said. “And there’s uncertainty about the ability to interconnect the site, and that’s led to a natural response of people essentially filing multiple requests” for the same data center plan. 

“Here’s my take on it: The load is real. It’s a question of what’s the actual volume,” said Brian Cole, vice president of resource management at Arizona Public Service (APS). “It’s hard to see where there’s overlap and where there’s not. That makes it difficult.”  

Cole said APS has created a new data center strategy team to deal with the issue. He said the utility “literally” is having daily conversations with data center companies. 

“We’re trying to learn from them, trying to understand what they need, trying to work with them, [and] trying to establish what is the best path forward,” he said. “Regardless of the path and how we do it, the reality is it’s going to require a lot of building, it’s going to be a lot of resources, and it’s going to be a lot of transmission.” 

Cole said the utility’s goal is to serve all customers while maintaining reliability and avoiding cost-shifts among those customers. 

Antoine Lucas, vice president of markets at SPP, said that, since the COVID-19 pandemic, his RTO has fielded 40 GW of customer interconnection requests, with about 15% of those resulting in load interconnection agreements. 

“Looking forward, though, we’ve seen quite a few projections that those numbers will increase,” Lucas said, partly driven by new demand, but also because SPP has integrated a large number of renewable resources. 

“That has been something that’s been attractive to a lot of these entities who are willing to bring data centers or other businesses into the footprint,” he said. 

Lucas also clarified that he thinks SPP’s 15% customer interconnection rate is like the section of prospectus for a mutual fund stating that “historical performance is not indicative of future returns.” 

“We know there will be an increase, but we know there are also factors that impact it as well — cost being one of those major considerations,” he said. “In my opinion, it’s not so much whether or not we’re going to see an increase, it’s just going to be where does it happen?” 

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Panels Debate PJM Capacity Market Design at OPSI Annual Meeting

COLUMBUS, Ohio — Uncertainty was the throughline across several panels on the state of PJM’s markets during the Organization of PJM States Inc. (OPSI) Annual Meeting, as state regulators, market participants and RTO officials discussed a possible delay in the 2026/27 Base Residual Auction (BRA) and debated the eightfold price spike in the prior auction.

PJM CEO Manu Asthana said that any time a change to auction rules or timelines is made, regardless of the merits, investor and consumer confidence in the outcomes can be damaged. Without certainty about price signals, he said the financing necessary to bring new resources to the markets can be impacted at a time when PJM projects resource adequacy shortfalls in the latter years of the decade. Balancing the need to deliver prices reasonable to consumers while sending price signals to invest could mean making hard decisions about what priorities the U.S. has in designing the future of the electric sector.

“I have a fear that without more explicitly choosing whether we’re going to actually relax some of our environmental goals; or if we’re going to relax our desire to win the AI race; or we’re going to be willing to pay higher prices; or we’re going to put all of our chips in to invent a new technology that comes up with this green and cheap power; that we will not actually have any of these things. We will not have a reliable grid; we will not have an affordable grid; and we may not be able to serve all of the data centers,” Asthana said.

In contrast to Asthana’s concerns about resource adequacy at the 2022 OPSI meeting, he said he’s more worried now about the confluence of permitting and supply chain challenges, accelerating load growth and increasing public policy pressure on generators. Developers considering building new gas-fired capacity in PJM have to weigh EPA regulations that require carbon capture and sequestration against the revenues that can be received through PJM’s markets.

“You’re seeing that in investment: If you look at what is coming through our queue, the picture is pretty dramatic. You saw gas plants, gas plants, gas plants; this year, almost no gas,” he said. “I’m not saying we only need gas; we need everything.”

To address resource adequacy concerns, Asthana said PJM seeks to make three key changes to how resources can come onto the grid: the process for transferring capacity interconnection rights (CIRs) from a deactivating generator to a new resource; surplus interconnection service (SIS) to allow new resources to be co-located at underutilized interconnections; and a reliability resource initiative (RRI) to create a one-time expedited application window for high capacity factor resources to be studied in Transitional Cycle 2.

The RRI concept has been met with criticism from many stakeholders who argue it would amount to preferential treatment for some resource classes at the expense of renewables that have been waiting years for interconnection studies to be completed. PJM has responded that new resources with a high reliability contribution are needed to ward off a potential capacity shortfall in the 2029/30 delivery year. (See Stakeholders Divided on PJM Proposal to Expedite High-capacity Generation.)

The Planning Committee endorsed a proposal from a coalition of stakeholders to create an expedited study process for resources receiving CIRs from deactivating generators during its Oct. 8 meeting. (See PJM Stakeholders Endorse Coalition Proposal on CIR Transfers.)

Elevate Renewables, the original sponsor of that package, told RTO Insider it is encouraged by PJM’s supportive statements during the OPSI meeting and the recognition that a process is needed to allow the efficient development of new resources in the place of retiring units.

“The replacement of existing resource should not be relegated to the back of a backlogged, multiyear-long interconnection queue process,” Elevate said in an email. “Instead, there are efficiencies gained by aligning the timing of the de-energizing of the deactivating resource with the energizing of the new replacement resource. However, the current state of the PJM queue creates a timing mismatch, which, as we’ve seen, has resulted in mass closures of generating facilities, affecting more than just reliability but employee and communities.”

Elevate said SIS presents PJM with an opportunity to optimize the capacity contribution of resources that are not fully using their maximum facility output. The RTO’s current rules prohibit any projects that would increase line flow or short circuit current from utilizing the SIS process to fast-track their interconnection.

“However, as currently deployed, the PJM [SIS] process creates significant roadblocks for battery storage and many other newer technologies and fuel types to utilize the process FERC directed all RTOs to adopt in Order 845,” Elevate said. “We are hopeful that as PJM makes statements that they plan to make tweaks to the surplus interconnection service process, that those tweaks would include changing the triggering criteria for project failure in the SIS process to be actual reliability criteria violations, e.g., line overload or breaker over duty as failing criteria.”

OPSI Speakers Discuss Future Auction Design

Speaking on a panel focused on the future of the capacity market, Executive Vice President of Market Services and Strategy Stu Bresler said PJM is working toward a Federal Power Act Section 205 filing in December to make several changes to the design of the BRA.

While the 2026/27 auction currently is scheduled to be conducted in December, PJM has asked FERC to delay its opening by six months (ER25-118).

The filing could include changes to how PJM models the output of generators operating on a reliability-must-run (RMR) contract, the topic of a complaint filed in September by the Sierra Club, Natural Resources Defense Council, Public Citizen, Sustainable FERC Project and the Union of Concerned Scientists that argues the expected output of RMR units should be included in the capacity market supply stack (EL24-148).

Bresler said PJM also is looking at changing the reference resource for the 2026/27 auction, which would be the first to use a combined cycle rather than combustion turbine as the model unit on which several parameters are based. Because of the higher energy and ancillary service revenues for combined cycle generators, the net cost of new entry (CONE) value fell to $0, bringing the Capacity Performance (CP) penalty rate for units that fail to deliver during emergency conditions to zero as well.

The disparity between the net and gross CONE also resulted in a significantly sharper variable resource requirement (VRR) curve capped at $696/MW-day should 145,774 MW or less clear the auction, falling to $0 at 149,455 MW.

“I think the reason why we went to [the Reliability Pricing Model] and the sloped demand curve in the first place is because we thought that the sort of boom-bust cycle associated with a more vertical demand curve was not the best answer for long-term lowest reasonable cost to the customer,” Bresler said. “And so getting back to a VRR curve and a slope of a VRR curve that results in a more stable pricing outcome given the supply and demand conditions I think is important.”

Vitol’s Jason Barker said a vertical demand curve with a narrow band of prices can create whiplash that undermines the auction’s value as a data point for investors evaluating PJM’s markets.

American Municipal Power Vice President of Transmission and Regulatory Affairs Steve Lieberman noted that the Members Committee had endorsed an AMP-sponsored proposal to redefine the penalty rate to be based on the BRA clearing price, a change that was rejected by the PJM Board of Managers. Complaints subsequently were brought by the Independent Market Monitor and East Kentucky Power Cooperative, both of which were rejected by the commission in August. (See PJM Board Rejects Lowering Capacity Performance Penalties.)

Because the bonus payments for overperforming during a performance assessment interval (PAI) are paid out of the pool of penalties collected under the CP construct, Lieberman said the status quo net CONE would eliminate the incentive to perform during an emergency.

Monitor Joe Bowring said RMR units are being retained to provide reliability services and thus should be included in the capacity market supply stack, which is one component of a package of changes to PJM’s generation deactivation rules proposed by the Monitor at the Deactivation Enhancements Senior Task Force. The results of an online vote on four proposals before the task force are set to be presented during its Nov. 14 meeting. (See PJM Stakeholders Delay Vote on Generator Deactivation Rules.)

The need to enter into RMR agreements constitutes a deeper market failure, Bowring said, driven by market rules that do not recognize the full reliability contribution of generators.

PJM has defended not including RMR units in the supply stack by arguing that those resources have a stated desire to leave the market, so a price signal is needed to incentivize development to replace them. It also has pointed to differing obligations for capacity resources, which are held to CP rules that penalize underperformance, and RMR agreements that limit when units can be deployed. Going beyond counting them in the supply stack to require that RMR units offer into the capacity market also would subject those units to PAI penalty risks, creating a disincentive for voluntarily entering into an RMR agreement.

Bresler noted that in some cases RMR agreements allowed PJM to dispatch those units only to resolve specific transmission security needs, which is something PJM may be rethinking. He cautioned that a one-size-fits-all approach likely does not make sense for a construct created to address specific transmission needs.

“No. 1, when it comes to RMR resources, I don’t think we want to include them or treat them or model them as supply in the auctions unless the service they’re providing is comparable to that of a capacity resource,” Bresler said. “Otherwise they’re not interchangeable, so you wouldn’t want to change the supply-and-demand balance on the basis of that assumption unless that’s the comparable service that they are providing.”

Barker expressed a similar outlook, stating that RMR units have different performance obligations from capacity resources and including the former in the supply stack could be unduly discriminatory if they are treated comparably to capacity without being held to CP standards.

Susan Bruce, representing the PJM Industrial Customer Coalition, said that the compressed auction schedule has left little time for developers to respond to the high price signals prompted by a generator leaving the capacity market to operate on an RMR contract. At the same time that consumers are paying higher capacity prices, they are also paying for transmission upgrades necessary to resolve the violations necessitating the RMR agreement, she said.

Gregory Poulos, executive director of the Consumer Advocates of the PJM States, said the repeated auction delays have led to risk being shifted to consumers, pointing to a “miscalculation” in the reliability requirement for the DPL South zone in the 2024/25 auction that cost consumers about $100 million in higher capacity costs with no corresponding reliability benefit.

It also left little time for market participants to respond to changes in the guidelines for energy efficiency resources offering into the following auction, which caused a marked drop in supply, Poulos said. A PJM filing at FERC would eliminate the resource class outright from the capacity market. (See PJM Asks FERC to Eliminate Energy Efficiency from Capacity Market.)

Given the little direct insight consumer advocates have on market decisions, they often are reliant on PJM estimates of the potential impacts market changes could have on prices, Poulos said. He urged PJM to use the information at its disposal to do more proactive modeling and analysis, which he said would improve consumer confidence in future auction outcomes.

More analysis and modeling of potential market changes could give stakeholders more certainty on proposals they are asked to vote on and increase certainty in future auction outcomes, he said.

Maryland Public Service Commissioner Michael T. Richard, moderator of the panel, said high prices can disrupt the economies and lives of ratepayers in PJM states.

“Markets are created for the customer. The concern I think some of us have is that after we see a sudden 800% jump in the market, we just have to ask, is this really a stable and predictable environment for customers, for state economies?” Richard said. “This essential service needs to be available to everybody and needs to be something that’s affordable.”

Panelists Discuss Price Surge in 2025/26 Auction

Speaking on a panel focused on the results of the 2025/26 BRA, Bresler defended the eightfold increase in prices, stating that the increase properly reflected tightening supply and demand. He said the capacity market has seen years of low prices owing to a surplus of generation in the market, leading to deactivations that are putting pressure on supply.

LS Power Senior Vice President of Wholesale Market Policy Marji Philips said the original concept of the capacity market was for prices to increase when demand is tight and fall when it is low, averaging out to net CONE over the lifespan of the reference resource. While regular market interventions have been creating price volatility and uncertainty, she said the return of prices to net CONE levels signals that investments in new generation are needed.

Bowring disagreed that the auction accurately reflected supply and demand, stating that administrative changes to the definition of capacity, namely the use of marginal effective load-carrying capability for resource accreditation, actually inflated prices. He also argued that supply is being suppressed by PJM’s categorical exemption of intermittent and storage resources from the requirement that all resources holding CIRs offer into the BRA. Both points were raised in the first two sections of the Monitor’s report on the 2025/26 auction. (See PJM Market Monitor Releases Second Section of 2025/26 Capacity Auction Report.)

“The design of the market did not reveal what the actual supply and demand was,” he said.

Clara Summers, campaign manager of the Consumers for a Better Grid project at the Illinois Citizens Utility Board, said there were changes in supply and demand, but they were not significant enough to account for the scale of the price jump seen in the July auction. Moreover, she argued that the capacity market is incapable of sending price signals to build because of the backlogged interconnection queue, an issue she said also is present when considering if high capacity prices can incentivize replacement resources while transmission upgrades are built.

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Tx Supporters Check in on Order 1920 Compliance Efforts

With the Order 1920 compliance window already halfway closed and an order on rehearing expected in the next couple of months, Americans for a Clean Energy Grid (ACEG) hosted a webinar Oct. 28 examining progress on the measure so far. 

The group worked with Grid Strategies to release an update to its regional transmission report card, which showed all U.S. organized markets recently have been looking at changes to their planning practices. (See ACEG Report Checks in on Regional Planning After Order 1920.) 

The original report, which predated Order 1920, attempted to examine best practices in planning. With Order 1920 compliance efforts underway, it was time for an update, said Rob Gramlich, president of Grid Strategies and co-author of both reports. 

“There’s some signs of improvement,” Gramlich said. “CAISO and MISO continue to proceed with what they’re doing, which is, you know, largely close to Order 1920 and the best practices.” 

CAISO and MISO received the best grades in the initial report, and other markets have all made improvements, though the report said areas outside organized markets — the Southeast and most of the West — have done little in terms of region-wide transmission planning, he added. 

Compliance filings are due next summer, but some regions are starting to work on them. For example, several regions have launched their state engagement periods, which give six months for state regulators to craft a regional cost allocation methodology, said ACEG Executive Director Christina Hayes. 

SPP launched that process Oct. 28 and its Regional State Committee was poised to vote on whether it would be the venue for those cost allocation discussions, said Christy Walsh, a senior attorney at the Natural Resources Defense Council. Walsh watches the organized markets for NRDC and its Sustainable FERC Project, and she noted a similar attitude among many of them. 

“They say: ‘We know there’s need for regional transmission — it brings reliability and affordability benefits, but we’re doing it right,’” Walsh said. 

WIRES Executive Director Larry Gasteiger said he sees some of that messaging from the RTOs/ISOs, but contended they still have many issues to deal with. 

“What I really think is happening is they are saying we are working hard on trying to address these concerns. We think we’re meeting them in some respects,” he added. “I think there’s an acknowledgement that there can be some improvements, but I’m also hearing it against the background where they’re trying to get a heck of a lot of other things done at the same time.” 

MISO got good grades on its ACEG report card, but it has asked for a year delay in complying with Order 1920 to avoid disturbing its ongoing planning processes. (See MISO to Request Year Deferral on FERC Order 1920.) 

ISO-NE got a most-improved nod from Gramlich because of its recent work with member states around transmission planning, but it recently put a pause on Order 1920 compliance due to uncertainty around the rule’s fate. (ISO-NE Announces Pause of Order 1920 Compliance Discussions.) 

Rehearing Order Imminent

In general, major FERC orders have not undergone significant changes on rehearing, but that might not be the case with 1920, Gasteiger said. 

“There were some stark differences right from the get-go on this rule, and I don’t know with three new commissioners how that’s going to play out,” he said. “My guess is not huge changes, but I think the potential for more significant changes is greater here than in the past.” 

FERC is expected to issue a rehearing order in the next couple of months because it has asked the 4th U.S. Circuit Court of Appeals to hold off on its review of the order until January, Walsh said. Gramlich agreed a rehearing order likely will come soon. 

Another looming area of uncertainty is the elections, as a change in the White House would mean a change in FERC chairs and eventually a shift to a Republican majority on the commission.

“To the extent some regions are not racing [toward] compliance, I do think the industry will get some more clarity in the next couple of months about some things, and hopefully at that point they’ll be moving forward quickly,” Gramlich said. 

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Future of Power Markets Discussed at Aurora Energy Conference

NEW YORK — The Inflation Reduction Act and other policies have made the U.S. into one of the most attractive places to invest in clean energy, but completing the energy transition will require additional advances, panelists said Oct. 24 at the Aurora Energy Transition Forum.

Oliver Kerr, Aurora Energy Research’s managing director for North America, asked panelists whether they would pick the U.S. or Europe if they had $1 billion to invest.

“If I had a billion dollars, I would spend $100 million on the best development pipeline that required $2 billion of investment” in the U.S., RWE Clean Energy CEO Andrew Flanagan said. “And I’d invest that other $900 million into that portfolio, and then I’d claw back that additional billion, or $1.1 billion from our colleagues in Germany, or find some other equity source.”

Germany-based RWE is not alone, with Sandhya Ganapathy, CEO of EDP Renewables North America (a subsidiary of a Portuguese utility), saying the U.S. represents 45% of the parent firm’s investments, the largest share out of the 29 countries in which it is active.

“This is a great, great market to invest, and it’s also a great market where I truly believe that market fundamentals work really well,” Ganapathy said. “It’s not a lot of intervention; it’s really set by demand.”

There’s clearly still plenty of room to grow, as Europe is up to 35 to 40% renewable energy, while the U.S. is at just half of that. On top of federal policies spurring investments, 28 states have set some kind of mandate for renewables, and there is large and active demand from big corporate buyers, Ganapathy said.

Arguably the two leading states on the energy transition are California and Texas, which have deployed tens of thousands of megawatts using very different regulatory models.

“California, as we know, by state statute, has committed to decarbonizing the power sector by 2045,” CAISO CEO Elliot Mainzer said. “I think when you take the fifth-largest economy in the world and put it on that path, every major developer is going to want to have a piece of that, and so that’s why we have a 510-GW queue.”

Many developers come up against friction in the queue, but the issues around it can mask some realities like the fact that California has deployed 20,000 MW of new supply over the past four years, including 10,000 MW of batteries, he added.

California has a much more planning-based process with its various state agencies taking a bigger role in things than Texas, but part of the fix for that major backlog in the queue was borrowed from the Lone Star State. CAISO’s newest recently approved process involves studying which of those 510 GW actually are responding to demand and linking the transmission planning process to the queue, Mainzer said. (See FERC Approves CAISO Plan to Streamline Interconnection Process.)

CAISO borrowed “very shamelessly” Texas’ Competitive Renewable Energy Zone approach, which picked out the best areas for wind and built major transmission lines to connect them to cities, turning the state into the leader in wind capacity, Mainzer said.

“The way the ERCOT market has evolved, it has been very open and made it very easy for both supply and for load to come to the system,” CEO Pablo Vegas said. “We’ve got a light regulatory touch on virtually all facets of the interconnection process, and we’re very flexible in the way we manage those interconnection queues. And it’s been a benefit that has, I think, gotten us to where we are today, but the old adage of ‘what got you to where you are today won’t get you where you’re going to go’ applies very accurately in Texas, as we look forward.”

Projections for load growth in ERCOT call for as much as 150 GW to come online; it set its peak record of 85,508 MW in August 2023. It is far from clear that demand will grow that much, but like in other parts of the country, Texas is seeing demand growth on a scale that has not been witnessed since the years following World War II, Vegas said.

“In order to meet that challenge, we are going to have to think differently,” Vegas said. “In Texas, we have not historically planned where load or where supply gets sited. And when you’re trying to build transmission, which is going to become the linchpin to the success of this whole strategy, transmission has to know where load and supply is going to be. And so, we’re starting to take similar constructs and approaches to what Elliot just described.”

ERCOT is doing that less formally, making assumptions as to where demand is likely to show up on the grid based on where resources are and linking the two with transmission. None of that activity is required by rules, but the hope is that the market will follow suit and plan accordingly.

“It’ll be the fastest way to get there, and it will be the most efficient way to build the transmission infrastructure, but the market will respond to that,” Vegas said.

ISO-NE CEO Gordon van Welie said the transition involves four pillars, but one of them is much less discussed: ensuring the system has enough stored energy in fuel tanks or other long-term options to make it through times when renewable supply is low and demand is high, especially during winter.

“We’ve assumed that problem away,” van Welie said. “Actually, if you go back 25 years ago when we started the market construct, we just assumed that everyone was going to have a reliable fuel supply.”

The clean energy supply in New England is being driven by state mandates, while the issues around resource adequacy and reliability services is driven by the wholesale market. The states have said they do not want to take back authority for resource adequacy, van Welie said.

“They want the kudos from signing the contracts with the green stuff, and they want to leave the problem of how you pay for all that fossil stuff to the ISO and FERC, right?” he added. “So that’s the sort of political dynamic that’s going on there. But in this regard, I agree with [FERC] Commissioner [Mark] Christie, which is the states can’t just walk away from resource adequacy.”

The states have to get behind a market that can support resource adequacy over the long term, because otherwise it will be chaos, with the markets having to be redesigned every three or four years, van Welie said.

One of New England’s longstanding issues is ensuring reliability at the end of the pipeline network during harsh winter weather, which has bedeviled the market at the opposite end of many of those pipelines: Texas. Unlike the Northeast, Texas has plenty of natural gas supply, but it has had its worst reliability issues during the winters, Hunt Energy Network CEO Pat Wood said.

“Gas has two mistresses in the middle of a cold day, and it’s gas customers who keep their homes warm through natural gas and now 62% of Texans who keep their home warm through electric heat,” Wood said. “And that very tight period of time is where you’ve got the problem.”

Texas cannot count on its growing solar resources before the sun rises on a cold winter morning and when wind also is not producing at those times, and the market is not sending a strong price signal that resource adequacy is required in such times, Wood said. After Winter Storm Uri, the price cap was cut back from $9,000/MWh to $5,000/MWh.

The dispatchable reliability reserve service (DRRS), a proposal from the Texas Industrial Energy Consumers working its way through ERCOT’s processes, could help send the right kind of price signals to get needed generation built, Wood said.

While Texas and New England both face winter reliability issues, Calpine CEO Thad Hill, whose firm is active in both markets, noted they have very different causes.

“In the east, we’ve got a fundamental capacity shortage,” Hill said. “In ERCOT, we had a breakdown of preparation.”

Part of that breakdown ahead of Winter Storm Uri came from new oil and gas production capacity that had come online in the Permian Basin since ERCOT’s previous winter reliability problems in 2011, he added. Oil and gas production older than that performed better, while the new Permian capacity often was supplied by the grid and stopped producing when it lost power, exacerbating shortages in both gas and electricity.

While PJM had its hiccups in winters past, historically it has had very healthy reserve margins. But its recent capacity auction saw prices shoot up as those narrowed, which has sparked controversy. (See PJM Capacity Prices Spike 10-fold in 2025/2026 Auction.)

Hill noted that in the past when capacity prices have spiked, his firm and other suppliers have responded with new supply, and he expects that to happen again.

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NJ Enacts 200-MW Dual-solar Pilot Program

The New Jersey Board of Public Utilities has approved a three-year pilot program to create 200 MW of dual-use solar capacity that puts solar panels on functioning farmland in a precursor to a permanent program. 

The board backed the plan with a 4-0 vote Oct. 23, concluding a three-year process designed to establish a framework to encourage the development of solar and also provide economic support for farmers to lease their land. 

The program, which will start immediately, sets a target of 50 MW for the first year, with a minimum project size of 500 kW and a maximum of 10 MW. Eligible projects include net metered, non-residential projects with a capacity of more than 5 MW, as well as qualifying grid supply projects paired with a storage facility and net metered, non-residential solar projects of 5 MW or less, according to the board order outlining the program. 

Dual-use solar, also known as agrivoltaics, is seen by supporters as way to help farmers struggling in a densely populated state with relatively small farms, while opening up farmland for solar development by ensuring it’s not permanently removed from farm use. Dual-use solar projects include growing crops beneath and around banks of solar panels, or grazing sheep and other animals in the same space. (See New Jersey Solar Push Squeezes Farms.) 

Open space in New Jersey is under pressure from housing development and efforts to build warehouses and logistics buildings, fueled in part by the proximity of the Port of New York and New Jersey and vast e-commerce market in urban areas around New York and Philadelphia. 

Through the pilot, the state is “advancing our solar energy goals and creating a powerful new tool to create revenue streams for our vibrant agricultural community while promoting farmland preservation,” Gov. Phil Murphy (D) said in a statement. 

Projects in the New Jersey pilot will be eligible for incentives under the state’s Successor Solar Incentive (SuSI) Program. The BPU sets incentive levels under the Administratively Determined Incentive (ADI) program, for net metered non-residential solar projects of 5 MW or less, which can pay up to $85/MWh. Grid supply solar projects and non-residential net-metered solar installations with a capacity greater than 5 MW will be eligible for incentives under the Competitive Solar Incentive (CSI) program, but the pilot dual-use solar program will set a base incentive level rather than requiring them to take part in a competitive CSI solicitation. 

Developers also can receive another incentive that “covers the incremental costs incurred as a result of participation in the Pilot Program, specific to the agricultural or horticultural aspects of a dual-use project,” according to the order. 

Developer Demand

“There’s definitely interest from the farming community,” said Ashley Kerr, legislative director for the New Jersey Farm Bureau, a trade group that represents farmers. “Farmers are already one of the first stewards of the land and do everything they can to maintain their agricultural viability. And this is another tool for that, you know, to minimize energy expenses and potentially even make some extra money.” 

Christine Guhl-Sadovy, president of the BPU board, said the pilot will enable New Jersey to “maintain our position as the Garden State, and also our position as a leader in solar development.”  

Developer Lightstar, a Boston-based solar developer with 45 MW of agrivoltaics projects in development that grow crops in between the solar equipment, welcomed the pilot’s approval.  

Kelly Buchanan, policy manager, said she believes that “developers will jump into the pilot program.” 

“There is pent-up demand for dual-use projects in New Jersey,” Buchanan said, noting the three-year wait for the pilot. “The process design ensures that the developers with mature and meaningful agrivoltaics projects can participate in the pilot program, while keeping costs to ratepayers low.” 

“We hope that the first 200 MWs will further confirm the cost-effectiveness and multi-faceted benefits of agrivoltaics and will lead to a permanent dual-use program in New Jersey with more flexibility for farmers and lower costs in project design,” she said. The pilot, she added, can provide a “wealth of knowledge” about dual-use solar techniques to help shape future projects and offer “an opportunity for farmer education and training that will be useful examples of successful agrivoltaics projects for the public to see.” 

However, she had slight reservations. The maximum project size of 10 MW is a large-enough share of the 50-MW annual capacity that it could crowd out two or three other smaller projects that could drive the sector forward, she said. She added that a pilot rule requiring each project to have a three-acre control plot “that mimics the conditions at the agrivoltaics array, including fencing and crops,” could dissuade some farmers from participating because it takes up too much land. 

Improved Agricultural Viability

The pilot is based on the guidelines for an agrivoltaics program in the state set out in a bill signed by Murphy in July 2021. The bill, A5434, required that the BPU, in consultation with the New Jersey Department of Agriculture, adopt rules and regulations for the pilot program within 180 days, or by the end of January 2022. (See New Jersey Plans Dual-Use Solar Pilot Launch for mid-2024.) 

The BPU issued a straw proposal for the pilot program in November 2023 and a preliminary rule draft in June. As the process has advanced, the New Jersey Agricultural Experiment Station (NJAES) and Rutgers University have begun a $2 million study at three sites to look at whether crops and cows can thrive next to bifacial vertical and rotating solar panels, which is ongoing. (See NJ’s $2M Agrivoltaics Study Advances.) 

The pilot outline states that in addition to the health benefits, and reducing climate change emissions, dual-use solar can give the state “increased resilience in the form of distributed generation.” 

In addition, dual-use solar “ensures that the agricultural community can play, not only a larger part, but a more sustainable part in the clean energy transition and can receive the economic benefits of doing so,” the order states. “Dual-use solar can provide farmers with an additional stream of revenue, assisting with farm financial viability and enabling continued agricultural or horticultural production.” 

BPU staff recommended a two-stage application process with an initial expression of interest, after which the board would invite the best applicants to submit a full proposal. Proposals would be evaluated on criteria such as the incentive level sought by the project, the interconnection planning, how the developer addressed decommissioning of the project at the end of the 15-year project life and proposals for minimizing negative impacts to farmland. 

The staff also recommended that program participants “provide documentation of active agricultural or horticultural use before and after the installation of solar panels.” 

State Secretary of Agriculture Ed Wengryn said the program will give farmers “the opportunity for improved agriculture viability.” 

“The pilot program will give the agriculture community the opportunity to identify the best production techniques and crops to grow and produce, while at the same time producing clean green renewable energy,” he said. 

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OMS, OPSI Pen 2nd Letter to MISO and PJM to Compel Meaningful Interregional Planning

The Organization of MISO States and Organization of PJM States Inc. have dropped a second letter at MISO and PJM’s doorsteps to emphasize the need for vigorous interregional transmission planning.

This time, the regulators asked in an Oct. 24 letter that MISO and PJM’s interregional transfer capability study include more steps to ensure MISO and PJM conduct wide-ranging and transparent planning.

State regulators requested MISO and PJM as soon as possible compile a list of projects under consideration, their estimated costs and benefits and details as to why the projects are set to either advance or be abandoned.

OMS and OPSI said benefits “could include energy savings, reduced line losses, etc., as long as the benefits calculated lead to real, not hypothetical or theoretical, savings.”

The two organizations stressed that MISO and PJM should perform stakeholder outreach, firm up study deadlines, provide regular progress updates and communicate preliminary findings with stakeholders as soon as practical.

Most OMS members voted in favor of the letter at their Oct. 24 annual meeting; regulators from MISO South abstained from the vote. OMS President and Iowa Utilities Board Member Joshua Byrnes and OPSI President and D.C. Public Service Commissioner Emile Thompson signed the letter. They addressed it to MISO and PJM heads of planning Aubrey Johnson and Paul McGlynn, respectively.

The second letter arrives after some OMS members panned MISO and PJM’s original aim to study only smaller projects as too shallow to fit the constructive planning the regulators asked for. OMS and OPSI wrote their first joint letter in February to inspire MISO and PJM to do more interregional planning. (See Some MISO Regulators Signal Early Discontent with New MISO-PJM Interregional Study and Smaller Projects Expected from Maiden MISO-PJM Joint Tx Study.)

Regulators and the grid operators since have met repeatedly in private to discuss the goals of the study; MISO and PJM have pledged the study will be a multi-act affair, with the first likely producing smaller upgrades and later iterations tackling longer-term needs. The RTOs have said they likely will settle on a first round of small project contenders early next year.

OMS and OPSI’s second letter also recommended the RTOs conduct at least the second segment of the study in accordance with FERC Order 1920, which dictates that solutions be tested against 20-year planning scenarios.

“We understand that a 2032 planning horizon is likely appropriate to identify the near-term upgrades for phase one of this study. However, given that FERC Order 1920 imposes a 20-year planning horizon, a 20-year planning horizon would likewise be more appropriate for future studies beyond phase one,” regulators wrote.

OMS and OPSI added that a follow-up to the first study should take “a more expansive look at interregional planning, including more ambitious studies and process reforms.”

The regulators said they would welcome MISO and PJM working from a joint model and the two adding more interfaces between their systems.

Finally, OMS and OPSI advised MISO and PJM to determine their current interregional transfer capability to use it as a baseline in the study.

“This will help identify current system limitations, the extent transfer capacity is underutilized today and will inform future needs as the bulk electric system continues to evolve,” the regulators said.

In a statement to RTO Insider, PJM said it appreciated “the constructive tone of the correspondence” from OMS and OPSI.

“PJM will review the requests made and will plan to communicate our thoughts to both organizations in the near future,” spokesperson Dan Lockwood said.

MISO likewise said it appreciated the “ongoing collaboration from OMS and OPSI” on interregional studies and promised to share preliminary results of the first interregional transfer capability study at the Nov. 22 teleconference of MISO and PJM’s Interregional Planning Stakeholder Advisory Committee.

MISO spokesperson Mike Deising pointed to MISO’s work on its near-final, second long-range transmission plan (LRTP) as evidence that the RTO is prepared to advance infrastructure for reliability. At $21.8 billion, Deising said the second LRTP is the largest transmission expansion portfolio in the nation and will establish a 765-kV backbone in the footprint that will “facilitate power transfers from the eastern edge of our footprint to the Dakotas.” (See MISO Affirms Commitment to $21.8B Long-range Tx Plan in Final Workshops.)

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RA Fear and Load Growth at OMS Annual Meeting

MADISON, Wis. — State regulators, MISO and members remain anxious over the fragile state of resource adequacy, how much load growth to expect and what a potential new resource adequacy standard might look like.  

Regulators and stakeholders descended on Madison, Wis., to talk about the issues at the Organization of MISO States’ annual meeting Oct. 23-24. 

Load Growth: Swift! Shocking! Legitimate?

Electric Power Research Institute’s David Larson said data center growth mapping efforts quickly become outdated as requests for interconnection routinely exceed expectations in number and size.  

He said the “AI race has now become a powering-AI race.” 

“There is a question of: ‘How much of this is real?’” Larson said. He said utilities sometimes treat requests as not definite until construction begins, while some assume only a percentage is likely.  

Mike Benn, with data center developer STACK, said “availability and certainty of power” is top of mind for companies that require newly built data centers. He said that though load growth numbers are big and real, some speculators are calling utilities to inquire about available capacity or those in a race to try to hoard capacity.  

Benn said it’s important that data centers be part of the solution in securing energy.  

“It might be very cathartic to call up the utility and yell, ‘You promised you had this capacity to serve us, now you don’t!’ That helps no one,” Benn said.  

“Has anybody checked their email by phone or computer? If so, you’ve used a data center,” Google’s Tyler Huebner asked.  

Huebner said individual companies for the most part have abandoned their backroom servers and have migrated services to data centers. The eradication of the small server rooms to large data centers is more efficient and ultimately saves more water and power, he said.  

Huebner said Google strives to forge partnerships with utilities and companies to become a market force for sustainable energy, backing geothermal projects, storage and small nuclear reactors, sometimes above market prices.  

“We’re willing to bring financial commitments and collateral to the table,” he said.  

However, Huebner said while Google doesn’t want to raise customer prices, it also doesn’t want to entirely fund projects it no longer has use for, especially when those projects’ output gets claimed by other industries.  

Huebner said it used to be a matter of securing real estate and then figuring out the rest to site a data center.  

“Now it’s power and nothing else,” he said. 

NextEra Energy’s Erin Murphy said NextEra is approaching MISO, looking for ways to link proposed generation resources and their designated loads in MISO’s generation interconnection study process to meet the needs of industrial customers.  

Murphy said with the MISO queue’s current five-year wait times, a MISO fast-track for resources with contractual agreements to serve load would be helpful.  

Larson said some hyperscale loads might be flexible but that EPRI encounters challenges getting data centers to publicly share demand response capabilities for analysis. 

“Data access is a huge bottleneck for us. We’ll have folks that say, ‘Trust us, it’s a flat load,’” he said.  

Huebner said Google is working with peers on demand response and said the company does have a “vested interest” in MISO’s recent proposal to reduce capacity credits for its load-modifying resources. (See MISO Tries to Win over Stakeholders on New LMR Capacity Accreditation.) 

‘Angsty’ Times

Ryan Long, Xcel Energy president of Minnesota and the Dakotas, said much of the “angst” associated with the energy transition today boils down to the industry “living between” major eras.  

“We’re in the seam between power-sector decarbonization and economy-wide decarbonization. … We’re trying to find our way through the energy transition and bring along other industries,” he told attendees.  

Long said when Xcel Energy’s Northern States Power retires its Allen S. King and Sherco coal plants by 2030, it will lose 3 GW of its 9 GW portfolio. 

Ryan Long, Xcel Energy | © RTO Insider LLC

“That means we’re going to lose a third of generating on our system. And we have a whole lot of work to do and construction to do,” he said.  

Long said Xcel doesn’t assume it will rely on the MISO market to serve load in future-looking analyses. He said the move is somewhat controversial, but he believes load-serving entities should build generation to meet their native loads and use the market only to optimize financial outcomes and earn economic hedging.  

Long said the rise of data center load can be considered the “first ship in the port,” with manufacturing and transportation growth to follow as the energy industry further decarbonizes and adds firm resources.  

Long said ratepayers can benefit if utilities carefully structure agreements with large customers. He said large customers can help steer a swifter transition, and he predicted hyperscale customers will drive the advancement of small modular reactors.  

“We’re running out of nuclear plants that are sitting around that could be brought back online,” he joked, and later said: “There is a real need to think about how we can all move faster.”  

That’s led Xcel to turn to an iron-air, “rusting and unrusting” battery facility in Becker, Minn., through a partnership with Form Energy; a solar farm at the Sherco site; and extending the lives of its two nuclear plants beyond 2050, Long said. He added that Xcel is betting on battery storage by planning to build an additional 600 MW in addition to the iron-air battery facility. 

He also said Xcel proposes to add anywhere from 400 MW to 1 GW of distributed resources at strategic locations.  

“At the distribution level, you can add resources fairly quickly, and it feels like the moment certainly calls for an all options on the table strategy,” Long said.  

RA Targets on the Move

MISO Executive Director of Markets and Grid Research DL Oates said given the zeitgeist, MISO’s role in providing supply and demand outlooks becomes more critical. He pointed to MISO and OMS’s annual resource adequacy survey and its regional resource assessment as increasingly important reference points for construction plans.  

Oates said because the environment is so uncertain, publishing a range of possible outcomes from scenario-based modeling is appropriate. He said he realizes utilities are building long-lived assets, and a planned facility sometimes can be found to help under several possibilities.  

Oates also said because risks are growing more complex, MISO needs a more complex reflection of resource adequacy, expressed partly through its new capacity accreditation method, which FERC happened to approve the next day (ER24-1638). (See related story, FERC Approves New MISO Probabilistic Capacity Accreditation.) Oates said MISO understands it needs to conduct analyses to predict how its proposed resource accreditations for resource classes are likely to change over time based on how much they can help.  

Midwest Reliability Organization’s Mark Tiemeier said across NERC, EPRI and ESIG, there’s consensus that the one-day-in-10-years loss-of-load standard is passé when used alone.  

Mark Tiemeier of Midwest Reliability Organization (left) and DL Oates of MISO | © RTO Insider LLC

“To me, it’s a very binary answer,” he said, though he added that he didn’t think grid operators would scrap it entirely.  

Tiemeier said with the past no longer an indicator of what’s to come with reliability, grid operators need to turn more toward a least-regrets standard that combines multiple elements.  

He also said MRO has asked for more consistency across the data regions to provide NERC for its reliability assessments. He said more data consistency would lead to more accurate comparisons between regions.  

Oates agreed MISO likely needs multiple metrics beyond its one-day-in-10-years standard to measure adequacy. (See MISO Dips Toes into Potential New Resource Adequacy Standard; States Demand Key Role.) MISO has said it might consider a combination of conditional value at risk, loss-of-load hours and expected unserved energy in addition to the one-day-in-10-years criterion.  

Oates said while multiple grid operators explore adopting new modes of resource adequacy measurements, they’re not all examining the same methods, creating the possibility that RA standards will become even less homogenous.  

“When you look at where to move to, there’s a lot of heterogeneity there. And I think that’s a hallmark of living in a time of change,” he said.  

“I think if there’s anything that be taken from this, it’s complicated,” joked Wisconsin Commissioner Marcus Hawkins.  

Signifying how often RA issues have come to the fore, OMS members passed a motion to create a resource adequacy committee.  

Former State Regulator Says Commissions Need More Hands, Data Analysis, Openness

Known for his frankness, Kent Chandler, former Kentucky Public Service Commissioner and a new addition to center-right think tank R Street, was invited to speak on how commissions should equip themselves as resource adequacy concerns and load growth take firmer hold in the footprint.  

Chandler encouraged commission staff to “shoot for the stars” with their budget asks and correct understaffing now. He advised commissioners to double the level of resources they think they can operate with.  

Chandler said commissions suffer from getting “asymmetrical” data from utilities. He said at the Kentucky commission, just one staff member usually would review data submittals from utilities for completeness.  

From left: Kent Chandler of R Street, OMS Executive Director Tricia DeBleeckere and Minnesota Public Utilities Commissioner Joe Sullivan | © RTO Insider LLC

Chandler also said commissions are privy to substantially more information from vertically integrated utilities in RTOs versus vertically integrated utilities that aren’t in RTOs.  

“I couldn’t tell you where any congestion is on the [Louisville Gas & Electric and Kentucky Utilities] system,” he said as an example.  

Chandler told commissioners and staff to “hold your utilities to account” based on the data they can retrieve. He told them to ask utilities what they’re doing about resource planning, why they’re making certain offers in the wholesale market, or why they’re not addressing congestion “that shows up five days a week.” 

Commissions also are “woefully” short on distribution system expertise, Chandler said.  

“Very few people who I’ve ever interacted with know how the distribution system works,” he said.  

Chandler said it’s important to recruit people with distribution system knowledge as distributed resources — demand response, batteries, generation — will play a more integral role in resource adequacy, like it or not.  

Chandler also said while he wouldn’t say MISO has it right on resource accreditation, it’s moving in the right direction by measuring capacity contributions when resource adequacy is the frailest.  

The OMS annual meeting was held at the Best Western Premier Park Hotel steps from the Wisconsin Capitol in Madison | © RTO Insider LLC

“I think it gives owners an incentive to make sure their generation is best in class,” he said, adding that MISO could add a layer to its accreditation where it shows locally what type of generation would be most helpful.  

“This is my Festivus. It’s my airing of the grievances. It’s professional; it’s not personal,” he joked.  

Finally, Chandler said it might be worthwhile for OMS to set up private meetings between its board and the MISO Board of Directors to discuss major initiatives to be filed at FERC. He said the MISO board should want to know how its regulators fall on MISO’s proposals. 

In closing, Chandler told regulators to be willing to admit when their processes aren’t working and work to improve them. He also told regulators to not be afraid to hear opposition, and said he never understood denying interventions in dockets. Chandler said though he’s not a “Kumbaya-type of person,” there’s value in interacting with people who disagree with you.  

“Everybody thinks their baby is the cutest. It’s almost never true. There can only be one cutest baby. There’s always a way to do things better. … You can make your baby cuter,” Chandler said.  

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NYISO Monitor Highlights Gap Between Planning, Market Requirements

NYISO’s transmission planning requirements result in a need for more capacity than is required in the ISO’s market rules, according to Potomac Economics, the Market Monitoring Unit.

Potomac highlighted the gap between what it calls the “effective planning requirement” for transmission security and capacity market requirements in a presentation before the NYISO Operating Committee on Oct. 24.

“The reliability planning process effectively requires more capacity to meet transmission security needs than is represented in the capacity market requirements that are ostensibly based on transmission security,” according to a memo Potomac sent to the ISO. For the 2025/26 capability year, Potomac said the effective requirement for New York City is 743 MW higher than its locational capacity requirement.

NYISO this month found a potential reliability need by 2033 for New York City, which would trigger a process in which the ISO solicits solutions from utilities and stakeholders, including non-market interventions. (See NYISO Draft RNA Finds Reliability Need for New York City.)

“Within the next five years, the base case assumptions become much more important when reliability needs appear,” Pallas LeeVanSchaick, vice president at Potomac, told the committee. “If there are not forthcoming market-based solutions, then there’s the potential to identify a need that requires an out-of-market investment to resolve it. That raises concerns.”

The MMU noted the 565 MW of peaking units retained in Brooklyn to address a reliability need identified in a Short-Term Assessment of Reliability in 2023. Despite that, the city is expected to have an over 800-MW surplus in summer 2025.

“Out-of-market actions to satisfy the planning requirements increase risk to investors by depressing capacity prices below anticipated levels,” it said.

LeeVanSchaick said that special-case resources — a type of demand response for large loads — were not being counted in transmission security analyses because they are only called upon in emergency conditions. Surplus capacity, he said, was being overcompensated in part because it was being set by the inflated transmission security floors.

“When SCR program resources also participate in peak shaving programs, the resulting load reductions are not counted towards satisfying the reliability need even though they occur during normal operations,” the MMU said. “This treatment significantly increased capacity shortfalls in the transmission security analysis of the RNA and inflates the transmission security limit for New York City by a comparable amount.”

The MMU recommended including loads participating in peak shaving and emergency DR programs in transmission security analyses and compensating capacity suppliers based on the requirements they contribute to meeting. It also repeated a previous recommendation that NYISO implement more granular capacity zones, particularly in places like New York City, and update them dynamically.

The OC voted to send the draft RNA to the Management Committee, though it changed the motion from an approval of the draft itself to an approval of its findings.

NYISO also presented the results of the 2024-2025 Winter Assessment, finding that the ISO expects sufficient winter capacity assuming that all firm fuel generation is available under both normal and extreme weather conditions. The ISO cautioned that disruptions in fuel supplies could create problems for the grid given the reliance on firm fuel generation during extreme cold weather.