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November 22, 2024

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MISO Outlines Plan on Fast-track Queue for Resource Adequacy

MISO hopes to file a proposal in February to create an exclusive, faster route through its interconnection queue for generation projects that are key to maintaining resource adequacy.

At a special Nov. 18 workshop, Director of Resource Utilization Andy Witmeier said MISO hopes to have the fast-track process in place by June for generation projects that are key to sustaining resource adequacy over a five-year horizon. (See MISO to Devise Express Lane in Queue for Generation Projects that Keep Lights On.)

Witmeier emphasized that MISO sees the fast pass as a short-term fix, with a sunset date included in the proposal. That date would be based on the RTO’s best estimate for when it might have its interconnection process streamlined enough to achieve a one-year queue wait time for generation projects.

“It will take us time to get a one-year queue process,” Witmeier warned.

Some stakeholders said dividing the queue into two parallel processes with one given priority might result in two clogged queues, making MISO’s ultimate goal of a single, yearlong process even more unattainable.

Witmeier said MISO’s automatic withdrawal penalties currently in place for the traditional queue will likely curb the late-stage withdrawals that set restudies in motion and make processing sluggish.

“The restudies on the older cycles is preventing us from finalizing the newer cycles. … We’re plagued with restudies. And we can’t wait for that any longer,” Witmeier said.

“What I can tell you is, if I’m not down to a one-year queue cycle by 2028, I’m paying penalties,” he added, invoking FERC’s Order 2023.

Witmeier said that to enter the expedited process, generators must be part of a plan from a load-serving entity, be able to come online within three to five years for a known RA need, have network service to be deliverable and have endorsement by their state as a necessary project. MISO would not discriminate based on fuel type as long as a project is deemed essential.

The RTO is working with the Organization of MISO States on what documentation that states and authorities might use to demonstrate that a project is necessary, and how that documentation might differ for projects located in MISO’s deregulated areas.

Witmeier also said MISO will need to establish a cost allocation method for the projects. The RTO would probably charge a higher, nonrefundable application fee to cover staff hours for the studies, which will be conducted serial-style instead of in batches.

Clean Grid Alliance’s Beth Soholt asked what would happen if a project enters the expedited queue only to not ultimately receive a certificate of public convenience and necessity.

“Ultimately, whether or not to recognize that project is necessary as a resource adequacy project is up to that jurisdiction,” MISO Deputy General Counsel Kristina Tridico said.

“We think the likelihood of projects going into [the expedited queue] and dropping out is very low,” Witmeier added. Projects that have state backing are already usually considered foregone conclusions, he said.

Travis Stewart, representing the Coalition of Midwest Power Producers, said that even an express lane will not make RA projects “immune” from the exorbitant network upgrade costs often found in MISO interconnection studies.

But Witmeier said that under the expedited processing, developers should get a clearer idea sooner of network upgrade costs.

“We expect a lot of these LSEs will have done their due diligence and done their own studies on expected network upgrades,” he added.

So far, MISO is not proposing a withdrawal penalty for the expedited class of projects. Stakeholders asked it to reconsider that stance, arguing that even those projects could be canceled.

Sustainable FERC Project’s Natalie McIntire said existing projects in the regular queue might be harmed financially through expedited projects snapping up available transmission capacity first. She asked how MISO would make sure that the regular queue is still viable.

Witmeier said MISO will draw on the same system modeling for the regular and accelerated processes. He said projects in both queues would have a chance to claim transmission capacity on the system. After that, MISO would consider it unavailable.

McIntire said she did not see how, somewhere along the line, the parallel processes would not assign the same transmission spot to two projects.

“It seems to me we have a math problem,” McIntire said.

“It seems like an age-old problem that we’ve had, and we’re compounding it,” WEC Energy Group’s Chris Plante agreed.

MISO will hold another workshop to hammer out details on its expedited resource adequacy queue studies on Dec. 6.

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Texas PUC’s Cobos to Leave Commission

Texas regulatory commissioner Lori Cobos announced Nov. 21 that she plans to step down from the Public Utility Commission at the end of 2024.

Cobos told her fellow commissioners, PUC staff and stakeholders that she already had shared her plans with Gov. Greg Abbott. She promised a much broader statement during the commission’s last open meeting of the year, Dec. 19.

“It has been a tremendous honor and a privilege to serve as a PUC commissioner,” Cobos said. “I want to thank the governor for the opportunity of a lifetime and for placing his trust in me to serve on the commission after Winter Storm Uri. I’ll say a lot more later … we’ve accomplished an extensive list of important milestones at the commission over the last several years, and I am proud and tremendously grateful to have been part of that amazing work.”

Cobos has played a leading role in the development of major transmission infrastructure projects, including in the Permian Basin region in West Texas and in the Rio Grande Valley. (See Texas PUC Approves Permian Reliability Plan.)

She was one of the three commissioners named to replace the PUC’s incumbents, all of whom left the commission after the devastating February 2021 winter storm that came within minutes of collapsing the ERCOT grid. Cobos joined Peter Lake, who chaired the commission, and Will McAdams. Both left the PUC in 2023.

The commission since has been expanded by state law to five members.

“Like I told Peter and Will when they were leaving, ‘Thank you for being willing to say: yes.’ These were not jobs that people were falling all over themselves to come take right after Winter Storm Uri,” Commission Chair Thomas Gleeson told Cobos. “It took a special kind of person with the heart of a public servant to want to come and do this right after the storm. You will be missed up here.”

Abbott appointed Cobos to the PUC in June 2021. Her term expired that September but by law, she did not have to be reappointed and has continued to serve at the governor’s pleasure. (See Abbott Taps OPUC’s Cobos to Fill out PUC.)

Cobos has more than 20 years of experience in the Texas power industry, including several senior-level positions at the PUC and in-house counsel at ERCOT. She joined the commission after being appointed as CEO and public counsel for the Office of Public Utility Counsel.

Cobos is an ex officio member of the ERCOT Board of Directors and serves on SPP’s Regional State Committee. She also is president of the Southeastern Association of Regulatory Utility Commissioners.

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La. PSC Reviewing Entergy Request for $5B Data Center with Gas Gen

The Louisiana Public Service has taken the first steps to consider Entergy’s request to power a proposed $5 billion artificial intelligence data center in northern Louisiana with $3.2 billion in mostly natural gas generation.  

Louisiana commissioners at their Nov. 20 meeting voted unanimously to hire familiar firms Stone Pigman and the Sisung Group’s United Professionals Co. to review Entergy Louisiana’s application (U-37425), which could spell a possible 25% increase in its generation, according to commissioners. 

Though Entergy continues not to name the customer, multiple news outlets reported that Public Service Commissioner Foster Campbell confirmed outside of the meeting that Facebook parent Meta seeks to raise an AI data center in Richland Parish. Meta currently does not list a Louisiana-based data center among its plans. 

According to its filing made earlier in November, Entergy plans to build three new combined cycle natural gas generators at a combined 2.26 GW, a new 500-kV transmission line and substation, and other upgrades to host the unnamed large customer. Entergy seeks cost recovery and rate-making treatment for the project, as well as a corporate sustainability rider, where the customer would commit to funding 1.5 GW of new solar or solar and storage hybrid generation. Entergy also requests an exemption from an RFP competitive solicitation process and a ruling from the commission by October 2025. 

In a statement to RTO Insider, Entergy again declined to identify the customer, with spokesperson Neal Kirby saying the utility is “not able to identify the type or scope of the customer until the customer is ready to disclose their plans.”  

Entergy said in its filing that it expects the data center “has the potential to transform the economic landscape” of northern Louisiana and “employ directly 300 to 500 employees with an average salary of $82,000, in a region of the state that has long struggled with a lack of economic development and high levels of poverty.”  

Richland Parish’s approximately 20,000 residents have an average $25,285 per capita income, according to the U.S. Census Bureau.  

“This is the best news that we’ve had in north Louisiana in a long, long time. So, I’m for it 1,000%. We need it more than anybody. This data center would be a godsend for northeast Louisiana,” Campbell said at the meeting, adding that the data center could represent an investment of anywhere from $5 billion to $10 billion. 

Campbell said he thought the facility is all but a given and added that a lot of people “will have good-paying jobs.” 

The Louisiana PSC allowed consulting firm United Professionals a maximum of $675,000 and law firm Stone Pigman a maximum of $788,000 to evaluate Entergy’s request. 

“This is a very expansive docket that may require, depending on what happens with intervenors and whatnot, very extensive legal work and legal services. We’re talking about the approval, certification of five different resources, including three generating resources, one high-voltage transmission line and upgrades of a transmission substation. So, it’s all rolled into one proceeding that needs to be handled on an expedited basis. The customer here has expressed a need to get this done quickly, to get this data center to market very quickly,” Stone Pigman attorney Dana Shelton explained to the commission. She added that she anticipated hearings in the docket.  

Commissioner Davante Lewis said that while the commission is on “an [expedited] timeline,” he urged the law firm to make sure “every intervenor is heard” and asked for a “thorough review.”  

“There are a lot of complicated issues that should be worked out that could be beneficial, especially when we’re talking about the generation capacity, the water consumption,” Lewis said. “These are long-term commitments; these are big projects.”  

Shelton said while she was “encouraged by the package Entergy has put on the table,” her firm would make sure “unwarranted costs are not visited on our residential ratepayers.” 

Longtime PSC consultant Lane Sisung, of United Professionals, told commissioners his evaluation will be complex because it involves not one but three generators, associated transmission and “future rate mechanisms to allow a single customer access to renewable portfolios.”  

“It has many elements to it that aren’t normally within a bid,” Sisung said, adding that the consulting firm also would monitor Entergy’s construction and conduct a prudence review.  

Entergy did not respond to RTO Insider’s request for comment on how the three new gas plants could fit into Meta’s zero-carbon target coming due within six years. Meta has a goal to reach net zero emissions across its “value chain,” which extends beyond its data centers to its suppliers, sometime in 2030. Kirby said Entergy is committed to its own net zero by 2050 emissions goal, but did not address the 20-year mismatch between Entergy’s and Meta’s aims.  

In its filing, Entergy said the unnamed customer has “robust sustainability goals.” The utility added that it explored alternatives but didn’t find any as strong a trio of new gas plants.  

The Alliance for Affordable Energy, the Southern Renewable Energy Association (SREA) and the Union of Concerned Scientists already have petitioned to intervene in the case. SREA’s filing indicates Entergy’s requested exemption from a competitive solicitation for the generation would “unfairly limit competition.”  

During the utility’s most recent earnings call, Entergy CEO Drew Marsh said the new industrial customer — presumably Meta — signed a 15-year electric service agreement with Entergy Louisiana. Marsh at the time also said Entergy was in “active discussions” about carbon capture solutions with customers, refraining from naming any. 

Marsh also mentioned Entergy Louisiana’s front-end engineering and design study to evaluate the technical and financial feasibility of installing carbon capture and sequestration (CCS) at the Lake Charles Power Station. (See Entergy CEO: Nuclear, Carbon Capture in Equation to Handle Industrial Growth.)  

According to Entergy’s application, the large customer “has agreed to pay a capped amount” toward the cost of CCS at the Lake Charles Plant. 

Entergy also said the proposed corporate sustainability rider for the customer could offset “a significant percentage of emissions” from the planned natural gas generators. 

Finally, Entergy noted that the new gas plants would be “30% hydrogen co-firing with the capability of supporting 100% hydrogen firing in the future with upgrades, and all will have the ability to incorporate a CCS component in the future.” The utility said it’s also possible it could offer the plants’ excess supply in the MISO markets, lowering costs for its customers. 

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Kairos Power Cleared to Build Demonstration SMRs

The Nuclear Regulatory Commission has approved construction of Kairos Power’s Hermes 2 demonstration plant in Oak Ridge, Tenn. The NRC and Kairos announced the decision Nov. 20. 

It is the first fourth-generation electricity-producing reactor to be greenlighted for construction in the U.S. It will be shaped by the knowledge gained from Hermes 1, a low-power demonstration reactor producing heat but not electricity, which in December 2023 became the first Gen IV reactor to receive a construction permit in the U.S. 

The fluoride salt-cooled, high-temperature design also was the first non-light-water reactor to be permitted in the U.S. in more than a half-century. It is the heart of Kairos’ business model but only part of an iterative, vertically integrated effort to commercialize advanced reactor technology. 

Reactor modules will be fabricated in New Mexico and shipped to Tennessee using modular construction techniques, which likely are to be central to any successful effort to scale and speed the deployment of small modular reactors in the United States. 

This standardization is hoped to eliminate the feedback loop in the U.S. commercial nuclear sector — high cost and low speed of construction help limit new projects, while the scarcity and uniqueness of projects help make construction so slow and expensive. 

Standardizing and multiplying new projects could change this. 

Many policy makers are eager to see this change, and see nuclear fission emerge as an affordable and constant source of zero-emissions power. 

The U.S. Department of Energy has committed up to $303 million to the Hermes project. 

The NRC approval process for the Hermes 2 construction permit is one step toward the modularization that could reduce the time and cost needed to build a reactor: Hermes 2 incorporated process improvements made during the Hermes 1 review, and the similarities between the two iterations allowed the second review to leverage work done in the first. 

Peter Hastings, Kairos’ vice president of regulatory affairs and quality, highlighted this in a news release: “The licensing basis established with both the Hermes and Hermes 2 construction permits will carry forward to future license applications, ensuring the safety of Kairos Power’s deployments while supporting continued innovation and efficiency in the review process.” 

Another factor: NRC has streamlined its mandatory hearing process, which now is conducted via written documents. 

“While keeping safety at the forefront, the permitting process was quite efficient, and we issued these permits in less than 18 months,” NRC Chair Christopher Hanson said in a news release. “This shows we can rapidly apply relevant conclusions from earlier reviews to promptly reach decisions on new reactors.” 

Small modular reactors and other next-generation nuclear technologies have some hurdles to overcome before widespread deployment. Safe, affordable and scalable designs must be perfected, a fuel supply chain must be built, a raft of regulatory approvals must be secured and public support must be built for a technology that long has been a pariah. 

But there is widespread interest in seeing this happen. 

Big Tech has begun betting on nuclear to power the data centers that are expected to add significant demand to the grid. 

In October, Google and Kairos announced a first-of-its kind power purchase agreement for Kairos reactors starting by 2030 and growing to 500 MW by 2035. (See Google, Kairos Sign 500-MW Nuclear PPA.) 

Hermes 1 is targeted for operation in 2027. 

Hermes 2 will bring together Kairos’ various research and development efforts in a complete plant architecture at reduced scale, with two 35-MW reactors and a shared power-generation system feeding 20 MW into the grid once NRC approves its operating license. 

Operational data gleaned from Hermes 2 would support development of a larger version for commercial operations, and build certainty around licensing, the supply chain and construction of future reactors, Kairos said. 

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AEU Report Shows Major Economic Benefits from Quicker Queues

Fixing the interconnection process to speed up the development of new generation could add $100 billion in economic benefits, according to an analysis released Nov. 21 by Advanced Energy United.

Improving interconnection processes around the country could lead to $57 billion in economic benefits and 667,000 job-years from increased solar energy deployment and $42 billion and 376,000 job-years from increased onshore wind deployment, according to the report, “How Interconnection Reform Can Accelerate Clean Energy Deployment.”

“Our nation’s electricity demands are growing, and these broken interconnection processes are standing in the way of Americans building the energy projects we need to thrive,” AEU CEO Heather O’Neill said in a statement. “Fixing interconnection would unleash job-creating energy projects and deliver an economic boom in states across America. If states can more quickly build the poles and wires needed to connect new electricity resources to the power grid, they will unleash their economic potential, lower electricity bills for residents and improve energy reliability for all.”

Generators coming online in 2023 averaged five years in the queue, from when they requested interconnection to commercial operation, compared to an average of just two years from 2000 to 2007.

FERC has attempted to address the issue with orders 2023 and 1920, and the report argued that states can support and build on those efforts by engaging in implementation and pushing for supplemental reforms.

“In the United States, almost 2,500 GW of non-emitting power generation and energy storage capacity are seeking to interconnect, equivalent to double the capacity of all generation sources currently online in the United States,” the report says. “Legacy interconnection processes were established decades ago to individually evaluate a small number of large, predominantly coal and natural gas power plant proposals, and these processes are ill-suited to evaluate thousands of more geographically distributed wind, solar and energy storage projects.”

The precise impacts of speeding up the queues will take years to play out, but the report offers an illustrative analysis showing how accelerating them can benefit the economy.

Under one of the scenarios, attrition of projects initially increases by 25% this year, which reflects a “purging” of the queues prompted by Order 2023’s higher financial requirements. But as additional improvements play out, project attrition is expected to fall by 50% from historic rates, while a business-as-usual case would see a 10% increase.

The report includes state projections (for the Lower 48 except Texas) for projects getting through the queue quicker and what benefits that would bring to their economies.

“Results vary between states, which is to be expected, as interconnection requests reflect renewable energy resource potential, state policy support and local project development considerations such as land availability, perceived permitting complexity, local construction costs and more,” the report said. “Nonetheless, each state sees incremental renewable energy deployment with interconnection reform.”

For most states, implementing changes will lead to an appreciable increase in renewable projects, with California, for instance, seeing 147 TWh in additions by 2030, compared to 112 TWh under business as usual.

One clear group of exceptions are those states banking on large offshore wind contracts — Connecticut, Delaware, Maryland, Massachusetts, New Jersey and Rhode Island — for most of their incremental renewable growth. The successful deployment of offshore wind depends on other factors, the report says.

“In a few states, successful interconnection reform leads to a significant increase in renewable generation such that generation in 2030 exceeds state [renewable portfolio standard or clean energy] requirements,” the report says. “New Mexico and Arizona show renewable energy generation increases that outstrip state requirements, showing that each state is well positioned for exporting first-rate solar and wind-generated electricity.”

The report suggests states advocate for transmission providers to build trunk lines that aid interconnection and fast-track interconnection requests that are proposed for areas with available grid capacity.

It also suggests tailoring analyses to requested levels of interconnection (capacity- or energy-only), standardizing study assumptions, evaluating alternatives to traditional transmission upgrades, using automation, and using independent monitors to oversee the process and recommend improvements.

Another suggestion is to expedite construction of needed upgrades by adopting industry best practices and proactively addressing supply chain constraints.

“By engaging directly with FERC, pursuing available federal funds and calling on their regional grid operator to fulfill their responsibility to provide reliable and low-cost electricity, states can maximize economic opportunities made possible by more abundant solar and wind projects,” O’Neill said.

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CAISO Kicks off ‘Workshop’ to Update RA Mechanisms

CAISO on Nov. 18 kicked off a Resource Adequacy Modeling and Design “workshop” designed to reevaluate and refine several mechanisms the ISO uses to ensure resource adequacy.

The workshop builds on the ISO’s RA Modeling and Program Design working group, in which staff and ISO stakeholders highlighted problem statements associated with the RA program. It aims to continue refining solutions to the problems identified and develop policy responses.

The main goal of the effort is to update the default counting rules and planning reserve margin (PRM), evaluate the need for the Resource Adequacy Availability Incentive Mechanism (RAAIM) or an unforced capacity mechanism (UCAP), and reevaluate outage and substitution rules and the capacity procurement mechanism (CPM), also referred to as the “backstop.”

The issues will be addressed in the three different tracks, but ISO staff noted the tracks can be combined or changed based on stakeholder feedback.

Track one addresses modeling, default rules and accreditation, while track two deals with outage substitution and availability and performance incentive mechanisms. Track three tackles visibility and backstop.

The workshop will be further divided into three “packages” that outline workflow. Package one identifies minimal changes needed to take the first step in addressing the topic, package two outlines forward planning and package three covers operational measures.

The packages are “illustrative” and not representative of CAISO’s preferred or final approach, said Partha Malvadkar, principal of RA and infrastructure policy at the ISO.

“What we’re looking for as we work towards policy development is packages of changes that make sense together and that are achieving the goals and objectives that came out of the working group process in a comprehensive and consistent manner,” Malvadkar said.

PRM and Default Counting Rules

Another central aim of the initiative is to evaluate how well PRMs and counting rules set by local regulatory authorities (LRAs) reflect forced outage rates, performance and availability. Evaluating the need for UCAP, which was discussed in the prior initiative, fits into this area. (See CAISO Considers Replacement of RA Incentive Program.)

“In response to potentially changing regulatory structures at the CPUC (including the scoping of UCAP), CAISO has an opportunity to establish alternatives to the current resource counting design and eliminate/redefine availability and performance incentives while acknowledging LRA authority to establish counting rules,” according to a presentation from the meeting.

The ISO also identified the need to update the PRM based on changes in the RA resource mix and evolving reliability needs within the CAISO balancing authority area (BAA). CAISO policy developer Ansel Lundberg identified that qualifying capacity values, also referred to as “counting rules,” should reflect the relative contribution of different resource types to maintain BAA-wide and local reliability and to meet at least a 0.1 LOLE.

The initiative also addresses the need for capability testing to account for seasonal resource availability. According to Lundberg, the availability of resources based on varying seasonal ambient derates is not consistently reflected in resource net qualifying capacity (NQC), which poses challenges for grid operations. CAISO thinks it should adopt minimum requirements so it can rely on capacity to perform consistent with accreditation in a given season. Such requirements could minimize partial forced outages that derate resources below their NQC value during critical periods.

Outages and Substitution

CAISO also intends to work to establish a more efficient process for outages and substitution. Central to that is developing a voluntary planned outage substitution pool, where scheduling coordinators can make capacity available and pay for it if needed. SCs could also procure from the pool.

The ISO is also considering developing a planned outage buffer provided by each LRA, as well as moving to annual or seasonal showings, CAISO lead policy developer Anja Gilbert said.

The final intent of this track is to remove planned outage substitution requirements and replace them with strong incentives and better information about periods of risk.

RAAIM Reform

RAAIM is one such incentive mechanism that could help remove planned outage substitution requirements. But the ISO is considering revising RAAIM to become a “pay-for-performance” mechanism for capacity to respond and non-capacity resources to be available during scarcity conditions.

That model, which has been implemented in PJM and ISO-NE, acts as both a reward and penalty relative to a resource’s obligation during scarcity events. If a supplier’s poor performance contributes to reliability risk, it could face “strong consequences,” according to Lundberg’s presentation.

Backstop and Visibility

A central component of the prior and current RA initiatives within the ISO is the need for more visibility into RA and non-RA resources. (See CAISO’s Capacity Procurement Mechanism Inefficient, Stakeholders Say.) CAISO’s lack of visibility into the “not-shown” RA fleet makes the backstop mechanism less efficient, but regular reporting on the status of RA capacity could improve the system, said CAISO lead policy develop Hilary Staver.

The ISO suggested options for policy reform, including updating CPM authority to accommodate the backstop based on an assessment of energy sufficiency and/or net peak needs.

“We’re looking to provide visibility into RA and non-RA resources in order to allow for efficient decision making in CAISO operations, obtaining capacity with the right attributes when and where it’s needed, and trying to be efficient and effective in our backstop approach,” Staver said.

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Consumer Advocates File Wide-ranging Complaint on PJM Capacity Market

Several state consumer advocates filed a complaint at FERC on Nov. 18 alleging that PJM’s capacity market is failing to mitigate market power, overestimating future load and producing high clearing prices that generation owners cannot act on. 

The complaint asks the commission to find that the 2025/26 Base Residual Auction (BRA) failed to produce appropriate rates, require a host of changes to the auction design and establish a refund with replacement rates. The complaint was jointly submitted by the Illinois Attorney General’s Office, Illinois Citizens Utility Board, Maryland Office of People’s Counsel, New Jersey Division of Rate Counsel, Office of the Ohio Consumers’ Counsel and D.C. Office of the People’s Counsel. 

“From one auction to the next, the total capacity cost to consumers jumped from $2.2 billion to $14.7 billion. Worse, continuing to run BRAs using the current design promises the possibility of future auction clearing prices that are even higher. Absent changes to fix the PJM capacity market’s flawed auction rules, some have predicted that the 2026/2027 BRA could clear at the new, higher offer cap ($696/MW-day) regionwide, ballooning charges to PJM ratepayers to $37 billion,” the advocates said. 

One of the market changes they advocated for is already the topic of a separate complaint filed by a group of public interest organizations: PJM’s practice of not modeling the expected output of generators operating on reliability must-run (RMR) agreements (EL24-148). The retirement of Talen Energy’s 1,273-MW Brandon Shores and 702-MW H.A. Wagner generators outside of Baltimore have been credited as one of the drivers of the BGE zone reaching the $466.35/MW-day price cap in the 2025/26 auction. 

While the RTO plans to submit a proposal under Federal Power Act Section 205 that would add the output of two generators running on RMR agreements to the supply stack beginning with the 2026/27 auction, the advocates want that change to be made for the prior auction as well. (See “Insight into Upcoming Filing,” FERC Approves PJM Capacity Auction Delay.) 

In addition to requiring that RMR units offer into the capacity market, they requested that the commission extend the advance notice that generation owners must provide PJM ahead of deactivating resources, empower the RTO to delay deactivations for reliability, base RMR compensation on a cost-of-service rate and require that RMR resources participate in all relevant PJM markets. 

The advocates wrote that market power protections are incomplete so long as intermittent generation and storage are exempt from the requirement that all resources must offer into the capacity market and demand response resources are not subject to the three-pivotal-supplier (TPS) market power test. Citing analysis from the Independent Market Monitor on the auction, they said the tight balance between supply and demand led to all capacity resources having market power, underscoring the need to ensure that no resource classes are able to exercise market power. In that analysis, the Monitor has argued that DR and intermittent resources did exercise market power in the auction, a claim PJM has said is unsubstantiated. (See PJM Market Monitor Releases Second Section of 2025/26 Capacity Auction Report.) 

“The primary cause of the BRA price spike is not the interplay of supply and demand. It is the byproduct of a market power problem endemic to the PJM design that the existing mitigation protocols are unable to address,” the advocates wrote. 

They requested that DR resources that fail the TPS test be limited to offer caps akin to generation resources; be required to offer their maximum dispatchable demand reduction into the markets; and have their performance measured as a function of the actual metered reduction in load before and after the resource is dispatched. 

They also asked that the commission implement the Monitor’s recommendation that the capacity ratings for gas generation be applied seasonally to align with PJM’s risk modeling. Accreditation for gas resources is capped at their summer ratings, a practice the advocates said is inconsistent with PJM’s risk modeling skewing toward the winter. Aligning the two would more accurately reflect their potential contribution to high-risk winter periods. 

New supply is unlikely to offer a remedy, the advocates wrote, because of the confluence of a compressed auction schedule and backlogged interconnection queue that make it unlikely that developers can construct resources in response to high prices. In testimony supporting the complaint, Daymark Energy Advisors CEO Marc Montalvo said the high prices serve no benefit for consumers and allow generators to collect windfall revenues. Prioritizing interconnection studies for resources that would be built in constrained locational deliverability areas would allow the resources with the highest impact to be accelerated through the queue, Montalvo recommended. 

“Under current market conditions, capacity prices are being driven by the barriers to entry of new supply — including constraints on the time it takes to study interconnection requests and build new transmission to interconnect new resources in the queue — which add to the market power of incumbent suppliers,” Montalvo wrote. “High prices cannot bring new generation into the market more quickly than it can be interconnected, and while such prices might retain existing generation, they are substantially above any just and reasonable measure of the net going forward costs that existing resources must cover to deliver capacity.” 

He went on to argue that the sudden jump in BRA clearing prices — from $28.92/MW-day in the 2024/25 BRA to $269.92/MW-day in the following auction — calls into question whether the underlying fundamentals reflect an abrupt shift from surplus to shortage or a flawed market design. 

The advocates also called for FERC to direct PJM to open a stakeholder process to make several changes to the capacity market in the longer term. It singles out the calculation of the net cost of new entry parameter and shifting the capacity market to a prompt or staggered auction to alleviate inflated load forecasts. They argued that PJM has a track record of over-forecasting load, a trend that could be exacerbated by rapidly accelerating estimates of data center load. 

“These clearing price outcomes do not match the market facts on the ground. Yes, load is increasing — but PJM has historically overestimated load and appears poised to do so again by exaggerating the likely additions of massive data center loads without firm power supplies,” they said. 

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Most Stakeholders Support Special Interconnection Rules for Tribes

Most stakeholders support a proposal before FERC to exempt energy projects developed by federally recognized Native American tribes from deposits and other fees in the generator interconnection process.

The Alliance for Tribal Clean Energy filed a petition for an expedited rulemaking to exempt tribal energy projects from fees designed to discourage speculative development, which won widespread support in comments filed ahead of a Nov. 18 deadline (RM24-9). (See FERC to Consider Special Interconnection Rules for Tribal Energy Projects.)

Tribes and their representatives from around the country were supportive of the policy, arguing that commercial readiness deposits and withdrawal penalties, which are meant to discourage speculative projects, do not make sense for the developments that tribal entities pursue.

The Inflation Reduction Act effectively opened up tax credits for tribal energy projects, but some of FERC’s rules still offer regulatory barriers to that development, said the Midwest Tribal Energy Resources Association, which represents 27 tribes from the region.

“We have witnessed firsthand the unique challenges tribes face due to current regulations that require commercial readiness deposits and impose withdrawal penalties,” the association said. “These requirements, while intended to manage speculative interconnection requests, disproportionately impact tribal nations who often lack access to the same financial resources and capital as traditional energy developers.”

The Navajo Transitional Energy Co. (NTEC) is a Tribal Energy Development Organization (TEDO) owned by the Navajo Nation, which controls 17 million acres of “trust lands” in the Four Corners area in the Southwest and includes 300,000 members, including 170,000 at the reservation. NTEC owns the Navajo Mine, which serves the Four Corners Generating Station, a 1,540-MW coal plant in which it owns a 7% stake with plans to add a carbon capture and storage demonstration project to the site.

NTEC is also pursuing renewable energy projects, including a 1,200-MW solar plant that will be built in several stages with ENGIE North America.

“The federal government has recognized it has a trust responsibility to protect tribal sovereignty, economic security and Tribal Energy Development Organizations’ energy development on tribal lands,” NTEC said. The commission has, likewise, stated it endeavors to “work with the tribes on a government-to-government basis.”

TEDOs have historically been structurally excluded from capital markets and are unable to use traditional tax equity or debt financing, NTEC said. “Instead of traditional financing available to other transmission developers, Tribal Energy Development Organizations secure much of their financing through philanthropy and federal grants only available once a project has secured interconnection rights.”

The sovereign nature of tribes can discourage private parties from entering into contracts with them, but they have land with often good resources to develop.

“Land, without an interconnection, cannot support a generating facility,” NTEC said. “The commission can make tribal energy development more attractive to development partners by modifying the pro forma interconnection procedures to increase Tribal Energy Development Organizations’ chances of being able to offer a favorable position in the interconnection queue.”

The Environmental Defense Fund, National Wildlife Federation, Earthjustice, Natural Resources Defense Council, Sustainable FERC Project and Center for Biological Diversity filed joint comments in support of the petition. They said the process leading to Order 2023 involved insufficient input from federally recognized tribes and that led to a rulemaking that does not work for them, which is a potential violation of FERC’s “trust responsibility” to tribes.

“The United States government holds a trust responsibility toward tribes, rooted in Article I, Section 8 of the Constitution, shaped and defined by 375 treaties, hundreds of laws and countless executive orders,” the groups said. “This fiduciary duty requires the government to honor treaty obligations, manage resources for tribes’ benefit and act in their best interests. Federal agencies are mandated to actively consult and engage with tribes on matters impacting tribal lands, resources and cultural heritage, ensuring respect for tribal sovereignty and upholding commitments to promote tribal self-determination and wellbeing.”

Energy projects developed by tribes are not speculative because tribes always have direct control of the land and limited points of interconnection, which means they cannot file speculative projects in search of the best one, the environmentalists said. Tribal lands on average have 70% fewer kilometers of transmission and 43% less high-voltage transmission than the rural U.S.

The environmentalists agreed that tribes often face issues with financing in part because lenders are unfamiliar with their legal systems, their lands have little pre-existing infrastructure, and it is hard to secure financing.

“Much of tribal land is held in trust by the federal government, restricting lenders’ ability to claim an interest in land as collateral if a borrower defaults,” they added.

The Choctaw Nation of Oklahoma urged FERC to also give deference to tribes when they oppose jurisdictional energy projects being built on their lands.

“These projects provide benefits to non-tribal entities while imposing most of their costs on the tribal nations, which is the definition of environmental injustice,” the tribe said. “The proposed Pushmataha County Pumped Storage Project is a textbook example of this.”

The tribe was referring to a project proposed by Southeast Oklahoma Power Corp. on lands and waters within the Choctaw reservation that derive profit by generating electricity to be sold to Texas (P-14890). Despite opposition from the Choctaw and Chickasaw Nation, it is moving forward.

While most of the intervenors in FERC’s docket were supportive of the petition, it did run into opposition from Idaho Attorney General Raúl Labrador (R).

“Instead of following the same requirements as everyone else, the tribes would get a blanket waiver from paying commercial readiness deposits at the same time as other requesters and from paying the full withdrawal penalties,” he said. “This exception would give the tribes an easier path to connecting their generators to the grid, giving them an unfair advantage.”

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SPP Has ‘Positive Outlook’ Heading into Winter

SPP says it expects to have enough generation to meet demand this winter following an assessment that indicated an increase in operational certainty over the previous two assessments.  

The grid operator’s staff told stakeholders Nov. 18 during its annual Winter Reliability Forecast and Emergency Communications webinar that they project a 98.5% probability of SPP having sufficient resources to meet the projected peak demand this winter season. That probability increases further when operating reserves are added to the mix. 

Weather forecasts, peak demand projections, expected generation availability and other trends suggest the region will have a greater margin between electricity demand and generating capacity than in the previous two peak seasons, staff said. 

“While this forecast presents a positive outlook for electricity customers throughout the SPP footprint, we must continue to be vigilant and plan for growing power demands in the future,” SPP COO Lanny Nickell said in a statement. “We can never say for sure when extreme weather events, such as what we have experienced in recent years, may materialize. SPP is doing everything it can to be prepared to meet customer needs.” 

Winter storms in February 2021 and December 2022 stretched the footprint’s available reserves, forcing the RTO to shed load in 2021 and import power. 

SPP has projected demand to peak at 46.92 GW in its 14-state footprint. It has a total winter capacity of 63.88 GW, resulting in about a 40% reserve margin. The capacity values do not include the effect of accreditation policies filed at FERC. The grid operator’s resource adequacy requirements for the winter season (December-March) are not effective until the 2024/25 winter season. 

The La Niña weather pattern is forecast to return during the upcoming season, bringing with it the potential strong polar jet stream that led to the 2021 and 2022 winter storms. Temperatures are expected to be lower than normal in the northern plains and higher in the South. 

SPP annually assesses historical and predicted future electricity use, weather forecasts, wind energy’s variability, drought conditions, and generation and transmission outages to identify and address threats to energy reliability during the winter. 

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Corporate Solar Development Continues to Grow

Large corporations trying to green their operations continue to expand their solar generation capacity, with Meta, Amazon and Target among the leaders. 

In its latest “Solar Means Business” report, the Solar Energy Industries Association reports nearly 40 GW of on-site and off-site corporate capacity installed by March 2024. 

It finds that Meta Platforms leads on overall capacity (5,177 MWDC); Amazon led on capacity addition in calendar year 2023 (2,930 MWDC) and has the largest self-reported pipeline (13,591 MWDC); and Target has the largest on-site capacity (319 MWDC). 

Additionally, the 2024 edition of the report is the first to tally corporate installed battery storage. Google tops the rankings by a wide margin, with 312 MWAC. 

Solar and storage are a reliable and low-cost way to power operations, SEIA President Abigail Ross Hooper said in a Nov. 20 news release announcing the report.  

It is not a one-size solution, she said: “These industry giants are investing in solar through a diverse range of applications, including on-site and off-site installations, on carports, paired with storage, or even as an anchor tenant for a community solar project.” 

Most of the companies surveyed for the report cited Inflation Reduction Act incentives as a driver of their expanded procurement of renewables. Most said they had no problem finding partners or institutional support for their plans. 

About half said high or volatile prices, expensive capital and internal financial constraints have limited procurements.  

About half said interconnection reforms, new community solar legislation and simpler tax credit monetization would help drive further investments. 

The report also indicates: 

    • Corporate procurement represents more than 18% of U.S. solar capacity. 
    • In 2023, 20% of solar installations had a corporate offtaker. 
    • Corporate involvement has become increasingly diversified, with growing interest in community solar, tax equity investment and microgrids. 
    • Expectations of increased demand and rising cost for electricity — and a desire to lock in supply and price — drive solar investment decisions. 
    • Big-box retailers and the largest tech firms dominate the rankings, but a range of other sectors are making inroads, including automaker General Motors, fast food icon McDonald’s and packaging manufacturer Smurfit Westrock. 
    • Rooftop commercial solar capacity has grown at a 12% compound annual growth rate for the past five years. It is an obvious choice for Target, Walmart, Amazon and other companies with large, flat-roofed facilities, and growth has continued despite rising costs, supply chain disruptions and other headwinds. 
    • Battery storage will be a key trend for corporate buyers, as states and utilities seek to add storage capacity to their grids. It is a versatile solution — No. 2 Kaiser Permanente, for example, is using its 115.6 MWAC of installed storage to form microgrids to make its medical facilities more resilient to outages, while No. 5 Starbucks is using its 10.5 MWAC for customer EV charging. 
    • Procurement plans are huge: The top 10 corporate buyers alone report a pipeline of 27.8 GWDC of solar, and the actual total is likely higher, as some pending projects are not disclosed.