Solar

This under-the-radar MISO proposal will hurt renewables, boost gas

This under-the-radar MISO proposal will hurt renewables, boost gas
(A Minnesota community solar project. Credit: Clean Energy Resource Teams / Creative Commons )

MISO is bringing back the “Reliability System Attributes” proposal to stakeholders after a brief hiatus. The renewable energy industry must pay attention even though other near-term priorities like MISO’s queue reform package are on the horizon because the primary beneficiary of MISO’s attributes framework will be the natural gas industry.

In addition to the increased study deposits and milestone payments, it is understandable for renewable developers to focus on MISO’s resource accreditation method for renewables. But renewable developers will regret not engaging MISO in the discussion of attributes because the grid operator’s current proposal signals the need for natural gas, not clean dispatchable resources like energy storage or providers of demand flexibility.

MISO’s current attributes proposal misses the connection between load interconnections and higher penetrations of renewables. That missing connection is why renewable developers must pay close attention to the discussion of the attributes before it is too late.

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MISO’s attributes proposal is being resurrected

Close observers might recall a former MISO executive’s statement at a state commission hearing in 2022 that natural gas is the only fuel that fits the attributes MISO needs in the future.

“Today, the only thing that we’re aware of that would provide those attributes are gas units,” said the former MISO Executive in this news article. After antagonizing stakeholders last fall with a new seasonal capacity market proposal, attributes discussion, and capacity accreditation for non-thermal resources, MISO took a breather. This fall, MISO is back with its attributes proposal and has engaged the energy consultancy Brattle Group to make its case to the natural gas industry.

By most accounts, MISO pulled off a decent seasonal capacity auction for the first time in 2023. In this “Reliability System Attributes” framework, MISO says it needs ramp-up capability and rapid start-up to ensure flexibility to serve reliability needs in the future. But MISO fails to realize that it is sitting on energy storage waiting to be studied in the queue that offers both those attributes.

Why does MISO not make a case at FERC to study storage ahead of other resources if it anticipates flexibility needs in the future? If solar is not dispatchable and not flexible, energy storage fills that need. MISO is signaling the gas industry as the only resource that fits those attributes unless the demand flexibility providers, such as crypto miners and renewable developers join forces.

Coal unit retirements postponed

MISO’s recent capacity prices were partly lower due to delays in announced coal plant retirements. Plant owners of almost 3,600 MW of coal developed cold feet after the 2022 capacity auction results were announced. This coal capacity does not get derated except for industry-wide average outage statistics.

So, coal is inherently at an advantage compared to the solar industry because solar receives nearly 0 MW capacity accreditation under MISO’s new proposal, which it has delayed until 2027. But 2027 timing is critical for the solar sitting in the queue because that’s when more than 65,000 MW of solar is likely to have signed interconnection agreements. Hence, MISO’s attributes framework is penalizing solar right at the same time when the bulk of the interconnection capacity will be available.

Natural gas is the only fuel that fits all the attributes

By laying the breadcrumbs in front of both federal and state regulators that we are running out of capacity in future years (“capacity deficit of 2.1 GW is projected for the summer of 2025/26 which grows in subsequent years”, 2023 OMS MISO Survey Results) and indicating that coal plant owners have done their share by delaying retirements, MISO is telegraphing its capacity needs to the natural gas industry to fill the perceived capacity gap in 2027 and beyond. We can draw this conclusion because MISO prioritizes a market improvement for the natural gas units over FERC Order 2222, which requires MISO to aggregate smaller customer-owned generation.

Even if we leave the gas-specific market improvement aside, we can see the outlook brightens for gas because that’s the only fuel that fits all the boxes in the attributes framework. So, MISO is engaging stakeholders now to pre-position regulatory support from states like North Dakota, which would primarily benefit from the fossil industry jobs, to mute the likely criticism from a state like Minnesota, which passed legislation recently to achieve clean energy by 2040.

Attributes discussion is a win-win strategy for MISO because it allows MISO to keep both North Dakota and Minnesota happy. Xcel Energy and other Minnesota utilities benefit from MISO’s repeated alarm bells that we need natural gas to maintain reliability during winter storms. Instead of replacing coal with solar and energy storage, they will replace coal with natural gas.

MISO control room. Credit: MISO Energy

Winner: Natural gas. Loser: Solar

MISO’s attributes framework is another shot across the renewable industry’s bow because MISO has already riled up the renewable developers with its proposed increase in interconnection study deposits and tightening of site control requirements. MISO backed down on a controversial proposal element only after top developers complained because MISO had planned to restrict the number of interconnection requests by top developers. MISO plans to file this reformed queue proposal with FERC by the end of this month. Only after FERC approves the proposal, MISO will open up the 2023 queue window.

So, the solar industry is hit on multiple fronts at MISO – the capacity accreditation tanks when solar finally comes out of the queue, and higher study deposits might scare away most renewable developers, leading to a smaller queue post-2027. The small queue size is MISO’s announced intention because MISO insists it does not want a repeat of the 2022 cycle when capacity over MISO’s historical peak demand of 120 GW entered the queue. So far, MISO has not announced plans to study and clear out the past queues, but the queue reform proposal ensures future queues are not bloated.

Demand flexibility is missing

So, what is missing from the discussion of the attributes if MISO’s intention is ensuring reliability under a high penetration of renewables? Demand flexibility or load flexibility is missing. And we know this by the record amount of load interconnections MISO is studying. Unlike generator interconnections, these load interconnections have less visibility because there is no transparent queue. And load interconnection’s first point of entry is the Transmission Owner, not MISO. These load interconnections are called Expedited Project Requests. MISO Transmission Owner first receives these load interconnection requests from a large customer like a technology company for a data center load.

That large data center load wants to ensure transmission access. The MISO Transmission Owner must submit this Expedited Project Request form to MISO so that the large load is modeled in MISO’s Commercial, Network, and Transmission planning models. If the transmission is needed to serve that load, MISO makes that determination as part of its MISO Transmission Expansion Plan (MTEP).

MISO’s attributes framework is missing the link with increased load interconnection requests. If MISO connects the dots, or if the renewable industry makes this connection for MISO, it will be clear that higher demand flexibility leads to more load and renewable interconnections. If that link (load interconnections to reliability system attributes framework) is not established, the natural gas industry will benefit because the market design will telegraph signals for flexible generation, not flexible load. Specifically, this means the providers of demand flexibility, such as the crypto mining industry and the renewable developers, must join hands. Both lose when the MISO’s attributes framework incentivizes the natural gas industry.