Why this developer wants to pay more for a spot in the MISO interconnection queue
Utility Integration

Why this developer wants to pay more for a spot in the MISO interconnection queue

EDF Renewables proposed a big increase in study deposits to alleviate the crowded MISO interconnection queue. Not all of their peers are on board.

Due to the large volume of study requests received in the 2022 cycle, MISO is delaying this year’s edition. The Midwest’s grid operator plans to make a Federal Energy Regulatory Commission (FERC) filing at the end Q3 or early Q4.

Keeping up with the MISO interconnection queue is challenging, in part due to its constantly changing set of rules. This latest filing could lead to a smaller queue due to higher study deposit payment requirements and withdrawal fees for developers, which at least one major player, EDF Renewables, supports. More on that in a bit.

Not everyone favors increasing study deposits, so what specifically MISO files at FERC later this year remains to be seen.

MISO’s 2023 Definitive Planning Phase (DPP) delayed from September to December

MISO is delaying the due date to receive 2023 DPP cycle applications due to the high volume of study requests received in the 2022 DPP cycle. If developers recall, MISO closed the 2022 DPP cycle as scheduled in September last year but didn’t start the DPP Phase 1 until March.

MISO received 171 GW of new capacity requests last year. Even though MISO shows a one-year turnaround for 2022 DPP cycle projects, it is unlikely to catch up with restudies from past DPP cycles and clear backlogs based on MISO’s study metrics filed at FERC as part of Order 845.

So, MISO is banking on a queue reform proposal (again!), and will most likely follow PJM’s script by freezing the portal for new queue applications.

MISO plans to engage its Interconnection Process Working Group stakeholders with an initial proposal at its July meeting. Included in this initial proposal are common sense changes such as increasing the cost of study deposits (to reduce the number of speculative projects, which increases queue volume), increasing the penalty fee for withdrawals (to reduce dropouts, which trigger restudies) and, of course, make site control requirements more restrictive.

MISO is considering other changes at this stage, including making milestone payments cash-based instead of credit. That cash requirement could be problematic for small developers but would work in favor of large developers.

MISO’s analysis shows the top five developers are responsible for 30% of 2022 DPP cycle requests. Some large developers, including Invenergy, NextEra, EDF, Savion, and National Grid Renewables, may be in that category.

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EDF Renewables study deposit proposal is unique among developers

While a D1 deposit covers the application fee, D2 deposits support a MISO interconnection engineer’s work to determine upgrade costs. These D2 payments should not be confused with milestone payments. As the study progresses from DPP 1 to DPP 2, milestone payments increase to reflect the seriousness of the interconnection request and detailed engineering studies.

EDF Renewables proposed a big increase in study deposits based on the logic that a parent company that puts in multiple requests must be able to pay a higher share of the MISO study time. If stakeholders agree, this increase could whittle down the size of the 2023 DPP cycle because EDFR proposes a limit on MWs studied per cycle in each MISO region as a percentage of peak load. Limiting studies per region might impact the West region of MISO because it received 133 requests in the 2022 cycle with a total capacity of 25 GW. But in the 2020 cycle, the West received only 30 requests with 3 GW capacity.

EDF Renewables says fewer requests in a queue cycle translate into fewer higher-risk project requests, leading to faster results. Faster MISO turnaround means study assumptions that reflect actual future dispatch, which EDFR says will reduce queue withdrawals, thus leading to fewer restudies.

All of this is good, but would the rest of the MISO renewable developers go along with EDFR? MISO data shows that 80% of the queue submittals are not built. So, the EDFR proposal could shine a bright light on the 20% that get built if it gains consensus, at least among the top five developers at MISO.

Where does MISO go from here?

None of these proposed MISO queue reforms will address the renewable industry staffing problem. In some ways, renewables developers are responsible for staffing challenges at MISO and PJM. They have hired interconnection engineers with ISO experience, which is good for the developers but bad for the grid operators.

Would these latest reforms change the Affected Systems study processes? We don’t know for sure, because, if MISO increases its study deposits, developers will go to SPP unless SPP makes similar changes. If MISO and SPP restrict developers from putting in speculative projects, developers will enter the PJM queue. The bigger point is that the FERC generator interconnection order is pending. That FERC order has the potential to standardize these study deposits so that the unwieldy queue problem does not go from MISO to SPP, which could impact the Affected Systems studies because waiting on another ISO’s model-building process to conclude takes time.

Another big question is, will these changes be applied to past DPP cycles or begin with 2023? That distinction could impact the response to EDFR’s proposals from other developers. Clean Grid Alliance does not favor applying queue reforms to past DPP cycles. But if past DPP cycles, including 2022 projects, don’t get culled, how will MISO focus on future cycles?

Finally, if MISO wants to make a dent in the queue, it needs to try new software tools that enable model building and have a chance to reduce model-related delays.