By Amanda Durish Cook
CARMEL, Ind. — MISO’s market planners last week outlined a potential 30-minute reserve product to reduce uplift and multiday generator commitments to cut production costs. Both concepts are in early planning stages, officials told the Dec. 14 Market Subcommittee meeting.
30-Minute Reserves
Engineer Oluwaseyi Akinbode said MISO currently addresses short-term capacity needs using offline resources with quick start-up times and economic generation already online. However, Akinbode said, the approach results in expensive uplift payments.
Akinbode said a short-term capacity reserve would be especially helpful in MISO South, which has less than 500 MW of offline capacity available within 30 minutes. Two southern load pockets — Amite South and the West of the Atchafalaya Basin (WOTAB) — have none and less than 100 MW, respectively.
“We are on track in 2017 to incur about $20 million [in uplift]. Last year, we incurred about $20 million … in day-ahead revenue sufficiency guarantee to manage load pockets,” Akinbode said.
Making the price of the reliability service transparent may cause some generation owners to defer plant retirements and others to develop new fast-start resources, said Jeff Bladen, MISO executive director of market design.
“What we want to make sure is that generators have the best economic signal, and they judge for themselves,” Bladen said.
Northern Indiana Public Service Co.’s Bill SeDoris said that with only some localized parts of the footprint needing the capacity product, he saw a possibility that only generation with access to certain load pockets would be able to benefit financially. “That may raise concerns,” he said.
Bladen said that while MISO doesn’t yet have systemwide need for the short-term product, conditions will change with the increased adoption of intermittent resources. He pointed out that MISO doesn’t expect to have a short-term product ready for use until 2020, when the footprint’s resource mix will have further shifted toward renewables.
“We expect this to be needed systemwide … and by the time we’re fully utilizing it, we expect the need for a 30-minute product to be much more prevalent systemwide. We do see this as a need systemwide even though the short-term value proposition is localized,” Bladen said.
MidAmerican Energy’s Greg Schaefer asked under what conditions a 30-minute dispatch would be valuable.
Akinbode said the option would help eliminate out-of-market commitments that cause MISO to incur uplift payments.
Bladen said the product was needed because MISO’s forecasting of anticipated wind supply is less accurate beyond 30 minutes from dispatch.
“It’s a far less costly way to manage operations until we get to that 30-mintue window where we get a clearer picture of what to expect out of resources like wind,” Bladen said.
SeDoris asked if MISO designers were thinking about creating penalties for units that commit to offer the short-term capacity but don’t deliver.
“There are a lot of details we’re going to have to work through,” Akinbode agreed.
Werner Roth, an economist with the Public Utility Commission of Texas, thanked MISO for its work. “This is something we’ve been asking for a long time,” he said.
Multiday Market
MISO also is considering the use of a screening tool to make recommendations for turning generators with long lead times on and off seven days in advance. The RTO estimates implementation sometime in 2019. (See MISO Exploring Multiday Market.)
“The savings of a multiday optimization window are substantial,” Senior Market Engineer Chuck Hansen said.
Hansen said MISO identified the best candidates for multiday commitments using three criteria: long lead times, high start-up costs and the ability to respond. The RTO then developed a screening tool that estimates potential cost reductions by examining units individually.
“Some units have high emissions upon start-up and sometimes they can only start once or twice per month to avoid going over their emissions” limits, Hansen said.
He said MISO began researching with a multiday candidate list of 85 generators and later increased the number to 113 of the 1,200 units in the footprint after staff spoke with members and the Independent Market Monitor.
Using the 113 candidate generators, Hansen said MISO estimated that the multiday screening tool could reduce production costs by $157.3 million and output by 2,658 MW annually. Hansen said some of the savings were attributable to passing commitments to more nimble and economic units. But he cautioned that costs avoided using a multiday market won’t likely be as dramatic as the study suggests because it couldn’t account for unanticipated weather, unforeseen outages and increased renewable penetration. MISO estimates an achievable savings of between $29 million and $44 million per year, Hansen said.
“Some of this relies on [long-term] forecasts we don’t yet have,” he added.
Some stakeholders said that MISO estimating even a 10 to 15% share of the study’s savings would overstate the benefits.
Customized Energy Solutions’ Ted Kuhn said the multiday commitments could actually increase costs should MISO produce a wildly inaccurate seven-day forecast.
“With this, I just see more make-whole payments,” added Kuhn’s colleague David Sapper.
Bladen added that the screening tool merely suggests commitments to operators, and it’s up to operators to decide whether to act on those. MISO and stakeholders have yet to decide if the tool’s recommended commitment changes will come attached with make-whole payments and other market rules should operators decide to take its advice.
“What the tool is doing is simulating what the participant might change when they self-commit. The screening tool is not dispatch instructions. This is not a new kind of dispatch tool that we’re trying out,” Bladen said.
For financially binding commitments, MISO would have to create a multiday pricing forecast that the RTO would have confidence in, Hansen said.
When a generator decides to decommit, Hansen said, the lost generation will be replaced with new generation with the LMP at the hour, with the idea being to turn off more expensive generation and replace it with the system LMP.
In September, MISO Director Thomas Rainwater said that should MISO move to multiday financial commitments, “we have to make sure natural gas generation is in lockstep with pipeline commitments.”
