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August 2, 2024

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BANC Moving to Join CAISO’s EDAM

LAS VEGAS — CAISO scored a potentially important victory Wednesday when the Balancing Authority of Northern California (BANC) said it will pursue membership in the ISO’s Extended Day-Ahead Market (EDAM) — and not SPP’s Markets+.

BANC General Manager Jim Shetler revealed the decision during a CEO panel discussion at a CAISO EDAM Forum held at Resorts World on the Las Vegas Strip.

“I’m pleased to announce that at our strategic planning session a week ago today, staff recommended to the [BANC] commission that we move forward with participation in EDAM as our option for day-ahead market participation, and I’m pleased to say our commission unanimously endorsed that recommendation,” Shetler told an audience of about 240 electric industry participants attending the event.

BANC is a joint powers authority that manages system operations for six municipal utilities: Sacramento Municipal Utility District (SMUD), Modesto Irrigation District (MID), Roseville Electric, Redding Electric Utility (REU), Trinity Public Utility District (TPUD) and the City of Shasta Lake. With about 5,000 MW of load, BANC is the third-largest BA in California and the 16th largest in the Western Interconnection. Its footprint also includes the Western Area Power Authority’s transmission grid in the Sierra Nevada region (WAPA-SN).

Shetler said each of its members would have to decide individually whether to join the EDAM but pointed out that SMUD — California’s second-largest municipal — also has  received approval from its board to engage with BANC on participating in the new day-ahead market. SMUD was the first BANC utility to begin trading in CAISO’s real-time Western Energy Imbalance Market (WEIM) in 2019.

“Engaging with BANC to participate in the EDAM is a natural progression from SMUD’s participation in the WEIM,” SMUD CEO Paul Lau said in a statement. “Not only is the EDAM an important tool to support reliability and resiliency and low rates while helping SMUD deliver on our industry-leading decarbonization goals, it will also provide broader price, reliability and decarbonization benefits in support of regional goals.”

Shetler said Modesto, Roseville and Reading were all in “various stages” of obtaining approval from their boards, while WAPA-SN will be kicking off the federal process to gain its approval in September. He said BANC is looking to go live in the new market in 2026.

BANC is the second entity to commit to the EDAM behind PacifiCorp, which controls a large amount of transmission and generation in six Western states through its Pacific Power and Sierra Pacific utilities.

Sharing the dais with Pacific Power CEO Stefan Bird and CAISO CEO Elliot Mainzer in Las Vegas, Shetler said he looked forward to working with their staffs to “make EDAM a reality.”

‘Clear Winner’

At a press briefing at the forum on Wednesday, Shetler spelled out the reasons BANC decided to go with the EDAM, including its ability to help members meet their decarbonization goals.

“And the other dynamic here is, as markets evolve, if you’re not in a market, you do run the risk of losing your counterparties for trading going forward. That was certainly a decision for some of my members when we joined the WEIM,” he said.

But BANC’s decision to choose the EDAM over Markets+ appeared to come down to geography.

“I think the main driver for any market decision is what are your transmission capabilities and who you’re interconnected with, and we have tremendous interconnection capability with the ISO through our footprint,” he said. “And it just made sense for us when we did our evaluation, both from a cost standpoint [and a] potential benefits standpoint, that EDAM came out as a clear winner.”

Shetler acknowledged the reservations that other public power entities — namely Bonneville Power Administration — have expressed about joining the EDAM, given CAISO’s existing governance structure, in which the grid operator’s board is appointed by the governor of California. That arrangement is a no-go for BPA under federal statute if the power marketing agency were to seek the deeper connection of an RTO.

In kicking off BPA’s day-ahead market selection process in July, Russ Mantifel, BPA director of market initiatives, said the agency would need to factor in that possible limitation when choosing between EDAM and Markets+. (See Regulators Propose New Independent Western RTO.) During Wednesday’s roundtable, BPA Administrator John Hairston reinforced that point.

“When we joined EIM, we were really clear,” Hairston said. “We came out of our public process and said the governance structure was sufficient but wasn’t preferred. The joint authority model [with the CAISO and WEIM boards sharing decisional authority] has worked, but at the end of the day is not independent, and that’s what we’re looking for in this next step.”

Shetler said RTO participation is not currently “an end goal in and of itself” for BANC members, although they do want to leave open the possibility of getting there.

“I think that EDAM could evolve into an RTO if we wanted it to,” he said. “I also think there’s the ability that perhaps an RTO could get created and there might be some of us who want to just stay in EDAM and not participate in an RTO. So, I think that optionality is important to us.”

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DOE Announces $500M in IIJA Funds for CO2 Pipeline Buildout

By 2040, the U.S. could be capturing and sequestering 450 million metric tons (MMT) of carbon dioxide per year, and the Department of Energy wants to prepare for that future growth by investing $500 million in CO2 pipelines.

DOE issued a Notice of Intent (NOI) on Friday for the funds, part of the $2.1 billion the Infrastructure Investment and Jobs Act (IIJA) authorized for a CO2 transportation infrastructure finance and innovation program. The official funding opportunity for the $500 million in Future Growth Grants (FGGs) is expected to open between Oct. 1 and the end of the year.

As outlined in the NOI, the program’s goal is to help build “a domestic interconnected carbon management ecosystem” that can move CO2 from point of capture to storage or use facilities.

But instead of building the system to accommodate current or near-term demand, DOE wants to encourage developers to oversize their pipelines now to “help avoid future construction of separate, redundant transport networks, as well as associated environmental impacts,” according to a press release.

DOE has estimated that carbon capture and sequestration of industrial CO2 emissions alone could reach 65 MMT by 2030, 250 MMT by 2035 and 450 MMT by 2040.

The FGGs would be used to make up the difference in cost between building pipelines and other infrastructure for current demand versus projected future demand, according to the NOI.

“Significant economies of scale can be achieved if upfront investments are made to ‘oversize’ CO2 transport infrastructure capacity to accommodate potential CO2 supplies that are not yet under contract,” the NOI says. “However, financing for CO2 transport infrastructure investments is often difficult or impossible to obtain unless firm contractual commitments are in place for both CO2 supply and offtake.”

Building oversized transport infrastructure could also push carbon-emitting plants to install capture equipment, DOE said.

To be eligible for an FGG, a developer or other entity must be planning or building “large-capacity, common carrier infrastructure” for CO2 transport. A common carrier would be defined as any pipeline or other infrastructure providing transport of CO2, with the service open to the general public for set fees. Projects receiving an FGG would have to be completed within five years of the award and would have to demonstrate that the extra capacity would be used over the 20 years following completion.

Applicants would be required first to submit a letter of interest, to be evaluated by DOE. Developers deemed eligible for a grant would then be invited to submit full applications.

The NOI does not detail maximum or minimum amounts for the FGGs but says DOE expects to make additional funding announcements for the money.

The balance of carbon transportation funding, $1.6 billion, will be used for loans to be administered through the Loan Programs Office (LPO). Program guidance for the loans was issued in October 2022, but the LPO has yet to make any loans with the funds, according to DOE.

De-risking Carbon Capture

CCS remains a controversial technology in the U.S. Some environmental and clean energy groups continue to voice skepticism or outright opposition, seeing it as a hedge for continued use of fossil fuels. And, in fact, the technology has strong support from fossil fuel companies, such as Occidental Petroleum, which uses CCS for enhanced oil recovery ― injecting CO2 into low-producing wells to push out more oil.

Advocates for the technology point to analyses from the International Energy Agency and U.N. Intergovernmental Panel on Climate Change, both of which frame carbon capture as necessary to limit the increase in the global average temperature to 1.5 degrees Celsius.

Friday’s announcement is one of a series of administration and DOE moves signaling ongoing support for a range of carbon capture technologies, beginning with the renaming of the agency’s Office of Fossil Energy as the Office of Fossil Energy and Carbon Management in July 2021.

Carbon removal technologies also are a rare point of common ground between the White House and Republicans and some conservative Democrats in Congress. The IIJA provides more than $12 billion for a range of carbon capture initiatives, including the CO2 transportation program.

As part of the compromise hammered out between the White House and Sen. Joe Manchin (D-W.Va.), the Inflation Reduction Act authorized major increases to the existing 45Q tax credits for CCS, bumping up, for example, the credit for direct air capture (DAC) to $180/ton for permanently stored CO2.

Both laws seek to draw private investment to the development of emerging clean technologies and their supply chains and build out the physical and entrepreneurial infrastructure needed to de-risk and grow demand for such projects. The FGGs could be used to de-risk CCS projects receiving other IIJA funding, such as the regional DAC hubs in Louisiana and Texas that DOE announced this month. (See DOE to Fund Direct Air Capture Hubs in Texas, Louisiana.)

As with other projects receiving major funding from the IIJA and IRA, FGG applicants will have to create community benefit plans laying out how they will involve communities in project development, ensure local jobs are created and provide other community benefits.

Another DOE announcement Monday named 13 finalists in the DAC Energy Prize for Innovation Clusters (EPIC). Each will receive $100,000 to develop incubators and other programs that will support the development of new DAC technologies and startups. One example, the gener8tor DAC Accelerator in Chicago, will use the money to develop a program to help five startups per year “with individualized coaching, mentorship, networking and supporter access.”

“To meet our net-zero ambitions, we must rapidly commercialize and scale carbon dioxide removal. That is why accelerating the direct air capture industry is so important,” said Brad Crabtree, DOE assistant secretary of Fossil Energy and Carbon Management. “The DAC EPIC Prize [finalists] have demonstrated a passion and expertise for assisting the transition of direct air capture technologies from an idea to a marketable product through design, industry networking and business strategy support.”

DOE also launched a Responsible Carbon Management Initiative in August to establish a set of industry principles for CCS project developers “to pursue the highest levels of safety, environmental stewardship, accountability, community engagement and societal benefits in carbon-management projects.” (See DOE Launches Responsible Carbon Management Initiative.)

Since the passage of the IIJA, more than 100 carbon-removal projects have been announced in the U.S., according to Crabtree.

“That’s why this Responsible Carbon Management Initiative is so important,” he said. “It will provide a framework for encouraging and recognizing best practices in the development of carbon-management projects and for fostering transparency and learning through greater data and information sharing among industry, governments, communities and other stakeholders.”

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Hawaiian Electric Faces Multiple Lawsuits over Wildfires

A lawsuit filed last Thursday on behalf of shareholders in Hawaiian Electric Industries, the parent company of Hawaiian Electric Co. (HECO), accuses the company of ignoring opportunities for actions that could have prevented this month’s deadly wildfires on the island of Maui.

The suit, filed in the U.S. District Court for Northern California by the Pomerantz Law Firm and seeking class-action status, is one of several the utility is facing related to the wildfires. At least three more lawsuits were filed in Hawaii this month, two of which also seek class-action status on behalf of residents of Maui. In addition, Maui County also announced Thursday that it had filed suit against Hawaiian Electric and its subsidiaries for “failing to power down their electrical equipment” in spite of wildfire warnings.

The wildfires have killed 115 people and burned more than 3,000 acres of Maui, according to the latest update from Maui County, including the historic town of Lahaina, which the county’s lawsuit says was left in “utter devastation.” As of Tuesday, the Lahaina and Kula fires — which began Aug. 8 at 6:37 a.m. and 11:30 a.m., respectively — were 90% contained, while the Olinda fire, which started Aug. 7 at 10:47 p.m., was 85% contained.

Citing the Pacific Disaster Center and the Federal Emergency Management Agency, Maui County estimated that rebuilding from the Lahaina fire alone would cost at least $5.5 billion.

Maui’s lawsuit accuses Hawaiian Electric of negligence in failing to power down its power lines and other electric equipment despite a red flag warning from the National Weather Service on Aug. 7 indicating an increased risk of fire danger. The county further alleged that NWS warned the state of Hawaii in general, and Hawaiian Electric’s subsidiaries Maui Electric (MECO) and HECO specifically, days in advance of the ignition that high winds could knock down power lines and that fires could spread quickly in the dry conditions.

“Had defendants heeded the NWS warnings and de-energized their power lines during the predicted high-wind gusts, this destruction could have been avoided,” the complaint said.

In addition to the utility’s alleged inaction on the days the wildfires began, Maui County claims Hawaiian Electric and its subsidiaries neglected their duties to “properly maintain and repair” their utility poles and other electrical equipment, and to “keep vegetation properly trimmed and maintained” to prevent contact with power lines. The county’s complaint cites multiple state and national statutes and regulations it says the utilities did not follow (although not NERC reliability standards, with which Hawaiian utilities are not required to comply).

Maui County also said that even before the fire, many of HECO and MECO’s wooden utility poles on Maui “were severely deteriorated and damaged by advanced wood decay [that] caused and/or contributed to” their failure, and that the defendants should have known the above-ground transmission lines “posed a significant fire hazard.”

The class-action suit filed in California also accuses Hawaiian Electric of neglecting its duties before the fires but focuses on its alleged misdirection of shareholders in the preceding months and years. Plaintiffs in the suit claim to have suffered “significant losses and damages” due to the “precipitous decline in the market value of the company’s securities” following the fires and media reporting on allegations of the utility’s unpreparedness.

Hawaiian Calls Accusations “Irresponsible”

Hawaiian Electric responded to the Maui County lawsuit in a media statement Thursday, labeling the complaint “factually and legally irresponsible” and warning that the county might “leave us no choice in the legal system but to show its responsibility for what happened that day.” It has not commented publicly on the other lawsuits; a representative declined to comment.

The utility pushed back on some of the county’s claims, noting that while the fire that began in Lahaina the morning of Aug. 8 apparently was caused by fallen power lines, the Maui County Fire Department reported the fire “100% contained” and later “extinguished.” Although a second fire began in the same area around 3 p.m., Hawaiian Electric observed that all its power lines in the area had been de-energized for more than six hours at that point. It also mentioned that its own crews reported the afternoon fire to firefighters.

Hawaiian Electric did not mention the Kula and Olinda fires in its response, nor did it comment on the allegations of improper maintenance.

“The county’s lawsuit distracts from the important work that needs to be done for the people of Lahaina and Maui,” said Hawaiian Electric CEO Scott Seu. “Since the devastating fire in Lahaina, Hawaiian Electric’s focus has been supporting all of those who have been impacted and helping Maui recover. HEI stands with Hawaiian Electric and the community in rebuilding Lahaina and empowering a thriving future for Maui and the other islands we serve.”

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More Bad OSW News: SouthCoast Bails, Ørsted Tanks

A bad week for the U.S. offshore wind industry just keeps getting worse.

The latest: SouthCoast Wind is on the verge of falling out of the development pipeline, having reached agreements to buy its way out of too-low power purchase agreements, and Ørsted says it is facing a massive cost impairment on its Northeast U.S. projects.

Ørsted’s CEO followed up Wednesday morning by saying the company is prepared to walk away from its projects, if necessary, though it does not want to. The world’s largest offshore wind developer saw its stock price plummet 25% in trading later that day.

The developments followed the acknowledgment Monday by New York state that its offshore wind projects may not be able to proceed without significantly more money.

And on Tuesday, the first federal wind energy auction in the Gulf of Mexico was underwhelming — two lease areas went unclaimed, and the winning bid on the third was just $5.6 million.

The three auctions in 2022 drew a total of $5.44 billion in winning bids.

SouthCoast Wind

Like several other offshore wind projects along the Northeast coast, SouthCoast Wind says it cannot go forward with construction amid soaring costs under the terms of the power purchase agreements it negotiated with three Massachusetts utilities. Commonwealth Wind reached the same conclusion around the same time last year.

SouthCoast and Commonwealth both sought to renegotiate nearly a year ago and were rebuffed; Commonwealth then moved to cancel its PPAs, but SouthCoast did not follow until several months later.

Commonwealth Wind in July agreed to pay Eversource, National Grid and Unitil $48 million for their cooperation in its bid to terminate the PPAs. The Massachusetts Department of Public Utilities approved that deal last week. (D.P.U. 22-70, 22-71, 22-72.)

SouthCoast has negotiated similar deals with the same three utilities for $60 million. Its proposals to the DPU were made public on Tuesday. (D.P.U. 20-16, 20-17, 20-18.)

Both projects remain in active development, but without PPAs, they will be in limbo.

These recent events are a setback for the clean energy transition in Massachusetts, which is seeking 5,600 MW of offshore wind installed by 2027. Only the 800 MW Vineyard Wind would be left in the state’s offshore wind portfolio if the DPU approves the SouthCoast termination.

But construction of Vineyard is proceeding at a steady pace. It is expected to produce its first electricity this year and reach full capacity next year.

Fourth Solicitation

Also this week, Massachusetts on Wednesday issued requests for proposals in its fourth and largest offshore wind solicitation.

Under terms of the solicitation, SouthCoast and Commonwealth can bid for new contracts, though they may lose points in the scoring system for having bailed out of their previous agreements. The developers have said they intend to pursue this option.

State and labor leaders focused on the positive Wednesday as they announced the solicitation. Their news release did not mention Commonwealth or SouthCoast, but instead played up the expected benefits offshore wind will provide the economy and climate of the Bay State.

“This adaptive RFP was drafted to create a transparent, competitive process that will benefit Massachusetts’ residents and businesses with cleaner air, lower energy bills, jobs in a growing industry and economic development opportunities,” Energy and Environmental Affairs Secretary Rebecca Tepper said. “Offshore wind is the cornerstone of Massachusetts’ clean energy transition and will help us build a healthier, more resilient Massachusetts.”

The new solicitation offers bidders the option of adjustment mechanisms for inflation and changes in tax policies, which could help avert a repeat of the turmoil now facing the U.S. offshore wind industry.

Bids are due Jan. 31, and projects will be selected June 12.

Ørsted

Danish wind power giant Ørsted is among the developers getting squeezed by construction costs that soared after electricity prices were locked in.

The company on Tuesday announced anticipated impairments of up to 16 billion Danish Krone — $2.34 billion U.S. — on the three U.S. offshore wind farms for which it holds contracts but has not started construction.

Ørsted stock closed at 420.90 Krone on Wednesday, down 24.7% from Tuesday. It is now 40% off its 2023 peak, reached in February.

CEO Mads Nipper told analysts in a conference call early Wednesday that the situation comes down to the same problems other developers are having: rising costs and supply constraints.

However, Ørsted isn’t projecting impairments on projects in other countries — the problems are worst in the U.S., because of the newness of the industry here.

Nipper’s tone was markedly different than just three weeks earlier, when he discussed the struggling Northeast U.S. offshore wind sector on another conference call.

Analysts pressed him Wednesday on why the outlook had changed so much so quickly.

“In recent weeks we have seen an increasing probability that some risks will materialize,” he said. “We have concluded that there is a continuously increasing risk in [our suppliers’] ability to deliver on their commitments and contract schedules.”

Ørsted sees an impairment of up to 5 billion Krone on supply chain constraints, up to 6 billion on the investment tax credits it so far has been unable to secure and up to 5 billion on rising long-term interest rates.

Nipper listed other troubling news:

    • Ørsted has pushed the expected commercial operations date for Ocean Wind 1 back from 2025 to 2026.
    • The first wind turbine installation vessel being built in the U.S., the Charybdis, is behind schedule and over budget and is unlikely to be ready in time for some of Ørsted’s construction work, boosting costs.
    • Foundation components are not available on the schedule anticipated.
    • Ørsted has decided to reconfigure its Skipjack and Ocean Wind 2 projects to improve their financials.
    • The company has “adjusted” its recent offshore wind bids to avoid future problems. (Apparently, “adjusted” means “jacked up the price tag”: Last month, Rhode Island rejected Ørsted’s Revolution Wind 2 bid as too expensive and New York invited Ørsted and other bidders to resubmit lower bids.)

Nipper said Wednesday that Ørsted has invested about $4 billion so far in U.S. offshore wind development and walking away now would not be the best or most responsible use of shareholder money. So, it is exerting “maximum pressure” in negotiations.

However, he added:

“Let me be clear: We will continue to carefully assess all of our options … to ensure that we make the most financially responsible decisions. As we communicated earlier, we are willing to walk away from projects if we don’t see value creation that meets our criteria.”

Nipper said he expects the company to make a final investment decision on three large projects in three states — Ocean Wind 1, Revolution Wind and Sunrise Wind — in late 2023 or early 2024.

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Idaho Power Seeks FERC Help with $700K WEIM Fine

Idaho Power filed a complaint against CAISO with FERC on Tuesday, seeking to get out of $702,425.71 in penalties it was assessed after a metering mistake (EL23-94).

The utility wants at least a waiver of the rules because it argued that the minor, inadvertent meter data error should not have been penalized that much, as it had no real impacts on the Western Energy Imbalance Market (WEIM).

Idaho Power self-reported the meter data inaccuracies around the federally owned Arrowrock Dam, which houses a 19.5-MW hydroelectric facility “that consistently operates below its nameplate capacity,” according to the utility. The inadvertent double-counting led to an under-reporting of 0.37 MWh in generation output, which was so small it had no impact on prices, the utility said.

“There were no market impacts resulting from this double-counting of transmission line losses,” it told FERC. “In fact, the under-reporting of generation output resulted in energy being produced by Arrowrock without compensation, and the under-reporting led to an increase in energy required by Idaho Power’s load from the WEIM that was not needed but was paid for.”

Section 37 of CAISO’s tariff sets out the penalty rate for such meter data inaccuracies, and the grid operator has no discretion to reduce or choose not to apply the penalty.

CAISO has tried to waive the penalty, but that move was rejected by the commission. FERC has suggested in an earlier order that the ISO should change its rules, and it has a stakeholder process underway, but that has yet to produce a proposal.

The Arrowrock facility does not participate in the WEIM, and Idaho Power dispatches it for native load service. It is connected to Idaho Power’s system by several miles of transmission, but the metering takes place near the generator, so line losses must be accounted for.

The utility found out in July 2022 that those line losses were being double-counted since it joined the Western market four years earlier. The error dated back to when Idaho Power was preparing its metering systems for participation in the WEIM.

The utility told FERC the error was difficult to detect and it found out about it only when it was testing the meters and their programming. Idaho Power checked its other meters and determined the issue was limited to Arrowrock.

“The quantity of the data error, 0.37 MWh on average, is small enough that it would not impact the applicable LMP of energy in a material amount had it been reported correctly originally,” the firm said. “Importantly, meter data can be corrected after the fact, which does not impact WEIM market runs. The impact of corrected meter data is addressed through settlements after the WEIM market has run.”

Despite the lack of impacts, CAISO assessed penalties of just over $700,000. Idaho Power asked FERC for a waiver of that part of its tariff or to grant its complaint that the rules are unjust and unreasonable and should be thrown out.

FERC granted a similar waiver request from NV Energy over a metering error of 1.06 MWh/day that happened when that firm was setting up a new generator. The commission found that NV Energy acted in good faith, notifying the ISO as soon as possible, promptly issued corrective data and confirmed other meters in its footprint were operating correctly.

“These are the same actions that Idaho Power took with respect to Arrowrock,” the utility said.

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PJM Presents Preliminary 2023 Reserve Requirement Study to Stakeholders

Reserve margins would increase significantly based on the preliminary 2023 Reserve Requirement Study (RRS) results PJM presented to the Resource Adequacy Analysis Subcommittee (RAAS) on Aug. 29.

The installed reserve margin (IRM), which sets the targeted capacity level above expected loads, would rise from 14.7% for the 2026/27 delivery year (DY) in the 2022 study to 17.6% for the 2027/28 DY using PRISM modeling software. The forecast pool requirement, which considers forced outage rates, also would increase from 9.18% to 11.65% for the corresponding DYs.

When comparing RRS results, PJM looks at the furthest year out, as that would be the year a Base Residual Auction (BRA) would be run under a three-year advance auction schedule. (See “Stakeholders Endorse 2022 Reserve Requirement Study Results,” PJM PC/TEAC Briefs: Oct. 4, 2022.)

This year’s study also engages in a second analysis using software developed to perform hourly loss-of-load modeling used in effective load-carrying capability (ELCC) studies to calculate the IRM and FPR. Both results will be presented to stakeholders, who will be asked to endorse one of the sets of results.

The hourly analysis yielded an IRM of 18.3% for the 2027/28 DY and 12.31% FPR, with much of the difference between the PRISM values arising from the load model.

In addition to setting an initial IRM and FPR value for the 2027/28 DY, the study resets the figures for the previous three years. The preliminary results would be increased by a similar margin for each of those years.

PJM’s Patricio Rocha-Garrido said the drivers of the higher margins in the preliminary results are increased uncertainty in the peak load forecasts in the data and a higher generation forced outage rate in the winter owing to the December 2022 winter storm and the November 2013 polar vortex being included in the data. Shifting to hourly modeling of peaks also increased the expected peaks.

Minimal coincidence between the PJM peak load period and the “world” peak — which is defined as MISO, NYISO, TVA and VACAR — led to the capacity benefit of ties (CBOT) value more than doubling to 2.2% from the 1% value in the 2022 study. To reduce volatility, PJM elected to average the CBOT values from 2017-22 and use that figure, which landed at 1.5%, instead.

While the RTO opted to shift the world peak to not fall on the same week as PJM’s peak in the load model, spokesperson Jeff Shields noted that a similar shift was made last year. (See “Stakeholders Endorse RRS Load Model” PJM PC/TEAC Briefs: Aug. 8, 2023.)

“So, shifting the world peak week is not the whole story — the peak load coincidence in weeks other than the PJM peak week, as well as the magnitude of the world peaks on those weeks (as well as during the PJM peak week), also play an important role,” Shields said in an email.

The load model, which included data from 2013-19, contributed to a 2.1-percentage-point increase in the IRM, while the winter peak week caused a 1.1-percentage-point increase under the PRISM modeling. The values were slightly lower for the FPR drivers.

The CBOT contributed to a 0.5-percentage-point decline in the IRM value and 0.58-point-lower FPR.

Under the hourly analysis, the load model contributed to a 3.1-point increase in the IRM and 2.95-point increase in the FPR. The winter peak week increased the IRM by 0.7 points and the FPR by 0.66 points. The CBOT lowered the IRM by 0.5 points, which was about the same for the FPR.

The non-winter peak week had a smaller impact on the IRM under both approaches, 0.2 under PRISM and 0.3 in the hourly model, and had no contribution to the FPR. PJM used a larger amount of data to determine the expected winter peak capacity models, drawing on aggregate outage data from the 2007/08 DY through 2022/23. The remainder of the capacity model data used Generating Availability Data System (GADS) outages from 2018-22.

Rocha-Garrido said PJM is in the process of using coincidental peak distributions to calculate additional values to compare to the PRISM and hourly results to inform staff’s recommendation of which model to use in the final study results.

James Wilson, a consultant to state consumer advocates, said he calculated the PRISM values would lead to around a 3,700-MW increase in the summer reserve margin. Rocha-Garrido agreed that likely would be about right. Wilson questioned what has changed about PJM’s understanding of resource adequacy in the summer to drive such an increase in the amount of capacity that would be procured.

“The explanations just say we made a bunch of changes. … Why are we buying a lot more when we don’t have any reason to think the same isn’t enough?” Wilson said.

PJM’s Andrew Gledhill said staff worked with Itron to improve their load forecast modeling, leading to the hourly approach and an overall modeling which they believe has a tighter fit to the data available. The old modeling appeared to be underforecasting load certainty, in the winter in particular.

Wilson said PJM historically had not included data from the polar vortex in its modeling, believing the issues that led to high forced outage rates during the event had been addressed by winterization efforts. He called on PJM to provide additional analysis justifying the data’s inclusion in the RRS, saying PJM had relied only on the impact of Winter Storm Elliott to make that change.

First reads of the IRM and FPR values are scheduled for the September Planning Committee (PC) and Markets and Reliability Committee (MRC) meetings. The PC is expected to vote on endorsement the following month, while the MRC and Members Committee (MC) are anticipated to vote October through November. The values are expected to be presented to the Board of Managers in December.

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NERC’s DeFontes Calls for Industry Balance

AUSTIN, Texas — The Texas Reliability Entity’s Board of Directors hosted top NERC official Ken DeFontes during last week’s quarterly meeting.

Or, as Board Chair Milton Lee said in introducing DeFontes, “Thanks for visiting Texas at the height of summer.”

NERC Board of Trustees Chair Ken DeFontes | © RTO Insider LLC

DeFontes, who chairs NERC’s Board of Trustees, brought with him the grid’s three competing objectives: reliability, affordability and the environment. Objectives, he said, that are being thrown out of whack by policymakers focused on environmental legislation.

“I think we’ve done a really good job over the years of figuring out how to get to that right balance, to do the job economically, to be responsive and attentive to the impact on the environment at the same time,” he told the board during its Aug. 23 meeting. “We need to get back to that balance, and part of NERC’s job is to better inform policymakers, not only at the federal level but also at the state level because a lot of the impacts are coming from state policy matters.”

Part of the answer lies in the agency’s biennial reliability risk report. The report, released last week, added engagement in energy policy as one of NERC’s five risk profiles. (See ERO Adds Energy Policy to Risk Priorities List.)

DeFontes said he and CEO Jim Robb already are making the rounds on Capitol Hill. He said they’ve been impressed with the level of understanding they’ve seen from Sen. Joe Manchin (D-W.Va.), chair of the Energy and Natural Resources Committee, and other key legislators.

“That’s encouraging to me that there are leaders in Congress who are understanding that as we transition away from dispatchable coal plants and replace them with intermittent renewable resources without a path to get us to whatever the future is going to be,” DeFontes said. “Part of the challenge is our message in the short run is manage the transition. Don’t lose sight of the fact that we’re more dependent on natural gas, so solve the interdependency issue between gas and electric.

“The problem with that message is what happens after that. We don’t really have an answer.”

To help find it, NERC also is conducting an interregional transfer capability study that is due in December 2024, a joint effort with FERC, the regional entities and the industry. NERC says the study, a directive from Congress as part of the recent Fiscal Responsibility Act, could provide “important insights for industry, regulators and policymakers.”

“I don’t think the issue with transmission is a lack of desire or a lack of financing to build it. The issue is getting sited and getting it approved,” said DeFontes, who said he has the scars from building transmission dating back to his utility days. “People really don’t like to see the transmission lines through their neighborhood. We need to move power across state lines, and when that happens, getting the approval to build the line is complicated, particularly for the states in between … there’s no benefit for them. It comes down to the siting and permitting.”

Addressing the Texas RE’s board and leadership, DeFontes continued: “I would love to have you help me figure out what we can do to make that work better, but we need more. The rate at which we’re investing in transmission right now by all indications is far less than what it needs to be.”

ERCOT CEO Pablo Vegas brought a similar reliability message to the meeting. He also focused on the industry’s pace of change.

“The systems are becoming complex because of that pace of change and the need for all of us in positions of accountability or various parts of the electric industry to be able to respond,” he said, “and to adapt our thinking or methods or technologies or processes in our organizations in ways to be able to take advantage of incredible innovation that’s ahead of us and also to be ready for the big challenges that are ahead of us.”

At the top of Vegas’ to-do list is developing a reliability standard. ERCOT staff have proposed a three-part framework that considers the duration and magnitude of a loss-of-load event, along with the occurrence’s frequency. They say this will better quantify LOLE risks when intermittent resources are a large percentage of the generation fleet. (See “ISO Prioritizes Market Changes,” Texas Public Utility Commission Briefs: Aug. 24, 2023.)

“We’re operating at a 1-in-10 standard,” Vegas said. “The last time there was a load shed event [before 2021’s disastrous winter storm] was 2011. One in 10. Was everybody happy with that? Not even close. There’s clearly a lot of opportunities to better define what reliability means, the cost implications and frankly, to be able to have a conversation with constituents.”

Using such a conversation as a hypothetical example, Vegas said, “’This is what reliability standard means. This is what you should expect if we were to get into a situation like this because there is no such thing as zero risk. There is no such thing as no contingency.’ So let’s be upfront. Let’s be realistic.”

Spaulding to Serve 2nd Term

The Texas RE board’s Nominating Committee told directors it’s recommending Suzanne Spaulding be approved for a second three-year term as an independent director. The board will consider her nomination during its December meeting.

Spaulding is a senior adviser for Homeland Security at the Center for Strategic and International Studies and a member of the Cyberspace Solarium Commission. She previously was with the Central Intelligence Agency and the Department of Homeland Security, where she was undersecretary for cybersecurity and critical infrastructure protection.

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DOE Announces $300M for Tx Siting, Community Development

The Department of Energy on Tuesday announced a $300 million grant opportunity for states, tribes and local governments to strengthen their transmission siting and permitting processes.

Funding for the Transmission Siting and Economic Development (TSED) program comes from the Inflation Reduction Act and is administered by DOE’s Grid Deployment Office. The program is meant to accelerate the construction of new transmission infrastructure, which is vital to the Biden administration’s net-zero goals.

“To meet our ambitious clean energy goals, we need to expand the nation’s transmission capacity by 60% over the next seven years,” said Secretary of Energy Jennifer Granholm. “Now, thanks to President Biden’s Investing in America agenda, we have the funding to build out a grid chock-full of clean, cheap, reliable electricity and accelerate transmission expansion while creating good-paying jobs across the country.”

The $300 million is the first tranche of a total $760 million for the TSED program under the IRA and is available for permitting processes and economic development in affected communities. The program covers siting for any onshore transmission lines at 275 KV and above and offshore lines of 200 KV and above.

Independent estimates project that transmission will need to expand by 60% by 2030 and may need to triple by 2050 to meet the demand for clean electricity and resiliency. The TSED program will provide financial support to siting authorities to fund studies, modeling, environmental planning and analysis to assess alternatives, better inform decision making and cut application processing time.

Government siting agencies will be able to use the money to study up to three alternate siting corridors for transmission projects. Regulators can use it to participate at FERC or other agency proceedings for determining the rates and costs of a project they site.

The program also can support robust engagement with members of the public, participation in regulatory proceedings and other activities as approved by the secretary of Energy.

The program’s community-based projects can include energy investments such as microgrids, renewable power integration and electric vehicle charging infrastructure. They can support essential community facilities for public safety, health care, education and transit, or community centers and parks.

TSED funds can also be used for job training and apprenticeship programs. DOE wants communities to submit unique projects that are suited to local needs.

Transmission developers are not eligible for the grants, but they can partner with government agencies that are. Developers can work with siting and permitting agencies to propose improvements to cross-jurisdictional coordination, strengthen permitting processes and resolve permitting bottlenecks.

DOE wants initial concept papers from potential grantees by Oct. 31 and full applications by April 5, 2024.

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NYSERDA Backs Inflation Adjustments for Renewable Projects

The lead agency in New York’s clean energy transition has come out in favor of inflation adjustments for renewable projects under contract but not yet under construction.

Inflation and interest rate hikes have emerged as a significant threat to the state’s statutory emissions-reduction goals, as developers of 91 projects totaling 13.5 GW of capacity are seeing construction costs soar. Some are saying they may not be able to proceed under terms negotiated, and three petitions representing numerous developers were submitted to the state Public Service Commission in June seeking relief.

More recent solicitations by the state have offered adjustment mechanisms to account for cost changes, but the solicitations these developers bid into did not.

A flurry of comments was submitted Monday, the PSC’s deadline for input in Case 15-E-0302.

The sentiment fell largely along predictable lines: Those who are fighting for decarbonization and those who would profit from it favored a retroactive boost for the earlier contracts. Opposition came from those who would pay for it or fear they would lose a competitive edge because of it.

The New York State Energy Research and Development Authority submitted a lengthy analysis of options, costs, benefits and risks and concluded that a price adjustment could help maintain New York’s forward momentum toward the goals of the Climate Leadership and Community Protection Act (CLCPA), which requires renewable power make up 70% of the state’s generation mix by 2030.

If developers walk away from their contracts to provide it, the state will have to seek new contracts; bids will inevitably come in higher, perhaps higher than the adjustments the current contract holders seek. These new contracts inevitably will take longer to complete, and the delay will prolong the damaging effects of greenhouse gas emissions generated by burning fossil fuel.

NYSERDA said bid prices submitted in the latest solicitations are significantly higher than those in the earlier contracts.

More Money

Developers of nearly all of New York’s offshore wind portfolio and much of the onshore wind and solar pipeline sought relief through similar petitions submitted to the PSC on the same day in June.

Soon after, Clean Path New York — an $11 billion portfolio of wind and solar projects with an underground transmission line to carry the power they generate to New York City — said it needed the same adjustment if the PSC grants it to the Tier 1 generation projects. Two-thirds of its generation portfolio is Tier 1, so Clean Path would be paying them more.

Another shoe dropped this week: The Champlain Hudson Power Express asked the PSC in a petition Monday to level the playing field and make any inflation-related price adjustment apply to all new-build project components.

The underground HVDC line to carry emissions-free power from Quebec hydropower plants to New York City was first proposed in 2010. Early cost estimates were in the $2 billion range, but the PSC in 2022 authorized up to $6 billion in debt to build it. Construction began this year.

Champlain Hudson said in its petition it has suffered the same unforeseeable cost increases as everyone else, mentioning a converter station whose cost jumped 40% in less than a year. The adjustments it is seeking would not make it whole, it said, and would mean only a modest increase in costs.

A spokesperson for developer TDI told RTO Insider the issue is one of fairness: Any inflation relief must be extended equally to all participants in the state’s renewable energy certificate (REC) program. “CHPE’s petition reflects the necessity that large-scale renewable developers who participated in competitive NYSERDA solicitations and have all faced the same economic and geopolitical challenges are treated equally,” it said.

Reactions

Comments ranged from hundreds of the same supportive message from individual members of unions that expect to work on clean energy projects, to NYISO, which has warned of potential shortfalls in generation capacity amid the transition.

The ISO took no position on whether or how the REC agreements should be modified. Instead, it emphasized the importance of continued progress in the buildout. If development of renewables is not “rationally coordinated” with retirement of fossil fuel resources, system reliability is jeopardized.

As NYSERDA and others commented, losing the existing contracts would slow progress.

NYISO already has identified a potential deficiency of up to 446 MW in New York City on peak summer days, and its warnings about the slow pace of the state’s energy transition have grown increasingly firm in recent months.

In its comment to the PSC, NYISO wrote: “A sufficient fleet of new generation resources that satisfy the CLCPA must be available before more of the existing, traditional generators retire voluntarily or are forced out of service.”

The Public Utility Law Project of New York laid out a different set of priorities: a consistent and transparent review of the developers’ requests for more money, and an effort to cushion ratepayers from the impact of any increase.

“We strongly believe that ratepayers, especially those who are low-income or who live in disadvantaged communities, cannot and should not be left to shoulder the financial burden, especially unexpected cost adjustments,” it wrote.

The state Department of State’s Utility Intervention Unit came out in opposition to the increase.

“For markets and competition to function efficiently, contracts and obligations should be honored,” it wrote. “Altering contracts after terms are defined can diminish the competitive process that potentially disadvantages those bidders not selected in a respective solicitation and consumers who are paying for the project.”

The unit also urged that the PSC scrutinize each project’s costs carefully, and that it limit any adjustment mechanism to those projects more likely to succeed: “Ratepayers should not be throwing good money after potentially bad projects.”

New Yorkers for Clean Power urged the adjustment be granted, as the projects in question are critical for not only meeting the CLCPA’s goals, but also boosting the state’s economy. “The petition demonstrates that failing to redress the economic circumstances will result in both years of material delay and substantial additional cost,” it wrote.

Offshore wind developer Rise Light & Power dismissed the idea of giving other offshore wind developers more money than they agreed to. “It is unprecedented and unwarranted to ask the commission to direct NYSERDA to change ex post facto the most material terms of a competitively bid contract to benefit a petitioner and increase the cost and risk of such contract to NYSERDA.”

Rise had a similarly dim view of the onshore wind and solar petition, saying an increase would be “unfair to prior and current bidders in Tier 1 solicitations, harmful to ratepayers and would violate bedrock principles of competitive public contracting.”

The New York City Mayor’s Office of Climate and Environmental Justice led off with a pointed observation: The process is already too slow. Since 2016, NYSERDA has entered into 115 contracts totaling 13,730 MW of renewable generation and storage, it wrote. But only 14 of those projects have come online, delivering just 681 MW.

For this reason, the city endorsed relief for renewable developers, though not as much as was requested, because of the likely effect on ratepayers. “There is much work to do, and time is of the essence to achieve the state’s 2030 goal,” it said.

Nucor Steel Auburn — whose electric arc furnace is one of the largest loads on the New York State Electric & Gas system — blasted the request for an inflation adjustment for the Tier 1 onshore contracts as unsubstantiated, unjust and not in the public interest. It wrote: “The added cost to New York consumers from such a measure would approach $10 billion over the 20-year life of REC contracts.”

New York’s investor-owned utilities, commenting jointly, made a similar point, warning of billions in extra costs for ratepayers. “These petitions, if approved without modification, would create a perverse incentive and weaken the effectiveness of future NYSERDA REC contracting cycles and create unnecessary costs for customers throughout New York state,” they said.

The Sierra Club and Environmental Advocates of New York backed the idea of inflation adjustments weighed with impact on consumers, the market and the environment.

“While we do not endorse any particular level of support for contracted at-risk renewable energy projects, an inflation adjustment of the type requested by petitioners should be strongly considered as part of a least-cost approach to achieving New York’s renewable energy commitments.”

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NERC Utah Event Report Underlines Ongoing IBR Issues

The ongoing performance issues with inverter-based resources in the Western Interconnection show that “proactive industry action” is needed to prevent “a significant risk to [electric] reliability,” NERC and WECC said in an incident report released last week.

The 2023 Southwest Utah Disturbance, which occurred April 10, 2023, is the first major widespread loss of solar output to occur in the Western Interconnection outside of California. In the event, which involved nine solar facilities operated by PacifiCorp-East (PACE), the utility lost 921 MW of generation. This passed the 500 MW threshold to qualify the disturbance as a Category 1i event in NERC’s event analysis process, like the summer 2021 disturbances in Southern California that the ERO discussed in a report last year. (See NERC, WECC Repeat Solar Performance Warnings.)

The disturbance began at 8:51 a.m. Pacific time, when a single-line-to-ground fault occurred on a 345-kV transmission circuit in southwest Utah. While protective relaying cleared the fault within 3.5 cycles, PACE supervisory control and data acquisition records showed that aggregate solar output in the utility’s footprint dropped significantly; overall, PACE lost more than half the 1,600-MW total output of its solar fleet in less than half a minute, and the system frequency dropped from 60.01 Hz to 59.89 Hz.

WECC system frequency (in red), along with total output of the PACE solar fleet (in gray), during and after the disturbance. | NERC

Nine solar facilities were involved in the event; the lowest loss reported was 17 MW, and the highest was 234 MW. WECC and NERC found multiple reasons for the output reduction at all but one of the facilities:

    • Inverter phase lock loop (PLL) loss of synchronism — five facilities;
    • Instantaneous AC overvoltage (ACOV) — four facilities, all of which also suffered PLL loss of synch;
    • DC reverse current protection — two facilities, both of which also suffered PLL loss of synch and ACOV;
    • Inverter instantaneous AC overcurrent protection (ACOC) — two facilities; and
    • Passive anti-islanding — one facility.

The facility that tripped on passive anti-islanding also suffered ACOC. In addition, two facilities tripped for unknown causes, which NERC and WECC attributed to “poor data retention and/or quality.”

All of the causes reported “have been well-documented in past disturbance reports,” NERC and WECC said; while they did not cite specific incidents, most of the same issues were cited in last year’s Southern California event report, as well as the ERO’s reports on the Odessa, Texas, disturbances of 2021 and 2022. (See NERC Repeats IBR Warnings After Second Odessa Event.)

The ongoing issues reiterate “the strong need for inverter-based resource (IBR) performance issues to be addressed by generator owners (GOs) in a timely manner,” the report said. One of its key findings was that NERC’s Project 2023-02 (Performance of IBRs) remains important, because it promises to require “analysis and mitigation of unexpected or unwarranted protection and control operations” from IBRs when such potential issues are identified.

In another of the report’s recommendations, the ERO noted the “reiterated need” for a comprehensive ride-through standard to replace PRC-024-3 (Frequency and voltage protection settings for generating resources). Revising this standard is the objective of Project 2020-02, which aims to ensure that generators remain connected to the electric grid during system disturbances.

Finally, the report said the incident illustrates the importance of following NERC’s Level 2 alert on IBRs, which the ERO issued this year. (See NERC Issues Level 2 Alert on IBR Issues.) The alert provided recommendations to GOs for addressing known performance issues with IBRs and requested information on existing facility protection and control settings.

Responses to the Level 2 alert were due by July 31; the ERO is analyzing the results and will publish key findings and recommendations by the end of the year. The report reminded GOs that these alerts “help ensure that [utilities] are aware of potential risk issues” with their grid-connected equipment and can develop corrective actions when possible.