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November 18, 2024

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UPDATED: Ørsted Cancels Ocean Wind, Suspends Skipjack

The world’s leading offshore wind developer has canceled two major U.S. projects and suspended work on a third but committed to building a fourth and is trying to salvage a fifth. 

None of the five have reached steel-in-the-water construction yet, but all were in various stages of development. 

Ørsted announced the news Nov. 1 with its nine-month 2023 financial results, which painted an unhappy picture for the Denmark-based company: an impairment of $4.06 billion in U.S. currency, $2.83 billion of it attributed to the cancellation of the Ocean Wind 1 and 2 projects in New Jersey. 

The company expects to announce further developments later this year as it reviews its U.S. offshore portfolio. 

Ocean Wind 1 received its federal approvals for construction in July and September. It was an important project to New Jersey’s clean-energy initiatives, an 1,100-MW first chapter in what state leaders had hoped eventually would be an 11,000-MW offshore power portfolio. 

Gov. Phil Murphy (D) and other proponents criticized Ørsted after the announcement. Opponents unhappy with Ocean Wind’s potential impact on the fishing and tourism industries cheered the decision and vowed to keep up the fight as the state’s third contracted project, Atlantic Shores, continues in preconstruction development. 

Also Wednesday, Ørsted CEO Mads Nipper said during a conference call: 

    • The company would halt work on the Skipjack project off the Delaware coast so as not to incur any further costs on it; if negotiations do not yield significant increases in the offshore renewable energy credit (OREC) prices, the company will cancel that project as well. 
    • Ørsted and partner Eversource have made the final investment decision on Revolution Wind and will start construction next year, albeit with a longer time frame. 
    • Having had their request for higher ORECs rejected by New York, Ørsted/Eversource hope to rebid the Sunrise Wind project under the expedited process promised by the state. 

Headwinds

The problems Ørsted is reporting with the Ocean Wind projects are being felt to some degree by everyone in the first wave of U.S. offshore wind development: soaring material costs, surging interest rates, supply chain constraints and lack of domestic infrastructure. 

The exceptions are projects that locked in their costs early on. Ørsted/Eversource, for example, is now building South Fork, which may be the first commercial-scale offshore wind project completed in U.S. waters. Vineyard Wind also is under construction, and Dominion Energy says its Coastal Virginia Offshore Wind project — approved by federal regulators just hours before Ørsted’s announcement — also locked in its contracts early on. (See BOEM Approves Virginia Coastal Offshore Wind.) 

Nipper said Ocean Wind ran into a severe problem when completion date of the first U.S.-built offshore wind vessel, the Charybdis, was pushed back. That pushed the entire construction schedule back to the point of requiring contract re-negotiations. The cost increases in those new contracts would make Ocean Wind untenable, he said. 

Ørsted will look to use the equipment it has purchased for Ocean Wind 1 on other projects. It will retain the seabed lease area for Ocean Wind 1 and 2 and consider options for it as part of the review of its U.S. portfolio. 

Offshore wind has become a political flash point in New Jersey, where the Legislature earlier this year allowed Ørsted to claim federal tax credits that otherwise would go to ratepayers. (See Murphy Signs OSW Tax Credit Bill.) 

Murphy blasted the company Wednesday. In a prepared statement, he said: 

“Today’s decision by Ørsted to abandon its commitments to New Jersey is outrageous and calls into question the company’s credibility and competence. As recently as several weeks ago, the company made public statements regarding the viability and progress of the Ocean Wind 1 project.” 

Tim Sullivan, CEO of the New Jersey Economic Development Authority, posted on X: “Gov. Murphy’s statement is exactly right — outrageous decision but offshore wind remains vital to our future. Note on the bill passed in June: it permitted federal credits to benefit Ocean Wind 1 *if and only if* they built the project. Now they get nothing from that bill, period.” 

U.S. Rep. Jeff Van Drew (R), who represents much of the Jersey Shore, where opposition had galvanized, posted: “I am thrilled to see that Ørsted has decided to pack up its offshore wind scam and leave South Jersey’s beautiful coasts alone. A tremendous win for South Jersey residents, our fisherman and the historic coastline of the Jersey shore.” 

Save Long Beach Island posted: “One down-One to go. We are encouraged by Ørsted’s decision to move on but remain steadfast in our fight with Atlantic Shores. This fight is not over.” 

Wider Picture

Offshore wind is off to a late start in the United States. Thirty-two years after the first wind farm went live off the coast of Denmark, installed capacity is estimated at more than 64,000 MW worldwide. Just 42 MW of it is operational in the United States. 

The ill-fated Cape Wind project famously collapsed almost a decade ago, but Ocean Wind 1 is the first of the new wave of U.S. offshore wind projects to be canceled. 

It is the strongest blow yet to President Biden’s goal of 30 GW of offshore wind capacity installed by 2030. 

But it is far from the only setback. 

Vineyard Wind and SouthCoast Wind have canceled their power purchase agreements in Massachusetts and Park City Wind has reached a deal to do the same in Connecticut.  

The difference there is that the developers hope to rebid, secure higher compensation and start construction. 

Ørsted is walking away from Ocean Wind. 

Developers of the Beacon, Empire and Sunrise projects also have said they cannot continue without more money. New York rejected their requests in October but invited rebids. (See NY Rejects Inflation Adjustment for Renewable Projects.) 

Atlantic Shores in July said it needed more support from New Jersey of the kind the state had just extended to Ocean Wind. But it told the Philadelphia Inquirer on Wednesday it is continuing development for now. 

Ørsted’s Other Projects

Nipper said during the conference call there would be minimal financial repercussions if Ørsted cancels the Skipjack project. 

But cancellation of the Ørsted/Eversource Sunrise project would run in the range of $420 million, he said. 

Nipper said he sees rebidding as the best path forward for Sunrise, although he would like to keep the current contract alive during the rebid process. Initial indications are that New York will require cancellation before rebid. 

Two things give him optimism on Sunrise: The average OREC price in the latest round of tentative offshore wind contract awards is higher than Sunrise had been seeking, and soil testing reveals the landfall site for the Sunrise export cable is contaminated — making the project eligible for enhanced federal investment tax credits. 

Revolution Wind also should benefit from brownfield designation, Nipper said. 

Importantly, Ørsted has been able to secure a backup installation vessel for both Revolution and Sunrise. 

Revolution received its positive record of decision in August and its construction and operations plans are expected to be approved this month. (See BOEM Approves Revolution Wind off New England Coast.) 

Nipper said a risk analysis was favorable and Ørsted decided to move ahead with Revolution. Ørsted and Eversource announced the final investment decision Wednesday. 

Eversource is actively attempting to sell its share of the partnership. It did not return a request for comment on the progress of that effort. 

Nipper said Revolution and potentially Sunrise would proceed to construction with Eversource as a partner if the New England utility is unable to reach a sale deal. 

The two companies also are partners on South Fork Wind, a smaller project that may be the first to reach completion in U.S. waters. In early October, Newsday reported that installation vessel availability was delaying the work. 

But on Tuesday evening, the first turbine set sail from the Port of New London, Connecticut. It will be installed in the coming days. 

Financial Trouble

Ørsted’s nine-month financials were not well-received. Its stock price dropped more than 25% in heavy trading Wednesday to close at its lowest point in more than five years. 

As one financial analyst noted during the call, each update in 2023 has been worse than the one before it. 

The company did take some effective hedges against interest rates earlier this year, Nipper said, but accounting rules do not allow that to be deducted from the impairment. 

Equinor and bp, partners on the financially troubled Beacon Wind and Empire Wind projects in New York, also are suffering financially, though not to the same degree as Ørsted. 

Equinor on Oct. 27 announced a $300 million impairment due to its U.S. renewables portfolio and bp on Oct. 31 announced a $540 million impairment attributed to its New York Offshore wind projects. 

Reuters reported that bp’s head of U.S. renewables told a conference in London on Wednesday that “offshore wind in the U.S. is fundamentally broken.” 

However, she said she believed that while the path forward will be challenging, the projects will be built. 

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Advanced Energy United Urges Changes Beyond Order 2023 for ISO-NE

ISO-NE should go beyond the changes required by Order 2023 to address the high costs and long delays associated with interconnection in the region, said a recent white paper commissioned by Advanced Energy United and written by the energy consulting firm Daymark Energy Advisors.

“The costs imposed by inefficiencies in the interconnection process are borne by ratepayers in the region and are one significant factor which threatens the New England states’ decarbonization goals,” Daymark wrote. Advanced Energy United represents clean energy and storage developers, owners, and operators in the region.

The report detailed specific recommendations for the RTO’s compliance filing, along with longer-term actions to take to address issues that will not be addressed in the filing.

“While it is critical that Order 2023 is addressed and that a solid compliance package is submitted to the commission, we stress that this marks the beginning of the region’s interconnection process reform efforts,” Daymark wrote. “Changing technology, policy efforts and expected FERC orders on planning and cost allocation, among others, makes continued attention to comprehensive market reform imperative.”

Regarding ISO-NE’s Order 2023 compliance, Daymark said ISO-NE should work to limit the potential for restudies and keep the cluster study window to the 150-day time frame prescribed by FERC, instead of the RTO’s proposed 270-day cluster window. (See ISO-NE Details Proposed Order 2023 Compliance.) The firm said that reducing interconnection timelines was one of the main goals of the commission’s order, and a longer cluster study window could push back subsequent clusters.

ISO-NE representatives have said it is difficult to guarantee it will be able meet the 150-day timeline, in part because of the undetermined number of projects it may need to consider in any given cluster.

Daymark also recommended that ISO-NE clarify its methodology for studying separate subgroupings of projects within a given cluster. The firm said the RTO should publish the data and assumptions used in each cluster study in conjunction with its results.

“The process the ISO intends to use in each cluster study should be known before the cluster request window opens so that interconnection customers can replicate the process, if they so choose, and make fully informed decisions,” Daymark wrote.

Regarding alternative transmission technologies (ATTs), Daymark said ISO-NE should include dynamic line ratings with the other ATTs to be considered in interconnection studies. Daymark also called on the RTO to provide transparency around how each alternative will be considered in the study process and detail the results of ATT evaluations in study reports.

Looking beyond Order 2023 compliance, Daymark called for more disclosure around expected regional interconnection costs for project developers prior to interconnection studies, saying this could reduce the number of projects that drop out mid-process.

“Hand-in-hand with providing the data is ensuring that each study cycle follows a well-documented study approach,” Daymark added. The firm also said ISO-NE and the region’s transmission owners should work to minimize uncertainty within interconnection cost estimates and advocated for an upper limit to the cost overruns that can be charged to developers.

Finally, Daymark said spreading costs among a cluster of projects is a good first step toward properly allocating costs associated with interconnection upgrades. At the same time, ISO-NE should consider further steps to share the costs of upgrades with all beneficiaries, Daymark wrote.

“The establishment of a cost-allocation structure that is simple to administer, clear to all participants and fair to interconnection customers, the TOs and ratepayers should be a reform priority,” Daymark wrote, adding that interconnection upgrades can benefit state policy goals, enable increased electrification, promote system resilience and increase market competition.

“We recommend that the ISO pursue a cost allocation rule that would recognize the headroom created by a set of network upgrades and charge the projects in the cluster only for the system capability they needed to interconnect,” the report recommended, saying this would be conducive in the long term to “more closely coordinated planning of the system to address the reliable delivery of power to load and the interconnection of projects without distorting incentives.”

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PSEG Reports Q3 Earnings, Infrastructure Investment Plans

Public Service Enterprise Group (PSEG) on Tuesday reported that third-quarter earnings were up to $139 million, compared to $114 million for the same period last year, and executives laid out their plans for infrastructure investing on a call with analysts.

PSEG’s main subsidiary, Public Service Electric and Gas, “invested approximately $1 billion in capital spending during the third quarter, bringing the year-to-date spend to $2.7 billion,” said PSEG CEO Ralph LaRossa. “For the full year 2023, capital spend is expected to total $3.7 billion, slightly higher than our original plan of $3.5 billion, ahead of scheduled execution on our Clean Energy Future-Energy Efficiency and Infrastructure Advancement Programs. This work is helping our customers to save energy and lower their bills, upgrading the ‘last mile’ of our system, as well as adding new electric infrastructure due in part to increasing EV penetration.”

PSEG has been working to improve the predictability of its business by selling off its fossil generating assets to ArcLight Capital Partners early last year and exiting the offshore wind development business early this year.

“We have helped to secure the financial viability of critical, important New Jersey energy assets with the decision to retain our carbon-free baseload nuclear fleet, enhanced by the revenue stability of a production tax credit (PTC) that begins January of 2024,” LaRossa said.

The federal PTC for nuclear is in place for a decade, giving PSEG enough security that it can execute its five-year capital investment program without issuing new equity or selling any assets, he added.

PSEG is putting some of the extra money back into those nuclear plants, as well, with plans to transition its boiling water reactor at Hope Creek from an 18- to a 24-month refueling cycle, LaRossa said.

The firm is waiting for final approval on a $447 million transmission project that it bid into a PJM solicitation last year, with the RTO’s board expected to vote on it in December, LaRossa said.

“We intend to leverage our considerable transmission skills in similar opportunities that arise,” he added.

The utility also reported success in expanding efficiency efforts under the conservation incentive program that has been in place since 2021. The program limits the impact of weather and other sales’ variances on the firm’s earnings while letting it earn money by promoting efficiency to both its electric and gas customers, said CFO Daniel Cregg.

“To give you some perspective on how strong the demand for energy efficiency is: Consider that PSE&G now sells more energy-efficiency solutions in a single month than we did in an entire year just a few years ago,” LaRossa said.

The utility is also just over halfway done rolling out new smart meters, with 1.3 million deployed out of a plan for 2.3 million, LaRossa said.

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BOEM Approves Coastal Virginia Offshore Wind

Federal regulators have approved the nation’s fifth and so far largest utility-scale offshore wind farm: the 2.6-GW Coastal Virginia Offshore Wind project. 

Dominion Energy has been gathering components in anticipation of the Record of Decision that the U.S. Bureau of Ocean Energy Management issued Tuesday. Dominion said it plans to start construction in late 2023 and complete the work in late 2026. 

The project is an integral part of the company’s move toward clean energy, it said. 

“More than a decade of work has gone into the development, design and permitting of CVOW,” Dominion CEO Robert Blue said in a prepared statement. “Offshore wind is a vital part of our strategy to provide our customers with a diverse fuel mix that delivers reliable, affordable and increasingly clean energy.” 

The project will entail up to 176 wind turbine generators rated at 14.7 MW each. The layout of the offshore infrastructure was modified from initial proposals to reduce impacts on fisheries and ocean navigation, based on input BOEM received during public comment periods. 

The Record of Decision includes provisions to avoid impacts from construction and operation. BOEM said Dominion has committed to fishery mitigation funds to compensate the commercial and recreational fishing industries for any losses inflicted by CVOW. It also will take steps to reduce the chances of harm to protected ocean species. 

The decision comes 10 years and two months after Dominion won Lease Area OCS-0483 in a BOEM auction. The 112,799-acre zone stands 23.5 nautical miles east of Virginia Beach. 

Dominion has been laying the groundwork for the project even as it worked its way through the review process. It reached a milestone Oct. 27, when the first eight monopile foundations were offloaded at the Portsmouth Marine Terminal. The massive steel cylinders will be stored there to await installation, which is anticipated in spring 2024. 

More than 750 workers have been involved in the project directly or indirectly as Dominion ramped up preparations for CVOW, most of them in the Hampton Roads region. The company said more than 1,000 workers will support the project’s operations and maintenance after construction is complete. 

CVOW is the fifth commercial-scale project approved by BOEM, which previously greenlit the Vineyard Wind 1, South Fork Wind, Ocean Wind 1 and Revolution Wind projects. 

But in another way, CVOW was first: Dominion installed two 6-MW turbines in the lease area for research purposes. When they went online in fall 2020, they provided the first grid-connected wind power in U.S. federal waters. (Rhode Island’s Block Island Wind Farm went online in 2016 but is in state waters.) 

Wind power development off the Northeast coast has run into serious financial problems. Two major New England projects have canceled their power purchase agreements, and a third is in the process of doing so. Three major projects are at substantial risk of dropping out of New York’s development queue. 

The problem in each case is that the developers locked in their revenue before they locked in their construction costs, then were socked by inflation and rising interest rates. 

By contrast, construction is well underway on the first two projects, Vineyard and South Fork. CVOW seems to be in the same position: able to proceed to construction now because it locked in its costs early enough. 

In a Sept. 5 news release, Blue credited Virginia lawmakers and regulators with creating a framework that allowed it to take those steps. 

“[The framework] enabled us to take a differentiated approach to project development, securing agreements early with offshore wind suppliers for material and services while giving them confidence in our project’s completion,” Blue said. “This allows our vendors to maintain focus on delivering their equipment and services on time. Not only is our project on budget and on schedule, but it is also estimated to deliver electricity at a levelized cost that competes very favorably with the nation’s unregulated offshore wind projects while creating hundreds of jobs and millions of dollars of local economic benefit.” 

In the same news release, Dominion said that it would de-risk the CVOW project by taking on a minority investor. And in a filing with the Securities and Exchange Commission in August, Dominion indicated the offshore wind installation vessel it ordered will cost more and take considerably longer to complete than initially projected. 

The Charybdis is notable not only for its sheer size (473 by 184 feet) but because it is being built in Texas: It will be the first U.S.-built vessel of its kind and meet the domestic manufacture requirements of the Jones Act. 

The industry trade group Oceantic Network — which until Monday was known as the Business Network for Offshore Wind — hailed the decision as great news. 

“Dominion’s CVOW project is anchoring a critical corner of the emerging domestic supply chain, and advancing this project means supporting development of America’s first wind turbine installation vessel and substantial port redevelopment work,” Oceantic Vice President John Begala said in a news release. “The Hampton Roads area is abuzz with offshore wind activity and the federal government’s advancement of the CVOW project will continue advancing the area as a hub for the whole industry.” 

BOEM still must approve the construction and operations plan, which would be the final greenlight for CVOW. 

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MISO Selects Ameren to Build 2nd Competitive LRTP Project

MISO has awarded Ameren Transmission Company of Illinois (ATXI) the lead in building a pair of lines and substation in northwest Missouri, the second competitively bid project stemming from the RTO’s $10 billion long-range transmission plan (LRTP).

The Ameren subsidiary plans to partner with the Missouri Joint Municipal Electric Utility Commission on development of the $84 million, 345-kV Fairport-Denny project, extending to the Iowa-Missouri border. ATXI plans to sell 49% of the project to the Missouri state utility agency just before the project is placed in service in 2030.

MISO said ATXI was one of four developers to submit project proposals, with LS Power Midcontinent, NextEra Energy Transmission Midwest and Transource Energy offering nine. MISO does not reveal the companies behind non-winning bids, although it said one developer submitted six proposals based on differing designs. It said proposals ranged from $84 million to $134 million for project implementation. MISO originally estimated the Fairport-Denny project would cost $161 million. The RTO said cost differences between proposals came down to conductor size, substation design and tax liabilities.

Jeremiah Doner, MISO’s director of cost allocation and competitive transmission, said ATXI’s proposal incorporates “strong cost containment and a sound design.” MISO said ATXI pledged annual revenue requirement caps and carefully considered pre-construction studies and proposed routes.

“Ameren’s proposal, submitted with its partner MJMEUC, had a substantially lower cost than that of the next closest proposal, which was 36% higher based on the annual costs to customers over 40 years,” Doner said in a press release.

MISO said ATXI will execute a selected developer agreement. Doner said MISO looks forward to “working closely with the developer, regulators and other stakeholders to support a successful and on-time completion of the project.”

In a press release, ATXI President Shawn Schukar said the project bid was the “result of a collaborative effort with many community partners who have the best interests of our state in mind.”

He said ATXI will continue to solicit input from the community to build affordable transmission projects.

MISO is simultaneously managing multiple RFPs related to the first LRTP portfolio.

The grid operator opened an RFP for another LRTP project in March. It seeks bids on the $556 million Denny to Zachary to Thomas Hill 345 kV project, part of which will link up with the Fairport-Denny project. Proposals are due Nov. 14. (See MISO Begins LRTP’s 2nd RFP Process.)

The half-billion-dollar solicitation is MISO’s most expensive request for proposals.

The grid operator also opened two other RFPs in July: the $12 million Deadend to Tremval 345-kV project in Wisconsin and a $23 million, 345-kV line segment from the Iowa-Illinois border to the Ipava substation in Illinois. It will select developers for the trio of projects over 2024.

In May, MISO selected LS Power’s Republic Transmission to build the $77 million Hiple 345-kV line at the Indiana-Michigan border. It’s MISO’s first competitive project surfacing from the LRTP. (See MISO Picks Republic Transmission for 1st LRTP Competitive Project.)

In MISO, competitive transmission developers must be members and must be prequalified to bid on competitive projects. Developers must include a $20,000 application fee and a $100,000 initial deposit to have their bids considered by MISO.

MISO’s decision to go with ATXI for the LRTP competitive builds comes as a right of first refusal (ROFR) bill for downstate Illinois fizzled out, with supporters last week acknowledging they don’t have enough votes in the Democratic-controlled General Assembly to overrule Gov. J.B. Pritzker’s August veto of the ROFR portion of energy legislation approved in the spring. (See Ill. Gov. Vetoes Downstate ROFR for MISO Regional Tx Projects.)

The bill would have given ATXI exclusive rights to build regional MISO transmission lines in its territory and shut down MISO’s competitive bidding process for future projects in downstate Illinois. ATXI backed the legislation.

Recently, ATXI Chairman and President Leonard Singh wrote in a letter to state lawmakers that the company had been “subjected to well-funded misinformation campaigns by out-of-state developers and special interests” who opposed the ROFR.

Singh said a ROFR would keep transmission projects under state — rather than federal — control and remains “the best option to prevent unnecessary delays in construction and hundreds of millions of dollars in potential cost overruns.”

Rep. Larry Walsh (D-Elwood), who sponsored the original measure, said he would reintroduce even broader legislation in spring that seeks to install a permanent ROFR on transmission projects for all utilities in the state.

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EIA: Renewable Curtailments Rising Steadily in CAISO

CAISO’s curtailment of solar and wind power in California is on the rise, and about three-quarters of curtailments so far this year have been from transmission congestion. 

The remainder of curtailments in the first nine months of 2023 were due to oversupply, according to an analysis of CAISO data by the U.S. Energy Information Administration (EIA). 

“Congestion-related curtailments have increased significantly since 2019 because solar generation has been outpacing upgrades in transmission capacity,” EIA said in its report. 

CAISO’s solar and wind curtailments have been increasing since at least 2015, EIA found. Solar made up roughly 95% of the curtailments and wind accounted for the rest. 

In 2022, CAISO’s curtailment of utility-scale solar and wind was 2.4 million MWh, a 63% increase compared with 2021. 

On a month-to-month basis, solar curtailment peaked in April 2023 at 702,883 MWh. That compares to the previous peak of 596,175 MWh in April 2022. 

The increase of solar curtailments in CAISO from 2022 to 2023. As of September, the ISO had curtailed 1.3 million MWh of solar this year, compared with 1.4 million MWh for all of last year. | EIA

CAISO said on its website that it expects to see oversupply conditions more frequently as amounts of renewable resources grow. The ISO is pursuing several strategies to address the issue. 

“Key to curtailment reductions are the interconnection process enhancements, the 2022/23 transmission planning process and increasing amounts of battery storage,” CAISO spokesperson Anne Gonzales told RTO Insider. 

California now has more than 6,600 MW of battery energy storage systems online, up from 770 MW in 2019, the California Energy Commission reported last week. 

CAISO has also pointed to expansion of its Western Energy Imbalance Market (WEIM) as a way to reduce renewable energy oversupply and curtailment. The WEIM allows surplus energy to be shared across the region rather than reducing output. 

According to EIA, trading within the WEIM prevented more than 10% of total possible curtailments in 2022. 

As for CAISO’s upcoming Extended Day-Ahead Market (EDAM), Gonzales said the impact on curtailment would depend on the participation footprint. She noted that energy curtailments occur in real time, while EDAM is a day-ahead market. 

A state-led study last year found “incremental curtailment reductions” in a West-wide EDAM scenario, Gonzales said. 

CAISO has pointed to other strategies that may reduce curtailment, including time-of-use rates and EV charging systems that respond to grid conditions. In addition, policies could be explored to reduce existing generators’ minimum operating levels, making room for more renewable production.  

Storage, Transmission Planning

When asked about EIA curtailment analysis, Jan Smutny-Jones, CEO of the Independent Energy Producers Association, said most solar developers are building solar-plus-storage projects to capture the benefits of meeting net peak demand.  

“In addition, Western regionalization would provide a broader market for excess solar in other states,” Smutny-Jones told RTO Insider. 

Mark Specht, Western states energy manager for the Union of Concerned Scientists, said the fact that most of the solar curtailment in California is due to congestion indicates that solar energy is getting “trapped” in certain locations without sufficient transmission to send it elsewhere. 

A key strategy for solving the problem is coordinated transmission planning across the West, he said. 

Battery storage is another possible way to reduce curtailment, said Specht, who recommended adding batteries to existing solar projects that lack storage. 

Still, Specht said, building all the infrastructure needed to capture every drop of solar energy probably doesn’t make economic sense, and “some amount of curtailment is okay.”  

“Zero curtailment shouldn’t necessarily be the goal,” Specht said. 

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MISO Reports Lower Prices over September Operations

Energy prices continued a year-over-year downward trajectory in September, MISO operations data showed.

The RTO reported real-time energy prices averaged $30/MWh over September, down from $68/MWh during the same period last year. Average natural gas and coal prices both dipped to $2/MMBtu for the month in the footprint, sliding from $8/MMBtu for coal and $7/MMBtu for natural gas in September 2022.

MISO said load for the month peaked at 115 GW on Sept. 5 during a hot weather alert for MISO Midwest. The monthly peak registered higher than last September’s peak of 107 GW. Otherwise, load averaged 77 GW, above last year’s 75-GW average and climbing incrementally from September 2021’s 74-GW average.

Average daily outages for the generation fleet over September were the lowest they’ve been in four years. MISO recorded an average 39 GW in daily outages, down from last September’s 48 GW in outages.

Since September 2020, coal has lost a small amount of ground in the energy mix, while natural gas-fired generation has gained ground. Natural gas has reached 40% of the energy mix, while coal has shrunk to 31%, flip-flopping 2020’s mix, which saw coal leading at 34% and natural gas at 31%.

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FERC OKs Inflation-based Bump to MISO Queue Entry Fee

MISO has received FERC approval to increase its non-refundable interconnection request application fee, required for generation developers to enter the queue.  

As of Tuesday, MISO can raise the circa-2008, $5,000 application fee to catch up with 15 years of inflation and can continue to increase it into the future to keep pace with inflation (ER23-2742). 

MISO interconnection customers pay the nonrefundable application fee alongside each new request for interconnection service. The fee covers MISO’s costs to review interconnection requests, perform studies and facilitate negotiations for generator interconnection agreements.  

MISO will use its original 2008 fee as a starting point and increase it every three years, commensurate with its value in today’s dollars using the inflation calculator from the U.S. Bureau of Labor Statistics. The RTO said it wanted to be able to consistently raise fees and avoid multiple future FERC filings seeking permission.  

FERC said it’s reasonable for MISO to “account for inflation on a consistent schedule and ensure that sufficient study deposit funds are available to cover all necessary expenses. 

“This should contribute to more efficient processing of MISO’s interconnection queue, which will minimize opportunities for undue discrimination and expedite the development of new generation, while protecting reliability and ensuring that rates are just and reasonable,” FERC wrote.   

MISO said for the past 15 years, the application fee has stayed static while its costs to process interconnection requests have increased.  

MISO’s second, refundable study deposit will remain an escalating amount based on megawatt size of the proposed generation project. That deposit ranges from $50,000 for an up-to-6-MW project and up to $640,000 for a 1-GW or greater project. 

MISO’s request for inflation-based fee adjustments is separate from its package of more strict entry and exit rules to relieve pressure on its overcrowded interconnection queue. (See MISO Relaxes Proposal on Stricter Queue Ruleset.)  

MISO will split its suite of stiffer interconnection rules into two filings at FERC. One tackles proposals for tighter land requirements, an automatic penalty schedule for withdrawn projects and increases to the milestone payments MISO collects from interconnection customers as projects move through the queue. 

The other proposes an annual megawatt cap on project submissions according to a feasibility formula. MISO has said there are only so many potential generation projects it can simultaneously consider and still produce accurate interconnection studies.  

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Avangrid to Pay $615K for NERC Violation Penalties

Avangrid has agreed to pay $615,000 to the Northeast Power Coordinating Council for seven separate violations of NERC reliability standards by its utilities in New York and New England, according to a settlement between the regional entity and the company approved by FERC on Friday (NP23-20).

The Avangrid-NPCC settlement was the only notice of penalty filed with the commission by the ERO in September. FERC said in a filing last week that it would not review the agreement, leaving the penalty intact.

NPCC’s allegations involve five of Avangrid’s subsidiaries:

    • New York State Electric and Gas;
    • Rochester Gas and Electric;
    • Central Maine Power;
    • Maine Electric Power (majority owned by CMP); and
    • United Illuminated.

Collectively the companies serve more than 2.2 million electricity customers across New York, Maine and Connecticut. They operate a combined 8,638 miles of transmission lines and 71,000 miles of distribution lines.

The RE accused the utilities of violating several of NERC’s standards, all relating to facility ratings. According to the settlement, the violations began as early as 2007, and in some cases have yet to be resolved. NPCC expects all the remaining issues to be resolved by the end of next year.

Avangrid self-reported all the violations, starting with the initial discovery in February 2020 of an issue on one of NYSEG’s transmission lines between its Hillside and Canton Avenue stations. NYSEG found that the ratings for a 115-kV feeder in its thermal limit database software application differed from those used in its control center and by the application used to perform reliability studies.

Further investigation revealed that although the line had undergone multiple modifications between 2009 and 2019, NYSEG’s rating database had not been updated to reflect their impact on the line’s thermal rating as required by FAC-008-3 (Facility ratings), which was replaced by FAC-008-5 in October 2021. NPCC determined that the noncompliance began in 2012, when NYSEG replaced a breaker at Hillside without updating the rating sheet, and ended in 2019 when the utility correctly updated the sheet.

NYSEG submitted a self-report of another FAC-008-3 violation to NPCC in December of 2020, while fellow Avangrid subsidiary RG&E submitted two self-reports that year concerning infringements of FAC-008-3 and FAC-009-1 (Establish and communicate facility ratings). Following these reports Avangrid conducted an extent of condition review across all its grid transmission assets in New York and Maine.

The review concluded in April 2023, and uncovered errors at 119 of Avangrid’s total facilities. Forty-one affected facilities were owned by NYSEG, 72 by CMP, four by MEPCO and two by RG&E. Sixty of the errors required a reduction in rating.

Avangrid’s review did not reveal ratings errors at any facilities owned by UI, but the utility did report a potential violation of FAC-008-5 to NPCC four days after the review concluded, indicating that it could not locate engineering documentation to support some facility ratings and that there was some confusion about the facility ratings methodology that UI had used. UI’s noncompliance, along with that of CMP and MEPCO, is ongoing and expected to be resolved by next year; the others were reported resolved by 2022.

NPCC determined that the root causes of these violations included ineffective interdepartmental coordination, inadequate internal controls for verifying facility ratings, lack of company-wide rating modification processes and inadequate ratings validation programs.

Avangrid’s mitigation steps include developing a comprehensive transmission facility rating and modeling process, implementing a companywide facility ratings methodology, creating a centralized rating and modeling group and designing a new database to track facility ratings information. The company is also performing an extent-of-condition walkdown, which it expects to finish by the end of 2024 at an estimated cost of $75 million. In addition, it will submit monthly reports through the end of 2024 to disclose any additional facility ratings discrepancies it discovers.

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FERC Approves Extension of Comment Period in PJM CIFP Filings

FERC has approved a nearly one-week extension of the comment period on PJM’s two filings to rework several areas of its capacity market following the conclusion of the Critical Issue Fast Path (CIFP) process in October (ER24-98, ER24-99).

The extension, issued Oct. 27, allows comments to be submitted through the end of Nov. 9, rather than the Nov. 3 deadline PJM sought. PJM Chief Communications Officer Susan Buehler said the extension does not impact the Dec. 12 effective date PJM requested in its filing and therefore would not impact its target to have changes in place for the 2025/26 Base Residual Auction, scheduled to be run in June 2024. (See PJM Files Capacity Market Revamp with FERC.)

The commission did not go as far as the Independent Market Monitor asked when it filed a request for comments to be permitted until Nov. 17, arguing that the intricacy of the filing warrants additional time. The request was supported by American Electric Power, American Municipal Power (AMP), Old Dominion Electric Cooperative, the PJM Industrial Customer Coalition and the Office of the Ohio Consumers’ Counsel.

“The Market Monitor requests an extension of time of 14 days because the filings in these dockets raise important, complex and intricate issues about the design of the PJM capacity markets. More time is required for preparation of an adequate response than the current deadline affords,” the Monitor wrote.

PJM responded that the Monitor and stakeholders should be aware of the changes being proposed in the filing through the months of discussion throughout the CIFP process. Extending the comment period would reduce the amount of time for the commission to evaluate the filing and comments to make a reasoned decision by Dec. 12.

“Specifically, PJM thoroughly discussed the proposed enhancements with all stakeholders, including the Market Monitor, through the Critical Issue Fast Path stakeholder process over a six-month period before the actual filing. Further, the PJM board issued a public letter to all stakeholders detailing the very proposals contained within the underlying dockets nearly one month ago on Sept. 27, 2023,” PJM wrote.

In its comments supporting the Monitor’s request, AMP wrote that the changes being considered could have substantial impacts on the capacity market that should be fully thought out. If full consideration of the proposals leads to the commission not issuing an order prior to the commencement of pre-auction activities, AMP recommended that the commission delay the auction schedule or order it to be run it under the status quo rules.

“If a delay becomes necessary, PJM should seek a revised date for that auction or run it under the existing rules, which have not been found to be unjust, unreasonable or unduly discriminatory. Neither the stakeholders’ nor the commission’s review of PJM’s complex filings should be cramped by PJM’s assertions that allowing two more weeks for comments will materially affect the auction schedule,” AMP said.