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November 4, 2024

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NJ Extends Third Solicitation OSW Deadline for ‘Contingent’ Projects

In a sign of the complexity arising from offshore wind developers chasing solicitations in different Northeastern states, New Jersey on Wednesday agreed to extend the deadline — if necessary — by which developers with solicitations pending in other states can drop out of New Jersey’s third solicitation.

The New Jersey Board of Public Utilities, in a 4-0 vote, authorized staff to extend the deadline for the third time by which so-called “contingent projects” — that have submitted projects in New York or Rhode Island — should be taken out of the running for approval in New Jersey. In that situation, approval in another state likely would mean developers would not want, or have the resources or corporate capacity, to pursue a project in New Jersey.

The New Jersey solicitation, which opened March 8, closed Aug. 4 with four submissions. The solicitation guidance document initially required contingent projects to notify the agency by July 31 if they planned to drop out. The agency extended that deadline in June to Sept. 11, and staff extended it again by 30 days to Oct. 11, as allowed under the guidelines.

The state wants as many developers as possible in contention for solicitation approval to ensure a competitive selection, and so doesn’t want to exclude any developers prematurely or unnecessarily. (See NJ’s 3rd OSW Solicitation Attracts 4 Bidders.)

But even the Oct. 11 deadline “could be insufficient to fully consider contingent projects,” because of the evolving competitive environment, Jim Ferris, deputy director for the BPU’s division of clean energy, told the board.

Key among the uncertainties is the shifting timeline under which New York’s Energy Research and Development Authority (NYSERDA) will announce the winners of its third solicitation. The solicitation closed for submissions Jan. 26, with six developers submitting 100 proposals. But NYSERDA in July said developers could revise their bids, with downward price adjustments only, before Aug. 24, and that the winning bids would be announced sometime in the fourth quarter of this year.

Among the developers in contention in New York are two that have said they also submitted bids in New Jersey: Community Offshore Wind, a joint venture between RWE and National Grid Ventures; and Leading Light Wind, a partnership between Invenergy and energyRE. Also bidding in New York is Danish developer Ørsted, which has two approved projects in New Jersey — Ocean Wind 1 and 2 — but has not said whether it bid in the state’s third solicitation. (See NYSERDA: 3rd OSW Solicitation Breaks Record.)

Ferris said giving its staff the authority to “adjust the contingent project notification date as necessary” would enable the agency to “evaluate all third solicitation project options as fully as possible.”

$200 Million Payment Escrow

New Jersey is seeking to build 11 GW of offshore wind by 2040, and the third solicitation could approve projects totaling 1.2 GW to 4 GW, and perhaps more. The BPU approved projects totaling 3,758 MW in the first two solicitations, in 2019 and 2021.

Yet developers have found the environment for offshore projects increasingly tough, as logistics and materials costs have risen, prompting some to try to renegotiate contracts with states and push for additional public support. In New Jersey, Gov. Phil Murphy (D) on July 6 signed a bill that allowed Ørsted to access federal tax credits that previously had been designated to help state ratepayers pay for OSW projects. Ørsted, while lobbying legislators to award the credits, said Ocean Wind 1 faced rising materials, equipment and transportation costs because of unanticipated events, including the COVID-19 pandemic and the Russo-Ukrainian War.

The BPU board on Wednesday, with a 4-0 vote, approved the creation of an escrow account to enable Ørsted to fulfill a second part of the agreement: a payment of $200 million by the developer for New Jersey to use to support offshore wind projects.

“By the terms of the legislation, the escrow funds are used to support additional investments in qualified wind energy facilities,” Michael Beck, general counsel for the BPU, told the board. “That term is defined in the legislation including offshore wind component manufacturing facilities.”

Grid Scale Solar Delay

In an unrelated matter, the board also approved, by 4-0, an eight-week delay in the second solicitation of bids under the Competitive Solar Incentive program. The second solicitation will open Nov. 27 instead of Oct. 1 as planned.

The program awards incentives for grid-scale projects — those greater than 5 MW — by setting incentive levels through a competitive solicitation rather than a BPU directive as in the first part of the program, the Administratively Determined Incentive program.

The BPU opened the CSI program on Oct. 1, 2022, hoping it would help the state reach its goal of 12.2 GW of solar energy by 2030 and 17.2 GW by 2035. Figures released by the board Wednesday show the state on Aug. 31 had 4.56 GW of installed capacity, with another 736,028 kW in the pipeline.

But the agency closed the first solicitation on July 12 without approving any of the bids.  (See NJ Rejects Solar Bids as Too Expensive.)

Agency officials at the time said all the “responsive” bids exceeded the confidential price caps developed by the BPU, which the agency attributed to rising costs and economic and regulatory uncertainty nationwide. While the board initially pledged to hold a new solicitation as soon as possible, the agency wants to make sure it is ready before launching the next one, BPU staffer Diane Watson told the board.

“Staff recognizes that the board needs adequate time to consider the lessons of a prior solicitation and integrate any necessary changes,” Watson said, adding that “by doing so, the board demonstrates a level of responsiveness that serves stakeholders and ratepayers alike.”

As in the first solicitation, the second solicitation will aim to award projects totaling up to 300 MW, she said.

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Michigan Senate Passes First Renewable Bill; Talks on Package Continue

LANSING, Mich. — The first bill in a package of climate legislation won Michigan Senate approval this week, while the chair of the Senate Energy and Environment Committee said talks are continuing on the other proposals.

As several hundred supporters of renewable energy production rallied at the Capitol, the Senate voted 23-14 to approve SB 277, with three Republicans joining the Democratic majority. The bill would codify current policy and allow farms enrolled in the state’s farmland preservation system to lease out land for solar energy projects. It’s unclear when the state House will begin work on the measure.

While the legislation does not have the same impact as some others in the package — such as SB 271, which calls for the state to have 100% renewable energy production by 2035 — it has symbolic value as the first measure to pass one chamber. Another bill in the package would end coal-fired electric generation in the state by 2030. (See Michigan Dems Seek to End Coal-fired Plants by 2030.)

Most Republicans voted against the bill, arguing it could reduce the amount of land used for food production in the state. The argument was similar to that used by local governments that have opposed solar and wind projects. (See Wind, Solar Opponents Defeat Four Proposals In Rural Michigan County.)

One Republican, Sen. Dan Lauwers, abstained because several solar companies are interested in leasing part of his family’s farm.

Agriculture competes with tourism as the state’s largest industry following manufacturing. The state is one of the nation’s largest producers of such crops as tart cherries, pears and blueberries.

Sen. Kristen McDonald Rivet (D) insisted the bill was pro-farm and pro-environment and that it respected property rights.

Sen. Sean McCann (D) told the rallying activists that discussions are ongoing on possible compromises to move the entire package forward. One change being considered to win support is extending the 100% clean energy goal five years to 2040.

He said he did not have a timeframe for when bills might move but said it was unlikely the Energy and Environment Committee chairs would act this week.

Environmental activists have warned there are limits to compromises they would accept on the bills.

Opponents of the package argue the proposals could expose state residents to less reliable forms of energy and higher utility costs. And with the ongoing UAW strike against the Big Three automakers, opponents also are warning that pushing EVs could cause widespread manufacturing job loss in the state.

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First Wash. Ferry Being Converted to Electric-diesel Hybrid

The first overhaul of a Washington diesel ferry into an electric-fuel hybrid has begun, with the converted boat expected to be operating by September 2024.

That would be the first of eight electric or hybrid vessels to be adopted by the Washington State Ferries system over the next several years.

Overall, the ferry system — the largest in the nation — has 21 vessels handling 10 routes in Puget Sound. The system has been hit recently with a rash of mechanical problems due to the ages of the boats. The fleet handled 17.3 million people and 8.6 million vehicles in 2022.

Washington State Department of Transportation (WSDOT) officials briefed Gov. Jay Inslee on the conversion plans Wednesday.

“This is the start of a long revolution in the maritime industry. … Like every revolution, we don’t expect everything to be smooth,” Inslee said.

Washington is converting its ferry fleet to cut back on carbon emissions and diesel fuel costs. “We should be tired of being shackled to paying these outrageous prices for diesel,” Inslee said.

The first ferry to be converted, the MV Wenatchee, will have two of its four diesel engines removed and a bank of batteries installed. On its future trips, the Wenatchee will be in fuel mode to leave and enter a dock, while using battery power for the bulk of its route between Seattle and Bainbridge Island, a suburb on the opposite side of Puget Sound.

Vigor will begin work on the $150 million conversion at its Harbor Island shipyard in Seattle. The company has been contracted to convert two more ferries into hybrids after finishing work on the Wenatchee.

The state has begun training crews to operate and maintain hybrid ferries, said Amy Scarton, deputy secretary of WSDOT. The state also needs to install electric charging equipment at its docks.

The state expects to seek bids in spring 2024 to build five new electric ferries, said Matt Von Ruden, WSDOT’s system electrification program manager.

Meanwhile, the Kitsap Transit Authority told Inslee it is looking to develop an electric passenger-only hydrofoil ferry linking Seattle with Kitsap County. The county is on the west side of Puget Sound and includes Bainbridge Island and Bremerton on the Kitsap Peninsula, which hosts a major U.S. Navy base. The Kitsap authority is seeking $4 million for the electric hydrofoil ferry’s design and $18 million for its construction.

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ISO-NE Details Proposed Order 2023 Compliance

WESTBOROUGH, Mass. — ISO-NE outlined its proposed compliance with FERC Order 2023 at Wednesday’s meeting of the NEPOOL Transmission Committee, detailing plans to revamp its interconnection processes.

The RTO said it plans to adopt most of the order’s requirements but will request independent entity variations related to its operating assumptions for storage resources and the cluster study timeframe, proposing a cluster study length of 270 days, compared to the order’s 150 days.

Al McBride, director of transmission services and resource qualification at ISO-NE, said this timeline would be “consistent with established timeline for System Impact Studies in New England.”

McBride added that uncertainty around how many projects will request interconnection in any given cluster, coupled with the lack of standardization for generation equipment, makes it difficult to guarantee a 150-day cluster study timeline. Also, ISO-NE proposed to establish a uniform $250,000-cluster study deposit, consistent with Large Generator Interconnection Procedures requirements.

ISO-NE’s proposed Order 2023 compliance would require interconnection requests to be submitted during a specified period lasting 45 days, which would be followed by a 60-day engagement window featuring a single cluster study scoping meeting. The RTO then would undergo the 270-day cluster study process, which would be followed by a potential cluster restudy period lasting 150 days.

Adding up all the steps, the process would take 525 days — or just under a year and a half — if all steps proceeded in immediate succession.

Some stakeholders have expressed concern about extending the cluster study length from 150 to 270 days. Alex Lawton of Advanced Energy United (AEU) told RTO Insider in a statement that the AEU is reviewing the compliance proposals but that it “encourages ISO to adhere to Order 2023’s 150-day cluster study duration, propose a study duration shorter than 270 days, and work with stakeholders to effect changes that are necessary for the ISO to confidently conduct cluster studies in a timely manner that is aligned with Order 2023.”

Lawton said ISO-NE should require transmission owners to attend the study scoping meeting in the engagement window, which is not mandated by Order 2023. He added that AEU hopes to see more information on cluster subgrouping, the effect of cascading restudies on subsequent clusters, study assumptions for storage and the ways ISO-NE will consider grid-enhancing technologies.

ISO-NE said the presentations were intended to initiate conversations with stakeholders and welcomed feedback on the proposals.

The RTO said it is preparing an alternative proposal for storage operating assumptions that will “no longer study storage resources charging at peak-load conditions” and will “avoid incorporating additional control technologies.” The RTO plans to provide more detail on the treatment of storage resources at the October Transmission Committee meeting.

Capacity Interconnection

ISO-NE also presented to the TC on changes to its capacity interconnection processes, which will be separated from the Forward Capacity Auction process in response to Order 2023.

In the current process, capacity interconnection is connected to the Forward Capacity Market (FCM) and requires new resources to participate in FCM qualification and obtain a capacity supply obligation (CSO).

Alex Rost of ISO-NE said the current process will not be compatible with the requirements of Order 2023. To comply with the order, the RTO will “move all steps of the capacity interconnection process into the overall interconnection process.”

Rost added that ISO-NE will evaluate capacity network resource interconnection service (CNRIS) requests within each cluster.

“Achieving a CSO in the Forward Capacity Market would no longer be a milestone to achieving CNRIS,” Rost said. “CNRIS would be achieved by completing the interconnection process and entering commercial operation.”

Transition Process

Jody Truswell of ISO-NE presented on the RTO’s proposed transition process, which would begin soon after the compliance filing, and “be the most impactful for active projects in the ISO interconnection queue,” Truswell said.

“Interconnection customers will need to make decisions shortly after the ISO files its compliance package regarding how they plan to proceed,” Truswell said.

Assuming no extensions to the compliance deadline, interconnection requests would need to be “deemed valid” by Jan. 4 to be included in the transition process. If projects missed this deadline, they would need to wait until the first cluster entry window opened, which ISO-NE projected to be in mid-2025. ISO-NE is proposing an effective date of March 1, 2024, to initiate the transition study process.

Truswell also proposed that two ongoing cluster efforts — the Third Maine Regional Integration Study and the Cape Cod Cluster System Impact Study — proceed as planned.

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Emilie Nelson Named NYISO COO, Replacing Rick Gonzales

NYISO on Wednesday announced that EVP Emilie Nelson was named COO, replacing Rick Gonzales, who is retiring at the end of the year.

CEO Rich Dewey told stakeholders at an ISO Management Committee meeting that he recommended Nelson to the Board of Directors, which approved the promotion. Nelson will now be responsible for overseeing both the operations and the market mitigation and analysis (MMA) teams.

“I feel that this really positions us well for the future and is a good leadership expansion for Emilie and sets up both our organization and teams for the challenges of the future,” Dewey said during the meeting.

Nelson joined the ISO in 2004 and has been in the industry for almost 25 years. She previously worked for Mirant New York as a power plant performance engineer. During her tenure at NYISO she has held various roles of increasing responsibility on the market monitoring, energy market design and operations teams.

Nelson holds a bachelor’s degree in mechanical engineering from Tufts University, an MBA from Pace University and is a graduate of Harvard Business School’s Advanced Management Program.

NYISO Board Chair Dan Hill said in a statement that “Emilie has built a strong record of performance-driven results in a number of senior management roles throughout her career at the NYISO.”

Gonzales also congratulated Nelson during the meeting, saying she “will bring some great change to the organization by bridging [the operations and MMA] parts together.”

Gonzales, who has been with NYISO since its inception and previously worked for the New York Power Pool, is scheduled to retire on Dec. 31, 2023.

Draft Budget

NYISO presented the MC its draft budget for next year, saying it will total $194.8 million and that $8 million remaining from this year’s budget will be used to make early repayments on outstanding debt.

The 2024 draft budget is roughly $5 million higher than this year’s budget, with much of the growth attributable to proposed increases in consulting fees and staff salaries, which NYISO says are necessary to accomplish next year’s project portfolio. The ISO will also hire for 19 new positions in both the system and resource planning and operations teams next year.

NYISO’s draft budget for 2024 compared to 2023 | NYISO

NYISO already faced stakeholder scrutiny after presenting its final project budget recommendations of $41.62 million for next year, with many balking at the proposed labor cost increases. (See NYISO Proposes $41.62M Project Budget for 2024.)

Stakeholders can discuss the draft budget again in early October before the board reviews it on Oct. 16. The ISO anticipates bringing the final draft to the MC for a vote on Oct. 25.

Seasonal Demand Curves

The MC also approved NYISO’s proposed revisions related to implementing winter and summer demand curves into the next demand curve reset for the 2025/26 capability year.

The ISO’s proposed changes will be part of the next four-year DCR, which regularly updates the parameters for New York’s capacity market, and seek to better reflect seasonal reliability risks and the value that certain resources provide during the competing seasons.

The revisions were previously approved by the Business Issues Committee and will now go before the board for final approval. (See “Seasonal Demand Curves,” NYISO Business Issues Committee Briefs: Sept. 14, 2023.)

August Market Performance

Gonzales delivered the August market performance report during the MC meeting, saying, “we had pretty mild temperatures that were cooler than average and a little less wet than July.”

He noted that August’s year-to-date energy prices are down 56% compared to last year, decreasing from $93.42/MWh in 2022 to $40.13/MWh this year. August’s gas prices were also down 85% compared with last year, and prices at the Transco Z6 NY pipeline touched a low of $1.18/MMBtu.

As in a monthly operations assessment delivered to an earlier Operating Committee meeting, Gonzales highlighted how an unexpected four-day heatwave in early September saw some of the highest demand during the summer and that the ISO will investigate the hot weather phenomenon. (See “August Operations Report,” NYISO Operating Committee Briefs: Sept. 15, 2023.)

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PJM Board Releases Outline of Capacity Market Changes

The PJM Board of Managers has released an outline of several changes to the RTO’s capacity market to be included in a FERC filing slated to be made next month.

In a Wednesday letter, the board stated it built the filing’s structure off the annual capacity market design PJM formed during the critical issue fast path (CIFP) process. The filing would retain the core design of the Reliability Pricing Model (RPM) but rework the capacity performance (CP) construct, how resource adequacy risk is modeled and resource accreditation. The filing is expected to include parallel changes to the risk modeling and accreditation for fixed resource requirement (FRR) entities with a four-year transition period. (See PJM Members Lobby Board Ahead of Expected CIFP Filing.)

The board directed PJM to submit the filing to FERC no later than Oct. 13, with the aim of having the changes effective for the 2025/26 Base Residual Auction (BRA). It notes that components could be grouped together or filed individually to “mitigate the risk of a single component of the filing causing the delay or rejection of the entire suite of enhancements.”

The filing completes the CIFP process the board opened in February but acknowledges stakeholders and PJM raised issues that remain unaddressed under the expected filing, such as a seasonal or more granular capacity market design and shortening the period between the auction and corresponding delivery year. The board’s letter states it expects to receive feedback on the filing and next steps during the next Liaison Committee meeting, scheduled for Oct. 2, and through discussions with the Organization of PJM States Inc. (OPSI). (See PJM Stakeholders Vote Against All CIFP Proposals.)

In reworking the CP design, the board stated that it sought to strike a balance between the risks generators see in taking on a capacity commitment and incentives for them to maintain the capability to perform during an emergency.

The filing would leave the penalty rate unchanged but would revise the annual stop-loss limit to be based on the BRA clearing price; currently, both are derived from the net cost of new entry (CONE). Proponents of basing penalties on the value of capacity argued that it would align the risks generators face with the revenues they earn as a market seller, while opponents argued it would reduce the incentive to perform. A proposal to base both values on the BRA clearing price was endorsed by the Members Committee in May but was not approved by the board. (See PJM Board Rejects Lowering Capacity Performance Penalties.)

The filing also directs PJM to revise its calculation of the market seller offer cap (MSOC) to allow generators to include more cost of risk in their offers even when their net avoidable cost rate (ACR) is zero or negative.

“The ability to express risk in offers is integral to ensuring the optimal set of resources are selected to provide capacity and on its own is not an exertion of market power when those quantified risks are rooted in rigorous, reasonable analysis, as is required by the current resource-specific process,” the board said.

The eligibility for receiving CP bonus payments — which are based on the amount of penalties collected and are distributed to generators that overperformed during an emergency — would be tightened under the board’s filing to go only to committed capacity resources, rather than all generators.

The board rejected proposals to excuse long-lead resources from CP penalties, which argued they are not capable of modifying their generators to be more flexible, saying the current rules incentivize them to be ready for emergencies.

“The board does not believe that self-scheduling of such resources in the anticipation of being required to operate presents a reliability concern for PJM, and to the extent a self-schedule request is actively denied by PJM, it represents a dispatch instruction by PJM and therefore an excusal,” the letter said.

The risk modeling changes would increase the amount of weather history data PJM uses to go back 30 years and using hourly granularity and modeling of correlated outages when evaluating resource adequacy. The board did not, however, adopt PJM’s proposal to zero out the capacity benefit of ties, arguing that doing so requires further consideration. It directed PJM to continue engaging in it with the aim of arriving at a new process of considering the value of imported power during emergencies. The new methodology should be targeted for implementation for the calculation of the 2025/26 installed reserve margin, the board said.

“While the board does not support the 0 MW proposal at this time, the board is concerned that the current process to produce CBOT may no longer produce accurate estimates, given the evolving view of resource adequacy risk and resource adequacy dispositions of neighboring regions,” the letter said.

The board also directs changes to modify the winter deliverability assumptions in resource adequacy risk modeling and accreditation for solar resources to consider system conditions and resource output beyond the hours now studied.

The filing adopts PJM’s CIFP proposal to shift to using a marginal effective load carrying capacity for all resource types, which the board said will improve alignment between market structures such as accreditation, compensation and incentives, with system risk.

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Maryland PSC Approves Infinite Net Metering Credit Accumulation

Ratepayers with their own solar generating projects can reap the financial benefits from accumulating net-metered credits indefinitely under rules approved Wednesday by the Maryland Public Service Commission (PSC) that are set to take effect Sunday.

The rules update the existing 12-month accumulation period, under which the utility reimburses each ratepayer annually for any outstanding credits awarded from electricity fed into the grid when a solar system generated more power than the ratepayer needed.

PSC officials, working with the state’s four utilities — Delmarva Power & Light Co., Potomac Electric Power Co., Baltimore Gas and Electric Co. and The Potomac Edison Co. — crafted the rules to meet the requirement of S143, known as the Net Metering Flexibility Act, which Gov. Wes Moore signed in May. It takes effect Oct. 1.

Ratepayers, under the new rules, are by default limited to a 12-month accrual period. But they can opt each March 1 to limit the period for any credit accumulation to one year, or to accumulate credits indefinitely. The rules also apply to subscribers to community solar projects, who accrue virtual credits as a result of their participation in that program.

Eligible ratepayers include any customer who owns and operates, leases and operates, or contracts with a third party who owns a project. In addition to solar generators, the rules cover projects that generate electricity with biomass, micro-combined heat and power, fuel cell, wind or hydro.

Jacob M. Ouslander, assistant counsel at the Office of People’s Counsel, an independent ratepayer advocacy organization, said the rules could be a big benefit to some ratepayers.

“When the NEM (net energy metering) credits are paid out in excess generation, the customer ends up receiving a lower financial benefit from the credit,” he said in an interview with NetZero Insider after the meeting. That’s because ratepayers buy electricity at the “full retail rate,” including distribution charges, but the utilities don’t pay those charges when they buy excess energy credits, he said.

So, ratepayers whose electricity use rises in the future would be better off holding credits and using them in the future, rather than cashing them in.

Fair Valuation of Accrued Credits

Speaking at the meeting, Ouslander expressed concern, however, that it was unclear which method utilities would use to calculate the amount they would pay out for credits accumulated over a long period.

“When you have a situation where a customer could potentially indefinitely bank credits, meaning that they could bank credits for years and years and years, the method that’s spelled out in the tariffs [concerns] us,” he said. “Because there could be a situation where the credits that are eventually cashed out if the customer switches back (to annual accrual) or closes the account end up being much higher than the excess generation that would have been paid out had the customer been receiving the payouts under the 12-month annual accrual cycles.”

That would hurt other ratepayers, who collectively would be paying for the excess amount paid, he said. “Ideally, there would be a method that values the accrued credits at a level close to what the customer would have received under the annual accrual method,” he said.

He added that utilities need to educate ratepayers that they have the option and how to go about it, if they want to switch from the 12-month accrual period to indefinite accrual, or back.

That and other issues related to helping ratepayers understand the impact of such decisions would best be resolved by creating a clear form that would educate ratepayers and allow them to communicate their desired accrual period to their utility company, Ouslander said.

Utility representatives generally agreed. However, PSC officials said a working group tasked with creating the form had yet to complete its work.

Commissioner Bonnie A. Suchman suggested the commission approve the new rules but “suspend” the ability of ratepayers to make a decision until those details had been ironed out.

“If you haven’t nailed down how the indefinite accrual method will work, it’s very hard for a customer to make a choice,” she said.

Joel Michel, assistant general counsel at Baltimore Gas and Electric, said any ratepayer choice would not take effect until March 1. In response, the commissioners agreed to make that the deadline to produce the form and clear up unresolved questions about the process.

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CISA Publishes Hardware BOM Framework

The Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) put a spotlight on supply chain risk management Monday with the release of its Hardware Bill of Materials (HBOM) Framework, intended to help buyers of electronics equipment identify and mitigate risks in their supply chains.

CISA’s Information and Communications Technology Supply Chain Risk Management (ICT SCRM) Task Force developed the document. The group is managed by CISA with participation from the information technology and communications sectors, both classified as critical infrastructure by the agency.

The impetus behind HBOMs is to provide a list of the names and origins of all physical materials that went into a hardware product. A single modern hardware product may contain components from dozens of separate manufacturers, and an HBOM could provide a major help for purchasers who need to verify that the parts in the items they buy come from trustworthy sources. If something goes wrong with a piece of hardware, the HBOM could more quickly help track down the source of the problem.

Consistency Across HBOMs

But while the potential value of HBOMs is clear, an inconsistent approach may make it difficult for vendors and buyers to get on the same page. CISA’s HBOM framework is meant to provide a common platform to “help organizations illuminate supply chains and support the efficient evaluation and mitigation of” hardware supply chain risks “on a voluntary and flexible basis.”

The body of the framework is organized into three key components. Appendix A sorts HBOMs into potential use cases for risks that they may face. For example, the compliance use case deals with adherence to internal and industry regulations, the security case evaluates exposure to known security vulnerabilities, and the availability case assesses potential impacts from world events and supply chain constraints.

In Appendix B, CISA provides a format that vendors and buyers can use to ensure consistency across products. The appendix also describes a method for addressing components and subcomponents acquired from third parties and tracking their potential vulnerabilities.

Appendix C lists component attributes that may be appropriate to include in an HBOM, with the goal of creating “consistency across HBOMs by defining a data field associated with each attribute.”

Appendix D suggests potential enhancements that the ICT SCRM Task Force may later add to the document.

Grid security officials have been raising the alarm about hardware supply chains for some time as the operation of the North American power grid becomes increasingly reliant on remote connectivity and electronic devices largely manufactured in China.

In 2020, then-President Donald Trump declared a national emergency regarding foreign threats to the grid and banned federal agencies, citizens and companies from certain transactions involving grid equipment developed or manufactured by entities connected with “foreign adversaries” including China, Russia, Iran and North Korea. President Biden suspended Trump’s order upon taking office but largely reinstated it after a review. (See Biden Reinstates Trump Supply Chain Order.)

CISA Identifies New China Threat

Just days after releasing the HBOM framework, CISA, along with the FBI, National Security Agency, and their counterparts in Japan, issued a joint warning that cyber actors linked to China have demonstrated the capability to modify router firmware and install custom malware in targeted computer systems. The cyber group, dubbed BlackTech by law enforcement, has targeted “a wide range of public organizations and private industries across the U.S. and East Asia,” in sectors including technology, industry, electronics and telecommunication.

BlackTech — also called Palmerworm, Circuit Panda and Temp.Overboard — has been active since 2010, the agencies said in a more detailed advisory. Like Volt Typhoon, another China-linked hacking group that CISA warned about earlier this year, BlackTech uses so-called “living off the land” techniques to hide within a target system by appearing to be legitimately installed software. (See NERC Issues Cybersecurity Data Request.)

The group targets international subsidiaries of Japanese and U.S. companies, first gaining access to the branches and then pivoting to attack the central offices and steal confidential information.

“With our U.S. and international partners, CISA continues to call urgent attention to China’s sophisticated and aggressive global cyber operations to gain persistent access and, in the case of BlackTech actors, steal intellectual property and sensitive data,” said Eric Goldstein, CISA’s executive assistant director for cybersecurity. “We encourage all organizations to review the advisory, take action to mitigate risk, report any evidence of anomalous activity and continue to visit [CISA’s China page] for ongoing updates about the heightened risk posed by PRC cyber actors.”

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New Mexico Contemplates Organized Market Choice

When it comes to choosing one of the two competing Western day-ahead market offerings, who else is participating in the market is a key consideration, a representative of a New Mexico utility said last week.

The New Mexico Public Regulation Commission (PRC) held a workshop on Sept. 21 to discuss the pros and cons of utility participation in a regional day-ahead market or RTO. The discussion came as CAISO prepares to roll out its extended day-ahead market, in competition with SPP and its Markets+ offering.

Kelsey Martinez with the Public Service Company of New Mexico (PNM) said during the workshop that both market operators are “proven,” and PNM believes the two offerings would provide similar benefits.

“Less and less of the decision feels about the market operator and the market design,” said Martinez, who is PNM’s RTO and markets manager. “And more and more of it feels really about who’s in the market with you. So which resources are in the market, which transmission is in the market, what loads are in the market.”

In written comments to the commission, PNM was even more specific, saying “existing market transmission connectivity represents the largest deciding factor in choosing a day-ahead market.”

PNM said it currently has the most market transmission connectivity with Arizona Public Service. PNM expects to select a day-ahead market in 2024.

PNM also worked with consultant Energy and Environmental Economics (E3) to look at the impact of market seams between New Mexico and Arizona. The utility defined seams as areas where entities that share transmission connectivity are in different market footprints.

“For PNM … [the study] showed a large reduction in benefits when seams exist between Arizona and New Mexico,” the utility said in its comments.

PNM noted that it won’t know what transmission connections will be in each footprint until other utilities reveal their day-ahead market choices.

The E3 analysis was a follow-up to a report the consultant prepared for the Western Markets Exploratory Group, looking at the impact of different market footprints on WMEG member benefits.

Moving Renewables to Market

In August, the PRC opened a docket to establish “guiding principles” for participation in a regional day-ahead market or RTO by two investor-owned utilities in the state, PNM and El Paso Electric. (See NM Commission to Set Standards for RTO, Day-ahead Participation.)

PNM has been participating in CAISO’s Western Energy Imbalance Market (WEIM) since 2021 and El Paso Electric joined the WEIM this year.

Last week’s workshop was scheduled as part of PRC’s guiding principle development. In addition, PNM, El Paso Electric and other stakeholders filed lengthy written comments answering questions posed in the commission’s initial order opening the docket.

Some stakeholders used the workshop as an opportunity to make a pitch for a Western RTO.

“Moving forward in the stepladder of market opportunities before us is good, but stopping short of a full RTO leaves real opportunity on the table,” said Rikki Seguin, executive director of the Interwest Energy Alliance.

Interwest is an advocacy group that represents utility-scale renewable energy developers in six Western states. For the renewable industry, “getting to the benefits of centralized transmission planning and cost allocation is key,” Seguin said.

To meet state policy goals, the West will need to add 9 GW of renewable energy each year starting in 2026, Seguin said, citing data from Energy Strategies’ Western Flexibility Assessment.

New Mexico is well-positioned to help satisfy that demand, she said, with its “world class” solar and wind resources.

But “absent the transmission planning … it’s going to be really hard to move those renewables to market,” Seguin said.

Bifurcation Challenges

Public interest group Western Resource Advocates (WRA) also weighed in on the regional market issue in written comments and with a presentation during the PRC workshop.

WRA said a single, large-footprint market would provide the most economic, environmental and reliability benefits to New Mexico. In terms of challenges arising from regional markets, WRA said one of the largest would be a bifurcation of day-ahead energy markets and their impact on efficient clean energy dispatch and economic gains from the WEIM.

In addition, WRA is concerned about New Mexico utilities’ decision-making process for joining a market.

“The choice to join a regional market … should not be based on grounds of expediency to satisfy an adjoining utility that it relies on for transmission access and dispatch,” WRA said in written comments.

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MISO Somewhat Open to COD Allowances in Interconnection Queue Rules

MISO has signaled it is receptive — but only to an extent— to stakeholder ideas on loosening its commercial operation date deadlines in its generation interconnection queue.

MISO will collect stakeholder suggestions through Oct. 17 on how it might stretch deadlines around commercial operation date rules in its interconnection queue. The RTO is experiencing a growing number of generation projects that are approved to connect to the system but aren’t finished.

However, MISO said the potential commercial operation dates generation developers are using in negotiations for upcoming generator interconnect agreements (GIAs) so far don’t exceed the existing extensions MISO’s tariff allows.

“It appears at least on the surface that commercial operation date extensions are adequate,” MISO’s Brady Mann said at a Sept. 26 Interconnection Process Working Group teleconference.

Mann pointed out that MISO allows a three-year deferral when transmission owners cannot bring equipment necessary to connect new generation into service on time.

MISO policy requires GIAs struck among interconnection customers, transmission owners and MISO to contain a commercial operation date that’s within three years of the date originally requested in their queue applications. The grid operator additionally allows up to a three-year extension of the commercial operation date in the initial GIA. When developers can’t meet either extension, MISO can remove the project from its queue or developers can seek a waiver of the queue tariff deadlines with FERC.

Mann added that MISO is open to hearing potential remedies from stakeholders.

“It is a new world we’re living in, so having that collaboration and conversation will be helpful,” Mann said. “Our intent here is to understand the issues you’re facing and additional remedies that may be required.”

EDP Renewables last month requested that MISO consider extending its grace period or letting developers amend commercial operation dates to be more realistic in GIAs. The developer said study delays and supply chain setbacks mean interconnection customers can’t realistically meet the commercial operation dates set forth in the first drafts of their GIAs. (See MISO to Assess Extending Queue’s COD Grace Period.)

Multiple renewable energy developers told MISO that behind-schedule commercial operation dates will be common.

“We’re in a different world than in 2018. There are supply chain and delivery issues on both the interconnection customer and transmission side. … The problem is not likely to go away, in our view, and will extend into several future queue cycles,” EDP Renewables’ David Mindham said. “We believe it’s better to deal with this problem holistically than file a bunch of one-off waivers at FERC.”

Mann said MISO expects both interconnection customers and transmission owners to simultaneously gather supplies, conduct engineering analysis and construct facilities after a GIA is negotiated. He said one shouldn’t be waiting on the other to move ahead.

Growing Share of Approved And Unbuilt Generation

In a separate presentation, Mann said volumes of executed generator interconnection agreements are on the rise, with the 35 GW in GIAs expected to be executed by year’s end more than doubling 2022’s 16 GW.

MISO acknowledged the lion’s share of gigawatts from recently executed GIAs isn’t yet in commercial operation. Mann said MISO predicts a “large increase” in commercial operations in 2028, when developers exhaust their three-year grace periods.

MISO has said it has about 49 GW worth of generation projects that are approved to connect to the system under completed GIAs but remain unbuilt, which raises its near-term reliability risks. (See MISO: Reliability Risk Upped by 49 GW in Approved but Unbuilt Generation.)

By year’s end, MISO expects that value to grow to 66 GW in executed GIAs for generation projects that have yet to reach commercial operation.

Meanwhile, MISO’s interconnection generation queue studies continue to slip on their intended timelines. Most interconnection queue cycles for MISO’s four planning regions are delayed.