PJM MRC/MC Briefs: Jan. 25, 2023

Markets and Reliability Committee

MRC Discusses MSOC and CPQR Changes

The PJM Markets and Reliability Committee added a discussion of the market seller offer cap (MSOC) and capacity performance quantifiable risk (CPQR) to its Jan. 25 agenda at the behest of stakeholders concerned that the current constructs may not fully reflect the risk of penalties paid during emergency conditions.

Jeff Whitehead, of GT Power Group, said the current MSOC was built on the assumption that emergency performance assessment intervals (PAIs) would be few and far between. However, the 277 PAIs occurring on Dec. 23 and 24 during Winter Storm Elliott has challenged that notion.

Jeff Whitehead, GT Power Group | © RTO Insider LLC

With the 2025/26 Base Residual Auction (BRA) approaching and generation owners facing as much as $2 billion in performance penalties stemming from Elliott, Whitehead said it’s important that sellers are able to understand how the storm will impact the offers they can submit. (See PJM Gas Generator Failures Eyed in Elliott Storm Review.)

PJM Vice President of Market Services Stu Bresler said there are two meetings of the Resource Adequacy Senior Task Force (RASTF) — including Jan. 31 — and one Market Implementation Committee meeting before the next MRC meeting. He said the issue can be added to those agendas with the goal of having a proposal to present to the MRC at its February meeting. Given the current timeline for the June BRA, he said actionable market changes would likely require an alternative auction schedule.

Gregory Carmean, of the Organization of PJM States Inc. (OPSI), said that any changes to the auction schedule would be disruptive to states that run their own markets to procure energy.

Noting that the funding for bonus payments is derived from the penalties paid by underperforming generators, Carmean questioned why the capacity performance mechanism results in “exorbitant prices” for ratepayers and doesn’t net out to be cost neutral. Given that energy-only resources aren’t subject to penalties, he also asked why they are eligible to receive bonus payments.

PJM’s Adam Keech said the bonus payments are distributed to any overperforming resources to create an incentive to provide power when it is needed most, regardless of whether it comes from capacity or energy resources.

Jason Barker, of Constellation Energy, said many small or new market participants may not have developed the tools needed to fully model the performance risk to their facilities, creating a roadblock to offering as a capacity resource. A pro forma system where sellers can provide data and receive expectations of how their unit may perform could be a short-term step as broader market designs are considered.

Independent Market Monitor Joseph Bowring said it’s reasonable to raise the narrow issue of the interaction between Elliott and PJM’s market mechanisms.

“It is straightforward to include the PAI data from Elliott in the simulation calculations used to calculate CPQR,” he said. “But is important not to be hyperbolic about the impact of the Elliott PAI. It should come as no surprise to anyone that the market experienced PAI. But this is the first significant PAI event in the history of CP. This can be handled within the existing rules.”

Greg Poulos, of the Consumer Advocates of the PJM States (CAPS), noted that the conversation was occurring little more than a month out from the storm and data collection is still underway. Rather than rushing the MSOC conversation, he pushed for a more cautious approach.

“Overall, we would prefer to have a comprehensive market discussion and go at it that way rather than have a piecemeal and plug a hole, with a couple bandages over it,” he said.

Stakeholders Endorse Expansion of Hybrid Resource Rules

The rollout for the second phase of market rules for hybrid resources was approved by the MRC Wednesday, expanding the definition of hybrid to any combination of fuel types. The first phase created a set of market rules for the most predominant form of mixed-fuel facilities, solar and storage combinations, with the classification and metering language effective Oct. 1, 2022, and the energy market model scheduled to go live this June. The proposal requires FERC approval. (See PJM MRC Moves Forward on Storage, Hybrids.)

The new hybrid definition would allow for more resource pairings, such as hydrogen and solar or gas and solar, to benefit from the market provisions in the first phase, regardless of whether they are paired with storage. The market model for inverter-based storage hybrids is based on the phase one structure.

The proposal approved last week creates a new market model for inverter-based, generation-only hybrids, such as wind and solar modeled on the existing system for wind resources. The EcoMax and uplift parameters currently in place for wind resources are also being applied for hybrids.

Other MRC Business:

Stakeholders endorsed revisions to the charter for the emerging technologies forum to shift toward an emphasis on stakeholder discussion and debate, rather than a focus on education. The changes also include references to new Manual 34 language regarding forums, including added clarification that discussions in forums cannot be used to bypass the existing stakeholder issue resolution process.
The MRC approved a proposal to change how PJM models power flows in its day-ahead model to look at all 24 hours for the reference date. With changes in load patterns, particularly from behind-the-meter solar and data center development, PJM’s Amanda Martin said additional accuracy in aligning day-ahead and real-time flows is necessary. (See “First Read on Changes to Day-ahead Zonal Load Bus Distribution Factors,” PJM MIC Briefs: Nov. 2, 2022.)

Members Committee

Stakeholders Endorse Pathway for Issues to be Brought Directly to MC

The Members Committee endorsed a motion from Adrien Ford, of Old Dominion Electric Cooperative, to allow members to bring some issues best addressed by the MC directly before the body through a problem statement and issue charge, rather than having to be first considered by lower committees.

Adrien Ford 2022-06-29 (RTO Insider LLC) FI.jpg

Adrien Ford, Old Dominion Electric Cooperative | © RTO Insider LLC

The manual revisions were endorsed by the committee by acclamation with eight objections and five abstentions, all in the end-use customer sector.

Poulos said it’s best to have a problem statement and issue charge whenever possible to allow stakeholders to have a clear understanding of why a topic is being discussed. However, he worried that requiring those could lead to administrative discussion down the road that gets in the way of substantive work.

He asked Ford if she would be amicable to an amendment to her language to change the requirement that a problem statement and issue charge be approved by the MC be changed to recommend, but not mandate, that process. Such a change would also allow for issues to be voted on by the committee the same day they’re broached.

Ford said she could not accept the amendment, as the language was drafted by a group of stakeholders over a long period of time.

PJM Considering New Non-performance Charge Billing Schedule

PJM CFO Lisa Drauschak presented a series of adjustments the RTO is considering to its non-performance charge billing schedule to extend the amount of time market participants have to make payments when performance assessment intervals (PAIs) fall near the end of the delivery year.

Currently, billing is split between the remaining months in the delivery year after the charges have been determined for a generator. For PAIs in the summer this leaves as much as nine months for payments to be made, but for Winter Storm Elliot there will only be three months to make payments once the penalties have been determined.

PJM’s proposal would amend the tariff to allow payments to be split over an additional six months if less than six months remain in the delivery year once charges have been determined.

A second option being considered is to allow members who have been assessed penalties to elect to either pay them across the greater of the remainder of the delivery year, or three months, with no interest, or to have a six-month floor with interest added at the FERC prevailing rate. The alternative is based on stakeholder feedback received during the Jan. 24 meeting of the Risk Management Committee regarding the possibility of incorporating interest into the payment methods.

PJM General Counsel Chris O’Hara said that under the current language, if there were to be a PAI in the last two months of a delivery year, the collection period would already extend into the next delivery year, so the proposal is also an attempt to fix a broken provision.

January 31, 2023December 12, 2023

SERC Hits Virginia Electric with $320K in Penalties

SERC Reliability has levied penalties totaling $320,000 against Dominion Energy (NYSE:D) subsidiary Virginia Electric and Power Co. for violations of NERC reliability standards, according to a pair of settlements between the utility and the regional entity approved last week by FERC (NP23-9).

NERC filed the settlements Dec. 29 in its monthly Spreadsheet Notice of Penalty. On Friday the commission said that it would not further review the filing, leaving the penalties intact.

SERC assessed separate penalties against the utility’s generation and transmission divisions (respectively dubbed VEP-PG and VEP-Trans in the filing). Both involved infringements of FAC-008-3 (Facility ratings) and its predecessor, FAC-009-1 (Establish and communicate facility ratings), and were self-reported.

According to requirement R1 of FAC-009-1, generator owners (GO) and transmission owners (TO) must “each establish facility ratings for [their] solely and jointly owned facilities that are consistent with the associated facility ratings methodology” (FRM). Requirement R6 of the successor standard — which became effective in 2013 and has since been superseded by FAC-008-5 — contains nearly identical language.

Virginia Electric initially reported to SERC that, as both a TO and GO, it was in violation of FAC-008-3. The RE later determined that the infringement began under the earlier standard.

During an extent-of-condition assessment on April 2, 2020, caused by a suspected FAC-008-3 violation at a solar facility, VEP-PG found that the low-side and high-side cables in the facility’s generation step-up transformer had not been included in its facility ratings calculation, as required by the FRM. The utility subsequently performed a walk-down of all 102 facilities to which FAC-008-R6 applied, discovering 41 incorrect ratings that resulted in 28 uprates of up to 200%, and 13 derates of up to 33.14%.

VEP-Trans discovered its violation on Nov. 13, 2019, during an internal data validation process. According to its self-report, the utility found that the facility rating for a 500-kV networked line was inconsistent with the FRM because the rating had been changed during an upgrade without confirming the change was made in the field.

After SERC requested that VEP-Trans walk-down four transmission stations to check their ratings, the utility found 40 incorrect ratings. It then began a full system walk-down of all its bulk electric system transmission facilities on June 1, 2021. The full walk-down is expected to be completed by June 2025, but according to SERC’s filing, VEP-Trans had reviewed 244 facilities by Sept. 29, 2022, discovering misratings at six of them.

SERC concluded that the violations by both VEP-PG and VEP-Trans posed a moderate risk to the reliability of the bulk power system on the grounds that “incorrect ratings could cause system instability because planning models and system operating limits would not accurately reflect the true limits of the facility.” In the case of VEP-PG, the RE did note that the length of time of the violation and the number of affected facilities were aggravating factors.

Mitigating actions by VEP-PG include revising its FAC-008 compliance procedure document, along with other internal documents, implementing an “over-arching power generation document … to ensure consistency fleet-wide,” and conducting training on change management documents and requirements. VEP-Trans’ mitigation steps include conducting a third-party review of its facility rating process and streamlining its notification process, along with the full walk-down of its facilities.

SERC noted several credits to both VEP-PG and VEP-Trans for self-reporting the violations and demonstrating a high level of cooperation. However, it still assessed penalties of $130,000 against VEP-PG and $190,000 against VEP-Trans.

January 31, 2023

PG&E Must Seek New Diablo Canyon License

The Nuclear Regulatory Commission told Pacific Gas and Electric last week it would have to file a new application to keep California’s last nuclear generator, the Diablo Canyon Power Plant, operating beyond its planned closure dates in 2024 and 2025.

To expedite the renewal process, PG&E had asked the NRC to review a license application it filed 13 years ago. The NRC said it could not review the old application but would consider a waiver that might allow Diablo Canyon to continue operating as the commission weighs a new application.

PG&E said it had anticipated the decision and planned ahead.

“PG&E’s project plan considered this regulatory path, and we have been developing application materials and supporting documents to support a filing with the NRC later this year,” the utility said in an emailed statement.

PG&E filed its previous renewal application in 2009 but withdrew it in 2018, based partly on the determination by state officials that the plant would not be needed to meet future demand for electricity.

Circumstances changed, however, as the state faced energy emergencies during the past three summers including rolling blackouts in 2020 and near misses in 2021 and 2022.

Amid the crisis, Gov. Gavin Newsom and state lawmakers took steps to retain Diablo Canyon’s 2.2 GW of baseline power until at least 2030, and the U.S. Department of Energy awarded PG&E $1.1 billion to keep the plant open. (See DOE Grants PG&E $1B for Diablo Canyon Extension.)

In October, PG&E asked the NRC to review its prior application and offered to supply updated information as needed.

The NRC denied the request in a Jan. 24 letter to PG&E.

“The NRC staff has determined that resuming this review would not be consistent with our regulations or the [NRC’s] principles of good regulation and that there is no compelling precedent to support your request to resume the review of your withdrawn application,” the letter said.

“This decision does not prohibit you from resubmitting your license renewal application under oath and affirmation, referencing information previously submitted, and providing any updated or new information to support the staff’s review,” it said.

PG&E had also asked for a waiver under a federal regulation that allows a nuclear plant to keep operating past its license expiration date if it files a renewal application at least five years before the existing license expires. In that case, the “existing license will not be deemed to have expired until the application has been finally determined,” the regulation, 10 CFR 2.109(b), says.

PG&E asked the NRC for a waiver of the rule’s time requirement if it submitted a new application by Dec. 31, 2023. The current operating licenses for Diablo Canyon’s units 1 and 2 expire in November 2024 and August 2025, respectively.

PG&E’s waiver request remains under NRC review.

“The NRC staff has not made a determination on your request for an exemption from 10 CFR 2.109(b), which is included in your October 31, 2022, letter,” it said. “The NRC staff is evaluating that exemption request and expects to provide a response in March 2023.”

PG&E said in a statement that NRC’s decision had “clarified the regulatory path PG&E will follow regarding the license renewal application (LRA) process, while allowing the company to leverage work already reviewed in our 2009 LRA. PG&E intends to submit a new application by the end of 2023.”

January 31, 2023June 14, 2023

BNEF: Net-zero Targets Only Limit Climate Change to 1.77 Degrees

Of the $194 trillion in investments that BloombergNEF projects will be needed for the world to even get close to limiting climate change to 1.5 degrees Celsius by 2050, 47% will be targeted at electric vehicle sales, according to BNEF CEO Jon Moore.

Transportation electrification is the key theme at the two-day BNEF Summit in San Francisco, and Moore opened the event on Monday with a rundown of the numbers its analysis shows will be driving the transition, whether it is based purely on economics or on the 2050 net-zero targets set by the 2015 Paris Agreement.

BNEF CEO Jon Moore | BNEF

“Assuming we chose the most economic solutions … that gets us to 2.6 degrees, so not in line with Paris,” Moore said. Based only on targets, “we can actually bend the curve to about 1.77; so not to 1.5, but 1.77.”

Similarly, according to BNEF’s 2022 New Energy Outlook, greenhouse gas emissions from transportation could peak in 2024 in a net-zero scenario, versus 2028 in the economic scenario.

Moore’s numbers showed other significant gaps between BNEF’s economic transition scenario (ETS) and its net-zero scenario (NZS). For example, a transition based on economics would generate $119 trillion in investments — about 33% less than $194 trillion for net zero — with again almost half going to EV sales.

Either way, he said, “the scale of investment required, literally in the next 30 years, will be huge.” Moore sees encouraging signs in the $466 billion in investment that transportation electrification snagged in 2022, which was “up 54% year on year, which is … pretty amazing.”

Passenger vehicles drew the lion’s share of those dollars, and will continue as a major factor, he said, adding that more than 10 million EVs were sold globally last year. They will also account for more than half of EV battery demand, which could total as much as 6.6 TWh by 2035 in the NZS, Moore said. BNEF see similar, dramatic growth in lithium demand, reaching 5.9 million metric tons by 2035 — an 18-fold increase over 2020.

EV sales will account for almost half of all climate investments over the next decades, whether in an economic or net-zero transition. | BNEF

“So, lithium will become absolutely key as an enabler and as a potential bottleneck in the transition,” he said.

The Inflation Reduction Act could at least jump-start the supply chain buildout needed to meet that demand. BNEF has tracked more than $27 billion in supply chain investments since the law was passed, with about 60% of that total going toward EV battery plants.

But, Moore said, those figures do not include Tesla’s recent announcement of its plans for a $3.6 billion plant in Nevada. (See Tesla to Invest $3.6B in Nev. Truck, Battery Factories.)

One interesting point, Moore said, is that in the NZS, EV battery demand peaks in 2035, not 2050, “because if you want to, by 2050, decarbonize your fleet, you really have to be selling a decade or so earlier.”

Aviation is Hydrogen’s Sweet Spot

Moore framed BNEF’s figures as the company’s attempt to cut the “noise” in energy analysis — that is, the biases and errors in judgment that can skew figures.

Minimizing that noise — with extensive research and algorithms — is “really important because we’re going to spend tens, hundreds of trillions on the energy transition,” Moore said. “Every error in judgment that we make, every deviation from how the world progresses, is either an underinvestment or an overinvestment, so it’s actually very expensive.”

Disagreement is inevitable, he said, but “the idea is to bring down the cone of disagreement.”

“Economics alone won’t get us to net zero,” Moore said. “We’re going to need to bend the curve somehow, and policy is going to be one of the ways that we will do that.”

Policy could be critical in increasing the amount of clean power on the grid, as BNEF is anticipating that carbon-free electricity will account for just over one-half of the GHG emissions reductions needed to keep climate change to 1.77 C.

Wind and solar account for 65% of global power supply by 2050 in the ETS, versus 76% in the NZS, Moore said. Green hydrogen, bioenergy and carbon capture will play smaller but significant roles, together providing about 20% of emissions reductions by 2050, he said.

The IRA has triggered a wave of new investment in a North American EV supply chain. | BNEF

The IRA could have a significant impact here as well, by stimulating “a lot of different technologies,” Moore said. BNEF sees the law’s clean energy incentives expanding solar from about 40,000 GW to 50,000 GW by 2030, and wind from 25,000 GW to 35,000 GW.

The use of green hydrogen will also grow, Moore said, but BNEF sees aviation as its main market, followed by shipping and then transportation.

Hydrogen use in aviation will be for “short and medium haul,” he said. “For long haul, there will be biofuels and synthetic kerosene.

“For shipping, it will be ammonia and methanol from hydrogen, and on the road, it’s about 10% of [heavy-duty vehicles] and 15% of buses,” he said.

But BNEF sees hydrogen and electricity as complementary — with each serving different sectors — as opposed to competing. Aviation, shipping and steel will be “hydrogen-centric,” Moore said, while buildings, roads and other industries will be “electricity-centric.”

January 31, 2023April 9, 2024

ERCOT Technical Advisory Committee Briefs: Jan. 24, 2023

Staff Working to Understand Forced Outages in December Storm

ERCOT told its stakeholders last week that it is gathering information from its generators about the high number of outages during the December winter storm.

Staff told the Technical Advisory Committee during its Jan. 24 meeting that they have sent requests for information and its weatherization teams to generator resources that suffered forced outages during the Dec. 22-24 event. Thermal outages peaked around 13 GW, and gas supplies were again curtailed as an unwelcome reminder of the deadly February 2021 winter storm that killed hundreds of Texans and caused billions in economic damages. (See “ERCOT: December Storm ‘Non-event’,” PUC Closes in on ERCOT’s Market Redesign.)

Dan Woodfin, vice president of system operations, promised a more comprehensive report, saying staff are combining the information from the RFIs and will analyze the more detailed information.

Saying that ERCOT’s outage scheduler tends to understate outages, Independent Market Monitor Carrie Bivens asked Woodfin whether staff intended to do a true-up with telemetered values.

“Our intention is to look at telemetry and values, the outage scheduler and the results of the RFI, and kind of put it all together,” he said.

ERCOT’s preliminary analysis found gas restrictions in North Texas and operational flow orders issued to prevent gas flowing beyond contract maximums resulted in some curtailments and generation capacity. It also found that reduced renewable generation was not a large factor during the event.

Load peaked at 73.96 GW on Dec. 23, a 16-GW increase from ERCOT’s previous December record. The grid operator’s models projected a nearly 71-GW peak as the storm approached. Woodfin said other grid operators had similar problems predicting load, but that ERCOT’s miss had little effect on market reliability.

NRG Energy’s Bill Barnes took exception to the remark.

“You’re always going to get some type of market response based on ERCOT’s forecast. We look at it as a really big input into our decision-making,” he told Woodfin. “When there’s an under-forecast, that will probably result in a lower offer into the day-ahead [market], which is an economic commitment, which would mean you would have to take other additional [out-of-market] actions. The response that you get from the market? A lot of that comes from … what you guys think.”

Staff plan to engage with TAC’s Wholesale Market Subcommittee on the forecast error.

ERCOT deployed nearly 2.7 GW of its new firm fuel supply service (FFSS) Dec. 22-25 during the event. However, it failed to notify all market participants of the deployment or recall, as required under its protocols, and staff made system changes in January to correct the error.

Staff are drafting new protocols to improve existing language as they prepare for the next FFSS obligation period later this year. The changes are expected to improve the process for approving or instructing the restocking of fuel; offer disclosure reporting; incorporate an alternative FFSS resource concept; and improve qualified scheduling entities’ (QSEs) process for FFSS testing.

RUCs Continue to Increase

ERCOT staff’s annual report on reliability unit commitments led some stakeholders to call for market-based solutions after a second consecutive year of heavy RUC usage.

The grid operator said 8,244.8 instructed RUC resource-hours in 2022 resulted in 7,910.5 effective hours. That was up from the 3,853.1 effective resource-hours in 2021 and a significant increase from the two years prior, when a total of 421.8 effective resource-hours were deployed.

The increased usage is a result of ERCOT’s reliance since the 2021 winter storm on a conservative operations posture that maintains more reserves sooner. Bivens told lawmakers last year that the practice could add more than $1 billion to customers’ bills in 2022.

“We have a giant increase in RUCing some really old generators,” David Kee, CPS Energy’s director of energy market policy, told staff. “It’s causing some concerns in my shop, and we’re thinking about what we’re doing to these generators. … We’re basically running them into the ground. The more you lean on these generators and bring them online for reliability reasons, you’re going to find they’re going to break.”

ERCOT’s Dave Maggio said the average age of RUCed units was between 40 and 60 years. More than 87% of the effective resource-hours addressed capacity concerns, with 12.9% needed for local thermal congestion or voltage concerns; all of 2020’s RUCs were used to meet local congestion or voltage issues after a hurricane damaged transmission facilities in the Rio Grande Valley.

Pressed on staff’s “desire” to reduce RUCs, Kenan Ögelman, vice president of commercial operations, agreed there is a “potential better approach to procuring coverage for the uncertainty that we are dealing with.”

Ögelman said the grid operator expects to continue conservative operations but will be “looking at” modifications or improvements to RUCs. A long-term, market-based solution focused on revenue adequacy resides at the Public Utility Commission, he said, but priorities have yet to be established.

ERCOT paid out $34.11 million in RUC make-whole payments last year that was almost exclusively covered by capacity-short charges. It also clawed back $24.85 million. Those numbers were $404,000 and $484,000 in 2020, respectively.

Staff also said the delayed real-time co-optimization (RTC) project will be brought before the Board of Directors in June after they perform due diligence on the market mechanism favored by the Independent Market Monitor and many market participants.

ERCOT’s Matt Mereness said the project, put on hold almost two years ago after the 2021 winter storm, still has a $51.6 million budget line item and a three-and-a-half-year timeline “because we haven’t revisited it.”

The RTC tool would expand ERCOT’s real-time market by clearing energy and ancillary services every five minutes, as most other grid operators already do. The PUC in 2018 directed ERCOT to add RTC in 2018; it opened a rulemaking in December 2020 for its implementation (51588).

The project’s impact analysis will have to be revisited because of inflation’s toll. Staff will also reassess its scope with an eye of resuming RTC work in July.

“From a reliability perspective, it’s the next thing that we really do need,” Mereness said. “We’re not blind to the risk of this project of getting going, but we also know that we need to move forward on it. The reality is there are things going on at the commission. As that work [for ERCOT] comes out, it will have to be prioritized with other work.”

Subcommittee to Charter Credit Group

TAC delegated the soon-to-be-disbanded Market Credit Working Group (MCWG) to develop a proposed charter, structure and name for a new working group that will report directly to the committee. The group will then replace the MCWG, which had provided input on credit-risk management issues to TAC’s Wholesale Markets Subcommittee.

The stakeholder group will give market participants a voice in market credit issues after the board’s Reliability & Markets Committee determined that staff should report to it on credit issues, and it moved in December to disband the Credit Working Group (CWG). The group was shifted last year to the R&M’s purview from the Finance & Audit Committee, where it had been since 2004. (See “ERCOT Gets 1st Adjunct Member,” ERCOT Board of Directors Briefs: Dec. 19-20, 2022.)

Speaking for Reliant Energy Retail Services, Barnes, a regular CWG attendee, pushed for the new group to include credit professionals, saying his company’s credit pro recommended a voting structure. Other members stressed the importance of market diversity within the group.

The new group’s responsibilities will likely include a credit review of all future nodal protocol revision requests, as required by NPRR1157 and formerly carried out by the CWG.

TAC Elects 2023 Leadership

Jupiter Power’s Caitlin Smith and South Texas Electric Cooperative’s Clif Lange take their leadership seats for TAC. | ERCOT

Committee members re-elected by acclamation South Texas Electric Cooperative’s Clif Lange as their chair for 2023. Having recently been promoted as the cooperative’s general manager, Lange has asked that TAC meetings be moved to Tuesdays this year.

Members also elected Jupiter Power’s Caitlin Smith as vice chair. American Electric Power’s Richard Ross also ran for the position.

The committee’s 2023 subcommittee leadership was approved as part of the combination ballot:

Protocol Revision Subcommittee (PRS): Martha Henson (Oncor) as chair and Diana Coleman (CPS Energy) as vice chair.
Retail Market Subcommittee: Deborah McKeever (Oncor) as chair and John Schatz (Luminant) as vice chair.
Reliability and Operations Subcommittee: Chase Smith (Southern Power) as chair and Katie Rich (Golden Spread Electric Cooperative) as vice chair.
Wholesale Market Subcommittee: Eric Blakey (Pedernales Electric Cooperative) as chair and Jim Lee (CenterPoint Energy) as vice chair.

Most of the leadership are holdovers, with McKeever and Schatz switching positions. Coleman, Blakey and Lee are all new to their roles.

Members Endorse Five NPRRs

TAC unanimously approved NPRR1144, which provides a limited exception to the requirement that loads included in an ERCOT-polled settlement (EPS) metering facility’s netting arrangement only be connected to the grid through the facility’s metering point(s). The exception would allow no more than 500 kW of auxiliary load connected to a station service transformer be connected to a transmission or distribution service provider’s (TSP/DSP) facilities through a separately metered point using an open transition load transfer switch listed for emergency use.

The measure passed 29-0, with CenterPoint abstaining.

TAC unanimously endorsed four other NPRRs on a combination ballot with a change to the Planning Guide (PGRR) that, if approved by the board, would:

NPRR1147: set fast frequency response’s ancillary service offer floor 1 cent/MW lower than other responsive reserve services categories to allow FFR’s procurement up to the current limit, without proration with other categories.
NPRR1149: charge QSEs an ancillary service failed quantity if their supply responsibility is not met in real time by their portfolio’s resources, based on a comparison of their real-time telemetry.
NPRR1151: eliminate the protocol requirement that the PRS hold at least one meeting per month.
NPRR1153: add two existing fees (public information request labor and ERCOT training) to the grid operator’s fee schedule; create a $500 registration fee for resource entities, TSPs and DSPs, and subordinate QSEs; delete the system administration fee’s current value and the map sales fee; and restructure existing fees for generator interconnection or modification, full interconnection study applications and wide area networks.
PGRR102: require resource entities and interconnecting entities to provide operations dynamic model quality test results that demonstrate appropriate performance for submitted operations dynamic models, and make non-substantive clarifying changes.

January 31, 2023December 10, 2023

Bill to Expand Community Solar Target Clears Virginia Senate Panel

A Virginia Senate committee on Monday cleared a bill that would expand Dominion Energy’s community solar target sevenfold while changing how some consumers who use the resource are billed.

Dominion (NYSE:D), the largest utility in the commonwealth, has a target of just 200 MW for community solar, which is set to start rolling out after this July when the firm completes an update to its “customer information platform,” according to the Coalition for Community Solar Access.

The Senate Committee on Commerce and Labor voted 12-3 to clear Senate Bill 1266, which would increase Dominion’s target to 10% of its peak load.

Ten percent is the share the industry has pushed for in other states, CCSA Mid Atlantic Regional Director Charlie Coggeshall said in an interview. “That ends up being over 1.5 GW, so it’s a significant jump from 200 MW, but we think that the scale is appropriate to the size of the utility and the size of the market,” Coggeshall said.

The Dominion bill cleared the committee on a straight party line vote after sponsor Sen. Scott Surovell (D) and Katharine Bond, Dominion’s vice president of public policy, state, and local affairs testified that they could work through the issues they disagree on.

Minimum Bill

The two sides still disagree on the “minimum bill,” which is meant to ensure that those participating in the program do not shift costs to other customers.

Surovell seeks to change the $55 “minimum bill” approved by the State Corporation Commission in July for residential community solar customers using 1,000 kWh/month of power (PUR-2020-00125). (See Shared Solar at Risk from High Fees, Va. Advocates Warn.)

Community solar states (Coalition for Community Solar Access) Content.jpg

Virginia is one of 22 states with competitive community solar policies, according to the Coalition for Community Solar Access. | Coalition for Community Solar Access

Minimum bills are used to ensure that customers receiving credits for their solar generation also pay their share of the grid’s costs, but Coggeshall said the SCC’s order makes community solar unaffordable for all but low-income customers, who are exempt from the minimum.

Because the minimum bill never applied to low-income customers, all development has been focused on that sector, Surovell said. “What we thought was going to be the small part of the program is going to be the whole program, and none of them are going to be contributing towards all the costs that everybody else pays,” he added.

Surovell’s bill would require the SCC to open a new proceeding to set the minimum bill, striking language in the current shared solar law that requires that participating customers “should pay all the infrastructure and services costs associated with the utility providing service to them.”

The bill would require the SCC to consider the benefits of solar in setting that minimum bill, which include avoided transmission costs and cleaner overall generation, said Surovell.

Dominion wants to ensure that the costs of serving those customers with the grid power they will still rely on are recovered.

Another community solar bill sponsored by Surovell and Sen. John S. Edwards (D), SB 1083, for American Electric Power’s Appalachian Power Company (NASDAQ:AEP), was held over for more work at the subcommittee level. But Surovell told the full committee he hopes to move that bill forward too. Appalachian Power’s 10% target would be about 350 MW.

“Appalachian Power supports shared solar projects, but feels strongly those participating in the program should be the one to absorb the cost,” the utility said in a statement to NetZero Insider. “Shifting program costs to nonparticipating customers isn’t just or fair, especially at a time when the company is trying to keep costs and rate increases at a minimum.”

Tax Credits

Beyond fixing the issues CCSA has with the current Virginia program, new federal tax credits for clean energy are also a reason behind the legislative push.

“With the passage of the Inflation Reduction Act — and especially with Dominion’s programs focused already on low-income participation and bonus incentives that you can take advantage of [in] the Inflation Reduction Act — it felt like this was a good opportunity to pursue this session,” Coggeshall said.

Gov. Glenn Youngkin (R) included support for community solar in his energy plan released last year, which called out “shared solar” as a way to reduce barriers some customers face in installing distributed solar on their own.

Appeal Rejected

Solar advocates asked the SCC for rehearing on the minimum bill issue, but that request was rejected in an order the state regulator issued in October. Advocates claimed that the minimum bill would lead to difficulties in launching the shared solar market in Virginia.

“The commission concludes, however, that those difficulties — which if they occur would stem from ensuring that shared solar customers pay a fair share of the costs of providing electric service — are not unreasonable,” the commission said in its order.

Coggeshall said the minimum bill, which is volumetric, is often higher than $55 because that estimate assumes a $1 placeholder charge from Dominion, which actually tends to be $10-$20 on most customer’s bills.

“What that results in is completely undermining the economics for the program, at least with regards to non-low-income participation,” he added.

While community solar benefits low-income customers, only focusing on them leaves out a big part of the market and means Virginia’s program is less well rounded, Coggeshall said.

The coalition released the results of recent polling, which found broad and bipartisan support for expanding community solar in Virginia. The survey of 786 registered voters in Virginia was done by co/efficient, and it found that 73% of them want to participate in a shared solar program as long as it saves money.

Divided Government

Virginia has a divided government with Democrats still running the state Senate while Republicans control the House and the governorship. But given Youngkin’s signals that his office does not oppose growing community solar and support in the Senate, Coggeshall was hopeful the legislation would move forward this session.

“The big question I think is on the House side, whether they will be on board or not,” he said.

CCSA has a national goal of signing up 10 million people to split up 30 GW of community solar by 2030. So far, less than 5 GW of community solar has been installed around the country. CCSA said Virginia is one of 22 states with competitive community solar policies. The group says it wants to add 10 more states to reach its 30 GW goal.

January 31, 2023

Nev. Lithium Project Close to Securing $700M DOE Loan

A Nevada mining project that could produce enough lithium for 370,000 electric vehicles a year has received a conditional loan offer of $700 million from the Department of Energy.

The funds would go toward Ioneer’s Rhyolite Ridge lithium-boron project in Esmeralda County, Nev. If finalized, the loan would finance the on-site processing of lithium carbonate.

Ioneer said a term sheet for the DOE loan had been finalized, with a loan of up to $700 million and a term of 10 years. The conditional commitment indicates DOE expects to support the project, subject to conditions such as legal, contractual and financial requirements, Ioneer said.

Ioneer Managing Director Bernard Rowe called the proposed loan “the most significant milestone in the history of the company.”

“The term sheet and conditional commitment from DOE demonstrates its strong support for the Rhyolite Ridge project and, if finalized, the loan would be the first-ever by the DOE to provide financing for the processing component of a project where lithium is extracted and refined at site,” Ioneer said this month.

The loan would be made under DOE’s Advanced Technology Vehicles Manufacturing loan program. Lithium is a key component of EV batteries, and DOE estimates the loan could support lithium production for about 370,000 EVs each year.

Developing a U.S. supply chain for critical materials such as lithium is a national priority, according to DOE.

“Onshoring the critical materials supply chain is an important step toward energy independence, lower costs for American consumers and protection from global supply bottlenecks,” DOE said in announcing the loan.

Production in 2026

Demand for lithium is surging as EV adoption grows. The top lithium-producing countries are Australia, Chile and China. Interest in domestic lithium production is strong, but the U.S. has only one lithium mine in operation: Albemarle’s mine at Silver Peak in Nevada.

Ioneer described Rhyolite Ridge as the most advanced undeveloped lithium project in the U.S. Production at the facility is expected to start in 2026.

The project will be a drill-and-blast operation. Lithium and boron products will be made through a process with zero CO₂ emissions from electricity generation, the company said.

Boron, in the form of boric acid, will account for about 30% of the project’s revenue. Boron has a wide range of industrial uses, and Ioneer said the co-production of boron will help the company keep its lithium costs down.

Ioneer is partnering with Sibanye-Stillwater, a global mining and metals processing company that has committed $490 million for a 50% stake in the Rhyolite Ridge project.

And Ioneer has offtake agreements with three entities so far. EcoPro Innovation plans to use lithium carbonate from Rhyolite Ridge at its South Korea battery plant. In July, Ioneer signed agreements with Ford Motor and Prime Planet Energy Solutions, which is a joint venture between Toyota and Panasonic.

Permitting Process

In December, the Bureau of Land Management published a notice of intent to prepare an environmental impact statement for the Rhyolite Ridge project. Ioneer called the notice a major milestone toward finishing the permitting process.

The Nevada Department of Environmental Protection issued a water pollution control permit for the project in 2021.

The company has also taken steps in response to the listing of Tiehm’s buckwheat as an endangered species. The plant is found at Rhyolite Ridge.

Ioneer has spent $1.2 million on research to preserve the buckwheat and revised its operations plan to avoid direct impacts to the plant. A Tiehm’s buckwheat greenhouse has been built and is now in operation.

DOE said the Rhyolite Ridge project is expected to be in operation for 26 years, although Ioneer said on its website that there is “significant potential for this to increase.” After operations are finished, the land will be reclaimed and revegetated, according to DOE.

January 29, 2023November 2, 2023

Firm Plans Long-duration Zinc Battery Factory in NY

Canadian long-duration energy storage company Zinc8 Energy Solutions plans to build its first factory in Kingston, N.Y., the company and Gov. Kathy Hochul announced Thursday.

The firm’s five-year, $68 million plan calls for it to be the anchor tenant in iPark87, a sprawling former IBM campus. The state will provide up to $9 million in tax credits through its Excelsior Jobs Program (EJP), contingent on Zinc8 creating up to 500 jobs there.

Zinc8 CEO Ron MacDonald announced in September that the company would set up manufacturing in the U.S. to take advantage of the recently approved Inflation Reduction Act’s tax credits for domestic production of its zinc-air energy storage system.

The Zinc8 ESS is a modular design, adaptable to numerous configurations with the same subsystems. Because its capacity is determined solely by the size of the zinc storage tank, it is readily scalable from 20 kW to 50 MW and can provide eight or more hours power, the company says.

Zinc8, a small operation in Vancouver, is in the pre-commercial/demonstration phase of the technology for which it holds 21 patents and has five more patents pending. It hopes to begin production in 2024 and start scaling up in 2025.

Zinc8 Energy Solutions’ zinc-air long-duration energy-storage battery system is shown. | Zinc8 Energy Solutions

The company has been on New York’s radar as the state moves to slash its carbon footprint and build a clean-energy economy.

The New York Power Authority selected it as a winner in an innovation challenge for its proposal to build a 100-kW/1-MWh demonstration project at the University at Buffalo, and the New York State Energy Research and Development Authority provided a grant to defray the cost of its 100-KW/1.5-MWh demonstration project at a New York City apartment complex.

The company joined Scale For ClimateTech, the New York City-based manufacturing accelerator supported by NYSERDA. And U.S. Senate Majority Leader Chuck Schumer (D-N.Y.) pitched the Kingston site to MacDonald in July 2022.

Hochul recently announced a goal of installing 6 GW of installed energy storage capacity in New York state. MacDonald said in a news release that New York’s push for green energy, and storage in particular, helped Zinc8 decide to locate its factory there.

“We’re excited by the level of support and interest we’ve received towards locating a manufacturing facility and creating jobs in the state of New York,” he said. “The EJP tax incentives offered to companies looking to create jobs and help build a green economy is an additional layer of funding that can be utilized concurrently with other financing, including state, municipal and federal funding packages, which help companies like Zinc8 access additional sources of capital and expand their business plans.”

“Creating good jobs that will lead to a greener, more sustainable New York for our children and grandchildren is not only beneficial to our economy; it’s the right thing to do for our planet,” Hochul said In her own news release. “Zinc8’s cutting edge, clean energy storage technology is another tool that will allow us to achieve our bold climate agenda and continue to make New York state a leader in advancing the green economy.”

January 29, 2023December 31, 2023

SPP MOPC Approves Late Resource Adequacy Revisions

SPP’s Markets and Operations Policy Committee on Friday approved two revision requests related to resource adequacy requirements that members had set aside during their regular quarterly meeting earlier this month.

The special conference call became necessary when MOPC deferred action on the RRs after several late changes were shared with members the night before the January meeting began. The committee directed SPP staff and the Market Monitoring Unit to re-engage with stakeholder groups to ensure members still agreed with the changes. (See “Members Defer on PRM Deficiency RRs,” SPP MOPC Briefs: Jan. 17-18, 2023.)

“We’ve kind of taken them on a roadshow,” the MMU’s John Luallen told MOPC during the call.

Taken together, RR536 and RR537 would provide load-responsible entities with a short-term, non-punitive alternative approach to deficiency payments for the summer resource adequacy requirement (RAR). Staff have been working on the mitigation strategy since July, when SPP increased the planning reserve margin (PRM) from 12% to 15%, effective this year. That left some members complaining they would not have enough time to meet the requirements. (See SPP Board of Directors Briefs: Dec. 6, 2022.)

The Supply Adequacy, Cost Allocation and Regional Tariff groups all approved the RRs last week by a combined vote of 75-1, with 28 abstentions, making only various non-substantive terminology edits.

MOPC then endorsed the tariff revisions in separate electronic ballots. Solar and storage developer Savion cast the only dissenting vote. The measures will now go before SPP’s Board of Directors and Regional State Committee this week for final approval. Staff hope to gain FERC’s approval in time to accredit resources for the summer season (June 1-Aug. 31).

Stakeholders modified RR536 to clarify that LREs can make a sufficiency payment only when the PRM is increased within the previous two years and the LRE demonstrates it had adequate capacity to meet the PRM before it was changed. A deficiency cannot result from selling accredited capacity to another region after the PRM’s increase is approved.

Under the change, capacity can only be claimed for accreditation by one asset owner in the SPP footprint. Capacity used to resolve deficiencies cannot be sold to another region for the applicable resource adequacy requirement season.

The measure includes the MMU’s proposed sufficiency valuation curve to value capacity in the market. The curve starts at twice the cost of new entry (CONE) at or below the sum of noncoincident peak loads, then slopes downward to a net CONE value when regional accreditation reaches the PRM. When the region has sufficient accredited capacity, the net CONE drops down to zero at 115% of the PRM.

RR537 emerged from the last-minute stakeholder process with revised language that removes a tariff violation when LREs fail to make a resource adequacy payment. As modified, LREs would be deemed sufficient for the adequacy requirement with a deficiency payment.

The change was also modified to clarify that only capacity resolving deficiency is obligated to stay in SPP; the obligation only applies to a specific RAR season; and that a deficiency payment is based on a kilowatt-year.

CRSP Faces Tx Rate Issues

The grid operator is working to address concerns by one of nine entities evaluating membership in its RTO West offering over its restrictions as a federal power marketer.

The Western Area Power Administration’s Colorado River Storage Project (CRSP) in November requested changes to the terms and conditions for RTO membership, approved last July. Those terms were to be effective March 1, but SPP’s Strategic Planning Committee endorsed a four-month extension to July 1 and additional terms and conditions during its Jan. 18-19 meeting.

The new terms include crediting CRSP’s point-to-point (PTP) transmission service and a federal service exemption (FSE) of replacement energy to satisfy its statutory load obligations.

The board will consider staff’s recommendation during its quarterly meeting Tuesday. The changes are contingent upon WAPA publishing its intent to join the RTO West in the Federal Register by Feb. 28.

Bruce Rew 2023-01-18 (RTO Insider LLC) FI.jpg

Asked what SPP would do should other obstacles pop up before July, Bruce Rew, senior vice president of operations, said, “We would have to see what options we have that point to see if there’s some alternative that we can do to satisfy their situation.”

Rew said that about 88% of CRSP’s transmission obligations sink outside its zone, leaving the remaining 12% exposed to rate increases because of SPP’s treatment of PTP revenues. Low water levels in the Colorado River and the federal hydropower system also pose a risk, as the project’s transmission system was built to move federal hydro, he told stakeholders during the MOPC and SPC meetings.

Staff and other RTO West-interested parties, working together, agreed that CRSP would maintain PTP revenue from its reservations to pay for facilities in its transmission zone. This would apply to service delivered either inside or outside the SPP RTO footprint, with the contractual or statutory load obligations distributed solely to the project.

Because SPP’s tariff won’t allow CRSP’s replacement energy as an FSE, thus subjecting it to additional costs, staff and the other Western parties recommended the replacement energy be delivered to the CRSP zone and be subject to tariff provisions and charges. However, replacement energy delivered from CRSP’s zone will be eligible for an FSE; ineligible transmission purchases will receive auction revenue or transmission congestion rights.

CRSP sells about 5.3 GW of power to customers in Arizona, Utah, Colorado, New Mexico, Nevada, Wyoming and Texas over transmission facilities either owned or leased by WAPA.

SPP is also evaluating options to pull in the implementation schedule for its Markets+ offering in the Western Interconnection, an “RTO-light” market for those utilities not ready for full RTO membership. (See Governance, Resource Adequacy Key to SPP’s Markets+.)

The grid operator has projected an initial phase establishing market rules and tariff language will take about 21 months, followed by another three years to develop the day-ahead market.

The Western Resource Adequacy Program, a key part of the Markets+ offering, has attained funding commitments to move the program forward, and SPP has replied to a FERC deficiency letter over its tariff filing, the RTO’s Antoine Lucas told the SPC. Operations and forward-showing programs and systems will be implemented later this year, he said.

The SPC also approved a task force’s recommendation to add changes needed to include competitive upgrades to project monitoring processes as part of its business practice related to transmission projects.

The Transmission Owner Selection Process Task Force has reviewed 19 key areas to improve the competitive project selection process. It has reached consensus on 12 areas.

January 29, 2023

Xcel to Pilot Long-duration Storage at Retired Sites

Xcel Energy (NASDAQ:XEL) on Thursday announced plans to develop long-duration storage systems at two retiring coal plant sites, part of an accelerating timeline for transitioning away from coal as a fuel resource.

The Minneapolis-based company has entered into definitive agreements with clean energy developer Form Energy to deploy its iron-air battery systems in a pair of pilot projects. Xcel said the storage technology will allow it to integrate more renewable energy into its system and maintain reliability as it continues to retire coal plants in the coming years.

“We are starting to get on a treadmill of shutting down our coal plants,” CFO Brian Van Abel told financial analysts Thursday during the company’s year-end earnings conference call.

The 10-MW/1,000-MWh multiday systems — capable of providing 10 MW of instantaneous power for up to 100 hours — will be installed at the Sherburne County Generating Station in Becker, Minn., and the Comanche Generating Station in Pueblo, Colo. Both projects are expected to come online as early as 2025 and are subject to regulatory approvals.

“Our partnership with Form Energy opens the door to significantly improve how we deliver carbon-free energy,” CEO Bob Frenzel said in a statement.

The company remains on track to reduce carbon emissions 80% by 2030 and to deliver carbon-free electricity by 2050, Frenzel said. Pursuing advanced storage opportunities will “balance” Xcel’s system needs.

Xcel said in October it would quit burning coal by 2031 when it retires the final Comanche plant. It plans to shutter the 1.1-GW Tolk Generating Station in West Texas in 2028, more than four years earlier than planned. (See Xcel Energy to Quit Burning Coal in 2030.)

The company reported earnings for the year of $1.74 billion ($3.17/share), up from 2021’s performance of $1.6 billion ($2.96/share). Earnings for the fourth quarter came in at $379 million ($0.69/share), compared to $315 million ($0.58/share) for the same period a year ago.

The quarterly earnings were on par with Zacks Investment Research’s consensus estimate; the quarterly revenues of $4.05 billion exceeded the Zacks estimate of $3.54 billion.

Xcel’s share price closed the week at $68.43, off just 13 cents from its pre-earnings close of $68.56.