New England transmission owners have asked FERC to dismiss a RENEW Northeast complaint that seeks to shift the burden of network upgrade operations and maintenance costs off interconnection customers.
In the complaint, the renewables group argued that ISO-NE
is the only U.S. region in which interconnection customers are directly assigned costs for the capital and O&M needed for network upgrades, an “exemption” from FERC policy that RENEW said is unjust and unreasonable. (See Renewable Group Asks FERC for Interconnection Cost Changes in NE.)
In its response, ISO-NE asked to be dismissed from the complaint because the provisions under discussion are transmission rate terms under control of the transmission owners and in which the grid operator doesn’t hold any financial interest.
The transmission owners offered a more substantive answer, arguing that the complaint “fails to meet RENEW’s [Federal Power Act] Section 206 burden of proving that the tariff rate on file is unjust and unreasonable.”
The TO’s argue that generators paying for network upgrades is part of a “grand bargain” that also includes “free and unlimited open access to regional network transmission service on the ISO-NE system.”
It’s a deal that has been subject to FERC review several times and been repeatedly accepted by the commission, the TOs wrote.
They also argue that altering a single aspect of cost allocation for the region’s system could place the entire structure in “jeopardy,” which is why FERC has a “stated policy against unilateral changes to a single aspect of a comprehensive negotiated rate structure.”
Other Corners Respond
New England’s generators, unsurprisingly, backed the RENEW complaint.
The New England Power Generators Association (NEPGA) described in its commentsthe “negative impact this unlawful assignment of O&M costs has on competitive market outcomes.” NEPGA noted that market participants can’t recover the O&M costs in the capacity or energy markets.
“The shifting of costs RENEW highlights creates broad negative economic consequences both for resources that rely on markets to produce economic outcomes and those that pay for their services,” the association wrote.
Likewise, in a joint comment, the renewable and clean energy groups Advanced Energy United and the Northeast Clean Energy Council supported RENEW’s complaint, saying the direct assignment charges at issue “unduly burden interconnection customers” that are currently most heavily represented by renewable and storage developers.
“Directly assigning O&M network upgrade costs to interconnection customers clearly violates FERC’s O&M cost policy and the ‘beneficiary pays’ rule of cost allocation and should not be sustained,” the groups wrote.
Among those weighing in against the RENEW complaint were the New England states (as represented by New England States Committee on Electricity) and newly appointed Massachusetts Attorney General Andrea Campbell. Both argued that the complaint would shift costs unfairly onto ratepayers.
“RENEW seeks to replace long-settled rules that put development risks and costs on interconnection customers with a one-sided bargain that shifts 100% of those costs to consumers,” NESCOE wrote in its comment. “The commission should reject that myopic approach, as both bad policy and a matter of law.”
Campbell’s commentpointed to precedent, including past commission rulings and failure of a similar proposal in the NEPOOL process, to argue against the complaint in addition to expressing worries about the costs for consumers.
“New England ratepayers … already pay higher transmission costs than customers in any region in the United States,” the AG wrote. “To grant RENEW’s cost shifting remedy would only exacerbate New England ratepayers’ already high transmission rates.”
Staff from NERC and the Texas Reliability Entity commended ERCOT in a webinar Tuesday for its “extremely proactive approach” to mitigating the challenges exposed by the Odessa disturbances of 2021 and 2022, while reminding listeners that more work is needed across the ERO Enterprise to overcome the underlying issues.
The webinar was part of Texas RE’s monthly “Talk with Texas RE” series, in which presenters from the regional entity discuss ongoing and emerging reliability challenges in both the Texas Interconnection and the broader bulk electric system. Patrick Gravois, an electrical engineer at ERCOT, and Rich Bauer with NERC’s event analysis division joined David Penney of Texas RE in a discussion that built on the report that NERC and the RE released last year on the 2022 Odessa disturbance. (See NERC Repeats IBR Warnings After Second Odessa Event.)
The Odessa events occurred about a year apart near the town of Odessa, Texas. Both were initiated by faults at synchronous generation plants and resulted in the loss of significant amounts of solar PV and synchronous generation, with a reduction of 1,340 MW in 2021 and 2,555 MW in 2022.
In their report on the second event, NERC and Texas RE staff pointed out that most of the solar PV sites that responded abnormally in 2022 also did so in 2021. However, the cause of reduction for most of the facilities in the 2022 report was different from that recorded the previous year; many of these had implemented changes intended to prevent the causes of reduction in 2021.
The report concluded that addressing the performance issues of solar plants and other inverter-based resources is a “paramount” priority for the ERO that also requires the assistance of stakeholders including FERC, ERCOT, and electric utilities.
Gravois reviewed the risk mitigation measures that ERCOT undertook following last year’s disturbance. The first step was to convene discussions with generator owners (GO), original equipment manufacturers (OEMs) of the inverters involved in the incident, Texas RE, and NERC to investigate the root causes of the inverter tripping.
Following these meetings, the ISO ordered the affected GOs to submit mitigation plans and timelines within three weeks for correcting the identified issues. After the utilities submitted their plans, Gravois said ERCOT “followed up with them continuously … to make sure they were meeting the timeline [and] when we can expect these corrective actions to be implemented.”
Although the utilities have only had “the better part of fall 2022” to put their mitigation plans in place, Gravois said they are “getting really close” to completion. One of the few remaining measures needed on a widespread basis is a firmware update to inverters manufactured by Toshiba Mitsubishi-Electric Industrial Systems to address the DC voltage imbalance observed at three facilities.
“They had this ready to go at the time of the Odessa 2022 event, they just hadn’t implemented it yet,” Gravois said. “So they … will be implementing this in the rest of the facilities with these inverters throughout Texas as well, [and] ERCOT’s going to be reaching out to these facilities as well to make sure they’re working … to get this implemented.”
Further activities planned by ERCOT for 2023 include requesting GOs of affected facilities to update and resubmit their dynamic models to verify that they match the equipment’s field settings. The ISO also plans to contact all facilities, whether “operational or in the commissioning phase … to make sure they’re also proactively implementing all these corrective actions we’ve identified so they don’t trip off for future events.”
ERCOT’s longer-term goals include improving the interconnection process to check for known issues during commissioning and developing automated tools to look for small trips that might be signs of larger developing issues. Gravois said there also “really needs [to be] some discussion within ERCOT to look into running some kind of systemwide validation” to make sure GOs’ updated models are accurate.
The proposed Beacon Wind I project drew unanimous public support Tuesday during public hearings on the transmission line needed for the 1,230-MW wind farm planned off the New York coast.
The New York Public Service Commission held virtual comment sessions as part of its review process for the certificate of environmental compatibility and public need the developers must secure.
Many other state and federal approvals are needed before Equinor and BP can begin construction in 2025 in a 128,000-acre tract of ocean 60 miles east of the southeastern tip of Long Island.
Tuesday’s hearings officially centered on the 115-mile underwater export cable running the length of Long Island Sound, plus a short overland cable and substation where it will make landfall in Astoria, Queens, in the northwestern corner of Long Island.
But everyone who spoke — activists, residents with no stated affiliation, business owners, and elected, union and neighborhood leaders — was in favor not just of permitting the cable but the entire project, and offshore wind in general.
The written comments submitted to the PSC were similarly supportive.
The level of public support for zero-emission wind power in and near the Astoria neighborhood is not surprising; the area has been dubbed Asthma Alley for its concentration of fossil fuel power facilities, past and present.
A subsidiary of NRG Energy (NYSE:NRG) had initially proposed to refurbish the Astoria Generating Station, a 558-MW peaker plant, prompting vigorous protests from neighborhood and climate activists.
The state Department of Environmental Conservation rejected a plan to install a new 437-MW turbine generator on-site, saying it would not meet the emissions limits set in the Climate Leadership and Community Protection Act.
So instead, Astoria Gas Turbine Power opted to sell the site to Beacon Wind Land and demolish the power station.
Equinor told RTO Insider via email Tuesday that the purchase of part of the complex is complete, and the developers would share more of their plans for the site in coming weeks.
Among the speakers Tuesday:
Casey Petrashek of the New York League of Conservation Voters said: “Beacon Wind I will bring significant environmental and economic benefits to New Yorkers.”
Kayli Kunkel, founder of the Earth and Me ecologically themed stores in Queens, said: “Clean, renewable energy and air and water quality are rights that we deserve as New Yorkers, and considering the diverse makeup of our borough, this is also an environmental and racial justice issue.”
Edwin Hill Jr., of the International Brotherhood of Electrical Workers, said the union appreciates Equinor’s commitment to organized labor on the project. “Equinor has made a significant commitment of $52 million in social investments in New York state,” he added.
Fred Zalcman, director of the New York Offshore Wind Alliance, urged the PSC to grant the certificate of compliance and need. “The Beacon Wind project is a critical component of New York’s nation-leading effort to power its economy based entirely on clean, renewable and carbon-free energy resources.”
Marc Schmied, a volunteer with 350Brooklyn.org, contrasted the impact of constructing offshore wind farms with that of continued reliance on fossil fuel. “I understand and respect the concerns of both the local residents and the commercial fishermen who will be temporarily inconvenienced by the construction of Beacon Wind’s transmission line,” he said. “Offshore wind is by far the lesser of two evils here.”
State Assemblyman Zohran Mamdani, a Democrat who represents Astoria, said: “Our neighborhood has been on the front lines of the climate crisis but also on the front lines of fighting back, and last year we successfully beat back NRG’s proposal to build a fracked gas power plant, and the approval of this permit will ensure that very same site that the plant would have been built will instead become an interconnection site.”
Richard Khuzami, representing the Old Astoria Neighborhood Association, said: “The Astoria waterfront, home to three major [public housing complexes] has long been afflicted by increased rates of asthma and other environmentally related afflictions, and this project will have a direct positive impact and improve quality of life.”
Innovation Hub
As the developers push through the regulatory process, they are also taking steps to set up a supply chain, with construction of a tower manufacturing facility on the Hudson River in upstate New York and construction/support hub on the New York City waterfront.
Equinor and several partners on Tuesday announced the opening of the Offshore Wind Innovation Hub in Brooklyn, which will help startups develop innovation in the offshore wind industry.
In a news release Tuesday, Lyndie Hice-Dunton, executive director of the National Offshore Wind Research and Development Consortium, said:
“We are delighted to be a part of this exciting partnership. The Accelerator Program is a unique opportunity to help support innovative solutions for offshore wind in the U.S., as well as help build strategic partnerships within this growing industry. We are looking forward to working with this outstanding group of leaders to achieve our mutual goal of accelerating offshore wind innovation.”
Dominion Energy is backing legislation in Virginia that critics say would limit the State Corporation Commission’s ability to set its rates, while the utility has claimed it would save consumers millions.
Senate Bill 1265 also initially included language that would have made energy shopping by large commercial and industrial customers “nearly impossible,” according to the Retail Energy Supply Association, but that was removed as it advanced through a Senate subcommittee last week.
“As Virginians face historic inflation and rising energy costs, there is broad agreement that consumers need relief on their power bills,” a Dominion spokesperson said. “The proposed legislation would provide immediate and ongoing rate relief to our customers. It would provide strong state regulatory oversight. And it supports our mission of delivering reliable, safe, affordable and clean energy to our customers.”
The bill, sponsored by Sen. Richard L. Saslaw (D), cleared the Energy Subcommittee by a 4-1 vote, and it still must clear the full Commerce and Labor Committee before it can be voted on by the Senate. A House version of the legislation, HB 1770, has not moved forward yet.
Ever since Virginia decided against moving forward with retail restructuring back in 2007, state law has required the SCC to set Dominion’s rates based on a group of its investor-owned peers in the Southeast.
The bill would eliminate the SCC’s ability to remove the two highest returns on equity and two lowest returns from that peer group when setting Dominion’s rates. In return for that, it would shift some costs from riders to the firm’s base rates and make it go through rate cases every two years instead of every three.
Eliminating those riders would save $300 million annually effective July 1, which would save the average customer bill about $5 to $7 per month.
While the bill removed any language dealing with electric shoppers, at a Senate Energy Subcommittee hearing last week lawmakers indicated that they want to hear from the SCC on whether shopping shifts costs to remaining customers. That is an issue in California’s capped power market, where cost shifts from customers leaving utility service are covered through a mechanism called the power charge indifference adjustment.
“Our rates have been below the national average for some time,” Dominion Senior Vice President of Corporate Affairs Bill Murray said at last week’s subcommittee hearing. “This is a way for us to keep our rates below the national average, while having the certainty we need to raise a great deal of capital to build needed infrastructure, whether its generation, transmission or grid-hardening.”
The current peer group on which Dominion’s rates are based is made up of about 10 utilities in the Southeast, and Dominion has the lowest rate of return on equity among them, Murray said. That peer group has shrunk from about 20 when the legislature first set it up 15 years ago because of industry consolidation, so removing two highest returns and two lowest has a much bigger impact on Dominion’s rates than it usSBed to.
If Dominion wanted to offer customers $300 million in savings, the firm could do so on its own without any legislation, Southern Environmental Law Center’s Will Cleveland said at the hearing.
“This legislation does not let the Virginia commission set the rate of return for the Virginia monopoly utilities — that is our concern,” Cleveland said.
Walmart lobbyist Kenneth Hutcheson told the subcommittee the retailer appreciated the removal of changes to the state’s shopping rules, but he said the peer group should be expanded to include vertically integrated utilities from the Midwest and Gulf Coast.
Attorney Will Reisinger testified at the hearing on behalf of Clean Virginia, saying it would remove the ability of the SCC to independently set Dominion’s rates.
Eventually all the investments Dominion is making, including projects to meet the goals of the Virginia Clean Economy Act such as the 2.6-GW Coastal Virginia Offshore Wind project, would be impacted by any higher rates of return Dominion is able to get under the legislation, Reisinger said in an interview.
“It’s pretty extraordinary for a monopoly utility to try to set its own rate of return via legislation,” Reisinger told RTO Insider. “This is exactly what public utility commissions were designed to do — set the utility’s ROE at the correct level.”
The Dominion-backed legislation isn’t the only bill under consideration.
Senate Bill 1321, sponsored by Sen. Jennifer McClellan (D) and Sen. Creigh Deeds (D), and House Bill 1604, sponsored by Del. R. Lee Ware (R), would allow the SCC to lower a utility’s base rates if it finds they result in “unreasonable revenues in excess of the utility’s authorized rate of return.” The bill has also been assigned to the Senate subcommittee.
Generation owners are attacking PJM’s filing asking FERC to approve a change to the parameters of the RTO’s 2024/25 capacity auction, calling it a tariff violation and an attempt to intervene on behalf of buyers.
But utilities and state advocates argue that the potential impact of the auction’s results on ratepayers justifies the action.
In two filings last month, PJM laid out how a mismatch between the resources used to calculate the reliability requirement for the DPL South (DPL-S) locational deliverability area (LDA) — centered on the Delmarva Peninsula — and those that actually participated in the auction led to a fourfold increase in clearing prices compared with the previous year’s auction (EL23-19, ER23-729).
Describing the outcome as an artificial inflation in prices, the filings asked the commission to allow PJM to revise the reliability requirement to remove those generators that did not enter the auction as an additional step in the optimization algorithm run after bids have closed. (See PJM Decides Against Posting Indicative Capacity Auction Results.)
The core argument of the generators’ protests is that PJM’s tariff requires it to close the auction and post the results as soon as possible and that the RTO lacks the authority to hold it open while making a filing with FERC.
Former FERC Chair Joseph Kelliher submitted an affidavit in support of the PJM Power Providers (P3) protest to PJM’s filing, saying that granting the RTO’s request would violate the filed rate doctrine, which prohibits the charging of rates different from those filed with FERC, and the rule against retroactive ratemaking.
In rebutting PJM’s argument that changing the auction parameters would not violate the rules because the auction has not been completed, Kelliher compared the auction results to Schrodinger’s Cat. He noted that the RTO has stated that the results are preliminary and incomplete, but relies on the figures to estimate the impact to clearing prices in DPL-S.
“[T]he auction process appears to be final, except for the ministerial step of posting the auction results that PJM apparently has in hand but refuses to formally post — are the auction results final or preliminary?” he wrote.
Kelliher also argued that granting PJM’s requests would be bad policy, undermining confidence in capacity auctions and the commission.
“The commission has consistently recognized the importance of assuring market certainty and maintaining market integrity, even to the extent of opposing the re-running [of] RTO auctions to provide refunds as remedies in FPA Section 206 complaint proceedings and in response to court remands, where [the] commission has discretion to order re-running of markets, on the grounds that doing so would ‘undermine confidence in markets,’” he said.
NRG Argues Price Jump was Predictable Months Before Auction
In its protest, NRG Energy said it had relied on the market information and price estimates based on them to make “irreversible commercial decisions.”
“In its determination to retroactively revise the auction results to avoid politically unpalatable results dictated by the rules in effect when the auction was conducted, PJM blithely ignores the substantial and actual reliance interests of the NRG Companies and other market participants and proposes to change the rules after-the-fact,” the company wrote.
It also argued that PJM should have been aware of the likelihood that the reliability requirement would lead to elevated prices in DPL-S, as the company had previously reached out to PJM to inquire about the 12% increase for the LDA. The RTO responded that historical winter forced outages and expected increase in solar resources increased the risk of loss of load in the winter, leading to the higher reliability requirement.
Based on those parameters, the company estimated that the LDA would clear at around the cap of $426.17 MW/day and instructed traders to rely on PJM’s parameters after receiving its response, leading the company to reject capacity purchase offers on the grounds that it expected higher prices.
EPSA Worries About Reliability Impacts
The Electric Power Supply Association (EPSA) noted that the reliability requirement for LDAs looks at existing resources and projected resources expected to be in service, rather than at resources with Reliability Pricing Model (RPM) commitments. For that reason, EPSA contended, revising the reliability requirement to exclude resources not offered into the Base Residual Auction (BRA) would create a “false equivalence between the reliability needs of an LDA and the supply and demand in the LDA in an RPM auction.”
Drawing on information in an affidavit by Paul Sotkiewicz, president of E-Cubed Policy Associates, EPSA argued the effect would be dramatic differences in clearing prices depending on whether resources participated in auctions, regardless of whether those resources are actually available during the delivery year.
“The prices PJM would determine might not be high enough to attract future new resources to take on an RPM commitment especially knowing PJM is willing to put its finger on the scale to reduce prices even in the face of reliability needs with its proposal,” Sotkiewicz wrote.
AMP, Public Citizen Argue PJM Doesn’t Go Far Enough
American Municipal Power argued that FERC approval of PJM’s filing is necessary to avoid ratepayers paying a “Locational Reliability Charge that is unjust, unreasonable and unduly discriminatory.” The nonprofit, whose members include the Delaware Municipal Electric Corporation, said the RTO’s solution could leave future BRAs open to similar issues and called on FERC to establish a technical conference to explore long-term solutions.
In particular, AMP argued that the small size of many LDAs within PJM can cause price volatility through changes in load forecasts, uneven growth in resource development and generators not participating in auctions.
“It is therefore critical that LDAs in PJM be sized large enough that the failure of one resource or a small set of resources to participate in RPM auctions, or the inability to site new generation, does not drastically increase the auction clearing price,” AMP wrote.
The nonprofit power supplier also questioned PJM’s proposal to trigger the process of recalculating the reliability requirement to remove resources not participating in the BRA when the parameter increases more than 1% over the previous year. It noted that a 400% increase in clearing prices could be attributed to the 12% increase in the requirement. A 1% increase in the threshold would still correspond with a 33% rise in prices should the impact prove to be linear, AMP said.
Public Citizen argued that FERC should approve PJM’s requests, establish a refund date and investigate whether market participants engaged in intentional capacity withholding. It also wrote that future BRA results should be filed as standalone Section 205 rate filings to allow for public inspection of rates with the ability for comments and protests to be submitted before rates go into effect.
“Setting the matter for hearing and subjecting the capacity auction to refunds is the statutorily appropriate path for the commission to pursue, rather than PJM’s proposed ‘do over’ which does not appear to be permitted by its tariff. Subjecting the auction results to a hearing with refund authority will protect consumers and ensure accountability for any generators that engaged in capacity withholding,” the organization wrote.
Delmarva Zone Parties, ODEC Support PJM Approach
In its comments supporting PJM’s filings, Old Dominion Electric Cooperative said that actions being proposed are justified given the “artificially increased and unreasonable clearing price” that ratepayers would pay without any added benefits from the higher costs.
“The fact that prices are being increased and LSEs (and, thereby, consumers) will pay for an inappropriately calculated Reliability Requirement is in and of itself sufficient basis for the commission to take action to prevent the imposition of unjust and unreasonable capacity prices for the DPL-S LDA. When there are no discernable benefits from increased prices, the rates cannot possibly satisfy the requirement that customers receive benefits that are at least roughly commensurate with costs,” the cooperative wrote.
Several Delaware, Maryland and Virginia public organizations also supported PJM’s filings and said whatever solution FERC may approve, priority should be given to ensure that further delays in the BRA are avoided. Jointly filed by the Delmarva Zone Parties, the comment was signed by the Delaware Public Service Commission, Delaware Division of the Public Advocate, the Delaware Municipal Electric Corporation, Maryland Public Service Commission and the Virginia State Corporation Commission.
“Avoiding further delays in the BRA timeline is particularly critical as PJM stakeholders seek to reestablish the three-year forward procurement of capacity resources that has already been delayed by various proceedings before the Commission. Instead, in an effort to minimize disruption to the BRA process, PJM proposes to prospectively include a new element to its optimization algorithm that would allow it to reflect more accurately supply and demand levels while evaluating Sell Offers before determining capacity awards,” the parties wrote.
WASHINGTON, D.C. — In 2022, sales of electric vehicles, including plug-in hybrid models, accounted for close to 6% of U.S. new car sales, according to figures from Kelly Blue Book, which means 94% of new cars hitting the road last year were running on gas-powered, internal combustion engines.
The Washington, D.C., Auto Show, now underway at the city’s Walter E. Washington Convention Center, puts these uneven statistics into perspective: The vast majority of shiny, sleek new models that automakers are promoting here are ICEs.
EVs are on the floor, but by no means the main attraction, and much confusion and uncertainty remain about how fast automakers will be able to adjust or build out their supply chains for new EV models and which EVs will and won’t meet the Inflation Reduction Act’s U.S.-made content requirements.
“I think, over time, you will actually — even in the short term — see automakers moving quite quickly to make adjustments” to their supply chains, said Michael Berube, deputy assistant secretary for sustainable transportation at the Department of Energy. “Some of the new [U.S. content] requirements phase in over time; they don’t all hit on Day One, to allow automakers time to do it.”
Berube was one of a list of government and industry officials speaking at the auto show’s Public Policy Day on Thursday, where the focus was on the apparent collision between President Joe Biden’s ambitious goals for transportation decarbonization, the complicated provisions of the IRA’s EV tax credits, and market and economic realities.
The IRA’s requirements that 40% of critical minerals in EV batteries be sourced in the U.S. or from a country with which the U.S. has a vaguely defined “free-trade agreement” have become a particular flash point for European automakers, said Stavros Lambrinidis, the European Union’s ambassador to the U.S.
The EU supports the “IRA’s ambitions,” Lambrinidis said, during a panel on U.S. competitiveness. But Europe is “very concerned with some of these provisions that discriminate against European cars and other provisions that deal with critical minerals. …
“At the end of the day, if we’re going to be reaching our climate goals, we need to have consumers being able to select the cars they prefer from all the available options among countries that compete fairly in trading,” he said. “And if we cut that off, what you have is probably cars that cost more … so we basically undermine our capacity to meet our climate goals.”
The IRA’s domestic content provisions have also become a bump in the road for consumers, who are confused about which EVs will meet the requirements and qualify for a full $7,500 credit for a new car or $4,000 credit for a used car. EVs that don’t meet the provisions could only qualify for a partial credit — $3,750 for new cars and $2,000 for used vehicles.
EV tax credits are also tied to a vehicle’s manufacturer’s suggested retail price (MSRP) and a buyer’s income level, and right now, everyone is waiting on the Internal Revenue Service, which has delayed the release of guidelines on domestic content until March. (See Treasury Delays Key Rules for IRA’s EV Tax Credits.)
A single person buying an EV can earn no more than $150,000 per year to qualify for the tax credits, and the EV they buy cannot cost more than $55,000 for a sedan or $80,000 for an SUV.
Omar Vargas, vice president and head of global public policy at General Motors, called on the IRS and other regulators implementing the EV tax credits to “think like a business and put the customer first.” Consumers are seeing conflicting information on window stickers on EVs at dealerships and information on the IRS website, Vargas said.
IRS and other regulatory guidelines should be aligned with the federally mandated information on window stickers, he said. The details there cover where the different parts of the car were manufactured and assembled and what percentage of content was sourced in the U.S. or Canada.
Alex Laska, senior policy advisor for Third Way, a “center-left” policy think tank, said the IRS will need “to strike a balance between making sure we’re respecting the letter of the law absolutely, but also making sure that implementation is done in a way that sets us up for success in the long run.”
But Berube defended the domestic content and other provisions of the EV tax credits, even if certain models may not qualify in the near-term. Looking ahead five years, he said, “We will look back at this moment and, I think, everyone will see the wisdom in the structure of that tax credit. … This isn’t a short-term move. We are fundamentally changing the entire automotive platform; powertrain is the heart and soul of the cars. That tax credit is really going to help with that longer move.”
On the Show Floor
Biden wants 50% of all new light-duty vehicles — passenger cars and pickup trucks — sold in the U.S. to be electric by 2030, and he has also ordered conversion of the federal fleet of 640,000 vehicles to electric, with EVs accounting for 100% of new vehicle acquisitions by 2027.
But based on the EVs and plug-in hybrids on display at the D.C. Auto Show, the industry is preparing for a gradual transition. Rolling out electric and plug-in hybrid SUVs and pickups seems to be the top priority for many automakers, both domestic and foreign. The MSRPs for these vehicles trend toward the low $40,000s and up.
Luxury brands, such as Lamborghini and Bentley, have hybrid models, but both companies unveiled high-end gas-powered SUVs in D.C.: the Lamborghini 2023 Urus, with a $230,000 price tag, and the Bentley Bentyaga, with a minimum price of $167,000. The Bentyaga is available in hybrid and ICE models.
Lamborghini is not planning to release a full-electric vehicle until 2028, according to a recent report from electrek, an online publication tracking vehicle electrification in the U.S. Bentley is promising a full electric fleet by 2030, with its first EV planned for 2026, as reported in Automotive News.
On the fun side, Hyundai promoted its popular Ioniq 5 crossover electric SUV with a mini-speed track laid out on the convention center floor. Attendees could ride along with drivers obviously well-trained in showing off the car’s quick acceleration on a short straightaway and cool performance on a couple of hairpin turns.
Toyota’s big reveal at the show was its redesigned fourth-generation Prius Prime, a plug-in hybrid, with the company mentioning its bZ4X electric SUV, released last year, only in passing. While Toyota is planning a full line of bZ (beyond Zero) models, it is marketing its hybrids and plug-in hybrids as all part of its “electrified fleet.”
Jason Keller, Toyota’s director for dealer policy, claimed that the minerals used for a battery in one EV could produce six plug-in hybrid vehicles or 90 hybrids.
“Our approach is to provide a comprehensive portfolio of carbon-reducing powertrains so that no customer is left behind,” Keller told the Policy Day audience. “So, it is not simply focused on how many vehicles of a certain technology we can put on the road, but rather how we can reduce carbon the quickest.”
Out on the convention center floor, Andre L. Welch, director of government relations at Ford Motors, said the company has “bold, ambitious goals” for leading the industry transition to EVs, pointing to a fire-engine red model of its electric F-150 Lightning pickup. But, he said, “We’re not starving our ICE business. We love our ICE vehicles.”
A couple hydrogen fuel cell vehicles were on display, such as the Hyundai Nexo, a fuel cell SUV. But Berube doesn’t see these cars as successfully competing with battery electric vehicles in the light-duty class, given the falling price of batteries.
Rather, he said, long-haul trucking will be “the sweet spot where we see hydrogen playing a huge role in helping to decarbonize transportation. … When you need to move those really long distances, really heavy weights, the refueling time for the amount of energy you need becomes a huge factor. With hydrogen you can refuel quickly.”
Waiting for Guidelines
The wait for federal guidelines is affecting the rollout of both the IRA tax credits and federally funded EV chargers, under the $5 billion National Electric Vehicle Initiative (NEVI) program, authorized in the Infrastructure Investment and Job Act.
While still working on the domestic content guidelines, the IRS has an online list of EVs and plug-in hybrids it says are qualified for a $7,500 tax credit. Popular U.S. brands — including the F-150 Lightning, Chevy Bolt and Tesla’s Model 3 and Model Y — are on the list. But, the IRS says, many foreign automakers have “entered into a written agreement with us to become a ‘qualified manufacturer’ but [haven’t] yet submitted a list of specific makes and models that are eligible.”
The IRS has provided an opening for foreign models that are leased by individuals. In a recent fact sheet, the agency identifies leased vehicles as eligible for the commercial EV tax credit, which is not subject to the domestic content requirements of the IRA.
EU Ambassador Lambrinidis welcomed the leased vehicle provisions but warned that with both the EU and the U.S. putting billions into transportation decarbonization, “the biggest mistake that governments can do is to get into a subsidy war. …
“That’s a danger because the IRA, the way it’s structured, in a sense is endangering investment in Europe. It is sucking away investment potential, especially at a time of very high energy prices,” he said. “Nothing could be worse for the strength of the U.S. economy and U.S. companies than a weak European economy.”
Rather than subsidy wars, Lambrinidis called on the U.S. and EU to look “at our markets as a unified supply chain.”
The issue also created tension at the recent meeting of the World Economic Forum in Davos, Switzerland, where European government officials labeled the domestic content provisions in the IRA as discriminatory and protectionist, according to The New York Times.
Officials also called for a European version of the IRA, with subsidies to support the expansion of clean energy technologies and supply chains. Outside the official meetings, “the phrase ‘trade war’ came up more than once,” the Times reported.
The installation of federally funded chargers is also moving slowly. Gabe Klein, executive director of the Joint Office of Energy and Transportation, which oversees the NEVI program, reported that states are holding off issuing requests for proposals for their first chargers until the upcoming release of final technical guidelines. While all 50 states, Puerto Rico and D.C. have submitted plans and received their first formula-based NEVI allocations, only a few have opened their application processes, Klein said,
Ohio, for example, opened bidding for NEVI funds in October, and Pennsylvania announced its NEVI funding opportunity on Jan. 6.
The IIJA also includes $2.5 billion for “discretionary” grants to states, cities and local organizations to install chargers in underserved and remote areas. The application process for those funds should be announced in the next few weeks, Klein said.
The draft guidelines for the NEVI funds, issued in June, set requirements for all chargers to be 150-kW DC fast chargers, but Klein appeared to signal that the discretionary funding could be used for Level 2 chargers.
“You’re probably looking at definitely some [DC] fast chargers, but you’re going to have a lot of Level 2 chargers” from the discretionary funds, Klein said, “Level 2 chargers are much easier to procure. They are very available; they’re much less expensive, and they’re easier to install and easier for utilities to deal with because there is less draw on the grid.”
While charger installation should start this year, Klein does not expect to see “a lot of chargers going out” until 2024 and 2025.
Transition not Seen Before
The incremental pace of the transition is affecting White House goals for converting the federal fleet to electric, according to Crystal Philcox, assistant commissioner for travel, transportation and logistics at the General Services Administration. “We want more and more and more electric models,” she said. “We have more demand than we can fill.”
The agency leases about 227,000 vehicles and is the main source of new vehicles, totaling about 216,000, across other agencies, Philcox told NetZero Insider during an interview between sessions at the Policy Day forum.
“We would normally replace 40,000 to 45,000 on a year, out of that [total],” she said. “Last year we just got really lucky to even be able to replace just under 35,000.
“We could replace vehicles in the fleet more quickly, and we would love to have access to more electric vehicles because we are really the primary way that the federal government is electrifying the federal fleet,” she said.
The U.S. Postal Service, which has another 220,000 vehicles, has also committed to working toward all new vehicle purchases being electric by 2026.
Building out a charging network for the fleet will also require ensuring the software systems involved have the appropriate security certifications, Philcox said.
Charging stations are networked through the cloud “and so we just want to make sure that the data that’s going through is secure, especially for our [Department of Defense] customers and our intelligence community customers,” she said.
Getting new chargers installed will also require “site surveys” — more than 200 planned for this year — “in different locations around the country to make sure that the electric grid is sufficient to support” the chargers, she said.
Developing the workforce to build EVs and install and maintain chargers is another challenge affecting federal, state and corporate stakeholders. But analyses of jobs lost, for example, when a fossil fuel plant closes, and jobs gained in clean tech are often “static” and miss the mark, said Betsey Stevenson, professor of public policy and economics at the University of Michigan.
“It’s like, ‘Oh, we’re not going to get this task and this task and this task anymore, so that job will be lost,’” Stevenson said. “But historically, jobs are rarely lost. What happens is tasks within a job evolve, and jobs evolve.”
At the same time, “a lot of the new jobs are going to be capital intensive and therefore involve more skills,” she said. Workers will need training, and a key challenge will be convincing workers that transitioning to new jobs is possible and positive, she said.
“How do we let people know that, when this is a transition to something they haven’t seen before,” Stevenson said. “We’re going to need some prodding. We’re going to need government, we’re going to need auto manufacturers to be pushing behind people and saying, ‘Trust us. Build the skills; the work will come.’”
Addressing a nationally recognized shortage of electricians, Stevenson called for a shift in the way training for these jobs is framed and designed. “Everyone wants their kid to go do a four-year degree,” she said. “But the truth is electricians today actually need a wider set of skills, and maybe we should think about four-year degrees that teach you how to run your own business, because these electricians … they’re running their own business, they need business skills, they need to learn economics. …
“Let’s stop thinking about this as something for only people who don’t want to go to college but thinking about this as a way to build a career,” she said.
A report issued Monday lays out a path for the U.S. to follow as it builds a network of offshore wind turbines and presents it as an opportunity to create an entirely new industry.
But there is some urgency to the effort, the report says, as there is limited infrastructure and manufacturing capacity now, and building it will take years. Given the extended lead time involved, most resources would have to be committed by the end of 2023 to create an operational supply chain by 2030.
The vessels and port infrastructure that exist now or are planned to be built would be enough to install only 14 GW by 2030, for example. And components for up to 83% of that first 30 GW of wind equipment would still need to be imported, while factories are being set up in the U.S. and American workers trained to run them, the report says.
“A manufacturing supply chain is already emerging in more than a dozen locations up and down the U.S. coast in support of the offshore wind industry, which will lead to thousands of well-paying jobs,” said Ross Gould of the Business Network for Offshore Wind, part of the partnership behind the report.
“To meet our ambitious clean energy national goals,” he said in a news release, “American manufacturers must play a larger role to accelerate our transition. This road map lays out the challenges and collaborative actions needed to bring more domestic companies into the supply chain and the opportunity those businesses bring to building out the U.S. offshore wind industry.”
Offshore wind has been gaining momentum for several years, with multiple states pressing development of multiple projects, particularly along the Northeast and Mid-Atlantic coasts.
The report’s authors say there is a widespread agreement that a domestic supply chain will be critical for sustainable growth in the new industry, but no clear understanding of what the supply chain should look like, how long it will take to create, what costs it will extract, what benefits it will yield and how much the existing infrastructure will accomplish.
“We demonstrate that if individual states leverage their existing manufacturing capabilities to contribute to the offshore wind energy sector, this conceptual supply chain would generate significant workforce and economic benefits throughout the United States, not just in coastal locations with active offshore wind energy programs,” the report states.
Multiple potential roadblocks were found on the road map, including communication gaps between stakeholder groups; scarcity of space and uncertainty of permitting for manufacturing facilities in ports; stress on supply networks for raw materials and subcomponents; and insufficient incentives for incorporating equity and sustainability into supply chain decision making.
But the most common concern that manufacturers shared with the report’s authors was the difficulty in securing financing to build the components of a supply chain because of perceived risk of cost or schedule overruns, legal challenges, and changes in government policy.
The report did not even look at the complexity of the transmission grid expansions that would be needed.
Details
The project is being overseen by the National Offshore Wind Research and Development Consortium and conducted by the National Renewable Energy Laboratory, the Business Network for Offshore Wind and DNV Energy USA.
A full project summary will be released by NOWRDC late this winter.
Monday’s report quantifies the resources needed to build a supply chain to reach the 30-GW goal by 2030 as follows:
$22.4 billion minimum initial investment
12,300 to 49,000 full-time equivalent workers
6,800 miles of cable
2,100 turbines
2,100 foundations
58 crew transfer vessels
34 new manufacturing facilities
11 service operation vessels
8 East Coast marshaling ports
4 to 8 transport vessels
4 to 6 heavy lift vessels
4 cable lay vessels
2 floating wind integration ports
2 scour protection installation vessels
Recommended near-term actions (2023-2024) to build a foundation are:
Convene working groups focused on local and holistic aspects of the supply chain.
Identify efficient and equitable locations for infrastructure.
Assess the need for additional incentive mechanisms.
Establish mechanisms targeted at floating wind infrastructure.
Establish curriculum and funding streams for workforce training centers.
Increase supplier awareness of offshore wind energy opportunities.
Recommended middle-term actions (2025-2030) to gain momentum are:
Construct the major supply chain facilities to meet demand.
Develop and share supply chain best practices.
Incorporate lessons from early OSW projects into operations and decision-making.
Train a manufacturing workforce.
Evaluate procedural and impact equity metrics for early OSW projects and incorporate best-practices into ongoing supply chain development activities.
Recommended longer-term actions (beyond 2030) to maintain a stable industry are:
Update key supply chain infrastructure to adapt to evolving technologies.
Expand supply chain infrastructure to new regions using lessons learned in early projects.
Add domestic production to fill manufacturing gaps in supply chains.
Continue to expand the offshore wind energy pipeline toward a potential 2050 goal of 110 GW installed capacity.
SPP, MISO Applying for DOE Funds to Help with JTIQ Portfolio
OKLAHOMA CITY — SPP told its members last week that it will apply for grants from the U.S. Department of Energy to help fund transmission projects recently identified with MISO along their seam that could unclog their generation interconnection queues.
David Kelley, the RTO’s newly minted vice president of engineering, said DOE’s $10.5 billion Grid Resilience and Innovation Partnerships (GRIP) program aligns neatly with SPP’s Joint Targeted Interconnection Queue (JTIQ) study with MISO.
GRIP, authorized under the Infrastructure Investment and Jobs Act, is designed to accelerate the deployment of “transformative” projects that improve the grid’s flexibility and resilience against the growing threats of extreme weather and climate change. It includes a focus on interregional projects, investments that accelerate the interconnection of clean energy generation, and using distribution assets to provide backup power and reduce transmission requirements. (See DOE Opens Applications for $6B in Grid Funding.)
The JTIQ study resulted in five projects on the MISO-SPP seam that should help reduce congestion and allow additional resources, primarily wind farms, to interconnect with the RTOs’ systems. Their staffs have proposed a cost allocation that assigns most of the portfolio’s $1.06 billion in costs to generation. (See MISO, SPP Propose 90-10 Cost Split for JTIQ Projects.)
“We have still yet to find the magic unicorn of developing transmission along the seams,” Kelley said. “When we looked at [the GRIP] program and what it was intended to do, it almost reads as if it was written for something like what JTIQ was trying to do. It was kind of a no-brainer for us to seek to receive some of this money on behalf of our members.”
Kelley said an initial concept paper has already been filed with the program’s administrators, meeting a Jan. 13 deadline. DOE will review the applications to determine whether they are worthy of full applications, providing that feedback to applicants. Final applications will be due May 19.
Under DOE’s Grid Innovation Program, applications must come from a state or a group of states, regulatory commissions or tribal or local governments. That has led SPP and MISO to collaborate with the Minnesota Department of Commerce and the Great Plains Institute (GPI) on the effort. The state of Minnesota, as a potential eligible recipient of the funds, made the filing. The institute is coordinating the effort by holding discussions with utilities that will build the projects and those utilities and states that will be affected.
“Our job has been to facilitate all potentially affected folks to kind of vet the DOE requirements,” Matt Prorok, GPI’s senior policy manager, told RTO Insider. “How might those be fulfilled? Are [the JTIQ] projects a good fit for this funding bucket?”
The proposed cost allocation for JTIQ projects. | SPP
Kelley pointed out that the GRIP program is a partnership involving federal and private dollars.
“We feel pretty good about it. We’ve talked to DOE a number of times, and they were very interested in what we’re doing here,” Kelley said. “We are being encouraged by what we’re hearing. But again, because this is a partnership, we do think it’s important that we lay the groundwork that not only are we pursuing DOE funds, but that we also have a commitment from SPP, MISO and our customers in our membership that we have the other half of this bill covered.”
Under the staffs’ proposed JTIQ cost-sharing methodology, generators will pay 90% of the portfolio’s cost and load will pay 10%. SPP load will pay about $71 million and MISO load about $29 million, without the DOE funding.
As with any discussion about allocating costs, several stakeholders raised concerns.
“I think all of us are seeing this DOE funding opportunity as a way to facilitate mitigating some of the concerns the stakeholders are expressing and the opportunity for that mitigation to really help make this a success,” the Advanced Power Alliance’s Steve Gaw said. “The second round of that application process, if the application makes it there, will be a very opportune time for additional comments of endorsement.”
The Cost Allocation Working Group (CAWG) on Friday unanimously endorsed and recommended that the Regional State Committee approve the 90-10 allocation. It also recommended that:
the 10% load portion of the JTIQ’s annual transmission revenue requirement (ATRR) be based upon adjusted production costs, as outlined by the RTOs’ joint operating agreement;
the load portion of the portfolio’s ATRR be regionally allocated on a load-ratio share basis consistent with previous RSC policies;
each building transmission owner recover the non-capital cost component allocable to generation interconnection customers through a formula rate template in the building TO’s region; and
SPP’s load share in the current portfolio and for the next study of the southern party of the MISO-SPP seam be regionally allocated on a load-ratio share basis consistent with previous RSC policies.
The motions all passed unanimously except for the last one, which Louisiana, North Dakota and Oklahoma opposed.
The RSC meets Jan. 30. Kelley said SPP plans to make the appropriate filings after the April round of governance meetings.
“We have to ensure we’re in lock-step with MISO and its processes,” he said.
GI Queue Continues to Expand
The JTIQ work will only result in more generation interconnection requests as SPP staff continue to work on reducing the backlog of requests in its queue.
Kelley said the SPP and MISO queues have grown since the JTIQ work began, with no end in sight.
“While we’ve made significant progress in clearing our existing backlog, there continues to be significant interest in developing new generation, both within the SPP footprint as well as MISO’s,” he said.
The backlog, which once stood at 651 requests and nearly 120 GW, had been reduced to 370 and 68.2 GW, respectively, in mid-December. However, the 2022 study cluster that closed in early January added 53.8 GW of requests, pushing the backlog to about 122 GW.
Many of those requests have yet to be validated by staff, leaving the active queue at 463 requests and just over 88 GW.
“It’ll take a couple of months to evaluate the impact of this cluster. It’s really, really big,” SPP’s Juliano Freitas told members, noting that the 2022 cluster exceeded forecasts by about 10 GW.
He said the new cluster is about 50% solar and 25% wind, in line with the active queue. Solar requests (39.2 GW) account for almost half the queue, with wind requests at 23.1 GW and storage at 12.9 GW.
SPP currently only has about 250 MW of installed solar capacity, said Casey Cathey, director of system planning. “That is kind of our next frontier.”
Freitas said that considering only about 40% of GI requests result in signed interconnection agreements, SPP could add more than 45 GW of capacity by 2028. The grid operator has added 27.7 GW of capacity since January 2017, executing 143 GI agreements.
Members Defer on PRM Deficiency RRs
The committee deferred action on a pair of revision requests related to deficiency penalties by load-responsible entities unable to meet the grid operator’s new 15% planning reserve margin (PRM).
Following late changes to the two requests by stakeholder groups the night before the MOPC meeting began, committee members agreed to wait until a special conference call Friday to consider the change requests. That will give additional time to several stakeholder groups who have yet to approve the proposed revisions; the committee will then be able to endorse a recommendation for the RSC and the Board of Directors when they meet next week.
SPP is hopeful FERC will approve the revision requests in time to accredit resources for the summer.
Staff have been working on the mitigation strategy at the board’s direction since July. It became necessary when the board increased the PRM from 12% to 15%, effective next year, which left some members complaining they would not have enough time to meet the requirements. (See SPP Board of Directors Briefs: Dec. 6, 2022.)
COO Lanny Nickell has said the mitigation concepts include reducing the deficiency payment charge, extending the timeline to cure deficiencies and adding mechanisms to assure capacity.
RR536, proposed by SPP’s Market Monitoring Unit, would replace the sufficiency valuation methodology’s current penalty framework with a sufficiency valuation curve similar to the curve that NYISO uses to value capacity in its market. The curve starts at twice the cost of new entry (CONE) until regional accreditation reaches the sum of total noncoincident peak loads, then slopes downward to a net CONE value when regional accreditation reaches the PRM.
When accreditation exceeds the PRM, the curve continues its downward slope until it reaches $0 when regional accreditation reaches 1.15 times the PRM. By focusing on how valuable excess accredited capacity is to the market given the regional level of accredited capacity, this methodology shifts from a punitive approach to a tool that manages the current deficiency and properly rewards LREs with excess accredited capacity.
Staff worked with the MMU on RR536 and also drafted RR537, which clarifies that an LRE making the deficiency payment will be sufficient for this year’s resource adequacy requirement. It also says that any entity receiving a deficiency payment cannot subsequently sell any of the excess capacity during the applicable calendar year.
“I think we’re getting closer. Today is too soon, given the language was only provided last night,” Evergy’s Mo Awad said. “I would like to take some time and review the language.”
Staff drew up a number of issues for stakeholder consideration, including clarifying that the waiver process is only in effect when the PRM increases; the timing of when generation must be committed to SPP, based on a deficiency megawatt amount; how the cost of new entry is broken into seasonal components; and simplifying megawatt allocation for the MMU’s CONE process.
The Supply Adequacy and Regional Tariff working groups will take up the revision requests on Tuesday and Thursday, respectively. The CAWG met Friday but did not vote on them; it has scheduled a special meeting for Wednesday.
December Storm Raises Same Issues
Staff told the committee that the December winter storm, while less severe than the February 2021 storm that forced the grid operator to shed load for the first time, still highlighted some of the same issues from two years ago.
C.J. Brown, director of system operations, said constricted fuel supplies and extreme cold weather-related outages led to some generation unavailability as surface temperatures in the SPP footprint were up to 25 degrees Celsius below historical averages.
Staff began receiving notifications on Dec. 20 from natural gas suppliers that non-firm usage of pipelines would be limited through Dec. 28. Ice floes on the Missouri River threatened several gigawatts of hydro generation, and the RTO’s main control room operated on backup power during the event after the facility’s transformer malfunctioned.
Empire Electric District and City Utilities of Springfield, Mo., near the Missouri-Arkansas border, experienced extremely low voltages on Dec. 23 caused by resource trips, lack of deliverability and parallel system flows. Empire had to shed about 25 MW of load for 15 minutes on Dec. 22.
Still, SPP was able to meet a peak demand of 47.2 GW on Dec. 22, a winter record.
Brown said that if the worst weather conditions had shifted to Dec. 23 or Dec. 24, SPP would have had 2 to 5 GW of capacity at risk.
“It doesn’t mean we would have had load shed,” he said, noting that the RTO could have reached energy emergency alert levels. “None of us want to be in a headline that says we shed load over Christmas. We need to get better information” from gas suppliers.
Midwest Energy’s Bill Dowling cautioned SPP about taking comfort in the amount of gas generation it committed before the cold front blew in.
“It’s one thing to know that [a gas unit] is committed a couple or three days in advance; … it’s something else to get the gas,” he said. “If the gas producers aren’t producing and it doesn’t show up in interstate pipeline, you’re not going to get it, I don’t care how much you paid for it.”
Josh Phillips, who represents SPP at the North American Energy Standards Board, said the board’s Gas-Electric Harmonization Forum is preparing a report on three main areas of concern during extreme weather events: fuel delivery assurance, communication practices and gas reliability.
Power generators and load-serving entities are underrepresented on the forum, Phillips said. He urged more industry participation as the final report delves into whether there’s a need to require every gas generator to have firm gas supply and transportation contracts.
Dowling said that whenever he listens to discussions between the electric and gas sectors, “it ends up, ‘This is your problem, electricity, so you have to change to meet our requirements.’”
“If [gas suppliers] declare force majeure, you just don’t get your gas,” said long-time MOPC member Bill Grant, now consulting for XO Energy. “The NAESB agreement needs teeth if they don’t perform, that’s the answer.”
Brown said staff will complete its post-event review and gather lessons learned, while also participating in the FERC-NERC joint inquiry on the storm. They will continue to support resource adequacy efforts through the RSC and other stakeholder groups.
Members Endorse ITP Scope, STEP
The committee endorsed two stakeholder groups’ recommendation to approve the 2024 Integrated Transmission Plan’s scope, which includes assumptions not standardized by the ITP manual.
The assessment will study two futures — a reference case and an emerging technologies case — that assume between 49.9 and 54.9 GW of wind resources and between 14 and 22 GW of solar resources by Year 10. SPP currently has 32.5 GW of installed wind capacity and 14,000 turbines on its system, but only about 250 MW of solar, Cathey said.
The scope also includes peak and energy increases in both futures to account for electric vehicle growth and an approved methodology for retirements based on participants’ resource plans. Staff used those plans to also determine wind, solar and storage capacity amounts. The study scenarios will assume all companies meet the PRM.
“We believe the two futures capture the necessary scenarios for building out the transmission system,” Cathey said.
The committee also endorsed the SPP Transmission Expansion Plan (STEP), a comprehensive list of all transmission projects over a 20-year planning horizon. The report indicates that SPP members completed eight upgrade projects costing more than $40 million from last April to year-end. SPP issued 76 notifications to construct (NTCs) for $822 million during the same period; 12 NTCs were withdrawn.
Cathey reminded the committee that the 2022 ITP assessment was a reliability-only study, thus resulting in a smaller portfolio.
RAS Scheme Passes
The committee unanimously approved a consent agenda that included eight revision requests; an extension of the Transmission Owner Selection Process Task Force’s sunset to Jan. 31, 2024; a waiver request to include the 2023 ITP needs assessment’s market powerflow models (MPMs) and consider the 2023 ITP MPM violations in the 2024 ITP; and a sponsored upgrade study of NextEra Energy’s proposal to add a 345/138-kV transformer at Oklahoma Gas & Electric’s Cimarron substation.
Nebraska Public Power District had RR505 pulled off the agenda for a separate vote, over concerns that the remedial action scheme (RAS) criteria would lead to unintended consequences. The change would supplant the need for approval conditions and clarifies RASes’ appropriate uses. Members approved the revision request with a 95% vote.
Five other RRs, if approved by the Board of Directors next week, would:
RR519: formalize the SPP operating criteria’s requirement to perform an annual resource real-time availability evaluation and report findings and recommendations to appropriate stakeholder groups.
RR522: clarify the use of the word “separately” (“Each facility must be registered separately with SPP…”) to direct parties in the agreement to register each facility separately when they have multiple resources involved with the pseudo-tie agreement.
RR523: modify existing pro forma generator interconnection agreements and language to provide a clearer indemnification standard with clearer language. The changes are modeled on PJM’s interconnection service agreement.
RR526: specify that a resource or an aggregation must be able to maintain a response of at least 0.1 MW for at least an hour to participate in the Integrated Marketplace; if the anticipated response drops below 0.1 MW, the resource must set its commitment status to “outage,” consistent with recent FERC orders and SPP’s current process.
RR528: clean up Business Practice 7060 by using “evaluation” rather than “study” for projects that have been issued an NTC, aligning the term with how it is used when an NTC is re-evaluated through the ITP.
The consent agenda also included two other RRs that don’t require board approval and go into effect immediately:
RR525: deletes Business Practices 7100 (Designated Transmission Owner Qualification Process) and 7150 (Transmission Owner Selection when a Designated Transmission Owner Rejects a Notification to Construct), which became obsolete with the implementation of SPP’s competitive transmission selection process.
RR529: the annual cleanup to correct grammar, punctuation and acronyms in the production and/or forward looking protocols.
Members of the New York Climate Action Council continued their debate over the future of natural gas at a New York Senate hearing last week on legislative and budgetary actions needed to implement the CAC’s final scoping plan.
More than two dozen witnesses testified at the Jan. 19 joint hearing of the committees on Finance, Energy and Telecommunications, and Environmental Conservation. Sen. Liz Krueger, chair of the Finance Committee, helmed the joint session, saying “this is the most important issue that New York State must get its arms around.”
CAC Member Testimony
CAC members shared their thoughts on protecting ratepayers and revising tax codes in addition to defining the role of natural gas.
Donna L. DeCarolis, president of National Fuel, said mandatory dates that “effectively mandate electrification of homes and businesses without the assurance of identified reliability milestones should be rejected.”
New York “should unlock consumer benefits of alternative fuels, particularly RNG in the near term for immediate emissions reductions and hydrogen in the longer term,” as well as conduct a “quantitative analysis of all costs associated with the various emissions reduction initiatives identified in the scoping plan,” DeCarolis said.
Raya Salter, executive director of Energy Justice Law and Policy Center, told lawmakers “we must, leading with justice and equity, act on climate now, and that means closing the state’s fossil fuel plants and moving away from the combustion of fossil fuels.”
Bob Howarth, a professor at Cornell University, argued New York should restore earlier deadlines from the draft scoping plan and repeal laws that subsidize natural gas utilities.
Gavin J. Donohue, CEO of the Independent Power Producers of New York, cautioned “against legislative action that would increase consumer costs, jeopardize the benefits they are receiving from competitive wholesale electricity markets, and harm the reliability of power supplies.”
Donohue told lawmakers to also heed NYISO’s reliability warnings and conduct a “comprehensive ratepayer cost impact analysis.”
Preserving “existing renewable energy facilities and retaining and expanding other non-emitting facilities” is as important as attracting new resources, he said.
Anne Reynolds, executive director of the Alliance for Clean Energy New York, shared recommendations aligned with the group’s recently released legislative priorities, including tax breaks for renewable developers, policies supporting a cap-and-invest program, and expanding transmission capacity. (See ‘Environmental Expectations,’ 2023 Preview of NY Legislature on Energy and Environment.)
Additional Testimony
Other stakeholders provided suggestions, including passing new decarbonization legislation, adjusting the tax code, and increasing the availability of clean energy development programs.
Brian Schultz, CEO of Central New York Regional Transportation Authority, advised legislators to “allow flexibility to consider renewable natural gas and hydrogen energy sources as alternative means for further decarbonizing” and asked that legislators “avoid overly prescriptive legislation with unfunded mandates and unrealistic timelines.”
The Real Estate Board of New York (REBNY) said policymakers should “prioritize creating a set of achievable, predictable, and efficient standards for the building sector.” Failing to do so, it said, would “add unnecessary compliance costs and make it less likely that the state’s goals are achieved.”
Next Steps for New York’s Scoping Plan | Climate Action Council
REBNY suggested the legislature “create a tax abatement and incentive program for investments in building greenhouse gas emissions reduction” to encourage greater investment in decarbonizing the building sector.
Consolidated Edison (NYSE:ED) said legislators should allow utilities to own and operate renewable generation assets, and “increase clean heat and energy efficiency programs and allow for accelerated depreciation of gas assets.”
The company also called for property tax changes, saying the current system is regressive and discourages electrification of heating and transportation.
Raziq Seabrook, government relations manager at National Grid (NYSE:NGG), said the utility identified four policies to help with implementing the scoping plan: accelerate electric system modernization; expand energy efficiency programs; decarbonize buildings and industry through innovative clean energy options; and promote energy affordability.
Avrielle Miller, policy coordinator at NY Renews told the committee members they need to pass the Climate, Jobs & Justice Package to ensure “40% of the state’s clean energy benefits go to disadvantaged communities, create unionized jobs, lower utility bills, and protect our air and water.”
Betta Broad, director at the Association for Energy Affordability, testified that implementation would be assisted by passing the New York Home Energy Affordable Transition (HEAT) Act — formerly known as the Gas Transition and Affordable Energy Act — and creating programs that expand clean energy career pathways.
Next Steps
The committees will now break into their respective sessions, using recommendations from the joint session to draft bills that will implement the scoping plan.
In October, CAISO, ISO-NE, MISO, NYISO, PJM and SPP filed reports with FERC on how their system needs are changing in response to decarbonization and their shifting resource mixes (AD21-10). Last week, 19 groups and companies filed comments responding to the RTO/ISO reports.
Below is a summary of how the grid operators say they are working to ensure reliability and what the commenters think of their plans.
CAISO
CAISO told FERC its system needs are changing in response to the state’s 100% clean energy by 2045 mandate under Senate Bill 100.
“CAISO is actively engaged in addressing the evolving resource mix, an evolving market, and a growing recognition that regional coordination is necessary to enhance efficiency and reliability,” it said, adding that “weather patterns affected by climate change have created extreme conditions beyond those anticipated by current planning standards.”
One way CAISO is addressing its needs is with large amounts of battery storage to provide power during hot summer evenings after solar goes offline but air conditioning demand remains high. The ISO ordered rolling blackouts in August 2020, and had near misses in the summers of 2021 and 2022, under such conditions.
“The addition of lithium-ion storage capacity has been an extremely positive development,” CAISO said. As of October 2022, the ISO had about 4,300 MW of storage capacity available for dispatch; the California Public Utilities Commission, which is in charge of ordering procurement by the state’s three large investor-owned utilities, has called for 10,000 MW of additional storage by 2024.
Another way CAISO plans to deal with changes in the resource mix and load variability is through its proposed extended day-ahead market (EDAM) for its real-time Western Energy Imbalance Market.
“The EDAM will build upon the proven ability of the WEIM to increase regional coordination, support states’ policy goals and meet demand cost-effectively by supporting the rapidly evolving Western resource adequacy landscape,” CAISO said.
Managing its “unprecedented transition requires us to look very carefully at both the short and the long term,” CAISO said: “short term because we must maintain reliability during the transition to a carbon-free grid, and long term because we must make sound decisions now to help us reach that destination in the most reliable and cost-effective way.”
In February 2022, CAISO published its first 20-Year Transmission Outlook, “a long-term conceptual plan” of the transmission grid based on input from the CPUC and the California Energy Commission.
Its new 5-Year Strategic Plan focuses on what the organization must do in the short term to strengthen reliability during the transition.
To ensure resource adequacy, CAISO said it would rely on the Western Power Pool’s Western Resource Adequacy Program and California’s efforts to evolve its resource adequacy program through advanced computer modeling. “Together with its partners, the CAISO is actively working to develop a multiple-year roadmap that relies on its markets to provide reliable system operations in light of the changing nature of resources and load patterns throughout the West,” it said.
In comments filed last week, the American Petroleum Institute cited CAISO’s experience during strained conditions as a reason natural gas generators’ fast-ramping capability are needed. California continues to rely heavily on gas generation, especially at times when solar is unavailable.
“CAISO, which has the highest share of solar generation of the six ISO/RTOs, has already observed an increase in uncertainty around its net load forecasts,” API said.
“As the share of non-dispatchable resources grows, it can become difficult to guarantee that generation will be available when needed — particularly when resources with flexible attributes are either forced into retirement or not developed in the first place due to market, regulatory or legislative headwinds,” it said. “California faced such an issue in August 2020, when insufficient fast-ramping resources were available to compensate for the evening decline in solar generation and CAISO was forced to shed load on consecutive days. As former FERC Commissioner Tony Clark concluded in a recent opinion piece, ‘On-demand resources may not run as often in a renewables-heavy future, but the value of their ability to run when called upon will be critical.’”
CAISO monthly trend of historical day-ahead imbalances, which can exceed 6,000 MW, requiring large amounts of reserved capacity | CAISO
Advanced Energy United (formerly Advanced Energy Economy) offered its thoughts last week on several parts of CAISO’s submission.
“CAISO predicts that ‘artificial intelligence and machine learning will play an increasingly important role as the energy industry continues its trend towards more complex and distributed systems,’” the group said. “Given the foundational role of software in supporting critical RTO/ISO functions, the commission should work to track RTO/ISO software needs and upgrades and look for ways to support expedited software upgrades and use of new and emerging tools and practices.”
Advanced Energy endorsed CAISO’s recommendation that the commission “continue to facilitate industry dialogue regarding the coordination between the transmission and distribution interface.”
“This is especially critical in light of the trend mentioned by multiple RTOs/ISOs toward increased electrification of transportation and heating; ensuring that these end uses can be leveraged as a grid resource rather than simply adding a new source of load for grid operators to balance will be essential to maintain affordability and reliability in light of shifting system needs.”
ISO-NE
ISO-NE said it recognizes its energy systems are in the “early stages of a significant shift” caused by electrification and decarbonization goals in the six states of New England.
Among the changes that ISO-NE is preparing for are increasing winter peaks in the next five years, and the potential for a full-blown shift to a winter-peaking system in the next 10.
The grid operator said it expects to need “additional resource physical capabilities, ISO informational capabilities and markets’ capabilities to incent the former,” over those time frames.
ISO-NE cited what CEO Gordon van Welie has called the “four pillars” of New England’s energy future: clean energy, balancing resources, energy adequacy and transmission investment. It stopped short of making any specific asks of FERC, but called on the commission to remain flexible in its approach to overseeing RTOs.
New England’s emission reduction goals | ISO-NE
“We look forward to continued efforts by the commission to remain responsive to the evolving resource mix and load profiles of individual RTO/ISO regions, and any related future market reforms that the evolving energy system may motivate,” the RTO said.
Four public power systems from Massachusetts, Connecticut, New Hampshire and Vermont called on FERC and ISO-NE to continue to focus on reliability, saying, “New England today is facing profound winter reliability issues that require swift action.”
Specifically, the groups wrote that FERC should mandate the use of competitive processes in transmission development, take a closer look at New England’s rules for fuel procurement and consider creating a regional energy reserve. They also urged a major revamp of ISO-NE’s capacity market, calling for a seasonal auction to replace the existing annual one.
They also said ISO-NE should look at new market products to incentivize building balancing resources and commit to undertaking cost-benefit analyses as it evaluates changes to market rules.
MISO
MISO said adapting its markets to reliably meet future system needs has been “core to MISO’s mission and vision” since it introduced its energy market in 2005.
The grid operator cited its plan to use a seasonal accreditation of capacity, the opening of its markets to electric storage and the 2021 rollout of its short-term reserve product. It also said its long-range transmission portfolios and its ongoing market platform replacement are meant to keep the system nimble.
MISO also cited analyses such as its “Markets of the Future” report and annual regional resource assessment as ways to keep close tabs on its evolving resource mix and anticipate what new market products might be needed.
Policy drivers are accelerating the fleet transition and associated risks, MISO says. | MISO
The RTO said it considers market pricing “a powerful signal” to attracting resources. In its “ideal state,” it said, it would remove the requirement that it must declare an emergency to access its load-modifying and other “emergency only” resources and be able to commit and dispatch them “through more regular market operations.”
MISO has begun discussions with stakeholders on how to appropriately value and maintain resources that supply beneficial system attributes. It has defined six system reliability attributes as necessary, including resource availability, the ability to deliver long-duration energy at a high output, rapid start-up times, providing voltage stability, ramp-up capability and fuel certainty. (See MISO Considers Resource Attributes as Thermal Output Falls.)
NYISO
NYISO said it is simultaneously responding to more frequent extreme weather and higher temperatures caused by climate change and the renewable requirements of the Climate Leadership and Community Protection Act (CLCPA). Reaching the CLCPA’s targets — 70% renewable electricity by 2030; 100% emissions-free electricity by 2040 — “will require unprecedented levels of investment in both new supply and transmission resources.”
The ISO’s 2020 Climate Change Impact and Resilience Study said it could be facing one-hour ramp requirements of more than 10,000 MW and a six-hour ramp of more than 25,000 MW by winter 2040. In 2021, in contrast, the ISO’s maximum one-hour ramp was 1,800 MW, and the largest ramp was 8,800 MW.
NYISO said it faces uncertainties including “weather, net load forecasts, actual available energy from intermittent wind and solar resources, available energy from limited-energy resources, reduced availability of traditional flexible generation resources and higher probabilities that weather, or other factors, lead to correlated supply and transmission issues.” In July 2019, it experienced a 36-hour period when the state’s wind resources produced only 4% of their maximum output.
The ISO identified six time frames in which it must balance the variance in intermittent resources, ranging from six seconds (for regulation service) to decades — the time horizon over which investments in resources able to provide balancing will be made.
Progress toward New York’s “70 x 30” mandate | NYISO
NYISO told FERC its energy and ancillary services markets are “working efficiently,” citing its operating reserve demand curves, which were changed in 2021, and stakeholders’ recent approval of its constraint-specific transmission shortage pricing project. The latter project is intended to help its market software redispatch suppliers to alleviate transmission constraints and identify locations where new resources could provide the greatest benefits.
“The upcoming balancing intermittency project and the initiative to review real-time market features to enhance incentives to follow NYISO instructions directly respond to expected ramping and flexibility needs,” it said. The real-time project will consider lengthening the look-ahead capabilities of the ISO’s real-time commitment and real-time dispatch software.
It acknowledged that the low marginal costs of renewables will require changes to the markets to balance intermittency and improve price formation.
“Determining the quantity and location of operating reserves more dynamically will be instrumental in preparing the markets for the new grid risks as the resource mix evolves.”
Simultaneously co-optimizing energy and ancillary services requirements will increase revenues in those markets, the ISO said. “Absent ancillary services market changes or other wholesale energy market changes to improve incentives for flexible resource availability, market signals to retain and invest in flexible, controllable resources may not be sufficient.”
Another source of uncertainty is behind-the-meter solar PV. The ISO forecasts that 6,000 MW of BTM solar nameplate capacity will be installed by 2024, rising to 10,000 MW by 2030.
The ISO and its stakeholders are considering additional changes, including the implementation of reserve requirements within constrained load pockets; additional availability incentives for suppliers on Long Island; five-minute transaction scheduling; and separating up and down regulation service.
In response to Commissioner Mark Christie’s question on whether LMPs remain the best way to run energy and capacity markets, the ISO attached to its filing a report by economists Scott Harvey, of FTI Consulting, and William Hogan, of the Harvard Kennedy School.
Harvey and Hogan rejected those who question whether LMPs still make sense in a world of low-marginal-cost variable resources. “The critical role for LMP was true in the past, is true today, and will be true and more important with the anticipated changing resources mix,” they wrote.
PJM
PJM aims to meet the challenges presented by growing renewable penetration and electrification by expanding its energy and ancillary services market to include pricing of flexibility attributes. In its report to the commission, the RTO said many of the characteristics of dispatchable generation will be crucial through the clean energy transition — such as the ability to ramp, cycling capability, quick start times and low minimum run times.
“A significant challenge PJM faces over the next five to 10 years is the disorderly retirement of resources that provide needed ancillary services,” the RTO said. “The limitations in how these resources are priced today could well add to the premature and disorderly retirement of these needed resources that are not priced accurately in today’s markets.”
While the RTO believes it has adequate flexibility in the near term, it said it must create defined values for attributes as quickly as possible to incentivize generation owners to keep their facilities online.
“The value in addressing this issue now is that prices for this additional flexibility will rise slowly as the fleet transitions and send early price signals on the increasing value of flexibility. This is critical to avoiding the disorderly retirement of resources,” PJM wrote.
Winter load shape with electrification | PJM
The RTO urged the commission not to take a “passive stance.”
“A policy statement outlining the commission’s expectations would help to focus RTOs and their stakeholders on these issues at a time when there are countless issues that could distract from their development,” it said. “Moreover, such a policy statement, if adopted on a bipartisan basis, could ensure a level of continuity in the commission’s direction that would further incent the industry to move proactively.”
PJM’s Independent Market Monitor argued that the RTO’s core market design elements already provide the flexibility it will need going into the future. It said the focus should be on removing existing barriers rather than creating new market products.
“Creating new ancillary services products and repeatedly revising the existing ones is a distraction from identifying opportunities to improve dispatch tools and enhancing basic market rules to unlock existing resource flexibility,” the Monitor wrote in response to PJM’s filing.
Current market rules often allow resources to avoid defining their flexible operating parameters outside of instances where they fail the market power test, or during weather alerts and emergencies, the Monitor said. For example, combined cycle units have the physical capability to be dispatched on and off for morning and afternoon peaks, and typically do not offer their start and down time parameters on their price schedules.
The IMM also said “inferior capacity resources” that are exempted from must-offer rules — namely intermittent generation, storage and demand response — are undermining the reliability offered by PJM’s capacity market.
The PJM Industrial Customer Coalition said that the RTO must ensure that load is not responsible for resources that cannot meet their obligations.
“Currently, load is fully responsible for the payments associated with the reserve products in PJM. If certain resources are not able to meet their reserve obligations due to the intermittency of those resources or for other reasons, those resources should bear an appropriate cost; the full risk and costs should not be borne directly by consumers,” the coalition wrote.
The ICC also argued that all generation types carry some physical flexibility and that they should be required to offer that capability to grid operators. Those resources that cannot provide a range for its flexibility or fail to follow dispatch instructions should be obligated to purchase flexibility from other resources or their respective RTO, it said.
“Resources that cannot provide desired flexibility and dispatchability attributes should appear more costly and less desirable than resources that can provide the desired attributes. As a result, the mantra of ‘reliability through markets’ would continue to be fostered through proper investment signals,” it wrote.
The PJM Power Providers Group (P3) noted that the RTO is forecasting strong load growth as thermal resources are scheduled to retire. It argued that the renewable resources expected to go online are not a “megawatt-for-megawatt” replacement for those going offline, particularly as risk moves to the evening hours.
To address the reliability challenges expected in the future, P3 said that an overhaul of the capacity market is necessary to undo “myopic regulatory decisions from the commission, illogical proposals from the RTO” and delays in running auctions. P3 said the current market is unsustainable, with resources exposed to nonperformance charges during extreme weather, no ability to independently evaluate risk and no protection from buyer market power.
SPP
SPP’s report documented the RTO’s response to the rapid growth in wind energy and its increasing peak demand.
The RTO’s 33 GW of installed and registered wind power capacity represents 29% of its total capacity and 38% of its total energy. It also has seen a continued drop in coal generation, although rising natural gas prices allowed its usage to rebound in 2021.
Because of rising high temperatures, the RTO said, its coincident instantaneous peak demand has risen more than 7% in two years, from 49,569 MW in 2020 to 53,243 MW in July 2022.
Share of SPP’s real-time, annual generation by technology type | SPP
It also reported increasing uncertainty in load forecasting because of demand response and behind-the-meter generation. “SPP receives load forecasts from its members that inform SPP’s own load forecasts, and these load forecasts may be performed differently,” it said.
It has also seen increased generation variability, which it manages through reliability unit commitment studies and manual operator commitments and its new ramp capability product.
“SPP’s primary source of uncertainty comes from generation, not from load,” it said. “With the balance between available flexibility and system variability expected to tighten in the future, efficient methods to assist in providing the needed flexibility with the available generation fleet will become increasingly important to economical and reliable operations.”
The RTO said its requirement is for resources that are “visible, forecastable and responsively dispatchable.”
It recently revised its balancing authority emergency operating plan to incorporate information on generators’ on-site fuel and the ability of the BA to allow resources to take actions to conserve fuel. The RTO is also tracking plant retirements based on owners’ plans instead of making assumptions based on plants’ age.
SPP said it will need more information from its 550 distribution utilities as additional resources interconnect on distribution lines.
Another concern is the increasing complexity of the system, which is making it more difficult for software to clear, solve and post the results of SPP’s market in a timely fashion.
“The SPP market clearing engine has to optimize an extensive mathematical model (greater than 1,000 resources, large amounts of transmission constraints over a large footprint, granular modeling),” it said. “The potential addition of thousands of distributed energy resources, storage, greenhouse gas logic and continued variable energy resource growth could require adjustments to how SPP clears the market.”
SPP said it has an increased need for visibility of resources. “This means knowing where resources are on the system and forecasting their output. Visibility concerns arise with increasing numbers of distributed energy resources and behind-the-meter generation. This generation may not be registered in SPP’s markets and may be accounted for differently in the load forecasts of distribution utilities connected to the transmission system operated by SPP,” it said.
“Another potential problem with resource visibility is the potential for mobile storage resources (both plug-in vehicle and commercial-size truck bed storage) within SPP’s footprint. This possibility may be more likely as new electric charging stations along interstate highways come online.”
“Renewables have not caused any new problems but have only highlighted the shortcoming of the market,” SPP’s Market Monitoring Unit said in its comments last week.
Net load volatility increases with wind production. | SPP
The MMU said the RTO needs to construct its rules with an eye to “flexibility, dependability, availability, resiliency and quality.”
“These attributes must be defined and incentivized, or they may not be provided in the future,” the MMU said.
The MMU noted that wind’s market share has nearly tripled from 2014 to 2021 to about 35% of total annual generation. Compounding the challenges, in about half of all real-time intervals, wind production moves in the opposite direction of load, it said.
“Although almost all weather-dependent renewables are dispatchable in the down direction, they were expected to follow dispatch instructions in less than 7% of resource intervals, compared to about 80% for non-renewables.
“When not following a dispatch instruction, weather-dependent renewable output varies irrespective of price, causing a need for rampable capacity separate from load.”
Almost 36% of capacity in SPP is more than 40 years old, most of it gas and coal.
