CARMEL, Ind. — MISO says it “largely agrees” with its Independent Market Monitor’s five new market recommendations issued this year.
The IMM’s annual State of the Market report, released this summer, listed recommendations for promoting transmission reconfiguration plans, reducing out-of-market commitments, creating a future-looking dispatch model and ensuring MISO only pays for real load reductions. (See MISO Monitor Prescribes 5 New Fixes in Annual Market Report.)
The grid operator said it is actively working on three of the ideas, while the remaining two are on its list of five-year goals.
In reviewing the market performance in 2021, the Monitor said the RTO should:
work with its transmission owners to identify and implement economic transmission reconfiguration plans to better manage congestion;
evaluate and restructure its unit commitment process to reduce out-of-market commitments and ensuring make-whole payments;
develop a multihour, look-ahead dispatch and commitment model to better manage fluctuations in net load and decisions on when to use storage resources. Patton said, “as reliance on intermittent resources grows in MISO, the need to manage extraordinary fluctuations in net load will grow;”
improve rules around demand participation in energy markets so that MISO only pays for load reductions that occur; and
consider classifying load-modifying resource (LMR) curtailments as short-term demand in pricing models and the unit dispatch system.
The last recommendation stems from Patton’s observation that LMRs are allowed to set real-time energy prices long after emergency conditions have passed. He said that’s because of MISO’s extended locational marginal pricing (ELMP) model respecting resources’ ramp rates, which makes it impossible to replace a large volume of LMRs within a single dispatch interval.
Patton said the LMRs appear to be necessary and set prices “long after MISO’s resources are sufficient to replace them by ramping up.” He said that if MISO treats LMRs as an operating reserve demand in the ELMP model, it would eliminate the problem.
MISO said it has yet to begin work on the second stage of its look-ahead commitment tool or categorizing LMR curtailments under short-term demand for pricing purposes.
Zhaoxia Xie, with MISO’s market design team, said staff may encounter some difficulty including LMR curtailments because short term reserves are priced systemwide or zonally, whereas LMRs are modeled at the more local nodal level. But she promised more evaluation on the issue Thursday during a Market Subcommittee meeting.
The RTO said it plans to augment its look ahead commitment tool in 2023 to improve commitment decisions. It said upgrades should reform its unit commitment processes with the added benefit of using storage resources to manage fluctuations in net load.
“This has been a hot topic between MISO and the IMM for a while,” Xie said. She said staff is constantly evaluating improvements in its commitments process.
The grid operator agreed that it could use more stringent rules and procedures for demand participation “to avoid unjust payments.” MISO said it may file tariff revisions with FERC after consulting with stakeholders.
Staff said they’ve been working since January with transmission owners to develop operating procedures for transmission reconfiguration. They will begin a reconfiguration process in 2023’s first quarter to reduce congestion costs.
MISO’s Tony Rowan said the procedure involves a market participant bringing a suggested economic reconfiguration to staff and relevant TOs, who will test the solution over 15 business days for reliability and economic impacts. If MISO and TOs agree the solution puts a dent in congestion without deteriorating system conditions, the reconfiguration plan will go into effect for an agreed-upon duration.
MISO also said it will maintain a public list of the footprint’s top 10 most economically impacted constraints.
CARMEL, Ind. — MISO is proposing a biennial review to reduce its “parking lot” list of improvement suggestions, although some stakeholders are putting up resistance.
“We’d like to make sure that good ideas don’t go to the parking lot to linger indeterminately,” Laura Rauch, senior director of transmission planning, said during a Market Subcommittee meeting Thursday
MISO’s parking lot contains improvement ideas submitted to MISO through its issues-submission process. It has become a graveyard of shelved ideas, with some stakeholders complaining that their recommendations remain unaddressed. (See MISO Pledges Review of On-hold Stakeholder Ideas.)
The grid operator said it will clean up the parking lot and eliminate nearly 20 suggestions. In some cases, staff doesn’t have a record of the stakeholder that originally submitted the idea or its full description.
The grid operator said it will use “active,” “inactive,” and “closed” to label the idea list. “Closed” means MISO has no current plans to address the idea and i will fall off the list. Staff will work with stakeholders with inactive projects and determine their feasibility every two years.
Rauch pointed to a suggestion creating a universal resource participation model that has spent years in the parking lot. MISO doesn’t distinguish market participation models by intermittency, energy storage and demand response, leading Rauch to term the suggestion “aspirational” and suggest it should be closed. Stakeholders could always revive the idea by submitting it again to the RTO.
Rauch also said there’s some redundancy among the improvement recommendations.
“To me, this seems like another way MISO isn’t allowing stakeholders to decide when an item doesn’t need attention,” Clean Grid Alliance’s Natalie McIntire said.
Independent Market Monitor David Patton took umbrage with MISO’s move to close his suggestion that a virtual spread product be created in the day-ahead market. It would allow participants to specify the maximum congestion between two points they are willing to pay in a virtual transaction.
Rauch said in this case, staff last delivered a presentation on a virtual spread product in 2012. She said MISO has no plans to address the issue.
Xcel Energy’s Kari Hassler said she was concerned that the grid operator would put recommendations on the chopping block before it has completed its new market platform, which has been billed as being able to host more complex market products.
“We have a lot of projects that are pushed back and waiting in the wings until” MISO’s new market platform is finished, Hassler said.
MISO plans to roll out its day-ahead market on the new, modular market platform next year.
FERC must better explain its 2019 decision to give MISO transmission owners unilateral authority to finance upgrades needed to interconnect new generation, the D.C. Circuit Court of Appeals ruled last week.
The proceeding was “the latest episode in a long-running dispute over how to fund upgrades to power lines,” Judge Justin R. Walker wrote in the decision issued Friday (20-1453).
The details in the case extend back to 2015, when Otter Tail Power filed a complaint with FERC challenging MISO’s policy of providing “direct” transmission owners with unilateral authority to decide whether to initially fund a needed upgrade — and later collect the costs from the interconnecting generator — or allow the generator to pay the costs up front. Otter Tail contended that while direct TOs exercised that privilege, operators of affected systems further downstream (“indirect” TOs) enjoyed no such option, resulting in differential treatment.
In a decision issued June 2015 (ER14-2464), FERC agreed with Otter Tail, but rather than extending the right of unilateral initial funding to TOs indirectly affected by an interconnection, it instituted a proceeding under Federal Power Act Section 206 directing MISO to either remove the unilateral option or explain why it shouldn’t. (See FERC: MISO Gen Agreement Allows Overcharging.)
The D.C. Circuit vacated FERC’s decision in 2018 in Ameren Services Co. v. FERC, saying the commission hadn’t considered complaints from Ameren and five other TOs that claimed the policy forced them to accept “risk-bearing additions to their network with zero return” and essentially act as “nonprofit managers” of network “appendages.”
The decision in Ameren “also held that FERC should have considered that its decision could force transmission owners to incur the financial risks of generator-funded upgrades without the opportunity for a profit,” the court noted in Friday’s ruling. “We declined to decide whether those enterprise-risk concerns required a particular result until FERC ‘developed a record by considering’ them.”
The case was then remanded to FERC, which in 2019 reinstated TO funding rights and extended them to indirect owners, a decision the commission affirmed the following year after a protest by the American Wind Energy Association (later renamed the American Clean Power Association (ACP)) (EL15-68, et al.). (See FERC Upholds MISO Self-fund Order, Glick Dissents.)
The commission had also made its decision retroactive, forcing the renegotiation of several generator interconnection agreements between 2015 and 2018. (See FERC OKs MISO Agreements Following TO Funding Ruling.)
‘Plausible Reasons’ for Concern
In the case decided by the D.C. Circuit on Friday, the ACP petitioned the court to review FERC’s orders, arguing that the commission had: failed to follow the Ameren decision’s command to “develop a record” of enterprise risks for TOs; acted in an arbitrary and capricious manner by giving TOs unilateral funding authority; and erred in making its 2019 decision retroactive.
The court dismissed the third argument, saying that its jurisdiction only extends to arguments that a party raised in a rehearing application to FERC, “unless there is reasonable ground for failure to do so,” points that ACP failed to argue.
Addressing ACP’s first argument, the court found that FERC did comply with the Ameren remand order.
There, we told FERC to ‘[develop] a record byconsidering’ the transmission owners’ enterprise-risk argument,” the court wrote. “That instruction suggested no particular briefing. Nor did it demand any additional evidence for a record that was already voluminous. Rather, it required nothing more than FERC ‘considering’ the enterprise-risk argument and putting that consideration on the ‘record’ for our review.
“On remand, FERC did just that: It considered the enterprise-risk argument and rendered a decision on its merits in the record for us to review.”
But the court did agree with ACP’s second argument, ruling that FERC’s decision to grant unilateral funding authority to all TOs failed to satisfy the “arbitrary and capricious” standard in the Administrative Procedures Act.
“Although FERC’s decision may ultimately prove to be ‘reasonable,’ it was not ‘reasonably explained,’” the court said.
The court noted that ACP did not “seriously dispute” FERC’s determination that, under the FPA, direct and indirect TOs should receive similar treatment with respect to upgraded funding. Instead, it argued that the commission violated the APA “by not adequately explaining its decision to solve that problem by giving unilateral funding authority to all transmission owners, rather than by denying unilateral funding authority to all transmission owners.”
The court said it agreed with ACP that FERC failed to reasonably explain its decision: “In particular, it gave short shrift to the petitioner’s concern that transmission owners might discriminate in favor of generators they own.”
In proceedings before FERC, the court noted, ACP provided “plausible reasons” for that concern, having pointed out that many TOs in MISO also own generators, providing a competitive motive to discriminate against other generators. And while FERC acknowledged that concern, it also concluded that concerns about potential discrimination did not outweigh the TOs’ enterprise-risk concerns.
FERC had argued that ACP did not “show why the ability of [generators] to challenge costs before the commission, a point on which the court relied, is inadequate to address any concerns with potential undue discrimination.”
But the court pointed to “something important missing from FERC’s orders: an assessment of the risk of discrimination and an explanation of why individualized proceedings provide generators with sufficient protection against that risk.”
In oral arguments, the court noted, counsel for intervenors supporting FERC “gave a relatively detailed assessment and explanation” of why the current regulatory regime should alleviate the risk of TOs giving preferential treatment to their own generation.
But FERC’s orders had failed to do that, it said.
“FERC had the chance to explain itself at two different steps in its proceedings,” the court said Friday. “It could have done so when it found that the unilateral funding option was not unjust or discriminatory, or later when it remedied the disparity between direct and indirect transmission owners in the Otter Tail proceeding. …
“We therefore remand for FERC to adequately explain its decision,” the court concluded. “But we do so without vacating FERC’s orders ‘because there seems to be a significant possibility that [FERC] may find an adequate explanation for its actions, and, in any event, it appears that the consequences of its current ruling can be unraveled if it fails to.’”
The California Air Resources Board is getting close to finalizing details of its electric bicycle incentive program, a $13 million initiative expected to launch in early 2023.
The program will be geared toward low-income participants. CARB is considering an eligibility cap of 300% of the federal poverty level (FPL). In 2022, 300% of the FPL is $40,770 for a one-person household, $54,930 for a family of two, or $83,250 for a family of four.
The amount of the e-bike purchase incentive has yet to be decided, CARB staff said during a workshop on the program last week. Participants in previous workshops said a rebate of $750 to $1,000 would be enough to encourage an e-bike purchase.
Larger incentives might be offered to residents of disadvantaged communities or those whose income is less than 225% of the federal poverty level. Bigger rebates might also be available to buyers of specialized bikes, such as cargo bikes or adaptive bicycles for special-needs riders.
CARB is looking at setting aside half the program’s funding for people whose income is less than 225% of the FPL and those living in disadvantaged communities. Applications from those groups would be processed first.
The agency expects to start offering incentives in the first quarter of 2023.
Despite limiting the incentive to low-income applicants, CARB staff said they’re expecting strong demand.
“We already know this program is going to be super successful,” said Aria Berliner from CARB’s Advanced Transportation Incentive Strategies Section. “There is so much interest.”
An Alternative to Cars
E-bikes are viewed as an ideal alternative to cars for trips around town. By encouraging e-bike adoption, CARB aims to support active transportation, reduce miles traveled by car and cut greenhouse gas emissions.
California’s e-bike incentive program received a $10 million allocation from the 2021/22 state budget. (See Calif. Program to Provide $10M in E-bike Incentives.) Last month, the CARB board voted to increase program funding to $13 million.
Following a competitive solicitation, CARB selected San Diego-based Pedal Ahead to administer the e-bike incentive program. The nonprofit started work on the project on Dec. 1.
CARB has held a series of workshops to help decide program details. The agency discarded an earlier proposal to exclude Class 3 e-bikes from the incentive program. CARB’s concern was that the Class 3 bikes, which reach speeds of 28 mph, could be a danger to pedestrians or other cyclists.
But Class 3 has become the most popular type of e-bike, workshop participants said, and the bikes are useful to riders making longer trips.
Another issue that’s been debated is whether incentives can be used at online retailers, or brick-and-mortar stores only. Under CARB’s current proposal, eligible purchase locations would include local bike shops and online retailers with a presence in California — either a physical store, company headquarters or a manufacturing site.
CARB is also looking at requiring eligible bikes to come with a two-year warranty at no additional cost. Another idea is to offer incentives for safety equipment such as bike locks, lights, helmets and safety vests. Some workshop participants said eligible bikes should come equipped with front and back lights.
Other workshop participants said CARB should also offer financing for e-bike purchases. According to the California Bicycle Coalition (CalBike), e-bikes that are safe and have “respectable durability” cost $2,000 and up.
CARB plans to hold another workshop on the e-bike program early next year, with discussion focused on incentive amounts, safety gear subsidies and e-bike cost limits.
Other Incentives
In crafting its e-bike incentive program, CARB is looking at e-bike incentives available in areas such as San Mateo County, Calif., Denver and British Columbia.
The city of Denver this year started an e-bike rebate program with a standard rebate of $400 and a $1,200 rebate for low-income residents. E-cargo bikes are eligible for an extra $500.
As of late October, 4,401 e-bike vouchers had been redeemed, the city said. The program was paused because funding ran out, but it’s expected to return next year.
Pedal Ahead runs an e-bike program in San Diego County that prioritizes low-income applicants. The program loans e-bikes to participants, who are asked to ride at least 150 miles per month and use an app to collect trip data. Participants who meet the requirements for two years may then keep the bike.
This year, Pedal Ahead announced a partnership with the San Diego Association of Governments to bring the program to another 125 participants.
FERC on Thursday approved NYISO’s request for up to three more years to implement tariff revisions that will allow distributed energy resources in aggregations to provide all ancillary services they are capable of, in compliance with Order 2222 (ER21-2460).
NYISO last month proposed to extend the revisions’ effective date from the fourth quarter this year to a “flexible” date of no later than Dec. 31, 2026, because of unexpected delays in developing and implementing the necessary software modifications.
The ISO said it will not necessarily need all of that time to complete the necessary work. It noted that it is still on track to implement the DER aggregation and participation models accepted by the commission in 2020 by the third quarter of 2023 and, as a result, may be able to start having aggregations participating in its markets far in advance of 2026.
It also said that in 2024 it will start deploying software that will automate much of the work that will at first be done manually by staff.
NYISO had earlier this year requested for more time to submit its Order 2222 compliance filing; as part of compliance with the order, each RTO and ISO was required to propose a date by which it could complete the necessary work integrating DERs into their markets. (See NYISO Requests Extension, Clarification on Order 2222 Compliance.)
In its brief order, FERC noted that no answers were filed in response to NYISO’s request, approving it without further comment.
RENSSELAER, N.Y. — NYISO’s Management Committee on Wednesday approved tariff revisions on credit rules for virtual transactions, the deliverability of “internal controllable” lines and transmission owners’ right of first refusal. The committee also received briefings on the ISO’s winter supply outlook and its updated Strategic Plan.
Credit Requirements on Virtual Transactions
The MC approved the first changes since 2009 to the ISO’s credit requirements for virtual transactions — bets on the price spread between the day-ahead-market (DAM) and the real-time market.
The 2009 changes distinguished for the first time between virtual load — offers to acquire energy in the DAM — and virtual supply, offers to provide energy. The rules varied credit requirements based on seasonal, time of day and zonal groupings to reflect their risk characteristics, using data from April 2005 forward.
The current rules break supply and demand credit requirements into four periods for weekday peak hours (HB7-22), and one each for nights and weekends/holidays. Under the proposed changes, virtual demand bids will have different requirements for summer, winter and shoulder months, with 28 distinct groupings. Virtual supply bids will be broken into 33 groupings, also reflecting the seasonal differences.
Virtual supply and virtual demand positions show lookback comparisons | NYISO
The proposal also would change the lookback period, giving one-third weight to data from the last year and two-thirds to the last five years.
NYISO said expected changes to its transmission system and resource mix over the next decade “provide support for shift to a shorter lookback period so that changes in real-time price variability are reflected in credit requirements without a long delay.”
The ISO settled on the weighting to balance accuracy with responsiveness, said John Jucha, senior credit risk analyst. Longer lookback periods provide more data points and more accurate estimates but result in slower changes to credit requirements when system conditions and price volatility are changing rapidly. Shorter lookback periods allow quicker adjustments to credit requirements but can also result in dramatic changes not warranted by underlying conditions.
The proposed rules also would treat the ISO’s transmission zones and proxy buses individually rather than the current practice, which sets one requirement for zones A to F and another for zones G to I. The ISO said it expected “significant benefits” immediately for zones A and F, with potential benefits for other zones in the future.
Also changed was the threshold for virtual supply positions, which will increase to the 98th percentile. The threshold remains unchanged at the 97th percentile for virtual demand positions.
The new rules will also apply to external transactions.
Pending approval by the Board of Directors, the ISO hopes to file the changes with FERC by April 2023 and deploy them in June.
NYISO Strategic Plan
NYISO shared its 2022 Strategic Plan, which highlighted its responsibilities, accomplishments and future goals, as well as how state and federal policies help drive the ISO’s strategic objectives.
Executive Vice President Emilie Nelson said offshore wind represents the largest potential shift in New York’s resource mix and that the state Climate Action Council’s forthcoming final scoping plan will inform much of the ISO’s future work. Energy security has become a growing concern as geopolitics impact global supplies, she added.
Nelson told stakeholders that NYISO has taken on more responsibilities, such as developing a reliability needs assessment, increasing stakeholder communications and tackling multifaceted issues like cybersecurity.
Bruce Bleiweis of DC Energy asked Nelson what letter grade the ISO would give itself as a “leader in the application of technology.”
Nelson responded that NYISO performs at an “A” level.
Bleiweis disagreed, saying he and other stakeholders focused on the financial markets have been frustrated with their inability to win ISO backing for “relatively minor changes” to the transmission congestion contracts (TCC) market.
“We’ve been asking for certain changes to the TCC markets for six or eight years,” he said, saying a “simple posting of data” calculated by the ISO “seems to become a [$500,000] project.”
Bleiweis said his company doesn’t face such “roadblocks” in the other organized markets. “Once a project is approved by stakeholders and the ISO, they seem to move forward relatively quickly.”
Nelson said the ISO must make “difficult” tradeoffs between competing budget priorities.
Deliverability Rules
The MC approved proposed tariff language governing the deliverability of internal controllable lines (ICLs) such as Clean Path New York.
The rules would require a class year transmission project requesting capacity resource interconnection service for unforced capacity (UCAP) deliverability rights to be deliverable throughout the capacity region to which it proposes to inject energy and throughout the capacity region from which it proposes to withdraw energy.
Amanda Myott, NYISO market design specialist, said the ISO was proceeding with tariff revisions on the deliverability of ICLs before the rest of the ICL market design to ensure the changes apply to the class year 2023 deliverability analyses. (See “Ramp Limits on ‘Internal Controllable’ Lines,” NYISO Installed Capacity Working Group/Market Issues Working Group Briefs: Sept. 30, 2022.)
The changes approved by the MC also affect tariff Attachment S regarding the calculation of UCAP deration factors in the class year deliverability studies and expedited studies.
Pending board approval, the ISO intends to submit the revisions to FERC in January.
The March order only addressed upgrades that are part of a developer’s proposed PPT project. The new proposal, presented by Stuart Caplan of Troutman Pepper, would extend the ROFR provisions to “network upgrade facilities” that are required as a result of the transmission interconnection process. (See NY TOs Seek Clarification on ROFR for Upgrades.)
Without the changes, TOs must engage in case-by-case bilateral negotiations and FERC filings, resulting in a more time consuming and less transparent process, Caplan said.
Subject to board and FERC approval, the changes would be effective for the Long Island offshore wind transmission project.
Winter Capacity Assessment
Natural gas storage levels are higher than anticipated thanks to a mild fall, but they are still lower than previous years, according to the ISO’s winter capacity assessment.
Winter natural gas underground storage levels | NYISO
Distillate fuel inventories are well below the five-year average capacity, but generating units are still receiving deliveries, and inventories are approximately 95% of last year’s capacity, according to NYISO Vice President of Operations Aaron Markham.
Markham also shared that both the Sprainbrook-East Garden City Y49 line in Long Island and the Moses-Willis MW1 line would be taken out service this season for repairs.
A new report by the Massachusetts Commission on Clean Heat lays out a detailed roadmap for reducing buildings’ carbon footprint but stops short of recommending a ban on the installation of new fossil fuel-burning appliances.
The task force convened by Gov. Charlie Baker in January had a diverse membership holding strong and varied opinions on scheduling such a ban and could not reach a consensus on the issue. The report cited counterbalancing factors: Waiting to schedule a ban on new gas installations puts the state at risk of missing its climate protection goals; enacting a ban too quickly would create significant risks if the electrical grid, supply chain and workforce were not ready to support it.
The report also noted that rushing to ban gas appliances in an effort to reduce greenhouse gas emissions might actually boost them if clean electricity-generating resources were not yet online and fossil-fired power plants had to boost their output to run additional electric appliances.
The 66-page report issued Wednesday is only an advisory document, and the governor who commissioned it is a lame duck.
However, Baker will soon be succeeded by two-term state Attorney General Maura Healey, a Democrat whose campaign statements indicated strong support for climate protection measures. She has said she supports steps toward decarbonizing buildings, including authorizing individual municipalities to ban gas use in new construction.
The report says achieving the state’s building emission-reduction goals will be a “monumental undertaking” at great cost and lays out a potential framework through which to proceed.
Infrastructure
The report argues that the state should should move forward with policies based on the commercialized technologies available now and incorporate future advances as they become available. A joint energy system plan should lay out strategies to speed electrification and strategically retire or reduce the natural gas system.
Investments in new or expanded natural gas infrastructure should be redirected to support net-zero efforts, except for safety and reliability, in which case they also should be made “within the context of the shift toward electrification,” the report says. The governor should direct relevant state agencies to report on the potential risks and benefits of an enforceable phaseout of new fossil fuel heating systems.
The report argues that progress toward building decarbonization depends on progress toward increased electrical supply. Human infrastructure also is important: Significantly more funding is needed for workforce training.
And Massachusetts should immediately start to create a Clean Heat Standard, it says. The state should also create a climate bank to help provide affordable capital for projects, as traditional private-sector lenders are reluctant to invest in building decarbonization at this stage.
Equity
Environmental justice (EJ) and low- to middle-income (LMI) communities should be first in line for the transition to clean energy, the report says.
These communities — as well as the Black, indigenous and people of color population and frontline communities — should have a robust role in every stage of planning, implementation and evaluation of a program and should be compensated for their input. Information generated at all stages of the process should be made available in at least the five most common languages in the subregion.
LMI households must not bear the rising costs of remaining gas infrastructure as the transition progresses, the report says. Means-tested subsidies, carveouts and packaging of multiple incentives should be used to increase the equitable impact of energy transition programs.
LMI housing stock should also receive additional funding for necessary improvements not directly connected to decarbonization, such as roof repairs, basement waterproofing and hazardous material mitigation, the report says. Hiring and procurement processes should prioritize minority- and women-owned business enterprises and other disadvantaged participants.
Angst
The report list hurdles to clear that include inflation; a potential economic recession; diverse housing stock; high housing costs; a labor force with limited experience in the work that needs to be done; socioeconomic and racial inequities; the complexity of a multilayered government; the real and perceived cost of electricity and fossil fuels; and the tendency to not replace heating systems until they fail.
The transition will carry “very real burdens,” particularly for businesses, consumers and workers for whom there is no good alternative to fossil fuels, the report says. But it will also bring “significant benefits and opportunities,” including better health, climate protection and an enormous opportunity to invest in the state economy and workforce.
Public outreach and awareness are needed to show the state’s commitment to clean heat, and to highlight success stories. The state should evaluate ways to mitigate the cost of electric heat in the near- and intermediate-term, so that it is less expensive than gas, the report argues.
Substantial incentives will be needed, perhaps for a long time, as a signal of support to both consumers and suppliers, it says. Stakeholders reliant on fossil fuel must have clear and consistent market signals about the need to make the transition, and they will require resources to carry it out.
Massachusetts needs to focus more on its goals and the people those goals will benefit than on the programs it uses to accomplish these things, according to the report. The governor and legislature should create a new Building Decarbonization Clearinghouse as an umbrella for incentives, funding sources and technical assistance.
Delay and inaction will push back, but not cancel, the transition and make it more costly.
Goal
The Massachusetts Clean Energy and Climate Plan sets goals of a 28% reduction in building greenhouse gas emissions over 1990 levels by 2025 and a 47% reduction by 2030; the ultimate goal is net zero by 2050.
To reach this, an estimated 500,000 homes and 300 million square feet of commercial space will need to be using energy-efficient electric heat by 2030, and 100,000 homes would need to be converted per year after 2030.
Beyond the actual heating systems, 1.5 million Massachusetts homes will require weatherization and other structural efficiency upgrades by 2050 to achieve the desired reduction in GHG emissions.
The commission took no position on how to apportion the cost of clean heat infrastructure among ratepayers, taxpayers, regulated suppliers and markets.
It did say that cost and benefit of proposals should be evaluated not in terms of cost-effectiveness but for their societal impact.
CARMEL, Ind. — MISO said Tuesday that it will add an informational study on near-term transmission congestion to its 2023 transmission-planning cycle.
However, the study is unlikely to result in any cost-shared projects.
Speaking during a Planning Advisory Committee meeting Tuesday, MISO engineering adviser Ben Stearney said the RTO will use near-term economic models to examine congestion up to five years out. MISO typically studies congestion in 10- to 15-year-out modeling, but stakeholders have said congestion is increasing and deserves attention and relief projects.
“I do want to emphasize that MISO will not be proposing any new cost-allocation mechanisms or project types in concert with this analysis,” Stearney said, adding that any identified projects will be taken up and funded only by market participants.
He said staff used production cost models to determine that a new study for the 2023 Transmission Expansion Plan (MTEP 23) “could provide valuable insight into current system congestion as well as inform parallel study efforts.”
“We’ve done some investigation work, but we’ve never really done a study like this,” Stearney said. A near-term congestion study could help inform MISO’s other MTEP modeling work, he said.
Stearney said the RTO’s models were able to recreate some of the footprint’s top binding constraints.
Energy consultant Kavita Maini said in her home base of Wisconsin, congestion is a persistent problem. She said it would be helpful for MISO to pinpoint projects that can mitigate congestion.
“Congestion is very real, and the Independent Market Monitor has spoken about it as well,” Maini said.
Clean Grid Alliance’s Natalie McIntire asked that the grid operator explore pathways beyond participant funding for possible projects emerging from the study. She asked staff not to foreclose the possibility that MISO could land on a project that fits the criteria of a market efficiency project.
“We’re talking about congestion here that’s costing consumers a lot of money,” McIntire said.
MISO said last spring that it was mulling adding a class of smaller, congestion-relieving projects under its annual transmission planning cycle, inspired by its targeted market efficiency projects with PJM. (See MISO Considers Adding Smaller Congestion Relief Projects.)
The RTO later said it encountered modeling obstacles to adding a new study focused on solving near-term congestion. Staff said they had difficulty recreating some historical congestion in its planning models.
In October, Stearney said MISO needs to improve on how real-time congestion is captured in its modeling to identify worthwhile upgrades.
“MISO regional models are not tailored toward this type of analysis, so additional complications are expected,” the grid operator said at the time.
While Russia’s war on Ukraine has triggered a global “dash to natural gas” to replace lost Russian supplies, it has also created a bull market for electric heat pumps, with sales in Europe up 35% in 2021 and Poland doubling sales in the first half of 2022, according to new reports on global energy efficiency from the International Energy Agency (IEA).
“Energy efficiency is now at the center of policy agendas [as] governments and citizens around the world urgently look to save energy, secure supply and reduce energy bills,” said Nicholas Howarth, IEA energy policy analyst and lead author of the Energy Efficiency 2022 report, released on Friday. “We’re seeing strong signs of governments turning to efficiency, as they did in the 1970s, as it is the best way to simultaneously meet energy, affordability, security and climate goals.”
The central question, Howarth said at a media briefing on the report Thursday, is whether 2022 will “be a turning point for energy efficiency” to take a leading role in the global response to the current energy and climate crises.
The signs are encouraging, according to the IEA report. First, energy intensity — the amount of energy needed to produce one unit of gross domestic product — is expected to rise 2% in 2022, a four-fold increase over the previous two years, when the COVID-19 pandemic slowed both energy demand and efficiency measures, Howarth said.
In addition, global spending on energy efficiency could hit $560 billion this year, a new record, according to the report. Efficiency also represents about two-thirds of all clean energy and economic recovery spending since 2020. The report calls out the Inflation Reduction Act in the U.S., Europe’s REPowerEU Plan and Japan’s Green Transformation Initiative as examples of national efforts that are “driving this progress on efficiency.”
At an IEA conference on energy efficiency in Denmark in June, 26 countries, including the U.S., issued a joint statement underlining the importance of efficiency and calling for stronger action on national initiatives.
The report also points to the electrification of transportation and heating, which, it says, have reached a tipping point. “One in every eight cars sold globally is now electric, while almost 3 million heat pumps were sold in 2022 in Europe alone as they become the preferred heating option,” the report says.
Public campaigns are raising awareness of energy-saving technologies, which, in turn, are raising consumer perceptions of their value, the report says. “While energy cost-of-living pressures have risen considerably, efficiency actions implemented over the last 20 years are now saving consumers in IEA countries $680 billion off their energy bills this year at current prices,” the report says.
IEA has 31 member countries, including the U.S., and 11 “association” countries, which include China and Ukraine.
The savings for individual homeowners can be significant. In the U.K., for example, efficient homes can cut their energy bills by 40%, Howarth said. “[U.K.] families with the least efficient homes will be paying up to three times more for the same level of comfort … and the same story is true in every country.”
Switching to an electric vehicle provides similar savings: 40% over the most efficient gas-powered car, the report says.
Fuel bills for different personal vehicle types in Europe, June 2021-2022. Gas powered vehicles have become more efficient, but electric vehicles are still more efficient and less expensive to run. | IEA
In a separate report on heat pumps released Wednesday, the IEA projected that if all countries fulfilled their current pledges to cut greenhouse gas emissions, the global capacity for heat pumps could jump from 1,000 GW in 2021 to 2,600 GW by 2030, cutting fossil fuel use for heating in buildings almost in half.
The Energy Efficiency report also noted that a growing number of countries and “subnational governments” — cities, states and provinces — are banning or phasing out natural gas in new construction. Germany is planning a ban on fossil fuel heating in new construction beginning in 2024, while France is banning new gas connections in 2023. The Netherlands will require heat pumps in buildings beginning in 2026.
The issue has become a political flashpoint in the U.S., with 20 states prohibiting bans on natural gas hookups, while a growing number of cities and counties have passed bans on gas hookups in new construction. Montgomery County, Md., became the latest jurisdiction to take action, with the County Council on Tuesday passing legislation that requires all new construction to be all electric, with new regulations to be issued by the end of 2026 and 2027. (See Montgomery County, Md., Passes Building Electrification Law.)
Waiting for IRA Rebates
Energy conservation efforts in the U.S. and Europe date back to the OPEC oil embargo of 1973-1974. In the U.S., the embargo is associated with long lines at gas stations nationwide, a 55-mph speed limit and the first fuel economy standards. IEA itself grew out of international efforts to secure oil supplies at that time.
Steven Nadel, executive director of the American Council for an Energy-Efficient Economy (ACEEE), agrees with IEA framing of the war in Ukraine as a major factor for a ramp-up of energy-efficiency measures globally.
The war is “also affecting the U.S. because we are exporting a lot more LNG to Europe. Our prices have gone up quite a bit, and that’s been a major contributor to inflation but also a major contributor to consumers’ interest in trying to use efficiency,” he said.
The most recent Short-Term Energy Outlook from the U.S. Energy Information Administration projects that homes using heating oil for space heating will be spending 45% more than last year.
“When you have these types of prices — yes, consumers will care a lot more about efficiency,” he said.
The IRA has both tax credits and a range of rebates for energy efficiency home improvements, but Nadel does not expect the law to have a major impact this winter.
“All the IRA programs, they’ve passed, but the money’s not yet reaching the states, let alone consumers,” he said. The Department of Energy, Internal Revenue Service and other agencies still have to translate the law’s “fairly vague pronouncements” into regulations and guidelines. But, he said, the $3.5 billion in funds for low-income home weatherization in the Infrastructure Investment and Jobs Act is starting to flow.
“The demand for this program is greater than the supply,” he said. “This money will help, but it will not meet all of the demand.”
ACEEE on Thursday launched a new initiative, Residential Retrofits for Energy Equity, with $2.5 million from the Rockefeller Foundation and $250,000 each from JPMorgan Chase and the Wells Fargo Foundation. The initiative aims to “jump-start” energy-efficient upgrades for affordable housing.
US Energy Inflation is Low
Increased spending and action on energy efficiency also face major hurdles, first and foremost, the $550 billion that IEA estimates governments worldwide have allocated thus far to shield consumers from high energy prices. In developing countries, government support for consumers ”now exceeds that provided for clean energy investments since 2020,” Horwath said.
“Energy-related cost-of-living pressures are a major concern this year, driven by high fossil fuel prices,” Howarth said. “Increased energy costs being the single biggest contributor to inflation experienced this year in most countries, pushing up the cost of living for families worldwide and setting back progress on energy access in emerging and developing countries.”
Year-on-year change in energy price inflation, October 2022. The U.S. has one of the lower inflation rates, while Mexico is at the bottom of the list. | IEA
The U.S. is one of a small number of nations with relatively low energy cost inflation, according to the Energy Efficiency report: about 18% compared to some European countries. The Netherlands has seen a 100% jump in energy costs, while in the U.K., energy prices are up 59% year over year.
IEA cautions that short-term consumer support should “not weaken incentives to reduce energy waste or slow the switch to low-carbon supply. The least efficient interventions are those that lower market prices for energy through direct fossil fuel consumption subsidies, indiscriminately applied to all customers. Such subsidies risk removing the incentives to improve efficiency and disproportionately benefit wealthier consumers who are large energy consumers.”
The heat pump report looks at more practical barriers: the still-high upfront costs of some efficiency technologies and a shortage of qualified installers. According to the report, financial incentives for heat pumps are now available in 30 countries, “covering more than 70% of today’s heating demand.” The IRA offers rebates of $2,000 to $8,000 for installing a heat pump, depending on household income.
IEA sees the global demand for full-time heat pump installers quadrupling by 2030 and suggests “incorporating heat pumps into existing certifications for heating technicians, plumbers and electric engineers, who have similar skills,” and offering financial incentives to “attract new workers to specialized training programs.”
The California Public Utilities Commission on Thursday allowed Pacific Gas & Electric to exit an enhanced oversight and enforcement process the CPUC created two years ago to prevent the utility from starting catastrophic wildfires, but commissioners warned they would use the process again if needed.
Before the unanimous vote on a resolution freeing the utility from enhanced oversight, commissioners emphasized that PG&E had entered the first step of the six-step process because of particular problems with its vegetation management practices, and that it was being released because it had met specific goals imposed by the CPUC.
“This is an illustration of how the enhanced oversight and enforcement process can be effectively used,” Commissioner Clifford Rechtschaffen said. “It worked here. It’s of course not a panacea. No one is suggesting it is, but it did work. It did address an important problem. So, we should not be bashful about using it again.”
“PG&E’s operational practices remain a serious concern for us, despite everything that’s been done, so we should continue to utilize this tool,” Rechtschaffen added.
Commissioner Genevieve Shiroma said she would vote for the resolution, but “I do want to be very clear about the limited scope of this resolution and my continued concerns with PG&E’s operations.”
Other speakers noted that a number of CPUC actions targeting PG&E remain in place. They include an independent safety monitor that reports every six months on the utility operations; specific metrics to evaluate PG&E’s safety performance and to implement the enhanced oversight and enforcement (EOE) process; and continuing investigations of PG&E intended to rein in unsafe practices.
The CPUC required PG&E to accept the EOE process as a condition of it approving PG&E’s bankruptcy organization plan in June 2020.
In September of that year, a leaning gray pine fell onto a PG&E line and started the Zogg Fire in rural Northern California, killing four people and leading to additional scrutiny of PG&E’s tree clearing efforts by the CPUC and the federal judge who oversaw PG&E’s criminal probation from the 2010 San Bruno gas explosion.
The CPUC used the process for the first and only time against PG&E in April 2021, passing a resolution that said the utility was not “sufficiently prioritizing its enhanced vegetation management based on risk.”
PG&E had ranked its power lines based on wildfire risk but failed to perform the majority of its enhanced vegetation management “or even a significant portion of work” on its highest risk lines, the CPUC said at the time. The commission ordered PG&E to submit a corrective action plan and to report every 90 days on its progress clearing high-risk lines of trees and overhanging branches.
Trees and branches falling onto PG&E power lines caused devastating fires over the past five years, including last year’s nearly 1 million-acre Dixie Fire, many of the Wine Country fires of 2017 and the Zogg Fire.
The Utility Reform Network and the CPUC’s Public Advocate’s (Cal Advocates) office argued in a joint filing that the Dixie Fire and other activities warranted placing PG&E into a higher step of the EOE process, with escalating oversight and penalties.
The Dixie Fire burned for more than three months in the northern Sierra Nevada and southern Cascade ranges of California. | U.S. Forest Service
“Of particular note was PG&E’s failure to identify and remove the damaged and decayed tree” that started the Dixie Fire,” TURN and Cal Advocates said.
“When the tree fell and contacted PG&E lines, the utility demonstrated no sense of urgency despite the history of extreme fire danger and poor access in the surrounding region,” they said, citing the findings of the California Department of Forestry and Fire Protection. “PG&E’s delayed response allowed the tree to remain in contact with energized lines for approximately 10 hours and was a direct and negligent factor in the ignition of the fire.”
The CPUC decided those concerns and others were outside the bounds of the current proceeding. They found that PG&E had met the requirements of its corrective action plan and shown that it had prioritized work on high-risk lines.
“PG&E’s goal was to perform more than 80% of its [enhanced vegetation management] work in the top 20% highest risk circuit protection zones in 2021,” Thursday’s resolution said. The utility exceeded that goal by completing 98% of its tree clearing in 2021 on its highest risk lines and met other CPUC criteria, allowing to leave the EOE process, it said.
