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November 15, 2024

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NYISO Monitor Proposes Capacity Pricing Overhaul

NYISO’s Market Monitoring Unit is recommending a new capacity market pricing structure that it says would lower costs and improve incentives for market participants making long-term investments.

Presenting highlights of the Monitor’s 2021 State of the Market Report to the Management Committee on Wednesday, Potomac Economics’ Pallas LeeVanSchaick said that the current processes for setting the installed reserve margin (IRM) and locational capacity requirement (LCR) “aren’t well coordinated with each other.”

“It is not possible for the NYISO to address the concerns discussed above in a piecemeal fashion,” the report says.

It proposes to institute an overhauled capacity market pricing structure, dubbed locational marginal pricing of capacity (C-LMP).

The market has just four fixed pricing regions, so when transmission constraints arise within one, it can lead to inefficient results. For example, in recent years the Monitor has observed bottlenecks going into Western New York capacity zones from Central New York zones, and from Staten Island into the rest of New York City, that are not represented by the current capacity zone configuration, the report said.

“We’ve seen that the lack of a treatment of constraints upstate has accentuated some of the fluctuations in the IRM and LCRs,” LeeVanSchaick said. In addition, “the LCR optimizer has a flawed objective function. … It’s not only that it doesn’t find an efficient solution; it’s also problematic because there are aspects of it [overly sensitive to small changes in inputs] that contribute to more volatility in the requirements.”

These constraints can be a barrier to entry for new resources, which are required to pay for transmission upgrades to receive capacity rights if they are not fully deliverable throughout their entire capacity region. Offshore wind and battery projects in Long Island were recently assigned costly deliverability upgrades that are not required of incumbents that are limited by the same constraints, the report said.

Potential New Entry and Retirement Trends (Potomac Economics) Content.jpgPotential new entries include intermittent renewables principally motivated by REC solicitations and potential retirements include a number of dual fuel peaking units leaving through 2025. | Potomac Economics

The report says C-LMP would:

  • “produce more granular prices that are better aligned with NYISO’s planning criteria;
  • be more adaptable to changes in resource mix and transmission flows;
  • remove unnecessary barriers to new entry in the interconnection process;
  • be less burdensome for the ISO to administer; and
  • reduce the overall costs of maintaining reliability.”

“There are some emerging concerns that we see with potential new entry and retirements,” LeeVanSchaick said. “On the new entry side, of course, it’s a lot of intermittent renewables that are principally motivated by [renewable energy credit] solicitations, and on the potential retirement side you have of course Indian Point 3 in 2021. But then you’ve also got a number of dual-fuel peaking units leaving as well through 2025.”

Price Trends

All In Price Trends (Potomac Economics) Content.jpgAll in price trends | Potomac Economics

LeeVanSchaick also discussed pricing trends over the last few years. Gas prices are clearly driving energy prices, but they are not the single biggest factor, he said.

“We saw a big increase from 2020 to 2021, not only [because of] gas prices but certainly the Indian Point nuke retirements that are ongoing,” LeeVanSchaick said. “Between those two years it certainly is contributing to the higher prices in Eastern New York. We [also] saw more planned and forced transmission outages in 2021.” Last year also saw extra high levels of forced transmission outages into Long Island.

“Lastly we saw the return to normal consumption patterns, or more normal, in 2021 than they were in 2020 from COVID,” LeeVanSchaick said. “We saw higher gas prices, higher electric demand [and a] very large reduction in capacity prices in New York City.”

EAS Market Recommendations

The Monitor also recommended changes to the energy and ancillary services markets, including to compensate reserve providers that increase transfer capability by allowing use of higher line ratings; increase the reserve demand curve for statewide requirements to reduce out-of-market actions and reflect risk to load; eliminate offline fast-start pricing, which undermines incentives for flexible resources; and model transient voltage recovery (TVR) constraints on the East End of Long Island in the energy market.

Increased penetration of intermittent or variable generation will accentuate the need for these changes, the report says, and the evolving resource mix will increase the need for longer lead time reserves to address net load forecast uncertainty.

“This is potentially reserves that don’t have to be 10 or 30 minutes; they can be potentially just available in an hour, two hours, three hours or four hours; but it would be in a time frame that would allow the NYISO to meet what are going to be increasing requirements for reserves to deal with that load forecast uncertainty,” LeeVanSchaick said.

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Climate Change Impacting Northwest Streamflows, Hydro Planning

Climate change will have a mixed impact on hydroelectric output in the Pacific Northwest, resulting in wetter winters and springs and drier summers, according to the Bonneville Power Administration.

The changing weather patterns are altering the way the federal power marketing agency plans for the future, prompting it to shorten its look-back period for developing long-term forecasts, Erik Pytlak, BPA’s lead meteorologist, said last week.

“BPA has been looking at climate change for over a decade now, and we have been anticipating for some time that, as the climate continued to gradually warm, what would start happening eventually is it would start impacting our streamflows,” Pytlak said during a WECC summer readiness workshop May 24.

The agency has performed two studies showing that — unlike in the Southwest — the Pacific Northwest will not experience a decrease in streamflow volumes if climate change continues.

“The entire WECC tends to get lumped in as the same climate response, and that’s just not the case. … We have a very varied climate in the West, and so with climate change the responses are going to be different as well as you go from north to south,” Pytlak said.

Pytlak pointed out that the PRISM Climate Group at Oregon State University, which updates its 30-year weather data set every 10 years, recently dropped the relatively cool 1980s and added the warmer 2010s. The group’s data shows that much of the country has warmed 0.5 degrees to 1.5 degrees Fahrenheit in the last 10 years.

PRISM data also indicates that the Northwest’s “precipitation signal” has been different from the rest of the West.

“In the last 10 years or so, while the Southwest on an annual basis has gotten drier, the Pacific Northwest has actually gotten a little wetter. And in the key snowpack areas, it is actually notably wetter, particularly in the Cascades of Washington, parts of Montana and British Columbia,” Pytlak said.

Joint climate models produced by BPA, the U.S. Army Corps of Engineers and the federal Bureau of Reclamation show winters in the Northwest getting wetter over the next 20 to 30 years, with the most increased precipitation farther north in Canada, he added.

An Era of ‘Non-stationarity’

BPA predicts that the most “profound change” will be seen in the region’s streamflows, with higher fall, winter and early spring flows by the 2030s, and peak runoff coming earlier in the spring. The latter assumption is based on the fact that peak spring runoff has already shifted to several days earlier since the 1980s — a “statistically significant” amount, according to Pytlak. The agency also sees the likelihood for more extreme flood events in the colder months. 

Stream flows in June, normally a peak period in the Northwest, are likely to decline, followed by a longer period of lower summer flows as the region’s already dry summers become hotter and drier and electricity use increases because of cooling demand.

“We have seen a slight decrease in summer flows that is not statistically significant yet, but it is close, and you can kind of guess that, if these [climate-driven] things continue, and that shift does continue to occur, that statistical significance will show up here relatively soon,” Pytlak said.

The region’s climate is now in an era of “non-stationarity,” according to Pytlak, “where the past does not necessarily predict the future” with respect to weather. 

In response, BPA has already adopted a shorter period-of-record for the ensemble streamflow projection runs it uses for its medium-term planning, switching from 1948-2015 to 1981-2018. It has also updated the long-term temperature data it uses to forecast loads, moving from 1970-2005 to 2005-2019.

For future long-term planning, BPA is proposing to base its stream flow assumptions for hydroelectric forecasts on only the most recent 30 years of data (1989-2018), rather than looking back over the last 90 years.

As a result, BPA planners will expect to have more generation available from December to March — a period of potentially decreasing demand caused by warmer conditions — and less available from July to September, when demand is expected to rise. 

“What the most recent 30 years [of data] is starting to show, if we were to switch to that, it should help us keep up with what the climate projections are showing over the next 30 years, which is an increasing amount of water in the wintertime and early spring, which should equate to more generation. But the trade-off is a longer period of low summer flows in that July and August period, which means lower potential with generation going forward,” Pytlak said.

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Texas RE Knocks AEP for Communication Breakdown

FERC on Friday approved the Texas Reliability Entity’s settlement with American Electric Power (NASDAQ:AEP) for communication lapses during a 2018 load loss incident.

The agreement was the only violation filed in NERC’s public spreadsheet notice of penalty for April (NP22-24), though the organization also filed a separate non-public spreadsheet NOP in the same docket, its normal practice when dealing with violations of the Critical Infrastructure Protection standards. FERC said in Friday’s filing that it will not further review the settlements, leaving their judgments intact.

Texas RE’s settlement with AEP concerns requirement R8 of NERC reliability standard TOP-001-3 (Transmission operations), which mandates that a transmission operator inform its reliability coordinator, relevant balancing authorities, and other TOPs of “operations that result in, or could result in, an emergency.” Transmission Operators must be able to show that they have done so using operator logs, voice recordings, transcripts, electronic communications, or other evidence.

The regional entity discovered potential issues with TOP-001-3 during a compliance audit in 2019. Initially auditors attributed the noncompliance to requirement R1, but after further investigation determined that the utility was in violation of R8.

System Already Under Strain

The issue began on March 20, 2018. At the time several transmission lines serving the Del Rio, San Angelo and Mesa Verde area were out of service for planned construction and maintenance. AEP had also suffered a forced outage on another transmission line, meaning that only two 138-kV lines were available to serve the area that morning.

Beginning shortly before 11 a.m., AEP’s RC noticed several thermal limit exceedances in its real-time contingency analysis (RTCA). A generation solution was not available because the wind generation in the area was declining. AEP, the RC, and a neighboring TOP spent the next few hours trying to address the exceedances by bringing transmission facilities back online, while AEP also worked to raise voltage by activating a number of capacitor banks.

During these activities, AEP was also conducting its own RTCA in parallel to the RC’s. This is not required by NERC’s standards, but AEP does it voluntarily “as an additional check on its system,” NERC said. According to Texas RE, AEP’s RTCA “began to indicate a consistent, non-converged solution” around 12:20 p.m., but it failed to communicate this information to the RC during any of their subsequent calls at 12:26, 2:08, and 2:24 p.m. At 2:33, smoke from a grass fire led to a “local voltage collapse” and caused the loss of about 140 MW of load.

Texas RE said this failure to communicate AEP’s RTCA results to the RC constituted a breach of the standard, since it deprived the RC of “complete operation about the actual operations” of the utility’s system, though the RE acknowledged that the communication failure was not a cause of the underlying incident. It blamed the violation on inadequate processes and training: While AEP had protocols in place for communicating RTCA results to the RC, there was no specific procedure for operators to do so.

Although AEP’s violation occurred during a load loss event, Texas RE declined to press for a monetary penalty against the utility, saying that the communication breakdown did not specifically cause the loss of load. The RE also observed that AEP’s RTCA was voluntary and that the load loss would still have occurred if it hadn’t run the RTCA.

Texas RE noted that AEP has engaged in mitigating activities as well, including updating its processes to account for communicating issues with its RTCA to the RC and adding time requirements for doing so, along with training relevant staff on the new requirements. In addition, the utility conducted an extent of condition review of its protocols for communication with the RC that detected no further potential violations. The RE verified the mitigation steps were completed in January 2021.

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Michigan House OKs Nuclear Feasibility Study

LANSING, Mich. — Legislation requiring a study on the future feasibility of nuclear power in Michigan is in the Senate after being approved on a 85-20 bipartisan vote in the House.

The bill (HB 6019) was assigned to the Senate Energy and Technology Committee May 24 but has not been scheduled for a committee meeting.  A spokesperson for bill sponsor Rep. Graham Filler (R) said he had not been able to speak with Committee Chair Sen. Dan Lauwers (R) about the bill. Lauwers could not be reached for comment.

The measure moved as Entergy Nuclear (NYSE:ETR) shut down the Palisades nuclear plant May 20 after 50 years of operations. Entergy has agreed to sell the plant to Holtec Decommissioning International.

Last month, Gov. Gretchen Whitmer (D) called for the use of federal funds to help keep the plant in Covert Township, on the shores of Lake Michigan, open. (See Federal Aid Likely Too Late to Save Palisades, Diablo Canyon Nukes.)

Michigan Public Service Commissioner Katherine Peretick told Bridge Michigan that the state is in serious discussions with a company interested in buying Palisades and continuing to run the plant. She would not identify the company. She said such an agreement would be “a huge deal for the state.”

HB 6019 requires the PSC to hire a firm to assess the state for the possibility of adding nuclear power facilities and to report back in 18 months. The report would look at potential environmental affects, land siting issues, workforce training, the possibility of small modular reactors, workforce education and training, potential job creation, environmental justice issues, and the effect on state tax revenue.

The PSC has not taken a formal position on the bill. But a commission spokesperson said PSC chair Dan Scripps has said the commission will undertake the study if the legislature appropriates funds for the review.

In introducing the bill, Filler said Russia’s invasion of Ukraine proved to him the necessity that the U.S. and Michigan be energy self-sufficient.

Filler also said when he announced the bill that nuclear technology now allows for smaller reactors and more safety features and Michigan should investigate whether those are right for the state.

Palisades’ closure will make it more difficult for the state to meet its goal of becoming carbon neutral by 2050 by eliminating one of the state’s largest sources of clean electricity.

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FERC OKs New Queue Priority for MISO, SPP Seams Studies

FERC on Friday approved MISO’s and SPP’s plan to assign a new prioritization of projects to study in their respective interconnection queues.

The new priority will employ a “first-ready, first-served” approach in which the RTOs study the projects that are primed for interconnection first, rather than based upon the order in which they entered the queue (ER22-1533).

FERC said the new arrangement will provide more certainty by establishing a rank when the projects pass the queues’ first decision points instead of when they submit an interconnection request (SPP) or when they pay study fees (MISO).

The commission said the queues’ first decision-point deadlines are an appropriate touchstone because they’re “a point in time after most delays in the interconnection study processes occur.” The new priority should “reduce the possibility that lower-queued cycles or clusters will not have affected systems information from higher-queued cycles or clusters when major commercial decisions are made,” FERC said.  

The priority will be used for the RTOs’ system impact studies, affected system studies, and cost assignments for network upgrades. The grid operators study each other’s nearby IC generation projects for potential effects that might require transmission upgrades in their footprints. MISO and SPP assign network upgrades costs identified in interconnection studies based on queue priority.

The grid operators said their ongoing joint targeted interconnection queue (JTIQ) transmission planning study compelled them to reexamine queue priority to ensure higher-queued generation projects aren’t holding up more prepared but lower-queued projects. (See Midwest Energy Policy Series Addresses JTIQ Projects.)

The new approach is effective with the 2020 cycle of MISO interconnection requests and the 2017 cluster of SPP requests.

The RTOs said their current practice “can lead to situations where interconnection customers are required to make significant commercial decisions about the viability of their projects without knowing what network upgrade costs they will be assigned after projects with higher queue priority have been studied.”

EDF Renewables supported the change, saying that it is “often faced with having to execute a generator interconnection agreement 12 to 18 months prior to receiving final affected system cost responsibility.”

Invenergy said the new prioritization will improve cost certainty for IC customers but said the effective date leaves out customers that entered the MISO queue in 2018 and 2019 and are still awaiting SPP study results. (See CGA Requests MISO Help for Late-stage Interconnection Projects.)

But FERC said the “proposed transition point appropriately respects the expectations of existing interconnection customers while improving the affected system study process for new interconnection customers.” It declined Invenergy’s request to include the 2018 and 2019 MISO queue cycles in the new ranking.  

The change comes as MISO and SPP are proposing to do away with their affected system study process and instead conduct more frequent interregional studies like the JTIQ to get more generation online near their seams. (See SPP, MISO Propose Scrapping Affected System Studies.)

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Western States Play Catch-up on Community Solar

As the Biden administration has set a goal of expanding nationwide community solar capacity to 20 GW by 2025, several Western states are pursuing initiatives that could encourage community solar development.

The New Mexico Public Regulation Commission (PRC) in March adopted rules to launch a community solar program.  A yet-to-be-appointed program administrator could start soliciting community solar projects as soon as this summer.

The Arizona Corporation Commission this month ordered Arizona Public Service (APS) to form a working group to help create a community solar program. The commission expects to vote on a proposed program in November.

And on Wednesday, the California Assembly passed AB 2316, which would require the CPUC to open a proceeding by March 2023 to create a community renewable energy program. The bill now heads to the Senate.

Despite its abundance of solar resources, much of the West has lagged when it comes to community solar programs, Matt Hargarten, vice president of campaigns at the Coalition for Community Solar Access (CCSA), told NetZero Insider. Even though Colorado was a pioneer in community solar, other states such as New York, Massachusetts and Florida are taking the lead in developing new solar capacity, according to data from the National Renewable Energy Laboratory.

New York and Massachusetts are attracting private capital to community solar by providing long-term certainty about the programs, Hargarten said.

But the recent actions in California, Arizona and New Mexico indicate the West might start catching up.

“We’re really optimistic about some of the progress the West has been making,” Hargarten said.

Solar Sharing

Community solar offers a way for people who are unable to install their own rooftop solar to subscribe to off-site renewable energy projects. Subscribers receive credits on their electric bills based on their share of the project’s generation.

According to CCSA, community solar projects are smaller-scale installations often built on private land, former industrial sites or landfills. CCSA said that, nationwide, community solar generates more than 5 GW of power.

The National Community Solar Partnership (NCSP), a U.S. Department of Energy program, defines community solar as projects to which multiple entities subscribe through voluntary action. NCSP doesn’t set a size limit on what constitutes community solar.

At the end of 2020, community solar projects across the U.S. had a combined capacity of about 3,253 MW. At that time, community solar encompassed 1,600 projects in 39 states and Washington, D.C., according to an NREL report last year.

About 72% of the community solar capacity was in four states: Minnesota, Florida, Massachusetts and New York.

State policy is one factor influencing community solar development. Twenty-two states and Washington, D.C. have passed laws to enable community solar, NREL said. Those states have typically allowed virtual metering that lets community solar subscribers receive benefits from their participation.

While enabling legislation can help pave the way for community solar, other state policies may slow deployment, DOE said in a summary of lessons learned. That includes limits to net metering and barriers to third-party development.

DOE set a nationwide goal in October of developing enough community solar to power 5 million homes by 2025, or about 20 GW of capacity. Meeting that target would save customers an estimated $1 billion on their energy bills, an average savings of about 20%.

California Bill Advances

California’s Assembly passed AB 2316 on a 47-22 vote.

The bill, by Assemblyman Christopher Ward (D), would instruct the CPUC to establish a community solar program in which at least 51% of subscribers are low-income. The bill asks the CPUC to minimize impacts of the program on non-subscribing ratepayers.

Although customers of the state’s investor-owned utilities have access to existing community solar programs, such as the Green Tariff Shared Renewables (GTSR) program, participation in the programs is low, according to an analysis of AB 2316.

Supporters of the bill say a new community renewable energy program is needed because GTSR is “crippled by outdated statutory constraints,” the bill analysis said. Those include financing difficulties and a lack of energy storage.

“Moreover, the coalition [of supporters] notes a properly structured community renewable energy program will drive further renewable energy development, potentially aiding in system reliability,” the analysis said.

Investor-owned utilities oppose the bill due to concerns that the customer bill credit will shift costs, the analysis said.

Arizona Program

The Arizona Corporation Commission (ACC) on May 18 directed APS to form a working group to help with the creation of a community solar program. The commission will consider the proposed program in November and, if approved, it would be implemented within six months.

The directive came as an amendment to an order approving APS’ renewable energy standard implementation plan for 2022 to 2026. The amendment, proposed by Commissioner Anna Tovar, was approved on a 4-1 vote with Commissioner Sandra Kennedy opposed.

The working group will meet at least every other week starting in June. In designing the APS community solar program, the working group will look at other successful programs, such as Xcel Energy’s program in Minnesota. ACC also wants the program to attract long-term private sector investment.

The program will set aside a percentage of capacity for low-income customers. The working group may also consider community wind projects or including battery storage with community solar projects.

“This is a really big first step in Arizona,” said Autumn Johnson, executive director of Arizona Solar Energy Industries Association (AriSEIA).

Johnson said AriSEIA plans to participate in the working group meetings. Others who are interested in participating are asked to contact Tovar’s office.

New Mexico Program

In New Mexico, state lawmakers last year passed Senate Bill 84, the Community Solar Act. The state’s PRC adopted rules in March to implement the law.

In an initial three-year phase of the program, community solar will be capped at 200 MW across the state’s three investor-owned utilities, with a 5 MW cap for individual projects.

Native American nations, tribes and pueblos are exempt from law, but may own or operate solar projects in New Mexico.

The law requires each community solar project to have at least 10 subscribers. Up to 40% of a project’s capacity may go to a so-called anchor tenant. At least 40% of capacity must be available in subscriptions of 25 kW or less, and at least 30% of capacity must be reserved for low-income subscribers and related service organizations.

The PRC is in the process of finding an administrator for the program. The commission issued a request for proposals in April, with a May 12 due date, and expects to award a contract for the administrator position by July 1.

The PRC will collect data on the program and submit a report to the Legislature by Nov. 1, 2024. More information on the program is here.

Federal Initiatives

DOE announced several of its own initiatives in January aimed at meeting the 2025 community solar goals.

A new collaborative among states will bring together state energy officials and program administrators to provide education and share best practices on community solar. Another initiative is aimed at giving community solar developers better access to project financing.

And a $2 million NCSP technical assistance program will help accelerate implementation of community solar while improving the performance of programs and projects. The technical assistance is free to NCSP partners.

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NYISO Management Committee Briefs: May 25, 2022

Joint Board/MC Resumes In-person

Following two years of remote meetings during the COVID-19 pandemic, the NYISO Board of Directors will resume in-person interactions with the Management Committee at their annual joint meeting scheduled for June 13, CEO Rich Dewey told the MC on Wednesday.

“This is really an important meeting for our Board of Directors to hear directly from market participants what the key concerns are; what their issues are,” Dewey said.

Discussion will focus on the ISO’s Grid in Transition initiative and what specific challenges market participants are encountering, Dewey said.

While many market participants have expressed intent to attend the event at the Sagamore Hotel on Lake George, COVID infection rates continue to be high in the capital region and New York state generally, so the ISO has procured a larger space than usual to allow for greater distance among participants and is planning most social activities for outdoors, he said.

“We’re going to send out some information encouraging people not to attend if they’re experiencing any symptoms and just be smart about taking care of themselves and each other as we get ready for an event like this,” Dewey said. “We do recognize that there are some individuals who might want to participate remotely, and we’re looking at how we might be able to accommodate that.”

Dewey closed his report with a reference to the March MC meeting, where he had briefed the participants on the ISO managing some atypically high staff vacancy rates. (See “Staffing Recruitment Improves,” NYISO Management Committee Briefs: March 30, 2022.)

“We’ve had two good recruiting months in a row, and we’ve been able to identify some really top talent that we brought into the organization, so the vacancy rate is down in the range of 9%, which is still a little bit higher than our budget, but we do have a healthy queue of individuals we plan to onboard in the next month,” Dewey said. “At least from a recruiting standpoint, things are trending in the right direction.”

Adequate Capacity for 2022 Summer

NYISO foresees having adequate generating capacity margins for normal weather conditions this summer, without emergency operating actions, but it would require emergency operating actions to varying degrees depending on the severity of extreme weather conditions, Vice President of Operations Aaron Markham reported.

“From a statewide perspective, we expect a surplus of about 2,000 MW for a baseline forecast without operating emergency operating actions, and that dwindles to an approximately 2,300-MW shortfall when we go all the way to the extreme 99-1 [once in 100 years] forecast conditions,” Markham said in presenting the Summer 2022 Capacity Assessment.

Capacity Assessment (NYISO) Content.jpg2021 and 2022 Summer Capacity Assessment and Comparison | NYISO

 

Last winter the ISO started including a 99-1 extreme forecast in its capacity assessment and plans to continue to do so to advise stakeholders of what that looks like, he said.

“We do have approximately 3,300 MW of emergency [resources], so when we take into account those, we do show positive margin for all of forecast conditions even up to 99-1 on a statewide basis,” Markham said.

Projected capacity margins for normal and extreme weather conditions without emergency operating actions:

  • 1,918-MW capacity margin for 50-50 peak forecast conditions
  • -382-MW capacity margin for 90-10 peak forecast conditions
  • -2,287-MW capacity margin for 99-1 peak forecast conditions

Projected capacity margins for normal and extreme weather conditions with up to 3,294 MW of emergency operating actions:

  • 5,212-MW capacity margin for 50-50 peak forecast conditions
  • 2,912-MW capacity margin for 90-10 peak forecast conditions
  • 1,007-MW capacity margin for 99-1 peak forecast conditions

The ISO is continuing to monitor energy supplies and prices based on global markets and events, and the weekly fuel survey process indicates that the prices for fuel will be higher this summer than in recent history, Markham said. Oil inventories for dual-fuel-capable units are lower than last year but still sufficient for starting the summer.

“We’ve done our normal coordination with the transmission and generator maintenance outages to ensure that, to the extent possible, any outages scheduled over the summer can be recalled on short notice to make sure that the resources are available to meet hot weather needs,” Markham said.

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MISO Customers Ask for Penalty-free Load Reductions

MISO transmission customers filed a complaint with FERC last week that the grid operator should allow its customers to reduce their load without penalty to lessen the possibility of summer blackouts.

The Coalition of MISO Transmission Customers (CMTC) said in a filing that the load reductions will help address a 1.2-GW capacity shortage following MISO’s 2022-23 Planning Resource Auction for its Midwest subregion. The shortfall triggered a $236.66/MW-day cost of new generation entry clearing price for MISO Midwest. (See MISO’s 2022/23 Capacity Auction Lays Bare Shortfalls in Midwest.)

The RTO has said the capacity deficit might force it to order temporary, controlled load sheds this summer and it predicts insufficient firm resources to handle summer peak forecasts under typical demand. The grid operator’s management has also said members must build new generation or risk future blackouts.

CMTC argued that when the capacity auction fails to procure enough supply, it should allow some load to exit the system, bolstering reliability by trimming demand while also avoiding the steep capacity prices.

The group said it has members “actively assessing the need to reduce operations” by more than 200 MW at least through May 31, 2023.

“A significant factor in the customer’s operational decisions is the ability of the customer to avoid the PRA charges that it would otherwise incur,” CMTC told FERC.

The group argued that MISO’s tariff shouldn’t regard PRA charges as “unavoidable and sunk” for load. The group said the tariff is unjust and unreasonable because it doesn’t contain any options for load to leave the system when it faces threats to resource adequacy.

“Because the exit of the customer’s load and possibly other loads would provide reliability benefits to MISO as MISO addresses looming resource adequacy issues in its footprint and the shortage of capacity procured in the 2022/2023 PRA, load should have an opportunity to exit the system without being charged,” CMTC wrote. “MISO’s tariff should be revised to enable MISO to create an orderly process in which load could nominate to exit the MISO system for the remainder of the planning year, in exchange for avoiding PRA charges, to help MISO address the insufficiency.”

The group suggested that MISO could allow load exits equivalent to the 1.2-GW auction shortage and stop accepting any further load reductions once it resolves the supply and demand imbalance.

CMTC asked FERC for expedited treatment of its complaint, requesting a response no later than early July. It also said it had been in touch with MISO about its proposal before it filed the complaint.  

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California, New Zealand Forge Climate Pact

California Gov. Gavin Newsom and New Zealand Prime Minister Jacinda Ardern on Friday announced an agreement in which their governments will work together on climate issues such as transportation electrification and climate-smart agriculture.

The aim of the agreement is “to accelerate our efforts, to learn from each other,” Newsom said. “We need each other.”

Ardern said it was “common sense” to collaborate with likeminded partners to meet common goals.

“We both aim to achieve net-zero carbon emissions by the middle of the century,” Ardern said. “This agreement means we’ll work together to share expertise and experience and collaborate on projects that help meet each other’s targets.”

Newsom and Ardern made the announcement during an event in the New Zealand garden at Golden Gate Park in San Francisco.

The agreement is contained in a memorandum of cooperation between the two governments.

The transportation sector is the largest source of greenhouse gas emissions for California, and the second largest GHG source for New Zealand, the document noted. And both jurisdictions are interested in reducing GHG emissions from the agricultural sector.

The agreement creates a “flexible framework” for the two parties to cooperate on issues of environmental protection, natural resources and climate change.

Some of the activities specified in the agreement are sharing best practices and possible solutions in zero-emission transportation market development and exchanging ideas on stimulating innovation in the renewable energy and clean tech sectors.

The California Environmental Protection Agency and the New Zealand Ministry of the Environment will coordinate implementation of the agreement, which is effective for five years but may be extended.

The agreement announced Friday isn’t the first collaboration between California and New Zealand.

During the 26th U.N. Climate Change Conference of the Parties in Glasgow, Scotland, in November, the governments of California, Quebec and New Zealand agreed to work together on carbon markets and other climate action. (See Calif., Quebec, NZ Pledge Cooperation on Climate, Carbon Markets.)

On Friday, Newsom said partnerships such as the one with New Zealand took on added importance during the Trump years when “you couldn’t rely on the federal government.”

“It became even more important that we sign memorandums like we’re signing here today with likeminded jurisdictions around the world,” the governor said.

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Proposed NJ Solar REC Program Wins Initial Support

A New Jersey straw proposal to award solar renewable energy credits (SRECs) through annual procurements, with incentives for projects incorporating storage, won initial support from stakeholders in a Board of Public Utilities meeting May 26.

Representatives of the Division of Rate Counsel, the Solar Energy Industries Association (SEIA) and a solar developer expressed broad support for the Competitive Solar Incentive program (CSI), developed by BPU staff and Daymark Energy Advisors (Docket QO21101186).

The CSI program is one half of the Successor Solar Incentive program adopted by the BPU in July 2021 to implement the Clean Energy Act of 2018 and the Solar Act of 2021 and double the state’s solar footprint by adding 3,750 MW of new capacity by 2026. (See NJ Sees Solar Growth in Reduced Incentives.)

The other half of the BPU’s initiative is the Administratively Determined Incentive (ADI) program, which offers a fixed incentive for net-metered residential projects, net-metered nonresidential solar projects of 5 MW or less and community solar programs.

The 2018 law directed the BPU to redesign the state’s solar incentives and close the Legacy SREC program once it reached 5.1% of the power sold, a threshold attained on April 30, 2020. (See  Solar Subsidy Program Ending in New Jersey.)

As required by the 2021 law, the CSI program will use competitive procurements to target an average of 300 MW of new solar projects annually. All grid supply projects — front-of-the-meter projects that sell into the PJM wholesale market and net-metered non-residential projects greater than 5 MW — will be eligible to participate. (See NJ Solar Proposal Seeks More Market Competition.)

Five Tranches

The straw proposal recommends that the CSI program be structured as five separate procurement tranches to ensure that a range of types of competitive solar projects qualify to receive payments (called SREC-IIs) despite their different project cost profiles:

  1. Basic Grid Supply: All grid supply projects that do not qualify for one of the other tranches below (e.g., greenfield solar projects).
  2. Grid Supply on the Built Environment: Solar installed on rooftops, raised carports or similar installations.
  3. Grid Supply on Contaminated Sites and Landfills: Any currently contaminated portion of a property on which industrial or commercial operations were conducted and a discharge of contaminants occurred; or a properly closed sanitary landfill facility.
  4. Net-metered Nonresidential Projects above 5 MW:   Under the Solar Act of 2021, net metered solar projects of 5 MW or less qualify for inclusion in the ADI program.
  5. Storage Paired with Grid Supply Solar.

Projects eligible to compete in Tranche 2 or 3 would automatically also be eligible for Tranche 1. If some of the Tranche 1 awards go to projects that qualify in the specialized tranches, they would be removed from consideration in the subsequent tranches.

Year 1 Target Procurements (NJBPU) Content.jpgProposed year 1 target procurements by tranche | NJBPU

Price Premium to Reduce Open Space Development

The 2021 law requires that the “development of grid supply solar should be directed toward marginal land and the built environment and away from open space, flood zones and other areas especially vulnerable to climate change.”

The straw proposal said that considering the projects in separate tranches “recognizes that NJBPU may choose to select these projects even if they come at some premium over greenfield solar development, while establishing a competitive structure to set an appropriate market price for these projects.”

NJ Solar Projects (NJBPU) Alt FI.jpgAs of March 2022, there are 76 New Jersey solar projects totaling 1,583 MW active in the PJM queue. Of these, 37 (861 MW) have at least completed a system impact study. | NJBPU

Staff noted that solar on contaminated sites and landfills might face higher costs of mitigating contamination and securing permits but that encouraging projects on such sites would reduce development pressure on open space. The state had 230 MW of solar operating on landfills and brownfields as of the end of February.

Staff said it is uncertain how many qualifying large net-metered projects are likely to compete in the CSI program because of the “unpredictability of a competitive procurement” and limitations on the number of appropriate sites.

“However, the [Transition Incentive program that succeeded the Legacy program] received a robust response from large (> 5 MW) net-metered projects of approximately 120 MW, suggesting that there could be significant potential participation by large net-metered projects,” staff said. “In fact, net-metered projects may have some inherent advantages in a competition against wholesale projects, since they already receive some degree of subsidy, compared to wholesale projects, in the form of net metering credits higher than the wholesale cost of power.”

To ensure the continued diversification of resources as required by the 2021 law, “it would not be desirable to risk awarding all CSI program capacity to net-metered projects,” staff said. “By breaking these projects out into their own tranche, NJBPU will be able to award SREC-IIs to the most competitive net-metered projects, while ensuring that there is still room in the program for other types of projects.”

Storage Adder

Although the 2018 law requires New Jersey to achieve energy storage goals, the state currently lacks an independent energy storage program.

The straw proposal notes that solar projects with storage can obtain higher capacity ratings in PJM markets and are able to arbitrage by storing energy produced when wholesale prices are low and selling when they rise.

Staff said the dedicated storage tranche in the CSI program would provide a storage adder to solar projects that qualify for SREC-IIs in competition with other solar projects and also offer storage competitive within the storage tranche.

Solar-plus-storage projects would make two-part bids: a solar-only SREC-II price and a storage adder price. The project would first be considered as a solar-only project; if it receives an award, its proposed storage adder price would then be considered separately in the storage tranche.

The storage incentive would be limited to four times the total MW of the solar project (e.g., 4 MWh of storage per MW of solar capacity).

Bidding, Maturity Requirements

Staff recommended adopting project qualification and maturity requirements to ensure that selected projects are likely to reach commercial operation.

To prequalify, projects would need to demonstrate “a sufficiently advanced position in the PJM queue (taking into account the realities of the ongoing PJM interconnection reform process)” or a comparable interconnection position in a state-jurisdictional queue. Net-metered projects would be required to show conditional approval of their utility interconnection request.

Projects would be required to pay a $1,000/MW nonrefundable solicitation participation fee and achieve commercial operation three years after registration in the program.

“Using prequalification through queue position would avoid having to engage in a more complex, subjective process relating to permitting, securing right of ways or evidence of public support,” staff said.

Staff proposed resources be paid on a price as bid basis with confidential project cost caps. Among the 34 questions staff seeks input on is whether the SREC-IIs should be fixed or indexed to wholesale energy prices.

Staff recommended all tranches be included in a single procurement to be held once per year. “However, some adjustments to this schedule may be appropriate to coordinate with the implementation of PJM’s new queue procedures, should these be approved,” staff said.

Comments

During Thursday’s hearing, Sarah Steindel, of the state’s Division of Rate Counsel, expressed support for the tranches. “We think that the proposed five tranches are a sufficient number to recognize the legislature’s preferences for certain types of projects, but yet, each tranche is still broad enough to create robust competition.”

She said the Rate Counsel “strongly support[s] the proposal to utilize a confidential bid price cap for each tranche” but was still evaluating the proposal for solar-plus-storage. “We have some concern that … some of the tranche targets may be aggressive, and we recommend that the board consider what options it may have should some or all of the specialized tranches go unfilled.”

Speaking on behalf of SEIA, Nitzan Goldberger of Borrego Solar Systems, was also supportive.

“A pay as bid system, coupled with strong project maturity requirements for bidders, should avoid overpayment to bidders and avoid windfall [profits], minimize project attrition and ensures that the awarded projects reach completion,” she said.

Matt Tripoli, of solar developer CS Energy, echoed Steindel’s concerns that some of the tranches might go unfilled and suggested the BPU consider annual rather than monthly MW limits for the storage adder. We’re “glad to see that Daymark and the BPU are drawing lessons from some of those other states and how they’re constructing this program,” he said.

Fred DeSanti, the executive director of the New Jersey Solar Energy Coalition, said that by adopting a two-step process for storage-plus-solar, “we may be losing some economies because a lot of times when we’re pricing projects … if you do it on a joint basis, you can achieve some lower [costs] than you might by doing it independently.”

Feedback Sought

Staff will accept comments on the straw proposal until 5 p.m. June 20.

The BPU will hold two additional stakeholder meetings: