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September 30, 2024

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FERC Allows ISO-NE 1-month Delay for FCA 17

FERC on Friday agreed to allow ISO-NE to adjust the schedule for next year’s Forward Capacity Auction 17, which was pushed back because of uncertainty surrounding Killingly Energy Center.

In February, the RTO had asked the federal agency to allow it to ignore any dates set for FCA 17 in the grid operator’s tariff or other operating documents, and instead publish a new schedule (ER22-1053).

NEPOOL stakeholders and the New England Power Generators Association supported the ISO’s filing, and FERC signed off on the change.

“The proposed revisions enable ISO-NE to provide market participants with information (such as, for example, final FCA 16 clearing prices) that facilitates their ability to meet the requirements for participating in FCA 17 per the tariff,” FERC commissioners wrote.

The grid operator has proposed a pushed back FCA 17 schedule, which would see next year’s auction take place in March, a month later than the typical February auction.

FCA 16’s final auction results were delayed several weeks by confusion over whether the gas-fired Killingly plant could participate in the auction, but were published in March after it was omitted. (See Highlights from FCA 16: No New Gas, No Big Storage.)

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West Coast Wind Faces Big Challenges

SAN FRANCISCO — Offshore wind is expected to progress steadily in California over the next decade, but panelists at last week’s Pacific Offshore Wind Summit in San Francisco expressed concern that the infrastructure needed to support floating wind farms could lag development plans.

New to offshore wind, the West Coast will need to build high-voltage transmission lines, port facilities and assembly areas for massive wind turbines. The region lacks a trained workforce for offshore wind and a dedicated, on-time supply chain. And it still must develop a strategic plan, as required by last year’s California Assembly Bill 525, to make offshore wind part of its 100% clean energy initiative.

Eli Harland 2022-03-29 (RTO Insider LLC) FI.jpgEli Harland, California Energy Commission | © RTO Insider LLC

“We’re going to develop a strategic plan under AB 525, but it will only mean anything to the industry and to the climate if there’s a way to implement that strategic plan,” Eli Harland, adviser to California Energy Commission member Kourtney Vaccaro, said in a panel on regional cooperation.

“That’s not going to get done with a couple of people in the Energy Commission pushing it forward,” Harland said. “That’s going to take a resource commitment that, if we don’t make it, we’re going to find ourselves really behind when the industry takes off, and we’re not going to be ready for construction and operation.”

Stakeholders at the conference said a best-case scenario would be for the infrastructure work to happen in the years between a pending lease auction and the start of construction.

The West Coast’s first offshore lease auction will be held later this year for two areas off Northern and Central California, Amanda Lefton, director of the Bureau of Ocean Energy Management (BOEM) told the audience, prompting spontaneous applause.

“Let me be clear,” Lefton said. “We are going to hold a statewide offshore wind energy lease sale in California this year. The sale will offer up wind energy areas in the northern and central coasts, and these areas will enable the buildout of significant new domestic clean energy over the next decade or more. This will also help California reach its carbon-free energy goal by 2045.”

The California auction is part of the Biden administration’s goal to develop 30 GW of offshore wind by 2030, Lefton said.

“We plan to release a proposed sale notice later this spring,” she said. “This notice gives you all the first look at the [proposed] terms and will ask for feedback on important initiatives for … labor agreements, credits for domestic supply chain investments, engagement with tribal nations and ocean users, and working with the commercial fishing industry.”

Panelists at the conference, hosted by trade group Offshore Wind California and organizer Infocast, addressed challenges including port construction, transmission coordination and supply chain issues.

Transmission

The two wind energy areas that BOEM plans to auction this year have distinct transmission states.

​Neil Millar 2022-03-29 (RTO Insider LLC) FI.jpgNeil Millar, CAISO | © RTO Insider LLC

The Morro Bay Wind Energy Area in Central California is “well-positioned” because it’s already served by transmission lines to the defunct Morro Bay Power Plant and the soon-to-be retired Diablo Canyon Power Plant, the state’s last nuclear generator, Neil Millar, CAISO vice president of infrastructure and operations planning, said in a panel on transmission and interconnections.

There already is ample transmission capacity for the 3 GW that Morro Bay wind is expected to generate and more when Diablo Canyon closes, Millar said.

A growing movement of scientists and elected officials has argued for keeping the 2,256-MW Diablo Canyon plant open for reliability’s sake during California’s clean energy transition. If that happens, it will significantly limit available transmission capacity.

The Humboldt Bay Wind Energy Area, in contrast, requires “starting from scratch” to carry the 1.6 GW it is anticipated to generate, Millar said.

“It’s all about Humboldt,” he said.

Unserved by major transmission lines, the Humboldt area on California’s sparsely populated North Coast would require a new line that crosses rugged mountains to connect to the Pacific AC Intertie, one of the state’s major north-south transmission corridors, or an undersea cable that surfaces near San Francisco, he said.

The Humboldt area is being examined as part of CAISO’s new 20-year transmission outlook and in collaboration with the California Public Utilities Commission and the Energy Commission, Millar said.

Coordinated transmission, instead of the serial connections that became a problem for East Coast wind, is a priority on the West Coast, panelists said.

Since late February, when BOEM announced three new wind energy call areas in southern Oregon, there has been talk of coordinating transmission links between the two states. (See Energy Bar Weighs OSW in Oregon, California.)

“The growing Pacific Coast scale of this, which has just been expanded [with BOEM’s Feb. 24 announcement] … sets in motion a whole set of speculation about coordination across the region,” Adam Stern, executive director of Offshore Wind California, said at the time.

In far northern California, there are potential wind-farm areas off the coast near Crescent City, Arne Jacobson, director of the Schatz Energy Research Center at Cal Poly Humboldt, said. If those areas are eventually slated for wind development, transmission coordination with the southern Oregon areas might be an efficient solution, he said.

The Port of Coos Bay in southwest Oregon is also hoping to play a role in offshore wind, port CEO John Burns said in a panel on seaport facilities and staging areas. Once a major timber port, it still owns 1,000 acres that could be used to support offshore wind.

Ports

In the seaport session, panelists said that while Humboldt lacks transmission, it has what wind developers consider a nearly ideal bay and spacious quayside to assemble turbines and transport them to sea.

The Port of Humboldt Bay recently received a $10.5 million grant from the Energy Commission to begin upgrading its facilities for wind development.

The funds will help the Humboldt Bay Harbor, Recreation and Conservation District revitalize the historic timber port on the state’s Redwood Coast, beginning with preliminary engineering and design work. The money will also be used to attract matching grants from the federal government.

A new marine terminal is being planned to handle heavy cargo vessels and floating platforms. Humboldt Bay lacks the bridges and other impediments to developing wind ports in larger deep-water harbors, such as San Francisco and San Diego bays.

In Humboldt, the port is “foundational infrastructure” that might be ready for wind deployment in five to six years, about the same timeframe as the permitting process for sites in the Humboldt Bay Wind Energy Area, Jacobson said.

New transmission to Humboldt is likely to take longer, he said.

Larry Oetker, executive director of the Humboldt Bay harbor district, offered a similar assessment.

Seaport facilities panel 2022-03-29 (RTO Insider LLC) Alt FI.jpgFrom left: Larry Oetker, Humboldt Bay harbor district; Kristin Decas, Port of Hueneme; and John Burns, Port of Coos Bay | © RTO Insider LLC

“Our goal is to have all the permits and to be ready to go within the next few years,” Oetker said. “We want the work to be ready when the offshore wind industry is ready, and we don’t want the port to be an obstacle. And so simultaneously [with technical studies] we’re working on workforce development and transmission upgrades. Because in the end, the transmission upgrades and the offshore wind leases and future offshore wind leases are going to dictate the amount of port investment that’s going to be needed.”

In Central and Southern California, it is less clear which ports will be primary staging areas for the Morro Bay wind fleet.

The Port of Long Beach in Los Angeles County, one of the world’s busiest container ports, is interested in playing some part, possibly in conjunction with other ports that have different strengths, Matt Arms, the port’s director of environmental planning, said.

Kristin Decas, CEO of the Port of Hueneme in Ventura County, made a pitch for its potential to be the best staging area for Morro Bay. The deep-water harbor is home to Naval Base Ventura County and is a major entry port for cargo ships carrying cars and bananas.

“Right now, we sit as the sixth leading port on the West Coast for commercial cargo,” Decas said. “We are actually moving more cargo than Portland and Boston right now. We’re the fourth largest container port in the state of California.”

When panelists were asked if building a new port made sense, Decas said building a new port is a “heavier lift” than building a wind farm.

“I don’t think that’s going to be your answer,” she said.

Supply Chain, Floating Turbines

Several panels addressed supply chain issues, including a session on cabling and mooring. Whether the supply chain can provide “just in time” delivery for West Coast wind development remains doubtful, panelists said.

Bill Wall, project director at LS Cable Systems America, which made undersea cable for the first U.S. wind farm, Block Island, and subsequent projects, said his company has a two-to-three-year backlog in its factories, making delivery times uncertain.

Tom Fulton, head of renewables and mooring development at marine energy and infrastructure firm Acteon, asked audience members to imagine how much room it would take to store equipment for even a 1-GW wind farm if the equipment could not be installed promptly.

Developers are expecting to install enormous 15-MW floating turbines off the West Coast, each more than 900 feet tall with blades longer than a football field. A 1-GW wind farm will require 67 towers along with miles of anchoring and mooring gear. The links in an anchor chain weigh half a ton; polyester cable used instead of chain is a foot thick, Fulton said.

The floating platforms will be in water 2,000 to 4,000 feet deep, but that should not be a problem, panelists said.

Oil platforms have operated at such depths for years, Fulton said.

Henrik Stiesdal, CEO of offshore wind developer Stiesdal A/S, acknowledged floating wind is still in its infancy as an industry but said the technology has been proven since 2009. The West Coast won’t require entirely new designs, he said as part of a panel on floating turbines.

Asked for final thoughts on floating offshore wind, Stiesdal said, “It’s the future,” while other panelists commented that it is a way to harness large amounts of wind energy and to use its scale as a means of producing clean power.

California hopes to eventually have 10 GW or more of offshore wind.

Aaron Smith, chief commercial officer of wind developer Principle Power, said: “I agree with you guys, but it’s also going to take a lot of coordinated effort to build the capabilities to make this happen, so we really need to focus and get started now.”

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SPP Stuns with 90.2% Renewable Penetration Mark

SPP set the energy Twitterverse on fire last week when it announced it had become the first regional grid operator to temporarily serve more than 90% of its demand with renewable energy.

“Remember when they said that at 20% the whole thing would come crashing down?” tweeted Joshua Rhodes, an energy researcher at the University of Texas. “Ninety percent.”

Rhodes noted the 20% figure was an annual number and that 90% was an instantaneous number. “In the end, 90% instantaneous is a new U.S. record and worth recognition!” he said.

“It is indeed noteworthy — it’s awesome,” said Aron Patrick, manager of research for Kentucky utility LG&E and KU Energy.

The record came at 2:42 a.m. CT March 29, when renewable energy set a new penetration mark of 90.2%, breaking the old mark of 87.6% set in May 2021. Wind accounted for 88.5% of the renewables, breaking the previous wind record of 84%, also set last May.

SPP also set new renewable and wind production records. The RTO produced a record 23.8 GW of renewable energy at 9:25 p.m. on March 28, bettering the previous high of 21.8 GW set Feb. 15. At 10:34 p.m. that same evening, SPP produced 22.9 GW of wind energy, topping the previous high of 21.8 GW set on Feb.15.

With SPP’s system demanding around 25 GW during the off-peak periods, the numbers came as no surprise to RTO staff. A cold front that swept through SPP’s 14-state footprint, bringing wind gusts as high as 60 mph, also played a role.

CEO Barbara Sugg told RTO Insider the records were an example of staff’s increased ability to forecast both load and wind production.

“That speaks to the tools that we have in place for forecasting,” she said after delivering a keynote address during the Gulf Coast Power Association’s MISO South-SPP conference. “It speaks to the training and the systems that the operators have because that amount of volatile, non-dispatchable generation consuming that much of the load requires everybody knowing exactly what’s going on and having the systems in place to be able to manage through it.”

“In a decade’s time, our region has gone from thinking of 25% renewable-penetration levels as nearly unreachable to a point where we regularly exceed 75% without reliability concerns,” SPP Senior Vice President of Operations Bruce Rew said in a statement.

“It’s important to realize that reliability is more important than achieving a renewable goal,” Sugg said. “You’re setting a new record, right? We have to maintain reliability.”

The RTO has about 31 GW of installed wind capacity with another 66 GW of renewable resources in its generator interconnection queue. SPP’s footprint includes the high-wind regions of the Dakotas, Kansas, Missouri, Nebraska, Oklahoma and Texas, giving staff a huge pool of resources to draw from.

“There is a lot of wind in our footprint and a lot of desire for that demand to be harnessed into energy,” Sugg said. “We just have to be sure that the transmission rates can support it, and that we can figure out how to balance the desire for [wind energy] with the requirement to maintain reliability. It’s a delicate balance.”

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NYISO Management Committee Briefs: March 30, 2022

Ready for Next Winter

NYISO expects by next winter to meet the recommendations made in the joint FERC–NERC report on the February 2021 winter storm in the Midwest and Texas to protect critical natural gas infrastructure from manual and automatic load shedding and to prohibit use of such critical infrastructure loads for demand response, COO Rick Gonzales told the Management Committee on Wednesday.

“The NERC Board of Trustees directed the development of reliability standards consistent with the report recommendations in anticipation of this coming and next winter,” Gonzales said. “Normally it would take much longer through the NERC standard development process, but the directive by the NERC board is to have those standards developed again in time for the coming and the following winter, consistent with the recommendation time frames identified in the report.”

The ISO presented stakeholders its work on the recommendations at the Installed Capacity Working Group meeting Feb. 3, saying it intends to implement the rules on Nov. 1, the first day of the 2022/23 winter capability period.

In addition, the ISO requested that resources meeting its proposed definition of critical infrastructure load not be registered in its DR programs for the 2022 summer capability period.

Staffing Recruitment Improves

NYISO has started to make significant progress in terms of recruiting talent for several open key staff positions, CEO Rich Dewey told the MC.

“We’re still looking at a vacancy rate as we sit here today of about 9%, but of the 56 open positions, we have had accepted offers on 17 of them, so that’s a pretty successful recruiting month,” Dewey said.

Those new people need to be onboarded and brought up to speed, trained and acclimated to the ISO, but the progress is encouraging, he said.

NYISO has adopted a hybrid approach to working and has not identified any specific number of days that people are required or mandated to be in the office.

“We’ve asked each of the department heads to identify those positions and those work functions where it’s more efficient or effective to do it in person and, when flexibility is warranted or justified, allow people the choice of where they want to work,” Dewey said. “It varies by job and by department and will be monitored and tracked and adjustments made to the extent we need.”

Board Seeks 10% Increase in Compensation

Following a tri-annual structured compensation review, the NYISO Board of Directors intends to increase its members’ pay by approximately 10%, or 3.33%/year for the period.

The board reviews its compensation every three years and compares it to market forces to assess whether it is consistent. According to the ISO agreement, any change to board compensation can only happen after notifying the MC.

“I wanted to inform the Management Committee today of those plans and then if there’s any comments, questions or concerns, give the committee the opportunity to voice those, and then the board will take that under consideration when they meet in April before they finalize those changes,” Dewey said.

The current annual retainer of $65,000 per director would increase to $71,500; the retainer for being vice chairman or committee chair would go from $10,000 to $12,500; and the board committee meeting day stipend of $5,000 would increase to $5,500.

“This was anticipated when we put the budget together for 2022,” Dewey said. “The changes that the board is proposing are going to be accommodated within that budget that’s been placed, so I’m not coming here today to seek additional funds.”

Real-time BPCG Eligibility Changes

The committee unanimously recommended that the board approve tariff revisions to the real-time bid production cost guarantee (BPCG) payment provisions.

In order to close a loophole whereby units may receive inappropriate real-time BPCG payments under certain circumstances, the new tariff language adds an exception to the eligibility criteria for units placed out of merit for reliability below a self-scheduled wattage level, said Mark Buffaline, senior settlements analyst at the ISO. (See “Real-time BPCG Eligibility Changes,” NYISO Business Issues Committee Briefs: March 16, 2022.)

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Md. General Assembly Sends Climate Solutions Bill to Hogan

A legislative showdown is brewing over Maryland Senate Bill 528, the Climate Solutions Now Act, which would require the state to cut its greenhouse gas emissions to net zero by 2045, convert its vehicle fleet to electric and establish distribution system planning to help achieve these and other clean energy goals.

Gov. Larry Hogan (R) is expected to veto the bill, and Democrats in the General Assembly are expected to override that veto, allowing the bill to become law before the legislative session ends on April 11.

The main question now is how close to the wire the likely veto and override will occur. In a statement released March 10, Hogan slammed the bill as a “reckless and controversial energy tax.” Senate Democrats, however, pushed the bill through a final 32-15 vote on Thursday, with substantial amendments from the House of Delegates, to get it to Hogan’s desk on Friday.

The vote in the House was similarly veto-proof, 95-42. Under state law, Hogan has six days, not counting Sunday, to sign or veto the bill, or let it become law without his signature. If he holds the anticipated veto until the sixth day, April 7, Democrats will have a tight window for the override.

In addition to the 2045 net-zero target, the bill’s key provisions include:

  • an increase in the state’s interim target for emissions reductions, from 40% in 2030 to 60% in 2031.
  • the establishment of a Climate Catalytic Capital Fund that will be used to start a green bond program and help finance and leverage private investment for a range of emission-reduction and clean energy programs. Initial allocations for the fund would be $5 million a year for 2024 to 2026.
  • a $50 million electric school bus pilot program that will allow utilities to test out the use of vehicle-to-grid technologies at times electric buses in the program are not in use.
  • a steady phase-in of EVs in the state’s passenger car fleet, with 100% of all new purchases electric or hybrid by 2028 and 100% of all other light-duty vehicles electric by 2033.

The House Amendments

The school bus pilot and the distribution planning requirements were part of the 50-page package of amendments passed in the House on March 29. Under the new planning provisions, beginning in December 2024, the Public Service Commission would have to submit a yearly report to the General Assembly on the “current status of electric distribution system evolution.”

As listed in the bill, specific goals of distribution planning would include the incorporation of a range of distributed energy resources, such as electric vehicles, energy storage, demand response and non-wires alternatives.

But the House amendments also softened or cut some of the bill’s core initiatives.

Cut entirely from the bill were net-zero school provisions requiring that, from 2023 to 2033, at least one new school in each school district be built to net-zero standards.

The Senate’s provisions on building performance standards were another casualty. They would have required that new or renovation projects built with at least 25% state funding meet high-performance building standards developed by the Maryland Green Building Council. Emission-reduction targets for large commercial buildings and multifamily dwellings were also cut, from 50% to 20% in 2030, and a net-zero target for 2035 was completely eliminated.

The House amendments also rebranded the Maryland Climate Justice Corps in the original Senate version as the Chesapeake Conservation Corps. The goal in both cases is to provide education and job training programs to help develop “green career ladders” for youth and young adults, but with a shift in focus from environmental justice to environmental conservation.

For example, while a primary purpose of the Climate Justice Corp was to “promote climate justice and assist the state in achieving its greenhouse gas emissions-reduction targets,” the corresponding goal of the Conservation Corps is to “promote, preserve, protect and sustain the environment.”

Reactions

Tweeting out an announcement of final passage of the bill, Sen. Paul Pinsky (D), SB 528’s chief sponsor, called it “a victory,” pointing to the 60% emission-reduction target for 2031 and the 20% target for cutting building emissions.

“It’s no question that climate change presents an existential threat,” House Speaker Adrienne A. Jones (D) tweeted on Friday. “We passed Climate Solutions Now to have more aggressive greenhouse gas-reduction goals and reduce our carbon footprint faster.”

Environmental groups also stayed focused on the positive impact the bill will have.

“We owe it to future generations of Marylanders to address the root causes of the stronger storms, rising sea levels and higher temperatures that threaten their quality of life, and this bill is a strong step toward doing so,” Josh Kurtz, executive director of the Chesapeake Bay Foundation, said in a statement released after the House passed the bill.

“The Climate Solutions Now Act takes concrete steps that are good for our economy and all our communities,” said Kim Coble, executive director of the Maryland League of Conservation Voters. The bill will, she said, “put Maryland on the path to lead the nation once again in addressing climate change in a responsible, achievable and equitable manner.”

Beyond his initial statement in March, Hogan has made no subsequent comments on the bill.

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Overheard at EPSA Competitive Power Summit 2022

WASHINGTON — More than 150 people attended the Electric Power Supply Association (EPSA) Competitive Power Summit at

the National Press Club on March 29, where competitive generators and others discussed the market changes they said
are needed to ensure reliability while reducing carbon emissions. (See related stories, EPSA Members Renew Call
for Carbon Price; See Long ‘Bridge’ for Gas; EPSA Panel
Debates Role of ISOs, RTOs in Decarbonization; and NERC
Chief: ‘Longer, Deeper, Broader’ Weather Presents New Reliability Challenges.)

Here’s some more of what we heard.

Frustrations over RTOs

The role of RTOs was a recurrent topic. During the first of five panel discussions, PJM CEO Manu
Asthana and Devin Hartman, energy and environmental policy director for the R Street Institute, acknowledged
frustrations over the RTO stakeholder process.

“The stakeholder process is hard, because you have a lot of really smart stakeholders who have their own economic

interests, and their own agenda; they’re at the table, pushing,” Asthana said. “But I also think the stakeholder

process is necessary, [so] please continue participating, keeping in mind … there’s a compromise that we’re going to

have to come to [so] that hopefully everyone will get what they need. Not everyone will get all of what they want, to
quote the Rolling Stones.”

“Market design is anything but a clear fix. Even to the top minds in the field, no one’s going to agree on all the

particulars,” Hartman said. “But this debate is worth having. … The value of organized market structures is actually

increasing over time. So don’t let the frustrations over the debate on the market rules boil over. … I think a lot of

times, there’s some misfires in our public dialogue.”

“I just can’t see the RTO not being an important part of” the transition,” said John Moore, director of the Natural

Resources Defense Council’s Sustainable FERC Project, citing grid operators’ role in ensuring

“transparency, accessibility [and] resource neutrality.”

Insider LLC

But David Springe, executive director of the National Association of State Utility Consumer Advocates, said FERC and
RTOs must do more to consider consumers’ input.

“So much of the transmission decisions get made at a regional level, by an organization that is somewhat beholden to

members, that is very difficult to participate in,” he said. He said consumer advocates’ staffs are too small to

“meaningfully” participate.

“A lot of people like to point to CAPS [Consumer Advocates of the PJM States] in PJM. And [CAPS Executive Director]

Greg Poulos does a great job representing the consumer advocates in PJM. But it’s one person,” he continued. “And

there’s not one in SPP [or MISO]. You know, we’re talking about

huge decisions being made in rooms where the people representing consumers aren’t really participating. That’s just

[wrong]. It has to be fixed.”

Rule Churn

Asthana said he gets regular complaints from generators and others that the pace of change of market rules is too
fast. “It’s making it harder for market outcomes to be predictable and is having an effect on financing,” he said.

“Let’s accept that there’s no perfect answer; let’s get a consensus set of answers, and let’s let them run for a

period of time, unless there’s a real issue. I think that needs to be something we should all strive for.”

Kevin Smith, president of Tenaska Power Services, said more stable market rules could unlock innovation.

“When the rules are always changing, then we have to start focusing on our existing assets. And so those human

resources that we innovate with are now focused on existing assets, trying to evaluate the potential impacts of those
changes and, in some cases, mitigate the impacts of those changes,” he said. “And if we’re focused there, then we

can’t be focused on new, innovative products to advance the grid.”

Insider LLC

Arnie Quinn, vice president of FERC-jurisdictional markets for Vistra (NYSE:VST), cautioned against a proliferation
of new ancillary service products.

“It’s very seductive [to suggest], ‘Let’s create a new product every time my revenue source needs to be a little bit

more secure. So in the energy and ancillary service [technical conference] comments, there were a couple conversations
about breaking out the regulation service into up and down service,” he said (AD21-10).
(See Stakeholders Ask FERC to Support E&AS Market
Changes.)

“For the most part, I would say that conversation was very principled, [but] some of it was, ‘Do down, because

renewable resources can provide that, and it would be really nice to give them a revenue source.’” Similarly,

traditional generators have sought to create a product to produce additional revenues for being dispatchable. “That

can’t be the answer” either, he said. “If there’s a system need for dispatchability; if there’s a system need for

regulation down differently than regulation up, then … let that system need drive the design.”

Pat Wood: Fix Supply Chain 1st

In a luncheon speech, former FERC and Texas Public Utility Commission Chair Pat Wood III said that Russia’s invasion

of Ukraine, and the subsequent international sanctions imposed on it, has brought new urgency to fixing the U.S.
supply chain.

“The supply chain has got to be fixed before we continue our march toward decarbonization,” said Wood, now CEO of

Hunt Energy Network. “We are running away from what we have plenty of in the U.S., which is coal, gas and oil, for

good reasons. … But we are falling into the arms of Russia and China. They today make the vast majority of the
world’s enriched uranium, batteries … solar panels and even I think about 50% of the world’s wind turbines. So that

should compel us to move this issue — this equipment and technology supply diversity issue — up to the top of our

agenda.” He complimented President Biden for committing to more LNG exports to Europe to make up for Russia’s supply

of gas to the continent.

Wood also provided predictions for what the world will look like in 25 years. For one, he predicted EPSA would have
to call itself “EPSDA” — the Electric Power Supply and Demand Association — “because in those 25 years, we’ll

finally learn how to commoditize the demand side.”

He also predicted a warmer climate, “but I’ll tell you, it was damn cold on Feb. 15, 2021, in Houston, Texas,”

referencing the winter storm. It will also be much more electrified, especially transportation. “All the people who

say, ‘Oh, it’s going to be slow.’” He shook his head. “There’s not a bubba in Houston, Texas, who’s not going to be

dying to have” an electric Ford F-150. “They’re going to be able to have that car be a two-way charger back to the

house, so you don’t have people who are out [of power] for 36, 72 hours like last year in Texas. They’re suddenly

demand response customers who look a lot like a large industrial [customer] on the Houston Ship Channel.”

Renewable Generators as Merchants

Travis Kavulla, vice president of regulatory affairs for NRG Energy (NYSE:NRG), said policymakers should strive to
“make merchants out of clean energy resources,” subject to “tail risks and risks of economic underperformance” by

avoiding long-term contracts that shift risk onto captive customers.

Kavulla noted that state officials have often been critical of wholesale market design, which they do not regulate.
“And yet the design of retail markets — which are exclusively jurisdictional to states; where states are dictators —

are largely undiscussed. And so I think states would be wise to contemplate what barriers are facing decarbonization
of the retail markets. That begins, I think, with retail competition. One of the reasons why you don’t necessarily see

… wholesale market gains pass through to retail rates is the lack of retail competition.”

Calpine CEO Thad Hill said the “bedrock” of private investment in infrastructure is investors’ belief that they can

earn a return on and of capital over time. “We’ve seen this play out in California, where there hasn’t been a new

megawatt built in 20 years without a state contract or state-approved contract. It’s central planning all over again.

I don’t think we want that.”

Kavulla also called for more demand-side participation. “Consumers have spent billions to invest in a smart grid

that’s still very dumb. And very few customers are on any kind of time-varying rate plan that would give them either

visibility into, or an incentive for, switching their loads,” he said, “something that has to happen in order to

accommodate these intermittent supply resources.”

Paul Sotkiewicz, president of E-Cubed Policy Associates, agreed, saying the California “duck curve” is a function of

the state’s retail rate structure. “Nobody has an incentive to consume energy when prices in the wholesale market are

close to zero because they’re based on block tariffs. They’re trying to stay out of that next block. … So you’ve got

smart meters, dumb rates.”

Investment Strategies for the Energy Transition

The conference also featured much discussion on the business opportunities in addressing climate change.

Stephen Gallagher, chief commercial officer for Brookfield Renewable U.S., cited an estimate that it will cost $150
trillion to decarbonize the public and private sector, calling it “the largest commercial opportunity of our

lifetime.”

For its part, Brookfield is about to close its first global energy transition fund, which will bet in part on
decarbonizing industries such as cement, steel and chemical manufacturing. Announced with a target of $7.5 billion,
the fund is expected
to close at $15 billion.

“That’s $15 billion of equity. So by the time you leverage that up, you’re talking probably $60 [billion], $70

billion plus that we [will] deploy into this landscape,” Gallagher said. “We not only provide the renewable [energy];

we also work with them on supplying capital to fund their transition.”

EPSA members agreed that investors have shown an increased appetite for environmental, social and governance (ESG)
investments.

“What’s not so clear is exactly what an ESG investment is,” said Sherman Knight, president and chief commercial

officer for Competitive Power Ventures. “For example, is a renewable project in a highly penetrated market that is

displacing other renewable projects an ESG investment, where natural gas projects displacing coal is not? As we see
things going forward, I think there will be more of a standard, clear definition around what ESG really stands for. At
least … I’m just hoping that that will be the case.”

Vistra CEO Curt Morgan said an ESG label can’t trump profitability. “Make no mistake: Ultimately [investors are]

going to look for returns. We’re going to be driven more by economics than we are by the flavor of the day that will

come and go.”

Tenaska’s Smith, who said his company remains focused on solar and energy storage “despite the current headwinds and

challenges,” predicted a shakeout.

“I think we’ve had the luxury of an abundant capital market where there’s been a willingness to invest in every

technology type,” he said. “People are going to be more focused on returns [in the future]. And so I think that the

focus will gravitate more towards those technologies which will yield near-term cash flows.”

Knight said CPV does not assume there will be a big increase in electric growth from electrification when choosing
its investments.

“We definitely run sensitivities and look at that, because I think that there’s a real potential [for demand growth].

… When I started in the industry 20 years ago, the argument was over 1% or 2% growth. And now, you know, you’re

arguing between, is it going to be flat growth, or we’re going to grow 40%? … The range is so, so large.”

“There’s a huge amount of risk” on betting on electricity growth, Morgan agreed. “There’s a tremendous amount of

money going into hydrogen. That can be a part of the solution, which may dampen the growth of electricity.”

No Immediate Solutions

EPSA CEO Todd Snitchler closed the daylong conference by conceding the group had not solved any of the issues facing
the industry.

“But I don’t think that was the objective when we started,” he said. “So I hope you’ll come away with the same

appreciation I have that we’re trying to figure out how to enable reliability to be paramount and to use competitive

markets to deliver it, because it delivers on affordability and also on emissions reductions — and those are all

things I think everyone here can get behind.”

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NJ Transit Advances with EV Bus, Sustainability Plans

NJ Transit, New Jersey’s mass transit agency, is pursuing its first ever planning process to draft a sustainable agency future as it pushes ahead with plans to launch its first electric bus program, at a South Jersey garage, and spend $4.3 million to prepare a second garage for electrification.

The agency on March 23 held what it expects to be the first in a series of hearings to solicit public input on the 18-month process to shape and create a sustainability plan that will address issues such as clean vehicle technology, equitable transportation and energy consumption.

The state’s 2019 Energy Masterplan, initiated by Gov. Phil Murphy, set the foundation for the sustainability plan, calling for the state to decarbonize the transportation sector, including a directive for NJ Transit to implement an electric bus program and introduce a battery electric train prototype by 2025. The state’s Global Warming Response Act (GWRA) report, which outlined legislative and policy initiatives to confront global warming, called for 10% of NJ Transit’s new buses to be zero-emission vehicles by Dec. 31, 2024, and all new bus purchases to be for zero-emission vehicles by 2032.

NJ Transit CEO Kevin Corbett said the sustainability plan will build on the agency’s existing efforts by “expanding and optimizing solar energy assets, and implementing energy-efficiency and conservation measures.”

The initiative comes as the agency on March 22 announced that it has completed the installation of eight electric vehicle chargers at the Newton Avenue Bus Garage in Camden, where the agency expects to launch its first electric bus project. The garage is undergoing a $3 million renovation, and the first of eight electric buses are expected to arrive in June, with the full complement expected by the end of the year. The agency approved a $9.5 million purchase of eight buses in October as part of an effort to convert its fleet of 3,000 buses to zero emission by 2040. (See NJ Committee Advances $45M Electric Bus Bill.)

In a separate initiative, the agency on March 14 awarded a $4.3 million contract for the infrastructure design for the deployment of battery electric buses at another facility, Hilton Garage in North Jersey. The expenditure includes a survey of the agency’s 16 garages statewide to assess infrastructure upgrades needed at each garage for future transitions to zero-emission buses.

“Through our garage modernization program, and our zero-emission bus system design and investment planning study, we will transform our infrastructure, our routes [and] our operation to modernize our infrastructure and network to support zero-emission buses,” Erin Hill, an energy and sustainability analyst for NJ Transit, told the hearing.

Car Emissions vs. Mass Transit

Agency officials argue that mass transit is “inherently” sustainable because each person that takes mass transit instead of a private vehicle is reducing their carbon footprint. While a private car emits 0.96 pounds of carbon per passenger mile, commuter rail emits 0.33 pounds and a bus emits 0.64 pounds, according to a presentation at the agency’s sustainability meeting.

For that reason, the GWRA report calls for an increase in NJ Transit’s bus and train ridership from 2020 to 2050, seeking a 54% hike in the most optimistic scenario. The report also encourages the creation of transit villages, with residential areas that are easily reachable from rail stations and so reduces the need for car use.

Environmentalists have criticized the agency for moving too slowly, however. A 2021 report by New Jersey Policy Perspective, a nonprofit think tank, urged the state to move faster in transitioning its diesel buses to zero-emission, saying it would reap extensive health benefits and remove “significant environmental and public health costs.” The report expressed skepticism that the agency is on track to meet the 100% EV bus purchase goals by 2032, in part because the state has no dedicated funding source for the $5.7 billion that NJ Transit expects the transition to cost. (See Environmentalists Call for Faster Transition to Electric Buses in NJ.)

NJ Transit officials said they are looking for input from all stakeholders on the sustainability plan, especially for determining key issues that it should address, including two surveys: one of agency leaders, and the second of community stakeholders. The six “sustainability themes” the plan will encompass include community engagement, air quality, and improving fuel and energy-use efficiency while the agency transitions to clean energy technology, Marcella Thompson — vice president at HDR, a consultant working on the project for NJ Transit — told the hearing.

Sustainability and Reliance  

When the hearing opened to the public, however, the agency’s focus on sustainability and cutting emissions quickly ran into an ongoing concern from some environmentalists about its plan to build a 140-MW natural gas-fired generating plant in Kearny as part of its “resiliency” preparations. The plan is part of a proposal to create a microgrid that would provide power to the agency and enable it to keep three key rail lines going in the northern part of the state if commercial power is knocked out by a storm or other incident, as it was after Superstorm Sandy in 2012.

Several speakers at the hearing decried the proposal and questioned how the agency could claim to be moving toward clean energy and a sustainable future while it is moving ahead with a gas-fueled power plant that will be adjacent to environmental justice communities that already see excessive air pollution.

Ken Dolsky — co-leader of the Don’t Gas the Meadowlands Coalition, a group created to oppose the plant, and a steering committee member of Empower NJ, a statewide environmental group — said he heard a lot of “good stuff” in the presentation about the sustainability plan. But it was marred by the agency’s continued pursuit of the generating plant, he said.

“The bottom line is, if you’re going to go ahead and you are going to build a gas plant, the hypocrisy of this sustainability program is evident, is obvious,” he said. “I mean, this is nonsense. You’re talking about tweaking things around the edges while the elephant in the room is this new gas plant that you’re going to use to make our greenhouse gas problem worse, to make our air quality problem worse.”

In response to that and other concerns about the generating plant, John Geitner, senior director for energy, environment and sustainability for NJ Transit, did not directly address the issue. But he told the hearing that the agency does not “view resiliency and sustainability as opposing topics or in separate spheres.”

“The challenge is to make sure that we’re thinking about resiliency in terms of what it means for sustainability,” he said. “If you don’t have a resilient system, it’s not going to be sustainable.”

“The more resilient system that we have, the more sustainable it is going to be for future generations,” he said, adding that many transit agencies are facing the same issue. “We’re all sort of struggling with what it means to create a system that that will withstand challenges, whether those challenges are weather related, whether the challenges are service reliability related.”

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Overheard at GCPA MISO South-SPP Conference

NEW ORLEANS — Relationships were on the agenda last week during the Gulf Coast Power Association’s MISO South-SPP regional conference, from those among the 200 attendees who hadn’t seen each other in two years to the strong bonds now evident between the two RTOs.

SPP CEO Barbara Sugg said her most rewarding accomplishment since taking the helm in March 2020 — about the same time the COVID-19 pandemic “moved everybody’s cheese,” as she said — has been building the RTO’s relationship with MISO.

“I think one of the biggest changes that we made is that we focused on our relationship with MISO, and I can’t tell you how much how rewarding that relationship has been thus far,” Sugg said during her keynote address that opened the two-day conference. “We were trying to solve the same problems. There’s just doesn’t seem to be a reason to me why we can’t solve them together.”

Sugg said SPP must be ready for the future grid, and collaboration with neighbors is one of her organization’s goals.

“I’ve got a long list of unexpected things that have happened in the past two years,” she said, jokingly. “Don’t worry, I won’t read them to you.”

Sugg referenced the RTOs’ Joint Targeted Interconnection Queue (JTIQ) transmission study as a uniting force between them. (See MISO, SPP Finalize JTIQ Results with MISO Tx Duplicates.)

“Quite simply, we can build it separately, or we can build it together,” she said.

A day later, MISO CEO John Bear said the improved relations were as “simple as Barbara Sugg and I decided to make it a priority.” He said many down the ranks also deserved credit.

“I can’t heap enough praise on MISO and SPP for doing this,” Clean Grid Alliance’s Beth Soholt said of the JTIQ study, which she called “groundbreaking.”

“We’re just very grateful to John and Barbara.”

Bear: High Reliability, Not High Costs

MISO Chief Customer Officer Todd Hillman conducted an environmentally friendly fireside chat with Bear using a tablet’s video of a burning hearth to add warmth.

Todd Hillman John Bear 2022-03-30 (RTO Insider LLC) Alt FI.jpg“Fireside” chat between MISO’s Todd Hillman (left) and CEO John Bear | © RTO Insider LLC

 

“We don’t want to emit any carbon from a fire in the building,” Hillman said.

He asked Bear about his reaction to a recent PJM study that concluded the grid operator might need a reserve margin above 70% to accommodate a 50% share of renewables in the resource mix and satisfy a one-day-in-10-year loss-of-load expectation.

“We all want really high reliability, but we don’t want really high costs,” Bear responded. He said transmission operators must strike a balance between intermittent assets and controllable assets while building new structures, but added that MISO will strive for a more efficient reserve margin.

“Otherwise, someone else will be here talking to you next year,” Bear said.

Although gas generation remains harder to build because of grueling pipeline permitting, Bear said, MISO will continue to rely on gas-fired generation to a degree. “You can’t paint 65% of your house without scaffolding and ladders,” he said, referring to fossil generation importance during the transition.

Bear called escalating weather events an “enduring issue.” He said MISO’s seams are a “magic lever” that MISO can sometimes pull to import generation during severe weather.

Hillman asked what topic Bear would raise if he was in an elevator with President Joe Biden. Without hesitation, he said MISO must build long-range transmission projects over the decade. MISO’s $10.4 billion long-range transmission package has a nearly 3:1 benefit-to-cost ratio, the RTO says. (See MISO Updates Stakeholders on $10B Long-range Tx Package.)

Bear said if staff is to operate with a fleet awash in intermittent resources, they must be able to move the energy around when output is high or when the intermittent resources aren’t producing at high levels. He said MISO will have to look closely at how renewable resources twice the size of today’s might alter flows.

The RTO will soon reassess the need for a new set of interregional transmission projects with PJM because of the increase in renewable resources, Bear said.

Consultant Asks for Unified MISO 

Jennifer Vosburg 2022-03-30 (RTO Insider LLC) FI.jpgJennifer Vosburg | © RTO Insider LLC

“The future is coming, and we’re going to have a rough ride getting there,” independent energy consultant Jennifer Vosburg said, calling for a more unified MISO between the Midwest and South. She lamented that about eight years into the South’s MISO membership, it’s isolated from the rest of the footprint when it comes to planning.   

“How many futures are we talking about? Are we talking about MISO future or a MISO South future?” she asked rhetorically. “I joined MISO. I didn’t join MISO South.”

Vosburg pointed out that MISO South is not included in the first half of MISO’s long range transmission plan (LRTP) and will not share in costs. When the South is included in long-term planning, she predicted rocky cost-allocation discussions.

A cost-allocation “Civil War,” she quipped.

Vosburg also said addressing the connection between MISO Midwest and MISO South is past due. She pointed out that because a 500-kV Dell-New Madrid line is on outage through June, MISO Midwest lacks any physical links into the South. (See MISO Midwest-South Transfer Service on Outage until July.)

“That is something we must address. It’s been long enough,” Vosburg said. “We’re planning for one MISO, but we’re operating two.”

She said while MISO South won’t see any costs from the LRTP’s first half, it also won’t see any chance for federal infrastructure funding. “I think there’s a danger there,” Vosburg said, reminding planners that ratepayers are at the other end of spending.

Undergrounding a No-go in NOLA

Deanna Rodriguez 2022-03-30 (RTO Insider LLC) FI.jpgEntergy New Orleans CEO Deanna Rodriguez | © RTO Insider LLC

Entergy New Orleans CEO Deanna Rodriguez earned the conference’s biggest laugh when describing the resilience plan the utility will file at the Big Easy city council’s request.

She said Entergy will likely stop short of “gold-plating” the infrastructure by undergrounding all power lines.

“We don’t underground our dead people in New Orleans,” Rodriguez said, a reference to the city’s iconic above-ground tombs. Because New Orleans is at or below sea level, the soil has a high water table, placing bodies buried in the ground at risk of being water-logged or even displaced.

In recent years, Entergy NOLA has been buffeted by hurricanes, severe winter weather and just recently, tornadoes. Hurricane Ida last year cut power to the entire city, and it took 10 days to completely restore electricity. Rodriguez said that the transmission structures that toppled during the storm were first tested by 150-mph winds.

She said it’s “critical” the utility get creative in making the system more resilient, including exploring microgrid technology.

“You have to look at all options,” she said.

Tx Planning a ‘Least-regret’ Approach

Aubrey Johnson, a freshly minted vice president at MISO overseeing all aspects of transmission planning, said that recent leaps in the electric industry are more dramatic than any of the 100 years that came before and require planning a system that can handle more uncertainty.

Johnson said MISO’s planning is a “path of least regrets” and quoted President John F. Kennedy in saying, “the best time to fix the roof is when the sun is shining.”

“We’re speeding to the outcome at a rapid pace. … What we should realize is, when it’s broken, it’s always harder to fix.”


Aubrey Johnson Antoine Lucas 2022-03-30 (RTO Insider LLC) Alt FI.jpgMISO’s Aubrey Johnson (left) listens to SPP’s Antoine Lucas during a panel discussion on transmission planning. | © RTO Insider LLC

Antoine Lucas, SPP’s vice president of engineering, agreed that transmission planning inaction carries a hefty cost.

“We’re going to have to get more study … into the cost of indecision to get folks more comfortable with the costs of decisions,” he said.

MISO Director of Real-Time Operations J.T. Smith said he had a role in the 2011 Multi-Value Project (MVP) portfolio, the RTO’s last long-range planning effort. He said the portfolio’s only shortcoming is that it didn’t go far enough.

“We underbuilt it,” he said. Nodding to Soholt in the audience, he said, “Beth was yelling at me [at the time] that it wasn’t enough, that more wind was coming.”

Lessons from the Natgas Sector

Steven Bruns 2022-03-30 (RTO Insider LLC) FI.jpgSteve Bruns, Tenaska | © RTO Insider LLC

 

Steve Bruns, a marketing vice president with Tenaska Marketing Ventures, gave attendees and MISO and SPP staff a crash course on natural gas contracts and curtailments during a panel discussion on the fuel supply issues during the February 2021 winter storm that led to load shed in both RTOs.

SPP COO Lanny Nickell said 53% of the grid operator’s accredited gas supply didn’t show up during the storm, leading to the first load shed in the organization’s 80 years. It turned out a “surprisingly low number” of contracts were for firm fuel.

“Less than 50%,” Nickell said. “That was eye-opening.”

“I’m sympathizing with you guys because I too still have PTSD over the events that transpired during that week in February,” Bruns said. “Firm means something different in the natural gas world. Unfortunately, the electricity markets have decided to be a spot buyer, a daily buyer of commodity [regulated local distribution companies].

“The big gas utilities’ industrial customers have much more of a portfolio approach when they’re procuring gas. They’re buying first of the month; they’re buying fixed price. Yes, those are typically higher priority products that those consumers of natural gas have contracted for, and therefore the producers are going to give those contracts a higher priority level of service when they’re going through their curtailments as they’re starting to lose production.”

Gramlich Says System at ‘Breaking Point’

Rob Gramlich 2022-03-30 (RTO Insider LLC) FI.jpgRob Gramlich, Grid Strategies | © RTO Insider LLC

Grid Strategies President Rob Gramlich said RTOs, save for CAISO, fail to proactively plan their transmission systems. He said MISO’s and SPP’s interconnection queues, largely designed to usher in natural gas and combined cycle plants, are dysfunctional when it comes to integrating the new resource mix.

“This system is really at the breaking point right now,” he said. “Low-cost decarbonization requires large-scale transmission.”

Gramlich said the future system must be able to flow tens of gigawatts of renewable power bidirectionally. “If we keep nickel and diming with generator interconnections, we’re probably going to end of paying a lot more in the long run,” he said.

Past transmission planning efforts to incorporate renewable energy, such as MISO’s MVP portfolio and SPP’s priority projects, only came up short in that they weren’t big enough, rendering wind generation curtailments today, Gramlich said.

“Let’s take that lesson, roll it forward, and do this big at the right scale,” he said.

Entergy La. CEO Looks to 2050

Entergy Louisiana CEO Phillip May said though some industrial customers were initially resistant to carbon reductions goals, they now widely accept sustainability.  

“The shift is complete. Anywhere you go, that conversation is welcome, and you can roll up your sleeves and talk about it,” May said.

He said while he’s confident about Entergy’s goal to reduce carbon emissions 50% by 2030, the path to net-zero by 2050 is hazy.

“The great thing about big, audacious goals is you don’t know how you’re going to get there,” May said. “But I’m confident we’ll get to 2050 and there will be a big, quantum change.”

May said solar generation is now a “very compelling economic asset,” and that carbon capture and sequestration will likely come into play. Electrification of the Gulf Coast’s heavy industry is also on the horizon, he said.

“Increasingly, our customers’ customers are going to demand that those products be cleaner,” May said.

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Nonprofits Push Entergy on Transmission Planning

NEW ORLEANS — Several nonprofits pushed Entergy to embrace large scale transmission expansion in adjusting to a growing renewable fleet during an Entergy Regional State Committee Working Group meeting Wednesday.

Debra Lew, with Energy Systems Integration Group, said Entergy’s corporate decarbonization goal requires transmission. The company committed in 2020 that it would meet a 100% clean energy goal by 2050.

Lew said Entergy should have a “triple goal” in the transition: “clean, reliable and affordable.” She said large-scale transmission projects are key to ensuring those goals.

“The larger the geographic size of transmission expansion, coordination, the cheaper the energy,” she said. “Transmission costs are tiny compared to other resources and infrastructure costs.”

Andy Kowalczyk, with activist group 350 New Orleans, also advocated for a robust transmission system and called for a re-examination of MISO South’s planning needs.

“Utility trends in the changing resource profile for MISO South, public policy goals and prevalence of extreme weather events drive the need for a reassessment of planning for the bulk power system in the region,” he said.

Kowalczyk said between Entergy utilities’ and Cleco’s current requests for proposals, MISO South is primed for an additional 4.2 GW of renewable generation. He said he pictures even more RFPs within five years.

“This is only the beginning of this generation shift,” he said. “There will need to be adjustments in transmission planning to deliver renewables and meet this shift.”

He also said an “inability to transfer power from outside of impact zones hindered recovery for Louisiana and Texas residents after Hurricanes Laura and Ida.”

Laura in 2020 and Ida in 2021 were the strongest hurricanes to ever strike Louisiana.

Clean Grid Alliance’s Natalie McIntire asked Entergy leadership to prepare a future presentation on how the utilities plan to handle a clean transformation in terms of generation and transmission planning.