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November 6, 2024

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SPP-MISO M2M Settlements Top $183M

SPP accrued $21.65 million in market-to-market (M2M) settlements with MISO during August and September, pushing the total payments due SPP to an all-time high of $183.39 million.

Permanent and temporary flowgates were binding for more than 1,500 hours in August, resulting in $4.72 million in settlements favoring SPP. Settlements jumped to $16.92 million in September when congestion led to more than 1,700 binding hours on 56 permanent and temporary flowgates, SPP staff told the Seams Advisory Group (SAG) on Friday.

M2M settlements hit a record $51.49 million, in MISO’s favor, in February, thanks to Winter Storm Uri. Congestion played a heavy role in limiting the amount of energy MISO could share with its seams neighbor.

The process’ settlements have accrued to SPP during the seven months since February and for 22 of the last 24 months, eclipsing the high-water mark of more than $168 million in January.

Cumulative-M2M-Payments-(SPP)-Alt-FI.jpgM2M settlements have eclipsed the previous high set in January. | SPP

 

The RTOs resettled 15 operating days between August 2020 and June 2021 that resulted in a $477,982 adjustment in MISO’s favor. Staff said that the appropriate transmission reliability margin (TRM) was not applied to a flowgate in North Dakota during the annual TRM update. The TRM affects the firm flow entitlements (FFEs) used for settlement purposes, but the difference would not and did not influence dispatch.

The M2M process began in March 2015. The grid operators exchange settlements for redispatch based on the non-monitoring RTO’s market flow in relation to FFEs.

Staff also told the SAG that language changes in the joint operating agreements with MISO and Missouri-based Associated Electric Cooperative Inc. (AECI) are undergoing legal review. SPP plans to file both JOA revisions with FERC at the same time.

The changes are related to interconnection queue priorities in the grid operators’ affected system studies.

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NARUC Panelists Optimistic on Transmission Planning ANOPR

LOUISVILLE, Ky. — Electric industry officials at the National Association of Regulatory Utility Commissioners’ annual meeting expressed hope that FERC’s recent advanced notice of proposed rulemaking (ANOPR) will live up to its goal of improving regional transmission planning.

During a Wednesday panel discussion, Krista Tanner, ITC Holdings senior vice president, said she was “really relieved” that FERC agreed that “something needs to change.”

The ANOPR seeks to get more transmission built, clear generation interconnect queues, and reach better consensus on cost allocation. (See FERC Goes Back to the Drawing Board on Tx Planning, Cost Allocation.)

“We’re practically glacial,” Indiana Utility Regulatory Commissioner Sarah Freeman said of the pace of major transmission planning.

Tanner said MISO’s Multi-Value Project portfolio created renewable zones in the footprint and helped clear a “200-year” interconnection queue.

“Let’s do that again, and let’s do it more often,” she said.

Tanner also said it’s time to scrap FERC Order 1000.

“Enough time has gone by that we know it’s not working and it’s having a chilling effect” on transmission construction, she said.

Asim Haque, PJM vice president of state policy and member services, asked that FERC publish a definition of resilience for grid planning. He said resilience should be a shared goal across grid operators’ footprints and placed in the “rubric” of cost allocation.

Public Service Enterprise Group General Counsel Jodi Moskowitz said she hopes the ANOPR directs RTOs to conduct long-term scenario planning that includes the benefits of addressing climate change.

“Most importantly, how can we get some certainty in cost allocation so new transmission can be built?” she said.

Moskowitz said she hoped the commission designs rules that consider lack of transmission investment costs in comparing construction costs.

Freeman asked whether the rulemaking will preserve planning processes that already work well.

“I think it’s fair to say right now that PJM’s planning process is very transparent,” Moskowitz said. But she added that regulators could get more involved in the RTO’s planning meetings.

“We’d like to get the states’ upfront buy-in about transmission needs,” she said.

Moskowitz also said she doesn’t agree that local transmission projects are supplanting the need for regional projects. The two serve different purposes, she argued, with local projects necessary to address upgrades for age and storm hardening and regional projects needed to meet decarbonization goals.

Danly Expresses Tx Cost Misgivings

In an earlier address, FERC Commissioner James Danly called out a recent flurry of transmission-planning activities and price formation in the commission’s jurisdictional markets as areas of concern.

“There is a feeling these days — part of the zeitgeist — that we need to string up wire everywhere we possibly can to bring online intermittent resources,” Danly said during a Nov. 8 session.

He said the idea of “cheap power being shunted across the country” is an illusion if ratepayers are forced to pay for “exorbitant” transmission buildout.

Danly said he gets the feeling that grid planners are ready to propose projects without much forethought. He singled out MISO’s three, 20-year planning futures for praise. He said the RTO has done an admirable job of estimating transmission needs across multiple scenarios.

“That candor is much appreciated,” Danly said.

He also said wholesale rates aren’t encouraging the right mix of generation or new resources. He said so far, intermittent resources have benefitted from operating alongside a “still very healthy chunk of dispatchable resources.”

“But my worry is, over time, the system will become unstable … It’s impossible to say what the right mix should be,” he said.

Michelle Manary, acting deputy assistant secretary in the Department of Energy’s Energy Resilience Division, agreed it’s a “tough assignment” for engineers to plan a resilient and reliable system when the ultimate resource mix and number of distributed resources is uncertain.

“We are asking them to change drastically,” she said, referencing the Biden administration’s goal for net zero emissions by 2050.

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Here’s What Key Glasgow Sectoral Initiatives Mean for 1.5 C

At the close of the U.N. Climate Change Conference (COP26) in Glasgow, Scotland, on Saturday, U.S. Special Presidential Envoy for Climate John Kerry optimistically announced that the world is closer than ever before to “avoiding climate chaos.”

“Paris was a signal to the marketplace, not a guarantee that we would be able to hold the Earth’s temperature rise to well below 2 degrees [Celsius], let alone 1.5 C,” he said in a press conference. “But in Glasgow, we have 65% of global GDP committed to real plans that have been certified by the IPCC [Intergovernmental Panel on Climate Change] and others.” (See related story, COP26 Ends: 1.5 C Still Alive, but ‘Pulse is Weak’.)

The U.S. and 150 other countries submitted updated nationally determined contributions (NDC) for COP26, and the Glasgow Climate Pact adopted by parties on Saturday urges parties to strengthen their 2030 targets by the end of next year. In addition to updating its NDC, the U.S. joined key sectoral initiatives on methane and deforestation, but it chose not to join pledges related to coal and zero-emission vehicle transitions.

Taking all NDCs, legally binding long-term climate targets and sectoral initiatives into consideration at the end of COP26, the result is that parties must do more to keep global temperature rise below 1.5 C.

If governments can achieve 2030 NDC and binding long-term and net-zero targets, temperature rise would be limited to 2.1 C, according to a Nov. 9 report from Climate Action Tracker (CAT). That estimate represents a 1.5-C reduction from CAT’s 2015 estimate when parties adopted the Paris Agreement.

With an IPCC benchmark of cutting emissions 45% below 2010 levels by 2030 for a 1.5-C warming target, the NDCs still leave an emission-reduction gap of 37 to 38%, according to the report. Sectoral pledges on methane, coal, transportation and deforestation — considering signatories as of Nov. 10 — close the emissions gap by an additional 9%, or 2.2 billion metric tons of carbon dioxide equivalent (GtCO2e).

Taken together, the NDCs, binding targets and sectoral initiatives leave an emission-reduction gap of 33 to 34%, the report said.

US Targets Methane, Deforestation

CAT estimated that the U.S.- and EU-led Global Methane Pledge launched Nov. 2 could reduce emissions by 0.8 GtCO2e in 2030. The agreement calls for a reduction in global anthropogenic methane emissions 30% below 2020 levels by 2030, but top emitting countries, including China, India and Russia, did not sign on to the initiative.

If all parties to the Paris Agreement were to sign on, CAT estimated they could achieve an additional 2.4-GtCO2e reduction. There currently are 110 participating countries. (See US, Canada, EU Pledge to Slash Methane Emissions.)

On Nov. 2, countries came together to support the Glasgow Leaders’ Declaration on Forests and Land Use, calling for an end to forest loss and land degradation by 2030. While the report cautioned that emissions from deforestation and land use are “highly uncertain,” it said the declaration could reduce emissions by 1.1 GtCO2e.

If all countries signed the agreement, it could reduce emissions by as much as 3 GtCO2e, the report said. As of Nov. 11, 140 countries, including the U.S., China and Russia, endorsed the declaration, covering 91% of the world’s forests.

US Dodges on Coal, Cars

The signatories to the U.K.-led Global Coal to Clean Power Transition statement could reduce emissions 2 GtCO2e by 2030, according to the report. Released on Nov. 4, the statement had the support of 46 countries, but China, the U.S., India and Russia were not among them.

Importantly, however, the statement includes specific clauses that some countries chose not to endorse.

One clause says signatories will transition away from unabated coal generation by 2040, or by 2030 for major economies. Another says signatories will no longer issue new permits and stop new construction for coal plants.

If all major economies phase out exist coal fleets by 2035, CAT estimated emissions would reduce by 0.8 GtCO2e. And canceling all coal plants in the global pipeline by 2030 would reduce emissions by 1.2 GtCO2e.

On the clean cars front, the U.S. chose not to support the Nov. 10 COP26 declaration on accelerating the transition to 100% zero-emission cars and vans. The declaration calls for new light-duty vehicles to be zero-emission by 2035 in leading markets and 2040 elsewhere. (See Calif. Supports New Clean Vehicle Pledges at COP26.)

With the initial 38 country signatories, the declaration could reduce emissions by 0.1 GtCO2e by 2030. If, however, major auto manufacturing countries, such as the U.S. and Germany, signed the declaration, additional emission reductions could reach 0.75 GtCO2e, the report said.

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COP26 Ends: 1.5 C Still Alive, but ‘Pulse is Weak’

The U.N.’s 26th Climate Change Conference of the Parties (COP26) ended with close to 200 nations adopting an agreement that recognized the urgent need to make “rapid, deep and sustained” cuts in greenhouse gas emissions to ensure that the average global temperature does not rise above 1.5 degrees Celsius from pre-Industrial Revolution levels.

But in a last-minute change, COP26 leadership buckled to pressure from China and India to water down a key provision on the phaseout of coal.

During the closing plenary in Glasgow, Scotland, the wording of the provision on coal was changed from “phaseout” to “phase-down.” Additional language proposed by India also called for support for “the poorest and the most vulnerable in line with national circumstances and recognizing the need for support towards a just transition.”

In long sessions throughout the day on Saturday, delegates had already registered their disappointment with the shortcomings of the Glasgow Climate Pact, particularly on climate financing for developing nations. But they all agreed to support it as a balanced compromise providing a foundation for further action at next year’s COP27 in Egypt.

Speaking at the plenary, COP26 President Alok Sharma, of the U.K., said, “We can say with credibility that we have kept 1.5 degrees within reach. But its pulse is weak.”

U.S. Special Presidential Envoy on Climate John Kerry put a positive spin on the last-minute change on coal during a press conference following the closing plenary, saying that getting the coal phase-down in the agreement, in and of itself, means it is “on the books.”

“You have to phase down coal before you can ‘end coal,’” Kerry said, adding that Glasgow was never going to be a finish line. “Paris built the arena; Glasgow starts the race; and tonight a starting gun was fired.”

The Paris Agreement, signed in 2015, committed nations to keep global warming “well below” 2 C above preindustrial levels, while also pursuing efforts to limit warming to 1.5 C. But the nationally determined contributions (NDCs) submitted by countries to date will not meet either target, and the Glasgow pact has been framed throughout the conference as essential to “keep 1.5 alive.”

The final agreement also:

  • expresses “alarm and utmost concern” that global greenhouse gas emissions from human activity have already resulted in a 1.1-C increase in temperatures and stresses the need for urgency during “this critical decade” ahead to limit warming to the Paris Agreement target of 1.5 C.
  • recognizes that limiting global warming to 1.5 C will require rapid, deep and sustained reductions in GHG emissions and, specifically, cutting carbon dioxide emissions 45% over 2010 levels by 2030.
  • calls on developed countries around the world to step up and deliver on their commitments to ensure adequate and predictable finance to developing countries, many of which are among the most vulnerable to the impacts of climate change. In particular, the agreement calls for developed nations to deliver on the $100 billion a year promised in the Paris Agreement in 2015 to help developing nations transition to clean energy.
  • calls on developed nations to double their funding to developing nations to help them adapt to the impacts of climate change.
  • urges nations that have not done so to raise their commitments to GHG reduction and develop long-term climate plans in line with the 45% reduction target needed for 2030.

Other provisions call on the U.N. to track nations’ commitments to GHG reductions on a yearly basis to close the gap between what they have committed and what is actually needed to reduce GHG emissions worldwide 45% from 2010 levels by 2030. A U.N. report released prior to COP26 found that current commitments would result in GHG emissions 13.7% above 2010 levels by 2030.

Earlier this year, President Biden committed the U.S. to reducing its GHG emissions by 50 to 52% by 2030. During COP26, the U.S. and the EU also launched a new international initiative to cut methane emissions by 30% from 2020 levels by 2030, with more than 100 countries signing on. The U.S. did not, however, join 40 other countries in a pledge committing developed countries to phase out coal by the 2030s.

The closing plenary voted to approve final adoption of the rulebook for the implementation of the 2015 Paris Agreement, setting standards for transparent reporting of nations’ GHG emission reductions and allowing for trading of carbon credits between countries.

US Takes Stock

Completion of the Paris rulebook was one of several major objectives of COP26 that Kerry highlighted during his press conference, along with adaptation and securing climate finance.

Completing the rulebook was “really hard,” he said, but it will now provide transparency on how and how often countries report on NDC progress. The text gives a “clear blueprint” for actions needed through 2030, and then from 2030 to 2050, he said.

While there was a collective interest in having stronger language on ambition, Kerry said a commitment by countries that have been dependent on coal to phase down is a significant first. Their commitment, he added, doesn’t mean it’s done. It means that accountability and reporting must follow that pledge.

Addressing adaptation during the conference was a top priority for the U.S., according to Kerry, who praised the progress on adaptation finance pledges.

“We have a clear path on the $100 billion [commitment to support developing countries], and we are on track to fulfill that obligation,” he said. “It will go out into the future year after year, and there will be more than $100 billion in those years.”

He also said that the private sector was at the conference “in force” to help rally climate finance.

“We embrace the reality that … we have a gap of some $2.6 [trillion] to $4.6 trillion a year for the next 30 years,” he said. “Since we know that’s not going to come from the government, we have to bring it to the table from the places where it is, and that’s principally the private sector.”

COP27 ‘Starts Now’

U.N. Secretary-General António Guterres admitted in a statement on Saturday that the adopted COP26 text was a “compromise” and reflected “the interests, the conditions, the contradictions and the state of political will.”

“They take important steps, but unfortunately the collective political will was not enough to overcome some deep contradictions,” he said.

The conference did not reach the goals of targeting the phaseout of coal, pricing carbon and fulfilling the financial commitments to nations vulnerable to climate change, according to Guterres.

In the final outcome, he found some “building blocks,” including commitments to end deforestation, reduce methane emissions and mobilize private finance to reach net-zero emissions.

The final text, he said, reaffirms the resolve to meet the 1.5-C goal, boost finance for adaptation and finalize the Paris rulebook with an agreement on carbon markets.

Guterres committed to creating a high-level expert group to establish clear standards to analyze and measure net-zero commitments from “non-state actors.”

“The path of progress is not always a straight line,” he said. “Sometimes there are detours; sometimes there are ditches.”

COP27, he added, “starts now.”

Enviros Disappointed

The climate advocacy community quickly commented on the final text after its adoption, largely expressing disappointment but also seeing progress.

“It’s meek; it’s weak; and the 1.5-C goal is only just alive, but a signal has been sent that the era of coal is ending, and that matters,” Greenpeace International Executive Director Jennifer Morgan said in a statement.

She credited the efforts of young people, Indigenous leaders, activists and countries on the climate frontline for forcing concessions from parties. “Without them, these climate talks would have flopped completely.”

The commitment on coal is both “significant” and “weaker than ideal,” Kelley Kizzier, vice president for global climate at the Environmental Defense Fund, said in a statement.

Kizzier was more optimistic about the progress on carbon markets. The final text, she said, provides rules for a “transparent and accountable carbon market.”

“The decision eliminates double counting for compliance markets and establishes a strong framework to ensure appropriate accounting for voluntary carbon markets that also supports emission reductions in countries hosting carbon market activities,” she said.

On commitments to hold global warming to 1.5 C, the World Resources Institute said in a statement that the 151 new NDCs fall short.

“A number of major emitters have weak 2030 plans and will need to put forward more aggressive targets to drive down emissions this decade,” WRI President and CEO Ani Dasgupta said in a statement. “Encouragingly, countries agreed to come back next year to submit stronger 2030 targets and to put forward long term strategies that aim towards a just transition to net zero by around midcentury.”

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Landowners Support 90-MW Solar Farm in Upstate New York

Two public hearings Wednesday on the 90-MW High River Energy Center solar farm proposed to be located south of Amsterdam, N.Y., resulted in no opposing comments but drew support from affected landowners, mostly farmers (Case No. 21-E-0357).

“Our family owns a portion of land being considered in this project and has owned it for generations dating over 100 years,” Shelly Hutchison said. “We feel proud that we can contribute in a way that positively impacts our town, county and the schools with the income being received from the project and the green energy being created.”

Solar projects like this can reduce the economic pressures faced by farmers through land agreements, encouraging an approach that does not permanently remove the land from agriculture production, Hutchison said.

The panels will be situated on approximately 582 fenced-in acres on an overall 1,425-acre area. It is being developed by High River, a subsidiary of NextEra Energy Resources (NYSE:NEE).

High River said in its June 25 petition for a certificate of public convenience and necessity that it has entered into a contract with the New York State Energy Research and Development Authority, which will purchase from High River renewable energy credits (RECs).

Local Benefits

High River estimates the project will involve approximately $13 million in development and construction expenses, up to 90% injected into the local economy, and will pay participating landowners up to $16 million over the 20-year life of the project.

It also estimates the town, Montgomery County and the Greater Amsterdam School District will together realize payments over the life of the project totaling approximately $11.4 million, including payments in lieu of taxes and host community agreement payments.

“I’m one of the farmer’s daughters in the project … and we hope that someday this can be looked back on as a huge achievement, something that we’re proud of and something that the town can take pride in as they were one of the first towns to do something this beneficial and that had this big of an impact,” said Krystle Button. “It’s only 580 acres, and if you would have asked anybody about these acres that we’re now looking at, nobody would have even known where they were on a map prior to this project.”

The New York Siting Board found that the project is consistent with the goals set forth in the State Energy Plan, the 2020 amendment to the plan, the Clean Energy Standard and the Climate Leadership and Community Protection Act.

“These have not been easy decisions for my family, but we must face the reality of the times,” said local dairy farmer Raymond Dykeman. “We have a federal government looking to access a penalty of $6,500 per dairy cow onto our food supply. … We will use the solar income to diversify the farm operation and hopefully be able to continue dairy farming.”

At the end of the lease, if the next generation needs to use the land for agricultural production, they will be able to remove the panels and put the land back into productive use, as it will not be built up with houses or a business park, Dykeman said.

No Market Power

In a supplemental filing Oct. 18, High River said it will not have the ability to exercise market power because its approximately 1,300 MW of planned and existing generation is spread throughout New York and represent only approximately 3% of the total installed generation capacity in the state.

High River also said it will have no control over transmission and/or distribution facilities in New York, nor will it have any retail customers.

Moreover, the ownership and operation of an approximately 20-mile, 345-kV electric transmission facility located in Erie County (the Empire State Line) by affiliate NextEra Energy Transmission New York does not raise any market power concerns, the developer said.

“Even though I will profit from this project, it won’t make a big difference in how we do things here; we will still put our crops in like we always have,” said Cristopher Persons, one of the farmers hosting the project. “As most people know, it was a very wet year, one that may be the wettest on record for this area during the growing season. Every year is a struggle as far as weather is concerned. This project will help me and my family and provide electricity to those that need it.”

Administrative Law Judge Sean Mullany conducted the hearings and said that while the due date for comments was Nov. 12, they will be accepted throughout the proceeding.

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Overheard at the NARUC Annual Meeting

LOUISVILLE, Ky. — Discussion topics during the National Association of Regulatory Utility Commissioners annual meeting Nov. 7-10 ran the gamut from affordable electrification to resilience investment, supply chain snarls and pipeline infrastructure in a decarbonized industry.

Is Electrification Affordable?

Andreas Thanos, a gas policy specialist at the Massachusetts Department of Public Utilities, said there’s not yet an answer as to how much residential ratepayers will shell out to electrify their homes and water heating.

“I’m still waiting on a good answer for that topic,” Thanos said during a panel discussion. “It’s a hot topic in many more ways than we admit.”

“Generally speaking, consumers are uninformed. They’ve heard about climate change; they know about electrification … but they know about it in this writ-large way,” said Charles White, with the Plumbing-Heating-Cooling Contractors Association. “They don’t have a good, clear understanding of what this means, today, tomorrow, a month from now.”

White said consumers don’t give much thought to replacing their natural-gas furnaces or purchasing a heat pump water heater and their steep costs. He said in many houses, heat pumps may need extra space. Consumers don’t understand electrification’s larger, upfront costs or its increased operating costs.

“They really can’t wrap their head around that reality,” he said. “We see a lot of burden coming down the road for these consumers … and us as contractors are in the crosshairs.”

National Energy and Utility Affordability Coalition Executive Director Katrina Metzler said that since the pandemic, she increasingly has become concerned about the affordability of electrification for limited-income residents.

She related the story of 60 families staying in a Florida motel and struggling to pay electric bills when its owners abandoned the property during the COVID-19 pandemic. She said the motel’s destitute inhabitants regularly faced shutoffs and thousands of dollars in past-due bills.

“I know that from your positions in your states, you’ve seen similar issues,” Metzler told regulators.

She said more than a quarter of the people who lost jobs in the pandemic reported skipping or delaying payment on utility bills. In some states, Metzger said, one in three households struggled to pay utility bills. Of those, two in five households were disconnected after the pandemic began.

At this juncture, the nation has $27 billion in late utility bills, she said.

Metzler said she foresees “a perfect storm” of increasing energy costs paired with a greater reliance on electrification. She also said she’s dismayed by the Biden administration’s apparent lack of concern for an affordable clean-energy transition.

“There has to be conversations about affordability,” Metzler said.

Determining Levels of Resilience Investment

Regulators asked themselves whether they’re placing an appropriate value on reliability risk management as capacity becomes more intermittent and weather grows more unstable.

New Jersey Public Utilities Board member Dianne Solomon said it’s difficult for states to gauge improvements from resilience investments. She said going forward, utilities should draft filings around the risks they are hoping to avoid.

Mishal Thadani, vice president of strategy and policy at artificial intelligence firm Urbint, said utilities and regulators should come together to discuss the most likely dangers from extreme weather events and identify which critical loads should be preserved at all costs.

Thadani said the Oregon Public Utility Commission is to be commended for opening a rulemaking docket to oversee utilities’ risk-based wildfire protection plans (AR 638).

He also said AI can assist utilities in deciding how to best invest in resilience. He said machine learning can identify at-risk utility poles with more accuracy than utility employees.

“Should you spend $5 million on vegetation management, or should you spend $10 million undergrounding lines?” Thadani asked rhetorically.

He also said AI collects data “agnostically,” keeping human biases out of investment processes that have long overlooked underserved communities.

Pipelines’ Place in the Transition

Summit Utilities CEO Kurt Adams predicted Americans will “be thinking about hydrogen today how we thought about solar 10 years ago” during a discussion of the future facing local gas distribution companies as energy is decarbonized.

He said hydrogen is ripe for a spike in popularity, with costs poised to drop. “We will need every single tool in the toolbox,” Adams said of decarbonization. “It is a mammoth undertaking.”

He said hydrogen-replacing-gas is a key component of keeping decarbonization affordable. Keeping existing gas facilities might avoid the need for some expensive transmission projects.

Adams said the nation needs 13 times its current solar and wind penetration to meet decarbonization goals. “That is an enormous challenge,” he said, noting that renewable curtailment rates currently hover around 5% of output and are rising.

Siva Gunda, vice chair of the California Energy Commission, said gas-usage patterns are expected to change unpredictably. He said the industry still doesn’t have a good idea on how affordable green hydrogen and other renewable gases will be and thus, how much current gas pipelines will be used into the future.

Dan Scripps, chair of the Michigan Public Service Commission, said 75% of Michigan currently relies on natural gas for heating needs. He asked whether commissions need to take a long-term examination of gas-system investments and make sure new facilities are hydrogen compatible.

Adams said regulators should focus on keeping bills reasonable while cutting emissions as quickly as possible. He said regulators now have an opportunity to avoid expensive past mistakes, referencing previous authorizations for nuclear and gas plants and Public Utility Regulatory Policies Act facilities.

Supply Chain Obstacles

Illinois Commerce Commission Chair Carrie Zalewski said ongoing supply chain and labor issues may threaten the clean-energy transition by delaying much-needed materials.

“We’ve all seen the ships sitting in port,” Zalewski said. She predicted that supply chain issues and difficulties securing labor will continue into the foreseeable future.

Center for Strategic and International Studies’ Nikos Tsafos agreed it won’t be an easy transition to net-zero emissions. He said climate change will likely further complicate the delivery of certain minerals. He pointed out that half of the world’s copper mines are in areas predicted to face water shortages in the coming years.

Project Canary’s Chris Romer said a solar panel manufactured in America has a carbon footprint different from the “maybe not as clean panel produced in China” and linked to coal-generated energy.

He said consumers can demand clean manufacturing for clean-energy sources. Businesses didn’t one day just stop offering blood diamonds or logs reaped from deforestation, Romer said.

“It’s the buy-side that stopped deciding to buy poorly harvested timber,” he said.

Romer also said utilities making pledges for 2040 or 2050 should be measuring carbon cuts now. Project Canary specializes in monitoring emissions.

“I’m going to lose weight by 2050. The problem is I should probably get on a scale to judge how much I need to lose,” he said. “You can’t lose what you don’t measure.”

Romer urged regulators to be more open-minded with what they’re willing to let utilities try in pilot programs because the energy sector needs to decarbonize quickly.

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MISO Schedules Cost-allocation FERC Filing

MISO said last week it will file with FERC a proposal to create two separate but identical cost-allocation designs for its Midwest and South sub-regions that rely on a 100% postage stamp rate to load.

The proposal, to be filed in mid-December, will split the costs of its long-range transmission planning effort between the two regions.

Jeremiah Doner, MISO’s director of economic and policy planning, said Thursday that discussion of possibly sunsetting the bifurcated allocation approach after a few years or when the RTO approves a transmission project that strengthens the link between the two regions. MISO has said it hopes to use a footprint-wide cost allocation within a few years. (See MISO Hopes Bifurcated MVP Cost Allocation Will be Temporary.)

“One of the drivers for the cost-allocation approach is the limited transfer capability between the regions,” Doner told stakeholders during a Regional Expansion Criteria and Benefits Working Group (RECBWG) meeting.

Staff said they will commission a Brattle Group study on the footprint’s distribution of project benefits in the filing to prove that long-range project benefits are confined to regions. The RTO committed to conducting a similar study in 2026 and every three years thereafter to analyze benefits distribution.

General Counsel Timothy Caister said MISO plans to study projects that increase flows between the Midwest and South as part of the long-range plan’s later stages. He said the RTO may consider a different cost-allocation approach for those cross-regional projects.

MISO is studying the Midwest’s transmission needs before it begins analyzing the South’s needs. Caister also reminded stakeholders that MISO must incorporate any final rules from FERC’s advanced notice of proposed rulemaking, which is aimed at improving transmission planning and cost allocation.

Some stakeholders remain apprehensive about dividing regional transmission costs based on location.

Clean Grid Alliance’s Natalie McIntire asked what MISO would do if it found its proposed Midwest long-range projects are found to have footprint-wide benefits. She asked whether that might change the cost-allocation approach.

“To the extent that the study does not meet the hypothesis, we’ll be back here at the RECBWG,” Caister said.

“I really think it’s important that MISO design what’s best for the grid instead of working around arbitrary boundaries,” Sustainable FERC Project attorney Lauren Azar said.

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PJM MRC/MC Preview: Nov. 17, 2021

Below is a summary of the issues scheduled to be brought to a vote at the PJM Markets and Reliability Committee and Members Committee meetings on Wednesday. Each item is listed by agenda number, description and projected time of discussion, followed by a summary of the issue and links to prior coverage in RTO Insider.

RTO Insider will be covering the discussions and votes. See next Tuesday’s newsletter for a full report.

Markets and Reliability Committee

Consent Agenda (9:05-9:10)

B. Stakeholders will be asked to endorse proposed revisions to Attachment F: Control Center and Data Exchange Requirements of Manual 1 addressing exceptional circumstances outside of the COVID-19 pandemic. The attachment was originally developed and implemented at the start of the pandemic to provide guidance for remote operations in case of control center staff illnesses. (See “Manual 1 Changes Endorsed,” PJM Operating Committee Briefs: Oct. 7, 2021.)

C. The committee will be asked to endorse proposed revisions to Manual 3: Transmission Operations resulting from a periodic review. Updates include minor changes such as removing a reference to NERC standard PRC-001 because of its retirement. (See “Manual Changes Endorsed,” PJM Operating Committee Briefs: Nov. 4, 2021.)

D. Members will be asked to endorse proposed revisions to Manual 13: Emergency Operations resulting from a periodic review. The revisions were endorsed by the Operating Committee earlier this month. (See “Manual Changes Endorsed,” PJM Operating Committee Briefs: Nov. 4, 2021.)

E. Stakeholders will be asked to endorse proposed revisions to Manual 14F: Competitive Planning Process addressing changes to the Regional Transmission Expansion Plan proposal fee structure to conform to the Operating Agreement. The updates were endorsed at the Planning Committee’s meeting this month. (See “Manual Endorsements,” PJM PC/TEAC Briefs: Nov. 2, 2021.)

F. The committee will be asked to endorse proposed revisions to Manual 19: Load Forecasting and Analysis resulting from the biennial review. Changes included adding battery storage to the list of forecasted items in the load forecast model overview. (See “Manual Endorsements,” PJM PC/TEAC Briefs: Nov. 2, 2021.)

G. Members will be asked to endorse the final proposed change to the 2022 day-ahead scheduling reserve (DASR) requirement to 4.43%, slightly lower than the 2021 requirement of 4.78%. (See “Day-ahead Schedule Reserve Endorsed,” PJM Operating Committee Briefs: Nov. 4, 2021.)

Endorsements (9:10-9:30)

1. Sunset of the Carbon Pricing Senior Task Force (9:10-9:20)

Stakeholders will be asked to endorse the sunsetting of the Carbon Pricing Senior Task Force (CPSTF). A majority of stakeholders last month indicated they were not ready to move forward with developing rules on leakage mitigation in carbon pricing. (See “Carbon Pricing Senior Task Force Sunset,” PJM MRC/MC Briefs: Oct. 20, 2021.)

2. Sunset of the High Voltage Direct Current Senior Task Force (9:20-9:30) 

The committee will be asked to endorse the sunsetting of the High Voltage Direct Current Senior Task Force (HVDCSTF), which was created last year to examine integrating HVDC converters as a new type of capacity resource in PJM. (See “HVDCSTF Sunset,” PJM MRC/MC Briefs: Oct. 20, 2021.)

Members Committee

Consent Agenda (1:25-1:30)

B. Members will be asked to endorse the 2021 reserve requirement study results for the installed reserve margin (IRM) and forecast pool requirement (FPR). The results were endorsed at last month’s Planning Committee meeting. (See “Reserve Requirement Study Results Endorsed,” PJM PC/TEAC Briefs: Oct. 5, 2021.)

C. The committee will be asked to endorse proposed revisions in Manual 15: Cost Development Guidelines, the OA and the tariff to address incremental and no-load energy offers. PJM said the Cost Development Subcommittee proposed revising the no-load cost and incremental energy offer definitions to clearly define what costs can be included, including operating costs, tax credits and emissions allowances. (See “Manual 15 Revisions Endorsed,” PJM MIC Briefs: Sept. 9, 2021.)

D. Stakeholders will be asked to endorse proposed tariff revisions addressing behind-the-meter generation business rules on status changes. The updates were developed in special sessions of the Market Implementation Committee. (See “Manual 14G Updates Endorsed,” PJM PC/TEAC Briefs: Aug. 31, 2021.)

E. The committee will be asked to endorse proposed tariff revisions to address changes related to auction revenue rights, financial transmission rights and transparency. The proposal was endorsed at last month’s MIC meeting. (See “ARR/FTR Market Task Force Proposal,” PJM MIC Briefs: Oct. 6, 2021.)

Endorsements (1:30-1:45)

1. Motion Regarding West Virginia PSC Attendance at Liaison Committee Meetings (1:30-1:45)

Members will be asked to approve a request from Public Service Commission of West Virginia that it be permitted to attend the Liaison Committee as an observer. The committee is being asked to endorse the motion upon first read.

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Monitor: PJM Energy Prices Rose in Q3, Still Competitive

PJM’s energy prices continued to rise into the third quarter of 2021, the Independent Market Monitor reported Thursday, but they also remained competitive.

In presenting Monitoring Analytics’ third-quarter State of the Market Report, Monitor Joe Bowring said the load-weighted average real-time LMP was 68.1% higher in the first nine months of 2021 than the same period in 2020, coming in at $35.68/MWh versus $21.22/MWh. Of the increase, Bowring said, 91.5% was a result of higher fuel costs, especially higher natural gas prices.

Real-time, average hourly load for the same period increased by 4.2% from 2020, from 85,886 MWh to 89,515 MWh.

“Energy prices in PJM in the first nine months of 2021 were set, on average, by units operating at, or close to, their short-run marginal costs, although this was not always the case,” the report said. “This is evidence of generally competitive behavior and competitive market outcomes, although high markups for some marginal units did affect prices.”

The Numbers

The report found that theoretical net revenues, which are a “key measure of overall market performance” and a “measure of the incentive to invest in new generation,” increased for all unit types in the first nine months of 2021 compared to 2020 in the energy market. Revenues increased by 42% for a new combustion turbine, 50% for a new combined cycle, 68% for a new nuclear plant and 974% for a new coal unit. The report said the new coal unit percentage was inflated because it remained near zero in 2020.

Other theoretical net revenues for units included 157% for a new diesel, 51% for a new onshore wind installation, 72% for a new offshore wind installation and 66% for a new solar installation.

Comparison-of-PJM-market-summary-statistics-(Monitoring-Analytics)-Content.jpgComparison of PJM market summary statistics between January-September 2020 and 2021. | Monitoring Analytics

Higher energy prices and gas costs changed the “relative economics” of coal and gas units, the report said, with coal generation increasing 30.9% and gas generation decreasing 6.4%. The Monitor found the changes in fuel prices this year have slowed but did not change the long-term decline in the share of coal generation versus the increase in gas.

PJM energy produced from coal was 24%, while the share of energy produced from natural gas was 37%, the largest of any fuel source in the RTO.

“The role of gas-fired generation highlights the importance of ensuring that PJM has current, detailed and complete information on the gas supply arrangements of all generators and that PJM consider rules requiring capacity resources to have firm fuel supplies,” the report said.

The cost of transmission continued to be greater than the cost of capacity, the report said, while the total cost of wholesale power increased by 37.6%, from $43.67 in 2020 to $60.10. Total energy uplift charges increased by 123.3%, from $58.6 million to $130.8 million.

The Monitor found that total congestion increased by 55.1%, going from $396.1 million to $614.6 million. Only 61.1% of total congestion paid by customers for the first four months of the 2021/22 planning period was returned to customers through the auction revenue rights and the self-scheduled financial transmission right revenues offset.

“The goal of the FTR market design should be to ensure that customers have the rights to 100% of the congestion that customers pay,” the report said.

New Recommendations

The Monitor made two new recommendations for PJM and stakeholders to examine.

In the energy market, the IMM recommended that capacity resources be required to use flexible parameters in all offers at all times to ensure effective market power mitigation and to ensure that resources meet their obligations to be flexible. The Monitor rated the change as a high priority.

In the capacity market, the IMM recommended that the value of capacity transfer rights (CTRs) should be defined by the total megawatts cleared in the capacity market, the internal megawatts cleared and the imported megawatts cleared, and not redefined later prior to the delivery year. The recommendation was rated as a medium priority.

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Buildings Alliance Launches Clean Heat Initiative to Rally Nations

The U.K. launched a new clean heat initiative Thursday at the United Nations Climate Change Conference (COP26) in Glasgow, Scotland, to generate a global understanding on how to decarbonize the built environment.

“To help countries overcome the barriers for decarbonizing heat, greater collaboration will be required so that policymakers can share best practices, we can scale markets for clean heating and energy efficiency solutions across multiple countries and provide better facilities for private sector partnerships,” said Martin Callanan, U.K. minister for business, energy and corporate responsibility.

Launched under the Global Alliance for Buildings and Construction (GABC), the Clean Heat Forum sprang out of a collaboration with Colorado-based nonprofit RMI. GABC, which originated at COP21 in Paris, has 35 member countries, including the U.S. and Canada.

“We see the GABC as the center of gravity for coordinating action for building decarbonization,” Callanan said during a launch event for the forum.

Global building decarbonization is not on track to reach the goals of the Paris agreement, according to the GABC-led 2021 Global Status Report for Buildings and Construction released in October. Data for 2019-2020 show a temporary improvement in decarbonization levels, but the report attributed the change to economic slowing under the COVID-19 pandemic. Emissions and energy consumption will rebound in the near term, leaving a narrow window of opportunity to make the building industry more sustainable, the report said.

Jon-Creyts-(UN-Climate-Change-Conference-UK-2021)-FI.jpgJon Creyts, managing director and chief program officer at RMI, hosted a panel discussion Thursday at COP26 for the launch of the Clean Heat Forum. | UN Climate Change Conference UK

The heating and cooling sector represents 51% globally of energy demand, said Rana Adib, executive director of the international think tank REN21.

“It’s clearly a sector that is massively lagging behind in the renewable energy share, which is 10%,” she said during the launch event. The lag, she added, is due to a lack of government attention to the heating sector.

“Only 22 countries have a policy and regulatory framework on renewable energy heat,” she said.

While 1,300 cities have either a renewable energy target or policy and regulatory framework to support renewable energy, only 300 cities have a support mechanism for renewable energy in the heating and cooling or buildings sectors.

With much of the world’s building stock located in cities, they have a vital role to play in the global ambition on building decarbonization, Adib said.

Municipal-level discussions on climate change usually focus on transportation and energy production, and heating is “neglected,” Zdeněk Hřib, mayor of Prague, Czech Republic, said during the launch.

In Prague, he said, 90% of the city’s heating is fossil fuel-based, and the heating sector accounts for 11% of the city’s greenhouse gas emissions.

To address building emissions, the city made sustainable buildings one of the main parts of a 2019 climate pledge. A flagship clean energy project for the sector includes installation of heat pumps on the water outlet from the city’s wastewater treatment facility.

The facility’s output, Hřib said, is 10 degrees hotter than water in the major river that runs through the city.

“We would like to bring this waste heat that is now being lost completely into the heating system of Prague, which will make our city more carbon neutral than it is now,” he said.

While the heat pump market has realized a major surge in recent years, Adib cautions that it is not a silver bullet for building decarbonization.

Solar thermal and sustainable waste-to-energy are important technologies for the sector, she said, adding that energy efficiency could be a better option under certain conditions.

“We need to raise our voice differently, think about calibration and become much better in communicating about what it means to have good quality heat,” she said.