Midcontinent Independent System Operator (MISO) is not offering a soft landing for solar on the transmission grid. MISO is going out of its way to penalize solar by reducing the capacity value to zero, insisting developers pay more for non-firm transmission access to go along with continued delays in processing interconnection studies.
MISO’s proposals could jeopardize state clean energy goals, like in Minnesota, because developers will drop out of the MISO queue, fueling the endless loop of restudies.MISO’s capacity proposal penalizes solar
MISO is drastically reducing the capacity credit for wind and solar. The implementation of this proposed change happens at the same time more than 75,000 MW of solar will be coming off the queue in 2025-27.
In the proposed Loss of Load (LOL) method, MISO looks at Expected Unserved Energy hours in the Loss of Load Expectation (LOLE) model, then determines whether wind and solar were available during those hours. Previously, MISO calculated a capacity credit for wind based on an average Effective Load Carrying Capability (ELCC) method.
Currently, MISO does not calculate capacity credit for solar even though, in late 2019, when asking for FERC’s approval of treating solar as a Dispatchable Intermittent Resource similar to wind, MISO told FERC that it would run ELCC calculations when solar reaches a threshold of 8,000 MW. However, MISO is changing its tune under this proposed LOL method. MISO assigns 50% credit to solar without running any ELCC calculations.
The industry accepts that the capacity value diminishes when more renewables are added to the transmission system unless storage is added at the same location. That is because, under an average ELCC method, the capacity value is determined by looking at past 10-12 peak load hours and verifying whether the renewable resource could contribute to those peak load hours. Under a marginal ELCC method, there is no gradual reduction in capacity credit. It drops to zero due to analysis of the marginal unit of capacity rather than taking an average of the past year’s 12 peak load hours.
This LOL method affects how Minnesota and any other MISO state that plans on meeting its 100% clean energy goals from renewables. Because if the capacity value of renewables is zero in the MISO market, why would renewable developers build transmission-connected solar in this state? An even better question is, why should renewable developers pay more than $10 million in upgrades to the transmission system if solar is used only for energy, not capacity?
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Starting with the 2022 cycle, developers pay more for non-firm transmission service (ERIS)
MISO has secured planning stakeholder approval to reduce a distribution factor percentage from 20% to 10% in interconnection studies for a transmission service called Energy Resource Interconnection Services (ERIS). This change applies to projects starting the 2022 Definitive Planning Phase (DPP) cycle. This change means developers now have to pay more in network upgrade costs even when they are not assured of a firm transmission service such as Network Resource Interconnection Service (NRIS) and the capacity value is zero.
MISO says there is too much congestion on its lower voltage transmission system when renewables are interconnected. Hence it needs to lower the factor for less than 345 kV transmission facilities. MISO justified the proposal with data in the West region that showed several flowgates (a bunch of transmission facilities) congested in 2021 and 2022 due to interconnection projects with a DFAX in the 10% to 20% range.
The Organization of MISO States (OMS), state regulators, and their staff association support this MISO change. The MISO South region gets a pass on this proposed change until the South has its Long Range Transmission Plan (LRTP) projects approved.
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MISO interconnection queue delays continue in 2023
There are too many changes in MISO’s seasonal capacity auctions, prompting multiple market participants to ask the Independent Market Monitor for clarifications regarding replacement capacity and exclusions from participating in the auction due to planned outages greater than 31 days in a season.
MISO members are worried about having enough resources to participate in each of the four seasons due to queue delays in all four regions – Central, East (Wisconsin & Michigan), South, and West.
These delays mean projects submitted in the DPP-2020 cycle will likely see interconnection agreements executed throughout 2023 even if all four season auctions clear in April. The Central region has the longest delay for the DPP-2020 cycle. December 2023 is the scheduled date for the execution of agreements which means market participants need exemptions from the Market Monitor for the summer and fall months. The South and East regions fare better with anticipated agreements in May and June. MISO’s current DPP schedule states that the West region agreements fall in September 2023.
If MISO’s capacity proposal for non-thermal resources becomes effective in April 2024 before the 2024-25 planning year, the solar projects submitted in the DPP-2022 cycle will start with 1% capacity credit in winter, 35% in spring, 43% in summer, and 6% in the fall seasons. Solar submitted in subsequent DPP cycles will get single-digit capacity values under this new LOL method.
At the same time, developers will be paying more for transmission upgrades. Unless MISO takes a comprehensive look at the grid needs, solar will be at a disadvantage and may not be part of future MISO utility plans.