US Midcontinent ISO weighs queue cap to deal with onslaught of renewables

To cope with the rush of new generation projects under the US Inflation Reduction Act, the Midcontinent Independent System Operator is planning to make sweeping interconnection queue changes, including limiting the amount of capacity allowed per cycle and per developer.

"We believe these rules will have a significant impact to ensure that we get better projects into our queue," Andy Witmeier, director of resource utilization at MISO, said July 19 at a meeting of MISO's Planning Advisory Committee. "We do not want to slow the energy transition down, but the more projects we have in our queue, the longer it takes to study them," he said.

MISO is proposing to cap the allowed capacity to 60% of the peak demand in MISO, which would translate to 73 GW of capacity per cycle, according to a presentation discussed at the meeting.

The grid operator is proposing to limit the amount submitted by one developer to 10% of the total cap, allowing 7.3 GW per developer, the presentation said. However, there would be safety valve to allow projects with signed power purchase agreements to enter the queue, the presentation said.

Cap concerns

The cycle cap and the developer cap are untested at the Federal Energy Regulatory Commission, said Sophia Dossin, regulatory affairs lead at Invenergy. "Do you see this cap proposal jeopardizing the entire suite of reforms given how likely it is be contested at FERC?" she said.

The developer cap is the most concerning of the reforms because of the administrative burden and the success rate at FERC, said Witmeier. "Although, if it was a democratic system, this would be implemented, because the majority of developers want to see this kind of cap on developers," he said.

In 2022, MISO received applications to connect 171 GW of new generation to the grid, which exceeds MISO's summer peak load of 123 GW, the presentation said. Not only is it difficult to model so much capacity, more than 70% of the projects are expected to drop out of the queue, Witmeier said.

The number of applications ballooned thanks to the IRA's tax credits for renewable energy projects, and the 2022 cycle was only two months after the IRA, Witmeier said.

"Given the time since the IRA, we assumed that we would probably get 200 GW of queue requests if we kicked off the 2023 queue cycle with the same rules that we have in place today," Witmeier said.

MISO's current queue, considering all cycles, includes 240 GW of capacity, 53% of which is solar, 18% of is hybrid, 16% of which is storage, 10% of which is wind, and 3% of which is gas, according to the presentation.

The current rules still incentivize speculative projects by requiring a small financial commitment up front and by allowing withdrawn requests to get most of their money back, with interest, due to lack of penalties, the presentation said.

Other reforms

In addition to the cap on the cycle and developers, MISO would attempt to limit the queue size by imposing stricter site control requirements, requiring bigger milestone payments, and imposing steeper penalties on projects that withdraw from the queue.

MISO is proposing to increase the initial milestone payment from $4,000/MW to $12,000/MW, Witmeier said. The payments for the third and fourth milestones would also increase, he said.

The grid operator also proposes to increase the point of interconnection site control requirements, including requiring 100% site control from generator to the POI prior to generator interconnection agreement negotiations, the presentation said.

There would be an automatic withdrawal penalty that increases at each milestone, the presentation said. Under current rules, over 74% of projects qualify for penalty-free withdrawal, and that should be reduced to 10%-25% of all projects in a cycle, Witmeier said. Penalties collected would be used to offset the interconnection costs of projects in that cycle that sign a GIA, the presentation said.

But the milestone payments, POI site control requirements and withdrawal may not be enough to limit the amount of new requests in a cycle, so the cap on capacity per cycle is still needed, the presentation said.

MISO plans to file a proposal with FERC in the third or fourth quarter of 2023, targeting FERC acceptance by the end of the year, the presentation said. MISO will extend the 2023 cycle submission deadline until the tariff changes are made, the presentation said.