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MISO taking steps to prepare for utility of the future


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MISO taking steps to prepare for utility of the future

The Midcontinent ISO said it is working on ways to accommodate an evolving industry, including a look at updating the investment approach for transmission and enhancing coordination and communication.

Both are a part of the action plan included in the MISO Forward 2020 report that was released March 3. The report focused on five hypothetical utility personas — conventional, new mix, high wind, distributed and wireless — to show what utilities might look like in the future and what they would need from a grid operator.

According to the report, those utilities "need market structures and planning approaches that include a more granular assessment of risk and value contribution for core system needs, as compared to the legacy approach that often bundled multiple capabilities into one priced component, such as energy."

The findings come about a year after the grid operator released its inaugural MISO Forward report. The 2019 report outlined three industry trends: resources that can provide incremental energy at low or no additional costs; the shift from large central-station power plants to smaller, often variable resources on local low-voltage networks; and changes in information and communication technologies. The grid operator respectively referred to those trends as the "3Ds": de-marginalization, decentralization and digitalization.

In its 2020 report, MISO asked stakeholders what influence these trends could have on utilities and how they shape supply and demand profiles for system needs.

The report described a conventional utility as one with a resource mix largely made up of gas and coal. A new mix utility is one focused on reducing carbon emissions, with investments in distributed energy resources and utility-scale wind and solar. The high wind and distributed energy utilities rely on those respective resources, while the wireless utility does not own certain traditional assets such as distribution or transmission wires but does have significant control over customer demand and timing of energy use through digital controls.

The different types of utilities also use the markets in different ways, according to the report.

A high wind utility, for instance, generally can produce enough wind power to meet its customer demand but uses the wholesale markets to sell any excess electricity and to buy power when the wind dies down. A conventional utility largely can serve its customers independently and looks to wholesale market products that enable compensation for the short-term flexible resources it can provide others in the region, the report said.

The report noted that while choices made by some utilities to invest in wind, solar and storage are bringing diversity to MISO's system, not all utilities are making the shift now and some may not do so for a relatively long time. Even so, stakeholders interviewed for the report encouraged the grid operator to start working on changes to its products and services aimed at accommodating such a shift.

"While the utilities of the future may be here today for early adopters, they may also be more than a decade away for others," the report said. "The urgency of preparing for change now, however, can be a helpful input to utilities as they make long-term investment decisions."

According to the report, the needs of the utility of the future fall into four areas: clearly set reliability criteria, redefined markets, a new approach for transmission investment and better coordination and communication.

In a foreword to the 2020 report, MISO CEO John Bear said the grid operator, in the course of discussions with stakeholders, heard of the need to set future reliability criteria that reflect growing uncertainty across all hours of the year. That includes addressing issues with MISO's planning resource auction and rethinking resource accreditation, he said. Another important step would be to redefine markets and ensure that prices reflect underlying conditions such as scarcity and the value of flexibility, Bear said.

On the transmission side, MISO can build on the value identified in new market constructs and reliability criteria to better deliver "key" grid needs. MISO also was told about the importance of boosting communication and coordination across the transmission and distribution interface to address challenges with load modifying resources and with an eye toward emerging technology and "active demand," the CEO said.

"These and other insights underpin the continuation of the multi-year action plan we have developed with our stakeholders … we are confident that it will help us realize our vision of being the most reliable, value-creating RTO," Bear said.