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ISO Outlook: MISO to net 5,100 MW as renewables replace fossil fuels

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ISO Outlook: MISO to net 5,100 MW as renewables replace fossil fuels

The Midcontinent ISO could see a net 5,156 MW of capacity added to the grid during 2018, as 696 MW of scheduled retirements are offset almost entirely by 671 MW of planned gas combined-cycle plants alone. Also expected to come online this year are 4,490 MW of wind capacity and 318 MW of solar.

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Fossil fuels account for 98% of the retirements with regulatory approval from MISO, with 615 MW of coal and 66 MW of gas. The largest scheduled retirement is the coal-fired Bailly facility in Porter County, Ind., at 480 MW. The retirement is part of NiSource Inc. subsidiary Northern Indiana Public Service Co.'s plan to halve its coal-fired capacity by 2023.

The majority of capacity additions are wind, and 248 MW have already come online in 2018. The largest of these is the 200-MW Red Pine Wind Project in Lincoln County, Minn., which began operating in January. The plant's owner, EDF Renewable Energy, an EDF Group subsidiary, earlier in February complained to federal regulators that MISO is too slow to process interconnection requests, putting up to 29,049 MW of wind at risk of not qualifying for production tax credits that expire at the end of 2020.

Of the capacity slated to come online in 2018, 32% is in the late stages of development, with 313 MW in advanced development and another 1,569 MW under construction. The largest project under construction is the 671-MW gas-fired Eagle Valley CC, which Indianapolis Power & Light Co. is building in Morgan County, Ind., replacing a coal-fired plant that was retired in 2016. The largest renewable energy project under construction is the North English Wind Project (Wind XI) in Iowa, which totals 340 MW. The plant is part of MidAmerican Energy Co.'s 2,000-MW Wind XI project, of which two facilities have already come online.

Indianapolis Power & Light is a subsidiary of AES Corp. MidAmerican Energy is a subsidiary of Berkshire Hathaway Energy.

Supply and demand analysis

From 2012 through 2017, MISO saw a slight net decrease in capacity, dropping from 193,648 MW in 2012 to 191,988 MW in 2017. Over the same period, peak load grew, going from 98,399 MW in 2012 to 120,233 MW in 2017, representing a 22% increase. This is skewed somewhat, because the Entergy Corp. system was incorporated into MISO at the end of 2013. As a result this growth in peak demand, the supply to demand ratio in the region has been on a steady decline. After surpassing 100% in 2013, it has since dropped to 60%. While this ratio is still high, the current pace of demand growth in the region demonstrates the need for new build to replace retiring units. For now, though, the ISO has proved it can handle spikes in demand reliably, with a recent example being the cold snap in early 2018, which MISO was able to manage despite experiencing 36,000 MW of outages during the peak hour of Jan. 2.

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Commodities outlook

Forward around-the-clock monthly power prices for locations across MISO as of Feb. 9 followed similar patterns, remaining generally stable during the shoulder seasons and spiking in the summer. There is some variation by region, with the Minnesota Hub in the north averaging $22.66/MWh, prices at the Illinois Hub coming in slightly higher at $27.27/MWh, and the Louisiana Hub averaging the highest, at $30.66/MWh.

Gas forwards at Henry Hub as of Feb. 9 for the year ahead show December having the highest price, at $2.92/MMBtu. Similarly, the Chicago Hub peaks in December as well, at $2.83/MMBtu. Henry Hub's average for the year, though, comes in at $2.70/MMBtu, higher than the Chicago Hub average of $2.44/MMBtu.

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