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Study: Demand response can help Michigan meet reliability needs in 2018

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Study: Demand response can help Michigan meet reliability needs in 2018

Michigan can maintain reliability through the summer of 2018, but additional resources such as demand response are needed to ensure a fortified grid, a study found.

The study, the "Michigan Capacity Resource Assessment," published Jan. 31, shows that utility projects now underway should help maintain reliability in the summer of 2018. But, "[t]he study also shows us, however, that we probably want to build more of a cushion between now and the summer of 2018 just in case things don't go as planned," Michigan Agency for Energy Executive Director Valerie Brader said in a news release.

"Demand response resources, which are essentially users agreeing to use less electricity when demand is spiking, are likely to be both cost-effective and can be put in place before the summer of 2018, Michigan Public Service Commission Chairman Sally Talberg said in the release. The summer of 2018 is important in light of a PSC analysis last year that forecast a potential shortage of supply during the summers of 2017 and 2018. Since requesting the study Aug. 9, 2016, the Agency for Energy collaborated with the PSC and the Midcontinent ISO, which manages the electric grid across Michigan and 14 central states.

The study reviewed potential reliability impacts to MISO Zone 7, which pertains to the Lower Peninsula of Michigan. With pending coal plant retirements, the agencies looked to understand if Michigan can meet local reliability standards if the state faces an extremely hot summer. One of the risks the study modeled is the potential simultaneous outages of the zone's two nuclear plants, Fermi and Palisades. The scenario mimicked an actual occurrence in the summer of 2012 when both plants were unexpectedly down, according to the study.

The study also modeled several long-term scenarios, one of which looked at the early retirement of Palisades. Though plant owner Entergy Corp. has announced plans to shut the plant Oct. 1, 2018, the study modeled the early retirement of the 820-MW plant as of Jan. 1, 2022, when its current power supply contract with CMS Energy Corp. subsidiary Consumers Energy Co. ends. Other scenarios assumed that Palisades retires in 2031, based on when its operating license from the U.S. Nuclear Regulatory Commission expires.

The study had three key findings. First, if DTE Energy Co.'s St Clair units remain out of service and no new resources are developed while power demand hits historic highs, then Michigan's Lower Peninsula would not meet federal reliability standards, the agency said in the release. DTE in June 2016 announced plans to retire six St Clair units, totaling about 1,550 MW, by 2023, but operations were interrupted by a fire in August 2016.

A second finding showed that Michigan can meet federal reliability standards if planned new resources within Zone 7 are developed and all the St. Clair units return to service by the summer of 2018. If not all of the St. Clair plant resumes operation, then additional resources would be needed, according to the release.

Finally, demand response is the most cost-effective way to "fill any gap" in meeting reliability standards, the agency said in the release.

The completion of this initial study provides the "preliminary work" to move on to a second study Gov. Rick Snyder requested Aug. 17, 2016, regarding expanded transmission between the Lower and Upper Peninsulas and between the Upper Peninsula and Ontario, the agency said in the release.