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MISO presents market changes to address anticipated rise in renewables

Houston — The Markets Committee of the Midcontinent Independent System Operator reported Tuesday that data collected from MISO members suggests a reduction in coal-fired generation as part of its fuel mix to 29% by 2030 from the current 48%, and anticipates a rise in solar and wind power generation to 30%, also by 2030, from the 2018 level of 7%.

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In a presentation to the committee, MISO board member Trip Doggett said there is a change underway in the asset portfolios of many utilities in the MISO service area. That change is headed in many cases to 50% renewable portfolios, he said.

Doggett said the "value proposition" of MISO is for not every utility [portfolio] looking the same and that MISO still values asset diversity, But, he added, the real question is one of "deliverability."

"It's no good to have a portfolio that looks a certain way. It has to be deliverable," Doggett said.

Nevertheless, "enhancements are needed [in the MISO market] to meet the needs of the future," Doggett said.

According to a Resource Availability and Need report presented by Richard Doying, MISO's executive vice president, markets, the grid operator's board has been looking at the "importance of necessary reliability attributes for an evolving grid where every hour matters."

Currently, reliability is based on a single-hour reserve. Doying said reliability in the future must be based on an all-hours criteria, not just one summer hour, but every hour.

The RAN emphasized that long-term reliability is a long-term project for MISO. It said that reliability criteria for a transforming grid has to reflect required attributes "in all horizons," and that "all hours matter."

It said that MISO members will have to be responsible for meeting reliability criteria with resources that can be accredited based upon the resource's ability to deliver certain attributes.

MISO also said that market prices must be reflective of underlying system conditions and "resources must be appropriately incentivized for the attributes they provide."

The Markets Committee reported that it expects to "fully meet" the 112 GW of peak load forecast it has for this fall. "Even in high load we have sufficient supply," Shawn McFarlane, executive director, strategy and enterprise risk management, said. He added that the highest peak load so far in September was 107 GW on September 7.

In its Summer 2019 quarterly report, MISO's market monitor, Potomac Economics, said that a "significant drop" in natural gas prices impacted the power sector by bringing real-time energy prices down 19% compared with the summer of 2018, with ancillary services prices falling between 11% and 24% and real-time RSG payments falling by almost 40%.

It said that MISO's annual peak load of 120.9 GW occurred on July 19. That was 600 MW lower than the summer 2018 peak load, "and well below the forecast peak of 125.5 GW."

MISO's average summer load in 2019 fell 4% compared with the previous year, the market monitor's David Patton reported.

According to Patton, the value of MISO's real-time congestion was down 12% compared with the summer of 2018, but there were "some constraints, some wind congestion."

In the month of July, congestion increased by nearly 50%, as wind production increased by 24% from July 2018.

"Generation and transmission outages and suspended baseload capacity contributed to $11 million in congestion on a single constraint," the market monitor's report said.

Patton discussed with the committee his concerns with errors in MISO forecasting, and particularly errors in forecasting by wind generators. MISO's average forecasting error was 200 MW, the market monitor said.

Patton also discussed an event that took place August 13, when the Electric Reliability Council of Texas was suffering through a heat wave that had pushed up load almost to its breaking point and prices up to $8,800/MWh between the hours of 3:00 pm and 5:00 pm Central Time.

Patton described how ERCOT requested units in MISO's Western Load Pocket on the seam in Texas to switch to serve ERCOT, "but conditions were tighter in MISO," Patton said.

"A transmission derate and loss of a critical unit brought MISO to the edge of having to shed load in the load pocket, which MISO was able to avoid," Patton said.

But while prices in ERCOT were near $9,000/MWh, prices at MISO's Texas Hub ranged from $500/MWh to $800/MWh.

Patton said the August 13 event underscored the need for MISO to "improve shortage pricing so prices reflect the expected value of lost load."

He told the committee that if MISO had shortage pricing August 13, the price of its power would have been $4,000 rather than $500.

(Revises headline, first paragraph)

-- Jeffrey Ryser, jeffrey.ryser@spglobal.com

-- Edited by Manish Parashar, newsdesk@spglobal.com