During the April 21, 2022, Markets Subcommittee (MSC) meeting, MISO discussed improvements to demand curves for Ramp Capability Up (RCUp) and Short-Term Reserve (STR). MISO is requesting feedback on the following questions:
Please provide feedback by May 11.
WPPI offers the following feedback on the questions posed by MISO re the proposed improvements to the demand curves for Ramp Capability Up and Short-term Reserve discussed at the MSC, 4/21/2022:
(1) Should MCPs [Market Clearing Price] be set higher for a given system or regional shortage in Ramp Capability Up in exchange for overall lower system production costs?
Ramp Capability Up MCPs should reflect the value of the product. The discussion at the MSC, 4/21 made a reasonable case that the current Ramp Capability Up demand curve does not place a sufficiently high value on the product. In particular, when Ramp Capability Up has a non-zero MCP, it is often capped at $5/MWh.
(2) Should DIRs [Dispatchable Intermittent Resources] be excluded from clearing RCUp (Ramp Capability Up)?
Before answering this question, WPPI would appreciate a discussion at a future MSC to discuss experience to date re DIR provision of Ramp Capability (both Up and Down).
(3) Are the proposed changes to STRDC [Short-term Reserve Demand Curve] appropriate given current and future system need?
Based on WPPI’s understanding of the proposed changes to the Short-term Reserve Demand Curve as discussed at the MSC, 4/21 (there was a lot of information conveyed on only 2 slides), they appear reasonable. The proposed changes: moving from a single value to a multi-step demand curve; maintaining the current single value ($100/MWh) as the first step; increasing to a cap of $500/MWh (emergency offer floor); beginning to increase $/MWh at MW less than 2700 (contingency reserves 2010 MW + 1% of average load 75 GW, headroom less than this triggers Max Gen Emergency Alert); and at 2010 MW (contingency reserves) hit cap.
(4) Do the proposed enhancements appropriately compensate resources to mitigate emergency reliability risks?
Yes, the proposed changes to the Ramp Capability Up and Short-term Reserve Demand Curves do appear to compensate resources appropriately to mitigate emergency reliability risks. The Ramp Capability Up Demand Curve reflects the cost of an operating reserve (spin) shortage and the Short-term Reserve Demand Curve is intended to reflect the cost of the loss of load.
(5) Should demand curve updates require a FERC filing, or be based on a filed methodology?
At this stage, WPPI isn’t ready for demand curve updates to be based on a filed methodology vs. requiring a FERC filing. That said, WPPI is open to having this conversation. MISO has advanced the development of demand curves considerably and perhaps it would be appropriate to file a methodology, which may facilitate more timely updates. On the other hand, perhaps the methodology is still evolving and at least this stakeholder’s understanding is still maturing, suggesting perhaps it is appropriate to continue to file demand curve updates, at least for a period of time.
MEMORANDUM
TO: MISO MARKET SUBCOMMITTEE
FROM: THE ENTERGY OPERATING COMPANIES
SUBJECT: CONTINUED REFORMS TO IMPROVE SCARCITY PRICING
DATE: MAY 11, 2022
The following feedback is offered by the Entergy Operating Companies ("EOCs")[1] in response to the request made during the April 21, 2022, Market Subcommittee meeting concerning continued reforms to improve scarcity pricing and price formations.
The EOCs support MISO’s continued efforts focusing on the reliability of the system and agree that appropriate price signals are one way to help ensure reliability. As provided in previous feedback, we reiterate that it is important that Demand Curves are appropriately designed so that they price operational incentives/outcomes and reliability appropriately.
Below are our responses to the individual questions posed by MISO in the feedback request:
1. Should MCPs be set higher for a given system or regional shortage in Ramp Capability Up (RCUp) in exchange for overall lower system production costs?
Response: If higher MCPs resulted in both system and regional production cost savings while increasing reliability, this would seem to be a useful pricing enhancement. However, the eight-day analysis period provided by MISO showed both modest savings and decreases in spinning and supplemental deficits. We ask that a more in-depth study be performed to demonstrate consistent performance of the proposed RCUp curve.
2. Should DIRs be excluded from clearing RCUp?
Response: If an individual DIR has the demonstrated capability to move up if called upon, then it should have the opportunity to participate.
3. Are the proposed changes to Short Term Reserve Demand Curve (STRDC) appropriate given current and future system need?
Response: To answer this question MISO would need to provide details around costs and reliability improvements associated with the proposed STRDC. It would be helpful to see both system wide and regional cost/benefits.
4. Do the proposed enhancements appropriately compensate resources to mitigate emergency reliability risks?
Response: Further analysis would be needed, see response to question 3 above.
5. Should demand curve updates require a FERC filing, or be based on a filed methodology?
Response: The EOC’s would be in support of requiring a FERC filing.
The EOCs appreciate the opportunity to comment.
[1] The Entergy Operating Companies are Entergy Arkansas, LLC, Entergy Louisiana, LLC, Entergy Mississippi, LLC, Entergy New Orleans, LLC, and Entergy Texas, Inc.
Environmental Sector feedback on Continued Reforms to Improve Scarcity Pricing (MSC-2019-1)
The Environmental Sector appreciates the opportunity to comment on MISO’s proposed changes to the demand curves for Ramp Capability Up and Short-Term Reserve (STR) that were presented to stakeholders at the April 21, 2022, Markets Subcommittee meeting.
We oppose prohibiting Dispatchable Intermittent Resources (DIRs) from clearing Ramp Capability Up. Excluding DIRs would be discriminatory because it unlawfully prohibits particular technology types from providing services that they are technically capable of providing.[1] Instead, MISO should be removing existing barriers to allow DIRs to participate in MISO’s ramping products, which would be consistent with FERC’s recent Orders addressing undue discrimination and promoting competitive wholesale markets.[2]
Wind farms can pitch blades and/or rotors out of the wind to leave headroom to make ramp up possible. Hybrid solar and wind generation facilities, which are registering as DIRs for market participation, can also be operated to provide ramp up capability both directly by injecting stored power, and indirectly by no longer charging from paired wind or solar and therefore allowing the wind or solar provide additional output to the grid. Given their technical capability to provide ramp up, it is inappropriate for MISO or the IMM to propose market changes that would prohibit participation.
Indeed, wind generators have already been providing regulating reserves in the Xcel/Public Service of Colorado (“PSCO”) balancing authority area for over a decade.[3] The vertically-integrated utility of Xcel/PSCO, which needs to balance its own load with its own generators and long-term contracts with wind power plant owners, has found that because wind can provide fast up and down responses without the wear and tear that thermal generators incur, it is in the system operator’s “interest to use wind to provide as much regulation as possible (when it is curtailed).”[4] “Having wind generators provide real-time balancing services reduced the amount of wind-generation curtailments and fossil-fuel costs by allowing fossil-fueled units to be dispatched at minimum generation,” and also “improved reliability by enabling fast-acting wind generation to meet the balancing authority area’s regulation needs.”[5] Excel/PSCO has also determined these variable energy resources “can dependably provide upregulation and 10-min spinning reserves.”[6]
We acknowledge MISO and the IMM’s concerns that a resource should not be dispatched for ramp up if it is already operating at maximum capacity or is unable to provide ramp up due to congestion on the system. However, these are operational issues that would apply to any resource already providing 100 percent of its capability or that is constrained by congestion. The solution, therefore, is not a market-based solution that removes the eligibility of DIRs from providing services and participating in MISO’s markets when they are technically capable of doing so. Such action doubles down on MISO’s misguided and legally dubious prohibition of DIRs from providing certain ancillary services, despite evidence that such resources can provide those services accurately and reliably.[7] Rather, technology-neutral, operations-focused solutions that properly establish criteria for when a resource is called upon to provide ramp up are where MISO should be focused.
Further, excluding DIRs is at odds with MISO’s ongoing effort to identify and incentivize increased flexibility on the system where any resource capable of providing that flexibility should be eligible to do so. As multiple initiatives are underway at MISO to contemplate a future largely powered by zero-emission resources, it will be critical that changes to MISO market structures incentivize rather than prohibit grid-supporting services like ramping from all resources capable of providing them, including DIRs. Disqualifying DIRs from eligibility for ramp up is a short-sighted proposal that will only prove problematic as DIRs become more prevalent and flexibility from these resources becomes more valuable to MISO operations.
We urge MISO to pursue a technology-neutral, operations-focused solution that will drive more, not less, flexibility on the system.
Submitted on behalf of the Environmental Sector.
[1] See, e.g., Preventing Undue Discrimination and Preference in Transmission Service, Order No. 890, 72 Fed. Reg. 12,266, 12,318 (P 425) (Mar. 15, 2007); Indianapolis Power and Light v. Midcontinent Independent System Operator Inc., 158 FERC ¶ 61,107 at PP 69-72 (2017) (“IP&L”); Calpine Oneta Power, L.P., 116 FERC ¶ 61,282 at P 36 (2006); El Paso Natural Gas Co., 104 FERC ¶ 61,045 at P 115 (2003); AEP, 67 FERC ¶ 61,168, at 61,490 (citing Associated Gas Distributors v. FERC, 824 F.2d 981, 998 (D.C. Cir. 1987) (in regards to the Natural Gas Act)).
[2] See generally Order No. 841, 162 FERC ¶ 61,127; see also Order No. 755, 137 FERC ¶ 61,064 at P 1 (2011); Order 2222, 172 FERC ¶ 61,24.
[3] Milligan, Michael, Bethany Frew, Brendan Kirby, Matt Schuerger, Kara Clark, Debbie Lew, Paul Denholm, Bob Zavadil, Mark O’Malley, and Bruce Tsuchida. 2015. Alternatives No More: Wind and Solar Power Are Mainstays of a Clean, Reliable, Affordable Grid. IEEE Power and Energy Magazine 13: 78-87.
[4] Id.
[5] Lew, Debra, et. al., Secrets of Successful Integration, available at: https://powermarkets.org/wp-content/uploads/2020/09/Future-Power-Markets-Forum-Session-4-Debra-Lew-Paper.pdf IEEE Power & Energy Magazine (November/December 2019), at 30.
[6] Id.
[7] See e.g., California ISO, National Renewable Energy Laboratory, and First Solar, “Using Renewables to Operate a Low-Carbon Grid: Demonstration of Advanced Reliability Services from a Utility-scale Solar PV Plant,” (November 2017) at 5 (“2017 Report”).
Response of the Solar Energy Industries Association
The Solar Energy Industries Association (SEIA) appreciates MISO for accepting stakeholder feedback on Continued Reforms to Improve Scarcity Pricing and MISO’s proposed improvements to demand curves for Ramp Capability Up (RCUp) and Short-Term Reserves (STR) (MSC-2019-1)(20220421). SEIA urges MISO not to exclude distributed intermittent resources (DIRs) from clearing RCUp.
There is no basis to exclude DIRs from clearing the RCUp. As MISO has noted, by incorporating improved real-time resource forecasting, variable resources can provide ramp capability service.1 There are field demonstrations of these capabilities. The California Independent System Operator (“CAISO”), First Solar, and the U.S. Department of Energy’s National Renewable Energy Laboratory, recently engaged in a test project to demonstrate the technical abilities of solar generation in the context of ancillary service production.2 The project utilized an un-named 300 MW solar plant in the footprint of CAISO. On two days in the summer of 2016, using advanced inverter technology, the plant was able to demonstrate numerous types of ancillary services. Specifically, the data from this project showed how wind and solar projects with inverter controls can “provid[e] services that range from spinning reserves, load following, voltage support, ramping, frequency response, variability smoothing and frequency regulation . . . .”3 The report further detailed that “[a]ll hardware components enabling [solar] power plants to provide a full suite of grid-friendly controls are already in existence in many utility-scale [solar] plants. It is mainly a matter of activating these controls and/or implementing communications upgrades to fully enable these.”4 Similar results were found in wind resources.5
New DIRs are often paired with energy storage, removing availability uncertainty. A 2020 study by the three California investor-owned utilities found solar and storage have a capacity value of 99.8%, achieving a theoretical “perfect generator” in CAISO’s grid.6 Today CAISO touts the benefit of battery storage moving from idea to reality.7 DIRs that are capable of providing this service should have the ability to be compensated for this service, just like any other resource type. A failure to do so could result in discriminatory treatment of DIRs.
Just as FERC initiated a proceeding directing the Regional Transmission Organizations to report on how they are modernizing their wholesale electricity markets,8 MISO is proposing to limit the participation of DIRs in its ancillary services market. Allowing DIRs to clear the RCUp would be a step towards MISO taking national leadership on flexible market solutions.
Sources:
1 See MISO (2021), The Changing Needs of System Operations: MISO Perspectives, at 8 https://pubs.naruc.org/pub/64EABF52-1866-DAAC-99FB-ACEE7EEC8DAD.
2 See California ISO, National Renewable Energy Laboratory, and First Solar, “Using Renewables to Operate a Low-Carbon Grid: Demonstration of Advanced Reliability Services from a Utility-scale Solar PV Plant,” (November 2017) at 5.
3 Id.
4 Id. at 30.
5 See California ISO, National Renewable Energy Laboratory, and Avangrid Renewables, “Demonstration of Capability to Provide Essential Grid Services,” (March 2020).
6 Solar-plus-storage has a 99.8% capacity value in California, (July 20, 2020), https://www.pv-magazine.com/2020/07/20/solar-plus-storage-has-a-99-8-capacity-value-in-california/
7 CAISO, From Idea to Reality - Battery Storage Comes of Age on the California Grid, March 2, 2022.
8 Modernizing Wholesale Electricity Market Design, 179 FERC ¶ 61,029 (2022).