MISO survey shows ample capacity, even amid coal retirements

Source: Jeffrey Tomich, E&E News reporter • Posted: Tuesday, June 12, 2018

The nation’s second-largest power grid has more than ample capacity to meet electricity demand next year, and likely for the next five years, despite continued coal plant retirements, according to a survey by the Midcontinent Independent System Operator and state regulators in the grid operator’s footprint.

The report by the Carmel, Ind.-based MISO and Organization of MISO States (OMS) shows MISO’s 15-state territory has a surplus of as much as 6.6 gigawatts in 2019 — equal to a half-dozen large power plants. And that’s on top of a 17.1 percent reserve margin for MISO, a buffer to ensure utilities can meet peak demand even in the event of unexpected plant outages.

While the size of the 2019 surplus in MISO is smaller than forecast a year ago, it indicates the nation’s central corridor could have as much as 22 percent more generating capacity than necessary to keep the lights on.

That’s in line with the kind of surplus seen in the neighboring PJM Interconnection grid in the Midwest and Mid-Atlantic, and bolsters arguments against subsidies for aging coal and nuclear plants struggling to remain profitable, such as the type of aid being weighed by the Department of Energy in response to a lobbying push by FirstEnergy Corp.

The annual OMS MISO survey provides a snapshot of expected electricity demand and power plant capacity over a five-year period. This year’s report is based on responses from utilities and cooperatives representing more than 97 percent of MISO’s demand.

The survey factors in potential power plant retirements and potential new generating resources for each of the 10 “zones” within MISO, whose grid stretches from the Gulf Coast to Manitoba.

Like in past years, the most recent data show continued reduction in peak demand compared with previous estimates.

MISO officials said 2019 peak load is expected to be 1.5 GW less than predicted a year ago. And from that lower baseline, utilities also reduced their expected load growth from 2020 to 2023 to 0.3 percent from 0.5 percent.

The reduced load forecast for next year, however, is almost negated by a higher reserve margin requirement in response to an increase in power plant and transmission outages.

The survey indicated 1.2 GW of new supplies added since last year, additions that are more than offset by a 4.6-GW drop in existing supply that reflects power plant retirements.

Across the Midwest, utilities are shutting down coal plants and replacing the capacity with natural gas and renewables.

Just this spring, for instance, We Energies in Wisconsin shut down the 1,188-megawatt Pleasant Prairie coal-fired power plant and announced plans to partially replace it with new solar generation. And DTE Energy is shutting down three coal plants from 2020 to 2023 and replacing them with renewables and a 1,100-MW natural gas plant near Detroit (Energywire, April 30).

Possible deficits identified

The OMS MISO survey identified two regions within MISO that could, depending on potential power plant retirements, see localized capacity deficits as soon as next year. Even if that was the case, however, there’s ample capacity surpluses in neighboring areas to keep the lights on.

“The region could have either a surplus or a shortfall in the 2020 to 2023 time frame depending on factors such as how many resources actually retire and how many new resources are built,” said Patrick Brown, MISO’s executive director of resource planning. “The main driver of what we’re seeing as this heightened risk is a year over year in potential risk of generator retirements.”

One of those regions that could see a deficit in future years is southern Illinois, known as MISO Zone 4, which is the only deregulated area within MISO.

Dynegy Inc., the independent power producer recently acquired by Vistra Energy Corp., has more than 6,000 MW of coal-fired generation in the area and has long argued that the MISO market structure doesn’t provide adequate incentive for competitive generators to invest in power plants or build new ones.

The MISO survey indicates southern Illinois could have a surplus of 700 MW next year or a 1.5-GW deficit, depending on potential retirements. By 2023, the range is a surplus of 1.1 GW to a 2.8-GW deficit.

However, consumer and environmental advocates argue there are no reliability concerns in the region, regardless of whether the company’s coal fleet remains online.

The MISO survey “reinforces our general position that there’s enough resources in the system, including in Zone 4,” said John Moore, director of the Natural Resources Defense Council’s Sustainable FERC Project.

Moore cited a recent study commissioned by the NRDC and Sierra Club that concluded retiring the coal fleet in southern Illinois and transitioning to a mix of renewables and natural gas would reduce bills and pollution while maintaining reliability.

Some of that capacity is already on the way as a result of the sweeping energy law enacted in 2016. The law calls for the development of thousands of megawatts of new wind and solar generation as well as energy efficiency investments and subsidies to keep two Exelon Corp. nuclear plants running.

Changing fuel mix

The survey also highlights a changing fuel mix in MISO and the increasing role of renewable energy.

In past years, state mandates and federal tax incentives were drivers of new wind and solar capacity. But “most recently we’ve seen customer demand being a big player.”

Of 93 GW of generation in MISO’s interconnection queue, 80 GW of that is renewables. And even among renewable resources, there’s change happening.

“We also see a shift from wind to solar,” Brown said, “with solar becoming the new wind so to speak.”

Even so, the survey indicates that coal will continue to represent more than a third of the capacity resources in MISO in 2023, and more than three-quarters will come from fossil fuels.

While solar and wind continue to make gains, Moore said there needs to be additional work to advance demand-side resources, such as demand response, that could be used to meet seasonal peak demand as well as year-round energy needs.

Making that happen will require coordination by MISO and policymakers in the states it serves.

“We need the states and the MISO rules to be aligned,” he said.