Southwest Power Pool backs report calling for new products, rules to cope with renewables

Source: By Kate Winston, Platts • Posted: Thursday, August 1, 2019

Washington — In the face of a rapidly changing generation fleet, Southwest Power Pool’s board has approved a wide-ranging batch of stakeholder recommendations to boost reliability, enhance transmission planning, improve the wholesale market and address energy storage.

The recommendations urge SPP to consider or continue some key overhauls to address the variability of renewables, including a creating a multi-day market, pursuing a new product to address uncertainty, and mitigating unduly low renewable energy offers.

The SPP board approved Monday 21 recommendations laid out in a report penned by the Holistic Integrated Tariff Team, which conducted a broad review of SPP’s markets and processes.

The report outlined ideas on reliability, the marketplace, transmission planning, and strategy. It laid out deadlines through 2021 for SPP to complete stakeholder processes on the recommendations. SPP’s working groups will now begin work on the recommendations.

CHANGING RESOURCE MIX

The report noted that the amount of wind in SPP has increased fivefold between 2009 and 2019. Low gas prices and cheap wind energy are driving down energy prices, and conventional resources that have traditionally provided reliability services are retiring, the report said.

To improve reliability, SPP should study whether any new reliability services are needed and whether compensation properly incents market participants to provide these services, the report said. SPP should keep working on improving the fast-start participation model, creating a multi-day market and creating ramping and uncertainty products, the report said.

The uncertainty product would cover a time horizon of up to four hours and would help SPP cope with a shortfall in renewables that can occur because of weather changes or inaccurate forecasts, the report said. The multiday market would help SPP procure energy from long-start time resources during periods when there is not enough wind or sun, the report said.

MARKET IMPROVEMENTS

On the topic of marketplace enhancements, SPP should consider whether variable energy resources should have a requirement to offer at a specific level related to their forecast generation output in the day-ahead market, the report said. Among other recommendations, the team said SPP should evaluate whether it should mitigate unduly low offers from renewables.

While SPP’s tariff allows mitigation of unduly high offer prices, the tariff does not allow a low offer to be automatically replaced by a cost-based offer, the report said. Mitigating unduly low offers could help in areas where congestion is driven by high wind output, the report said.

On transmission planning, the report included recommendations to: evaluate the effectiveness of SPP’s new three-phase generation interconnection process and consider requiring a positive net benefit for economic transmission projects. SPP should also weigh creating a process through which the costs for certain projects between 100 kV and300 kV can be allocated on a region-wide basis, the team said.

Strategy recommendations included a call for an energy storage white paper to better understand how the grid operator should address storage issues in the future. As of June, there were 5,796 MW of storage in SPP’s planning queue, the report noted.