MISO and its market monitor differ on storage’s role in transmission planning (original) (raw)

MISO’s Long Range Transmission Plan (LRTP) faces new challenges as it moves toward the approval of its $20 billion Tranche 2 Portfolio in December 2024.

The Independent Market Monitor (IMM) has raised concerns about MISO’s modeling assumptions, particularly regarding the underrepresentation of storage and hybrid resources (solar + storage) in its “Future 2” scenario, which aims for a 60% carbon reduction. While MISO increased projected storage in a revised Future 2A model, it still argues that storage is better suited for operational use rather than as a core planning tool, in contrast to the IMM’s view that storage could mitigate peak transmission flows from renewable energy.

These differences also stem from MISO’s focus on transmission line expansion and its belief that wind and solar, bolstered by Inflation Reduction Act subsidies, are the dominant resources for future grid needs. The IMM, however, suggests that MISO should include more storage in its planning models, reflecting the full market benefits of storage and hybrid resources. It remains uncertain if these concerns will delay the approval of Tranche 2 or prompt further regulatory scrutiny.

MISO’s Long Range Transmission Plan (LRTP)

MISO released its first Tranche 1 Portfolio in July 2022, and it cost 10billion.Becausemosttransmissionprojectsareupgradestoexistingtransmissionlines,andincumbenttransmissionownersareinabetterpositiontobuildthem,only2010 billion. Because most transmission projects are upgrades to existing transmission lines, and incumbent transmission owners are in a better position to build them, only 20% of that Tranche 1 Portfolio is competitively bid. Now, the MISO Board is scheduled to approve the 10billion.Becausemosttransmissionprojectsareupgradestoexistingtransmissionlines,andincumbenttransmissionownersareinabetterpositiontobuildthem,only2020 Billion Tranche 2 Portfolio in December. What is new this time is MISO’s Independent Market Monitor (IMM) has voiced multiple concerns with MISO’s Long Range Transmission Planning process, including the modeling of storage and ambient adjusted ratings for existing transmission lines. MISO’s IMM first voiced concerns in July 2023.

MISO has multiple “Futures” scenarios estimating what the future could look like based on member utility carbon plans and generator retirements. In Future 1, which led to Tranche 1, MISO assumed a 40% reduction in carbon from the 2005 baseline and assumed 85% of utilities would meet their carbon goals. MISO assumed 77 GW will retire and 129.5 GW will be added, with solar and natural gas bringing 50% of new additions.

In Future 2, which is where the IMM’s concerns are, MISO assumes a 60% carbon reduction from the 2005 baseline and 100% of utilities meet their carbon goals. In the Future 2 model, MISO assumed 80.4 GW will retire and 179.4 GW will be added. Storage is assumed at 0.6 GW in Future 1 and 3.4 GW in Future 2, respectively. This low amount of storage in MISO Future models is the point of contention between MISO and the IMM.

MISO disagrees storage is a dominant resource compared to solar and wind

MISO’s IMM is asking MISO to run a scenario that includes more storage and other dispatchable resources, including hybrid (solar + storage) resources, in Future 2 models. MISO insists that its role is not a resource planner and hence does not have the authority to tinker with utility resource plans. MISO also insists that it agrees with the IMM that dispatchable resources are important. Even though the initial Future 2 did not include much storage, the revised Future 2A includes 31.2 GW of storage. MISO revised the Future 2 model called Future 2A has 471 GWs of new generation.

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There is another reason for the differences between how the IMM and MISO view utility resource plans. IMM’s expansion plan for Future 2A includes more storage and hybrid resources compared to MISO’s expansion plan. According to MISO, IMM is assuming energy, capacity, and ancillary services market benefits for storage and hybrid resources in its expansion. However, it appears that MISO does not assume all those market benefits for storage and hybrid resources, and as a result, storage and hybrid resources are not dominant in any scenario. MISO also states that the Inflation Reduction Act’s subsidies, such as the Investment Tax Credit for solar and the Production Tax Credit for wind, make wind and solar the dominant resources, not storage and hybrid. Solar is 112 GW, and Wind is 161.7 GW in MISO’s expansion of 471 GW of new resources in Future 2A.

MISO disagrees storage is a viable planning solution compared to transmission lines

IMM states that storage resources are well-suited for mitigating peak transmission flows caused by peaks in renewable energy output, but MISO disagrees. MISO insists its economic and reliability models optimize the use of resources to address any surplus energy from renewable energy resources.

Taking the cue from transmission owners who insist grid-enhancing technologies are operations-oriented tools rather than planning tools, MISO is now insisting storage is more suited for operations than planning. MISO stated that it believes “storage works as a transmission alternative when the transmission issue has a localized impact and the areas also have predictable load profiles / lower load factors.” MISO pointed to its Storage As a Transmission Only Asset (SATOA) solution in its written response to IMM. MISO has largely stopped stakeholder proceedings on utilizing storage more widely as a market asset.

Even though MISO’s Electric Storage Resource model went live in June 2022, storage integration has been slow at MISO due to generator interconnection queue delays. But, interestingly, MISO believes storage is an operations tool only even though FERC has issued an Order 841 that allows electric storage to participate in the energy, capacity, and ancillary services market. Electric storage could be a capacity asset, which falls under MISO’s Planning Resource Auction.

It is unknown if the IMM’s objections will affect the MISO Board’s decision to delay the approval of the Tranche 2 Portfolio. To my knowledge, this is the first time MISO’s IMM has raised strong objections to MISO’s transmission planning. Earlier, the IMM insisted on the benefits of ambient-adjusted ratings, and FERC recently mandated the use of those ratings in Order 881. IMM has other concerns with MISO’s Future 2A models including the application of those ambient adjusted ratings. It remains to be seen if the IMM takes these objections to FERC.