By Amanda Durish Cook
CARMEL, Ind. — MISO now cautiously estimates that the benefits of a seasonal capacity auction would outweigh potential drawbacks.
“Right now, our working hypothesis is that it makes sense … but at the end of the day, that’s something we’re really going to have to verify,” Laura Rauch, MISO director of resource adequacy coordination, said during an Resource Adequacy Subcommittee meeting Wednesday.
The RTO last month rekindled the idea of a seasonal capacity auction as part of its multiyear resource availability and need (RAN) initiative. (See MISO, Stakeholders Debate Merits of Seasonal Auction.)
MISO planning adviser Davey Lopez said a seasonal auction would likely create price signals that better match the fluctuating value of capacity across seasons and a “better accounting of resource availability outside of summer.” If MISO adopts a seasonal construct, it would probably establish seasonal reserve requirements.
A seasonal auction would provide “additional visibility into risks not currently captured due to variations in capacity, load, outages, transmission limitations and weather,” Lopez said.
“There may be resources that are not participating in the annual construct when it would make sense for them to participate in one season,” Lopez said, adding that retiring generation and new market entrants alike could participate as partial-year capacity resources.
Customized Energy Solutions’ David Sapper said a seasonal auction could provide a solid foundation as MISO prepares for more renewable resources in its fleet. He said seasonal distinctions make sense when considering the varying output characteristics of the “wind and solar we’re worried about.”
“Setting a framework for this in the future is pretty critical,” Rauch agreed.
But Lopez said MISO is thinking about potential tradeoffs in a seasonal capacity future. He said seasonal auctions could produce complex changes to the loss-of-load expectation (LOLE) study and resulting reserve margin requirement.
Consumers Energy engineer Jeff Beattie said that while his utility for years advocated for a seasonal auction, it has now backed off the idea.
“We’re not necessarily seeing the benefit because our fuel mix is changing. We’re going zero-carbon,” Beattie said. He noted that much of the economic benefit of a seasonal auction derived from converting annual fuel contracts into shorter duration contracts.
“Whereas now, as we’re retiring all of our fossil units, we’re not seeing that cost savings anymore. … I hope we see a study with customer benefit and savings,” Beattie told MISO staff.
But some stakeholders said zero-carbon resources reinforce a need for an auction with seasonal granularity.
Xcel Energy’s Tom McDonough said utilities’ solar additions require a more specific seasonal accreditation. He argued that it’s not appropriate for MISO to accredit solar generation according to its summer output.
“As we know in Minnesota, it’s not going to be there in the winter. It’s not diluted so we’re going to get an exaggerated credit. …We have a thing called snow that covers a solar panel,” he joked.
McDonough said he would support even more auction specificity or even a return to MISO’s earlier monthly capacity auction design.
Madison Gas and Electric’s Megan Wisersky said MISO might consider that capacity today isn’t as fungible as it used to be because of characteristics of new types of generation.
Lopez said MISO will return to the RASC in May with a skeleton design of a seasonal auction.
More LMR Details in LOLE Study
MISO will this year also model load-modifying resource availability information into its annual LOLE study, which does not currently include availability and resource lead times.
Rauch said the improved specificity in LOLE data shouldn’t be considered a process change to the study. She said MISO will only be working with more specific availability data.
But Beattie said the small study alteration should still be documented for stakeholders.
MISO also said it will postpone a plan to model sub-optimized scheduled outages in the LOLE study. The RTO took stakeholders’ advice that it should first gauge the impact of its new planned outage scheduling rules before modeling poorly scheduled outages in the LOLE study. (See “History on Repeat?” MISO, Stakeholders Debate Merits of Seasonal Auction.) In the meantime, MISO will continue to gather information on how outages affect supply.
Lopez said aside from an unusual hypothetical testing scenario with high outages and zero LMR response, material loss-of-load risk within MISO still does not occur outside of summer.