Page 985 – RTO Insider

February 10, 2021March 9, 2025

Soapbox: An Efficient ‘Energy Markets Cascade’

Eric Gimon | Energy Innovation Policy & Technology

By Eric Gimon

President Biden’s goal of 100% clean electricity by 2035 would supercharge America’s clean energy industry, create hundreds of thousands of jobs and help prevent the worst consequences of climate change. Multiple states have already required 100% clean electricity by midcentury, and many utilities are voluntarily adopting these goals. But realizing these goals requires market designs capable of efficiently integrating a high fraction of renewables, leaving policymakers with important unanswered questions.

Policymakers must determine how wholesale markets built around short-term marginal cost pricing are supposed to work when large fractions of electricity are generated at zero marginal cost? And how can we secure rapid investment in new clean resources and rapidly retire fossil fuel generation if prices paid to these new resources keep falling, even with the most supportive policy?

Answering these questions is easier if we expand consideration of wholesale electricity markets to the entire “energy markets cascade,” a concept describing the flow of contractual agreements for electricity from long-term markets, power purchase agreements, and hedges to year-, month-, day- and hour-ahead commitments, to real-time spot markets. This course connects long-term resource investment to the day-to-day running of spot markets. Capital will flow efficiently along this path if the energy markets cascade follows three design principles.

First, the cascade should trade in only one underlying commodity: delivered megawatt-hours of electricity. Just as a cascade is one current flowing from pool to pool, the markets in our cascade best align if they all trade the same product. Any market in this sequence could experience changing conditions and forecast errors, but if they are all trading in megawatt-hours, the next market down can account for shifting situations by trading or adjusting given commitments.

Consider a wind developer with long-term contracts in place to secure financing. As their electric output delivery approaches, the developer often anticipates real-time market excess or shortfall from what they promised. To minimize the gap between financial commitment and physical delivery, developers can use a market with the most appropriate time frame depending on expectations, always keeping risk at acceptable levels.

Second, participation in the longer-duration markets should be voluntary. In a compulsory long-term market, participants cannot act just on volume and price expectations: A central authority provides targets, fixing demand irrespective of price. Voluntary markets, on the other hand, can balance diverse future outlooks.

For example, an electricity customer that deems current long-term prices too high might not commit to buy what they need until closer to delivery. This behavior lowers demand — and therefore prices — higher up the cascade and raises prices lower down, realigning prices across all markets.

Finally, markets in the cascade should be equal-access, transparent and liquid. Nondiscriminatory access fosters diverse and independent participation in the energy markets cascade, creating more potential buyers and sellers. This drives efficient capital allocation, because participants can more easily trade to adjust their positions according to need, developing a common basis for the current value of electricity contracts.

Efficient capital allocation also requires transparency and liquidity. Transparent public prices and information of trading volumes sharpens common understanding. Liquidity improves with a standard set of energy markets cascade products diverse enough to address different stakeholder needs yet limited in number so that sufficient trading volumes exist to value products at regular intervals.

Market Reforms for a Safe Climate Future

Today’s markets are failing to meet these three principles each in their own way. PJM, NYISO and ISO-NE have mandatory, not voluntary, capacity markets and stand accused of bias toward legacy resources. In MISO, SPP and CAISO, utilities hold the upper hand on information about what the market and new technology can offer, confidently asserting primacy over the integrated resource plans that shape procurement. This chokehold risks ignoring potential savings from inconvenient (for the utility) retirements, inertia in seeking new solutions (e.g., batteries over peakers), and persistent bias against demand-side resource participation or competition from distributed energy resources.

We must design wholesale markets to support long-term investment in variable renewables and complementary resources through better risk management tools. Legislators, regulators and market operators who want a fully decarbonized grid should look beyond the spot markets to consider the entire energy markets cascade and enact reforms to better align these with core principles. Furthermore, investigating new concepts, like organized long-term markets, that seek to meet investor risk and return expectations would allow policymakers to deliver a least-cost, clean, reliable grid — without a heavy regulatory hand.

Eric Gimon is a senior fellow with Energy Innovation Policy & Technology, a nonpartisan energy policy firm that “works with national and regional decision-makers to develop policies that will manage the grid’s transition to a cleaner, lower-carbon resource mix.” Eric holds a B.S. and M.S. from Stanford University in mathematics and physics, and a Ph.D. in physics from UC Santa Barbara.

February 10, 2021January 26, 2025

NERC Touts Progress During ‘Extraordinary’ 2020

NERC CEO Jim Robb | © ERO Insider

In its annual report released Monday, NERC applauded the ERO Enterprise for advancing the reliability and security of the power grid during a year that was “extraordinary on so many dimensions.”

Achievements highlighted in the report include the organization’s response to the COVID-19 pandemic, along with progress toward securing the bulk power system supply chain and improving cybersecurity practices at utilities.

“While I think we will all be happy to see 2020 in the rearview mirror,” CEO Jim Robb wrote in the report, “we can all be very proud of what we have accomplished and what we have learned about collaboration and resilience.”

COVID-19 Captured Attention

Public and private sector organizations across the world spent considerable effort grappling with the pandemic, which has led to around 500,000 deaths in the U.S. over the past year, according to the CDC, and the bulk power system was no exception. Efforts by FERC, NERC and the regional entities to help utilities adapt to the rapidly changing situation play a significant role in the annual report.

The report highlights three main initiatives:

Easing compliance burdens to allow registered entities to focus on COVID-19 response through measures such as deferring audits and other on-site activities and expanding the ERO Enterprise self-logging program (See ERO Pandemic-related Measures Extended Again.)
Collecting information to promote situational awareness and sharing it with industry via a Level 2 alert issued in April (See Industry Pandemic Prep Encouraging, NERC Says.)
Coordinating with government partners to ensure alignment between industry and regulators.

In addition, the Electricity Information Sharing and Analysis Center (E-ISAC) has been actively working with industry to highlight additional risks that might arise from the pandemic, including heightened vulnerability to cyberattack caused by employees working remotely and “potential supply chain issues … from a manufacturing slowdown in Asia.”

“These efforts continue to enable the ERO Enterprise to fulfill its unique and vital mission of assuring the reliability, resilience and security of the North American BPS during this uncertain time,” the report said.

Supply Chain Focus

The ERO’s work on supply chain security in 2020 went far beyond the pandemic, with several projects initiated last year aimed at preventing foreign interference in the grid through sabotage of electronic components.

Among these efforts was NERC’s second Level 2 alert of the year, issued in July in response to former President Trump’s declaration of a national emergency regarding foreign-made equipment in the BPS. (See Trump Declares BPS Supply Chain Emergency.) The report emphasized that efforts initiated by the Department of Energy and other agencies in response to Trump’s order would support activities “already underway in NERC’s supply chain standards and other work.”

Separate from the order, the organization also published a joint white paper with FERC sharing techniques that utilities can use to identify the manufacturers of equipment on their systems, information often difficult for them to access. (See NERC Board of Trustees/MRC Briefs: Nov. 5, 2020.)

Efficiency Achievements

Improving efficiency and effectiveness across the ERO Enterprise was another critical focus of NERC in 2020 “brought to the forefront by the pandemic.” Despite disruptions, NERC achieved several key milestones in these projects last year.

On the organizational side, NERC’s new Reliability and Security Technical Committee (RSTC) managed a smooth transition from its predecessor organizations, the Planning, Operating and Critical Infrastructure Protection Committees. (See RSTC Tackles Organization Issues in First Meeting.) The report credited RSTC leadership with moving ahead with a successful reorganization despite being forced to hold meetings remotely through most of the year.

Former NERC Board Chair Roy Thilly | © ERO Insider

NERC’s Align software project also moved ahead in 2020, along with the Secure Evidence Locker. The projects are intended to improve and standardize compliance monitoring and reporting processes across the ERO Enterprise; registered entities entered the first phase of training earlier this year, with the Midwest Reliability Organization and Texas RE leading the way. (See MRO, Texas RE to Lead Align Software Training.)

In the report’s conclusion, NERC’s outgoing Board Chair Roy Thilly commended the “seamless” adaptation by the ERO Enterprise to the swiftly changing circumstances of 2020. He called the relationship between NERC and the REs entering 2021 “the strongest [and] most productive … in [their] history,” which he said would be crucial to their future success.

“[Risks] to the grid are constantly changing. Cyber and physical attacks present major threats that require constant attention. Severe weather risks from hurricanes, droughts, unprecedented hot spells and wildfires are growing,” Thilly warned. “[But] while it is impossible to eliminate all risk or predict the future, we can say with confidence that NERC, the regional entities and industry are well-positioned to succeed.”

February 9, 2021

Energy Sector Inclusion Efforts Vital, Panelists Say

The energy sector’s efforts to improve diversity, equity and inclusion (DEI) vary in depth and scope, but such initiatives are critical amid the COVID-19 pandemic and systemic racism, according to panelists at a Northeast Energy and Commerce Association webinar last week.

Panel moderator David Fixler, an energy practice attorney with Greenberg Traurig, said the events of the past year had moved DEI “into the cultural, health and sociopolitical forefront.”

“While diversity is often used in reference to race, ethnicity and gender, the reality is that the term is much broader than that and includes age, national origin, religion, disability, sexual orientation, socioeconomic status, education, marital status, language and physical appearance,” Fixler said. “Equity is the guarantee of fair treatment, access, opportunity and advancement for all while striving to identify and eliminate barriers that have prevented the full participation of some groups. Tackling equity issues requires an understanding of the root causes of outcome disparities within our society. “

Diversity, however, is not necessarily synonymous with inclusion, Fixler added. He quoted diversity advocate and Netflix executive Verna Myers, who said that “diversity is being invited to the party. Inclusion is being asked to dance.”

Doreen Nichols, vice president of talent, culture and organizational development at Eversource Energy, said diversity and inclusion strategy is “a core value” for the utility. She added that Eversource pivoted to a “virtual world” to deal with the coronavirus and simultaneously meet diversity and inclusion metrics. The deaths of George Floyd, Ahamud Aubery and Breonna Taylor last year prompted a call for action on racial justice.

Energy Sector Inclusion — Clockwise from top left: Doreen Nichols, Eversource Energy; Tina Bennett, CMC Energy Services; David Fixler, Greenberg Traurig; and Rekha Chiruvolu, Nixon Peabody | NECA

“It’s close to home for me,” said Nichols, who is Black and has a biracial son. “I continue to be reminded of the threats he could, and will face, as he goes through life. I didn’t want him to be faced with these injustices and have them stand in his way.”

He said that systemic racism “is not new.”

“We’re clearly at an inflection point,” Nichols said. “We knew we had to focus on how to accelerate progress on meaningful positive change in our workplace and our communities by addressing racism and inequality.”

The three areas of focus for Eversource were building a more inclusive workplace, increasing leadership commitment and supporting diverse communities. In the workplace, fostering candid discussions about racism, bias and inequity drives personal learning and awareness and develops resources for employees to support each other. Company leaders need resources, tools and training to be inclusive, support employees and respond to difficult conversations. Finally, they must identify opportunities to support communities and organizations dedicated to justice and equality and continue to seek out business with diverse suppliers.

“We know that we’re not perfect, but we’re up for the task in making this a marathon and not a sprint,” Nichols said.

‘It Takes Education’

Attorney Rekha Chiruvolu, diversity and inclusion director at the Nixon Peabody law firm, said at least 20% of candidates interviewed for associate positions at her firm must be from “underrepresented backgrounds.” That number rises to 30% for senior associates and partners in addition to committee leadership roles.

Chiruvolu said the firm has also put increased emphasis on collaborating on DEI issues with clients and the legal community “because we are not navigating this alone” in terms of addressing racial inequality and inequity.

“The legal profession is one of the least diverse professions in the country, and other firms are struggling with this in meaningful ways,” she said. “It’s important for us to exchange ideas, to exchange best practices and to talk about what’s worked and what hasn’t worked.”

Tina Bennett, CEO of CMC Energy Services, said following last year’s protests, the company shared educational and training resources with employees on topics such as the impact of racism, overcoming bias and encouraging uncomfortable conversations. Bennett added that CMC created an online forum for employees to discuss racial and social justice issues in addition to an employee-led ideas council, which is intended to be “the voice of our employees to seek input on what action CMC can take” on racism and other biases.

Bennett concluded that “getting buy-in on the concept of diversity and inclusion is the easy part” but continuing the effort on an institutional change is “much harder.”

“It takes education. Not everyone has the historical context and the understanding of the issues to take time to educate your organization,” Bennett said. “It also requires vulnerability and a willingness to consider that our actions, policies and practices … and our own unconscious biases, may be unintentionally contributing to the problem. Remember, there is no quick or easy solution. You don’t need to try to do everything at once, but you do need to get started and stay committed to making real change, and employee involvement is critical.”

February 9, 2021

Colo. PUC Opens Investigation into Gas Emissions

Colorado’s Public Utilities Commission last week launched an investigation into the methane emissions released from natural gas infrastructure and the near-term actions needed to reduce them in order to meet the state’s greenhouse gas reduction targets.

Commissioner Megan Gilman kicked off a virtual information meeting on the issue on Feb. 1, briefly describing the PUC’s past efforts to curb GHGs before yielding the floor to hear presentations from stakeholders and experts.

Nationally, natural gas has become an ever growing portion of the resource mix, largely because of its net climate benefit, as it produces less CO₂ than coal when burned, Anthony Marchese, associate dean and professor of mechanical engineering at Colorado State University, told commissioners. However, natural gas is almost entirely made up of methane, a far more potent GHG than CO₂, he said.

“The problem is, if only a [small] percent of natural gas leaks out between the wells and the ultimate end use, then natural gas would have no immediate climate benefits compared to coal, gasoline or diesel fuel,” Marchese said.

In producing, consuming and transporting natural gas, leaks seem to be inevitable, and they were the biggest topic of conversation among stakeholders and commissioners. Reliable data on methane emissions is lacking, and the standard methods of sensing and repairing leaks currently used throughout the industry are out-of-date, CSU representatives and PUC staff said.

Colorado gas emissions — The Fort St. Vrain Generating Station is a natural gas-powered plant in Platteville, Colo. | *NRC*

Joe Molloy, head of the PUC’s Pipeline Safety Program, told the commission that collecting data on methane emissions is difficult because widely accepted data-collection methods can be incomplete. They don’t always account for equipment failure that can cause large leaks, and they’re not continuous, he said, so they depend on surveys to collect data intermittently. This could prevent a local distribution company (LDC) from finding and repairing a leak as soon as possible.

Joe von Fischer, associate professor of biology at CSU, spoke about advanced leak detection (ALD) technology and his experience working with LDCs to find and repair leaks that would be missed using standard technology. Using laser spectroscopy in emissions surveys allows for high-sensitivity methane analysis, he said. By using GPS, ALD surveys can detect a leak’s location, allowing LDCs to easily find the issue. Because the new technology also detects methane concentration, it can give LDCs information on a leak’s magnitude that allows them to prioritize repairs.

“In the case of the U.S. natural gas distribution system, we estimate that half of emissions in the U.S. are coming from the largest 16% of leaks,” von Fischer said. By making ALD surveys the standard, the largest sources of methane emissions can be reduced in the near term, he said.

But because of intermittent leaks, scheduled surveys may miss a large portion of escaped methane, said Caroline Alden, research scientist at University of Colorado Boulder and co-founder and director of operations at LongPath Technologies. LongPath studies and provides continuous monitoring, a method that uses autonomous long-range laser systems to constantly monitor methane emissions. She said that without wide implementation of the technology, it will be difficult to reduce emissions to target levels.

Representatives from Xcel Energy echoed Adlen’s concerns, saying the advanced technologies are necessary to significantly reduce methane emissions from the supply chain but are not widely available. In the meantime, the utility is trying to mitigate natural gas emissions upstream, verifying that their suppliers are not producing excessive GHGs and considering renewable natural gas options like hydrogen.

Commissioner Eric Blank was most interested in learning about the costs associated with finding and repairing the largest sources of methane emissions, but CSU representatives were wary in providing an estimate.

“Costs are pretty tough,” Marchese said. “The reasoning is, we’re typically working in coalitions or with combinations of oil and gas partners, and in those meetings, because of anti-trust concerns, they cannot disclose that information.”

Jokingly, Blank told Marchese that was not the answer the commission was hoping to hear.

February 9, 2021

NEPOOL Participants Committee Briefs: Feb. 4, 2021

The representative of several NEPOOL End User sector members circulated a memo Thursday floating the idea of compensating the group’s officers for their time and non-reimbursed expenses.

William P. Short III said he wasn’t yet prepared to offer a proposal but wants to study the issue during the next few months.

Short proposed the effort because the End User sector has historically had difficulty getting its members to participate as NEPOOL officers because of the time commitment and expenses.

End User representatives may be self-employed individuals who cannot afford to donate the time necessary to act as vice chair, the memo noted. A similar situation could exist for consultants whose clients will not pay for the additional time necessary to act as NEPOOL officers and for employees whose employer will not agree to compensate them for filling the role. Short said the issue also exists in the Alternative Resources sector and other sectors with “small” participants.

Short said he does not yet have a specific compensation framework in mind but did offer concepts that range from a cash stipend to simple and capped reimbursement of any reasonable time and/or verifiable out-of-pocket expenses. Payments could be made to an individual or their organization or just turned down, and the funds returned to NEPOOL. Compensation would not be intended as a financial windfall but to make the participating officer economically whole for their work.

He added that he is seeking opinions from current and former NEPOOL officers to prepare a reasonable compensation proposal for consideration at a future PC meeting. Short wants to know how much time they spent on NEPOOL-related activities, what incidental expenses they incurred and whether the current system discourages potentially serving as an officer. He said anyone interested in talking to him could send written comments until May 1, and that he will treat answers as confidential if asked to do so.

Currently, all NEPOOL stakeholder meetings are held virtually because of the COVID-19 pandemic. There was no mention in Short’s memo about whether virtual meetings would factor into a future compensation proposal.

Energy Market Value Drops

ISO-NE’s energy market value for January was $354 million (through Jan. 27), down $96 million from the updated December evaluation, but up $57 million from the same month last year, according to the monthly report from COO Vamsi Chadalavada.

Natural gas prices were 5.4% lower than December’s average values, which dropped the average real-time hub LMPs to $37.16/MWh, down 11% from the prior month. Average natural gas prices and real-time hub LMPs were up 41% and 42%, respectively, from the same period last year.

Average day-ahead cleared physical energy during peak hours as a percentage of the forecasted load was 98.4% during January, down from 98.5% during November, with the minimum value for the month of 92.6% posted Jan. 18.

NEPOOL — Daily average day-ahead and real-time ISO-NE hub prices and input fuel prices, Jan. 1-27 | *ISO-NE*

Daily uplift, or net commitment period compensation (NCPC) payments totaled $3.1 million over the period, down $500,000 from the adjusted December value and up $1.3 million from January 2020. NCPC payments were 0.9% of the energy market value.

Chadalavada said three new projects totaling 364 MW applied for an interconnection study, including two new battery storage projects and one PV project, with in-service dates in 2022 and 2023. There are 258 generation projects currently being tracked by the RTO, totaling approximately 24,200 MW, he said.

FERC Extends Filing Deadlines, In-person Meeting Waivers

The wavier of FERC regulations requiring that filings with the commission be notarized or supported by sworn declarations was further extended through July 30, according to the litigation report presented to the PC.

Entities may also seek waiver of FERC orders, regulations, tariffs and rate schedules, including motions for waiver of regulations that govern the form of filings, as appropriate, to address needs resulting from steps they have taken in response to the COVID-19 pandemic. FERC also extended the blanket waivers of RTO tariff in-person meeting and notarization requirements through July 30 as well.

February 9, 2021

Report: ‘Social Contract’ Needed for Decarbonization

The focus on technology in many roadmaps for the transition to a carbon-free economy ignores the inevitable social impacts of the changes, the National Academies of Science, Engineering and Medicine (NASEM) said in a report last week.

To succeed, the report argues, the U.S. transition must incorporate “the development and maintenance of a strong social contract.”

That focus on social impacts is what differentiates “Accelerating Decarbonization of the U.S. Energy System” from other reports issued after the 2020 election, said Princeton University’s Stephen W. Pacala, who led the committee of experts who wrote the report.

“Because even if we have cheap technologies, even if we succeed in innovation, we won’t be able to sustain the pace of the transition and the longevity of the marathon all the way to 2050 without delivering concrete benefits to people in the near term and mitigating the kinds of impacts that could derail the transition in the long term,” Pacala said during a Feb. 2 webinar on the report.

Pacala said that while the report was compatible with President Biden’s aggressive climate action plan, it was developed independently. In particular, Pacala and his co-authors called for the creation of several federal entities that would tackle both the benefits and mitigation needed for a nationwide commitment to decarbonization:

a national transition task force to provide a comprehensive view of communities and industrial sectors at risk and the kind of help they will need;
a White House Office of Equitable Energy Transitions to establish targets and monitor progress of federal programs working for a just transition and provide yearly evaluations and progress reports;
an independent national transition corporation to mitigate the impacts of the transition, for example, by supporting communities that have lost a critical employer; and
a federal green bank, initially financed at $30 billion, to invest in the development of zero-carbon technologies and infrastructure that are currently being tested and piloted but are not yet cost-competitive.

On Wednesday, Democrats reintroduced legislation that would create a $100 billion green bank, which the sponsors say would spur nearly $400 billion in private co-investments.

Last month, Biden issued an executive order establishing an Interagency Working Group on Coal and Power Plant Communities and Economic Revitalization, to be co-chaired by National Climate Adviser Gina McCarthy and Brian Deese, director of the National Economic Council. The working group will direct federal agencies to coordinate investments and other efforts to assist coal, oil and natural gas, and power plant communities.

The order also includes a “Justice40 Initiative,” requiring the chair of the Council on Environmental Quality, the director of the Office of Management and Budget and the national climate adviser to publish within 120 days “recommendations on how certain federal investments might be made toward a goal that 40% of the overall benefits flow to disadvantaged communities.” (See Biden Signs Sweeping Climate Orders.)

The National Academies’ report also recommends increased funding for research initiatives aimed at “modeling, data collection and data analysis that would support regional, state and local decision-making,” said Clark Miller, a professor at Arizona State University.

“It includes funding for the development of regional coordination centers that would help mayors and governors and other regional actors work together to plan aspects of the transition that cut across state lines and urban-rural lines,” Miller said.

No Single Answer

At the same time, local decision-making must also move beyond telling under-represented communities to come to meetings and provide input, the report says.

“The current state of public participation is woefully inadequate to the task,” said Danielle Deane-Ryan, senior adviser to the nonprofit Libra Foundation. She sees a major role for the White House Office of Equitable Energy Transitions in identifying best practices for improving community involvement in decision-making.

Similarly, “equity indicators” need to be built into funding initiatives both at the federal green bank and the Department of Energy, Deane-Ryan said. Another role for green banks should be providing low-income communities with ways to access renewable energy, as well as creating more options for displaced fossil fuel workers, said Julia Haggerty of Montana State University.

“Many people are curious about what individual fossil fuel workers are going be doing in the future, and there is no one single answer,” Haggerty said. Not all will be able to retrain for jobs in renewable energy or start new businesses and may need direct assistance for housing and lost income, she said.

Acknowledging Uncertainty

While integrating equity and social impacts into all its recommendations, the NASEM report does not skimp on technology and policy issues. For example, it calls for a national carbon tax starting at $40/ton of carbon dioxide and rising by 5% a year, with the goal of doubling the tax over 14 years.

If implemented, Pacala estimated the tax could raise $2 trillion in revenue by 2030 to help fund the transition. He also emphasized that because of the ever decreasing costs of wind and solar, the transition to net-zero emissions will ― after initial upfront investments ― cost less than the country has spent on energy in the past 30 years.

The report also argues that while the next decade requires accelerated ramping up of renewables, the path forward must acknowledge the “uncertainty about the final makeup of the energy system,” Pacala said.

“We need the same actions whether or not we’re shooting for a 100% renewable system in the end, or a system that retains strong elements of decarbonized fossil fuel use and nuclear electricity,” he said.

Such uncertainty may be a constant. The report notes that major parts of the U.S. energy infrastructure have life cycles longer than the 30-year horizon to 2050. The report calls for a tripling of R&D funding to ensure that as long-lived infrastructure is replaced, low- or no-carbon technologies will be commercialized and competitive, especially for hard-to-decarbonize sectors such as aviation and chemical manufacturing.

The goal, Pacala said, is to make sure that when infrastructure is replaced, “the no-brainer, economic self-interested decision is to invest in technology that is consistent with a net-zero transition.”

February 9, 2021

PG&E Files Wildfire Plan Under Intense Scrutiny

Pacific Gas and Electric submitted its latest wildfire prevention plan to the California Public Utilities Commission on Friday as it faces threats of more intensive oversight from the CPUC and a federal judge prior to this year’s fire season.

PG&E said the key to its $3 billion 2021 Wildfire Mitigation Plan is an improved computer system to predict risk more precisely.

“This new technology will allow us to more accurately prioritize our efforts within the highest fire-threat areas,” Debbie Powell, interim head of electric operations, said in a statement.

The updated risk modeling uses historical data on weather patterns, fire ignitions and outages, PG&E said in its plan. It also employs “fire-spread technology that shows the locations where specific infrastructure failures can lead to ignitions that have the highest consequences for our communities.”

That will allow the utility to focus its vegetation management and grid hardening efforts on the top 20% of high-risk circuit segments, the plan said.

The utility’s 2021 targets include installing 300 weather stations to complete its long-term goal of deploying a total of 1,300 weather stations, performing enhanced vegetation management on 1,800 miles of high-risk lines and hardening 180 miles of at-risk lines with covered conductor and stronger poles, among other measures.

Whether the utility’s plans will appease some of its staunchest critics remains in doubt.

‘Maybe Criminally Reckless’

Those critics include U.S. District Court Judge William Alsup, who oversees PG&E’s criminal probation related to the San Bruno gas pipeline explosion in 2010. In a hearing Wednesday, Alsup said he would likely impose new probation terms requiring PG&E to improve its vegetation management and public safety power shutoff (PSPS) practices.

Alsup said he believes the Zogg Fire, which killed four people in September, was likely started by a leaning pine tree that PG&E should have cut down. The line it hit remained energized during a PSPS event to prevent wildfires, even though PG&E had shut down other lines nearby, the judge said. (See PG&E Line Was Active when Zogg Fire Started.)

PG&E Wildfire Plan — Searchers indentified four sets of human remains in the Zogg Fire, including a mother and her young daughter. | *Shasta County Sheriff’s Office*

“I think it was reckless, maybe criminally reckless, for PG&E to have left that tree, that gray pine looming,” Alsup said. “It was leaning at a 60-degree angle over that line. Gray pines … have a shallow root system. That tree had also been burned earlier. That tree was a clear and present danger to the line, and whoever made the decision to leave that tree up should be looked at very carefully. And PG&E did leave it up.”

One new probation condition proposed by Alsup would require PG&E to consider whether lines had been cleared of dangerous trees when it decides which circuits to de-energize in PSPS events.

“Here is a fundamental problem I have with the way PG&E is doing this, the judge said. “When you decide on a PSPS and which lines to cut off, just hypothetically take two otherwise similar distribution lines. One is one that has been fully worked and is in full compliance with state law and [CPUC requirements]. The other is one that has not been worked at all. Your approach does not distinguish between those two.”

PG&E’s risk assessment and PSPS decisions consider weather patterns and historical wildfire data, the judge said. It stands to reason, however, that a line that has not been fully worked presents more of a danger than a line that has been cleared of problem trees, he said.

“The conditions that I’m requiring, or at least that I would propose to require, I believe would have saved those four people’s lives” in the Zogg Fire, Alsup said. Among the victims were a mother and her 8-year-old daughter who died fleeing the flames.

PG&E lawyer Kevin Orsini acknowledged the judge’s point but said the utility’s current approach “indirectly” factors tree trimming into its PSPS decisions. The utility wants the judge to soften his proposed conditions.

If “you take into account whether or not the line has been worked, that wouldn’t have had a different result with respect to the Zogg Fire,” Orsini said. About 1,000 trees in the area had been removed based on the recommendations of three foresters, but not the tree that may have started the fire, he said.

Alsup said he would entertain arguments to amend the probation conditions. The next hearing on the matter is scheduled for March. 9. But he ended Wednesday’s hearing by saying that since the San Bruno explosion, “PG&E has been a terror … to the people of the state of California.” With one more year left to oversee PG&E’s criminal probation, Alsup said he intends do all he can to change the utility’s safety culture.

“In this last season, I want you to do this right,” Alsup told Orsini.

CPUC to Weigh in

The California Department of Forestry and Fire Protection (Cal Fire) has yet to determine the cause of the Zogg Fire. Last year Cal Fire investigators seized PG&E equipment and a section of a gray pine in its investigation.

PG&E has told the U.S. Securities and Exchange Commission it expects to pay victims at least $275 million in damages for the fire, which destroyed more than 200 structures and burned over 56,000 acres.

Shasta and Tehama counties, where the Zogg Fire occurred, have sued PG&E in state court, and the Shasta County District Attorney’s office is investigating whether criminal charges are warranted.

If PG&E is found to have caused the fire, it would be the fourth year in a row that the utility’s equipment started a catastrophic blaze. The company was blamed for the wine country fires of 2017, the Camp Fire of 2018 — the deadliest in state history — and the Kincade Fire in 2019. The fires killed at least 111 people, destroyed 22,627 homes and other structures and burned approximately 500,000 acres.

In addition to Alsup, the CPUC has been trying to get PG&E to end its streak of death and destruction.

In November, CPUC President Marybel Batjer told PG&E that it could face a stricter regimen of oversight and enforcement because of concerns about its line maintenance. (See PG&E Faces ‘Enhanced Oversight’ by CPUC.)

“My concerns arose from what appears to be a pattern of vegetation and asset management deficiencies that implicate PG&E’s ability to provide safe, reliable service to customers,” Batjer wrote to the then acting CEO Bill Smith, citing Alsup’s findings.

A bill signed by Gov. Gavin Newsom in July requires PG&E to submit to greater scrutiny by the CPUC and potential state control for repeated and uncorrected safety problems. Under the terms of the law, the CPUC can appoint a third-party monitor, followed by a receiver, and eventually rescind PG&E’s license to operate as the monopoly utility for most of Northern and Central California.

The CPUC has three months to approve PG&E’s wildfire mitigation plan, which is set to take effect in June, shortly before the state’s summer-and-fall fire season typically starts.

February 9, 2021

FERC Rejects GridLiance Local Tx Planning Proposal

FERC last week rejected GridLiance High Plains’ proposal to conduct local transmission planning for nonpublic SPP utilities outside of the company’s service territory (ER20-3025).

The commission found in its Feb. 2 order that GridLiance’s proposal to perform the service for “transmission-dependent nonpublic utilities (TDNPUs)” would contradict its rules on local transmission planning, “which obligate the transmission provider to plan for the needs of transmission customers in its individual retail distribution service territory or footprint.”

GridLiance’s proposal would have allowed a transmission customer to conduct its own competing local transmission planning, FERC said, contrary to Order 890’s transmission-planning obligations. The commission disagreed with the company’s contention that its proposal would not give TDNPUs more rights to plan and develop local transmission facilities than they already have.

FERC said that while Order 890 requires that transmission customers “be allowed timely and meaningful input and participation into local transmission planning, it did not provide that transmission customers could establish their own transmission-planning processes and did not require that transmission customers be allowed to plan on a coequal basis with transmission providers.”

The commission said GridLiance’s proposal could not constitute a “local transmission-planning process” as defined by Order 1000 because the company would be performing planning outside of its own retail distribution service territory or footprint. Local transmission facilities resulting from the proposal would not meet the order’s definition of a “local transmission facility” because the facility would be located outside of GridLiance’s service territory or footprint.

FERC also found SPP’s tariff “does not contemplate third parties conducting competing local transmission-planning processes for customers within another transmission provider’s service territory or footprint,” noting the RTO does not have processes “designed to resolve different outcomes arising from the competing processes.”

“Without a clear system in place to resolve different outcomes arising from competing local transmission-planning processes, GridLiance’s proposal could increase conflicts and litigation … in SPP,” the commission said.

GridLiance, which collaborates with municipal utilities, joint action agencies and electric cooperatives to address transmission needs, disagreed.

“We are obviously disappointed,” GridLiance High Plains President Brett Hooton said in an email to RTO Insider.

He pointed to Commissioner Allison Clements’ concurrence with the order, saying, “Inadequate transmission planning is at the root of many of the problems leading to less reliable service for TDNPUs. As Commissioner Clements noted, reform is needed for more effective local transmission planning, including ‘mechanisms to address barriers to participation’ in local transmission-planning processes.”

In her concurring statement, Clements noted the grid has undergone “significant transformation” since Order 890 was issued almost 15 years ago.

“Consideration of reform to local planning processes is appropriate as part of broader transmission planning reform, to ensure that TDNPUs are given fair and adequate service,” she wrote, “and more broadly to ensure that all transmission system plans — local, regional and interregional — succeed in identifying cost-effective solutions to established system needs and thereby ensure that any new infrastructure is money well spent by customers.”

Clements said mechanisms similar to GridLiance’s proposal “may be appropriately considered as part of a broader discussion on transmission planning reform.”

“We perform transmission planning for our utility partners and believe our local planning process expansion would benefit other TDNPUs,” Hooton said. “While FERC didn’t accept our proposed solution in this case, we will continue our efforts to address inequities in transmission service to, as described by Commissioner Clements, ‘ensure TDNPUs are given fair and adequate service.’”

FERC offered a potential alternative, saying TDNPUs could always contract with GridLiance and other entities to study their local transmission needs and potential projects to address those needs, using that information to “inform their participation in the existing local and regional transmission planning processes.”

GridLiance said it had already executed planning agreements with three TDNPUs: Kansas Power Pool, Oklahoma Municipal Power Authority and Tri-County Electric Cooperative. It said that while it currently can conduct transmission planning outside of its local planning process, there is not a clear process for including identified transmission projects in the SPP process.

Western Farmers Electric Cooperative and Xcel Energy Services, on behalf of Southwestern Public Service Co., protested in the docket, arguing the proposal lacked sufficient detail regarding coordination with the incumbent transmission owner’s local planning process; that it would result in duplicative planning efforts; and that it did not explain how inconsistent planning results would be resolved.

February 9, 2021

NERC: Need to Prepare for Battery Growth

NERC on Monday called for the creation of a task force to ensure grid planners are prepared for the coming surge in battery storage, which is expected to double to 4 GW by 2023.

The ERO said the task force should be formed by the Reliability and Security Technical Committee (RSTC) and should study “the forward-looking implications” of battery energy storage systems (BESS) and their impact on bulk power system reliability and resilience.

The directive comes in a new report, “Impacts of Electrochemical Utility-Scale Battery Energy Storage Systems on the Bulk Power System.”

NERC Battery Storage — U.S. operating utility-scale battery storage by state | *NERC*

“As we continue to assess the implications created by the integration of cutting-edge technologies to the electrical grid and the increasing amount of projected battery storage in the future, industry and regulators must pay more attention to bulk power system-connected battery energy storage systems,” said Thomas Coleman, NERC’s chief technical adviser of engineering and standards.

The report, which focused on standalone BESS and hybrid resources — BESS connected with solar or wind — also recommended that:

system planners prepare for an increase in the “critical mass” of battery storage and ensure that it provides the essential reliability services to maintain BPS reliability, security and resilience. Planners must understand the impact of battery size, location and operating characteristics on maintaining reliability, NERC said, as well as batteries’ value as a complement to variable wind and solar resources.
planners conduct studies to determine the dynamic stability impacts of interconnecting battery storage and its ability to provide capacity to meet long-term and contingency reserve margin requirements.
entities reporting on batteries use consistent metrics and improve both their data and their reporting methods. “As energy storage systems become more prolific, accurate and timely data will be essential for both system planners and operators. The Institute of Electrical and Electronics Engineers (IEEE) should update the IEEE Standards to reflect any implications of battery storage systems,” it said. “The GADS Working Group should ensure that battery storage is accurately reflected in their data capturing protocols.”

U.S. BPS-connected battery energy storage power capacity (July 2020) | NERC

It concluded that existing reliability standards “adequately reflect battery storage as a generator, ensuring that the NERC TPL and MOD standards are applicable to the current number of BESS on the BPS.” But it called for a “gap analysis” to identify changes that will be needed in the future from both the growth of BESS and its additional functions.

Uses

Operating reserves and ancillary services (frequency regulation and voltage support) represent the lion’s share of BPS-connected storage capacity, with smaller amounts used for energy arbitrage, peaking capacity, black start and deferrals of transmission and distribution upgrades.

NERC recently conducted a joint study with WECC that highlighted the ability of BESS to provide fast frequency response (FFR) to avoid using under-frequency load shedding (UFLS) in response to generation losses. The study found that strategically located BESS provide effective FFR to avert UFLS.

“The team found that by altering the size of the BESS at different locations, it was able to inject power to arrest the frequency nadir,” NERC said. “While the location of this injection generally did not matter in relationship to interconnection-wide grid support, certain local stability problems may be exacerbated or resolved solved by using this BESS capability.”

Growth

The U.S. and Canada currently have 37.5 GW of storage capacity, 90% of it pumped hydro. Of the remaining capacity, more than half is lithium-ion batteries, which have matured because of their use in electric vehicles. “There are many electricity storage technologies at or near commercial viability with many more at various stages of development,” NERC noted.

The U.S. Department of Energy projects that 35% of the nation’s energy will come from wind (404 GW) and 27% from solar PV (632 GW) by 2050. BloombergNEF projects worldwide energy storage installations (including EVs but excluding pumped hydropower) will grow from 9 GW in 2018 to 1,200 GW of lithium-ion batteries by 2050. The U.S. is adding storage faster than any other country.

The largest battery in the U.S. is expected online later this year: Florida Power and Light’s 409-MW/900-MWh Manatee Energy Storage Center, which will pair storage with solar. Last April, Southern California Edison inked the nation’s largest-ever purchase of battery storage: 770 MW/3,080 MWh.

The top four states with facilities operating or under construction are California, Illinois, West Virginia and Texas, representing more than half of the total installed battery storage in the U.S.

Hybrids

According to the Energy Information Administration, the number of hybrid renewable-BESS rose from 19 in 2016 to 53 in 2019 and will double by 2023.

EIA says nine states comprise 90% of the operating hybrid capacity in the U.S., with Texas holding 46% of the total. “Although nearly 25% of the total United States battery capacity is installed as part of a hybrid system, only 1% of total wind capacity and 2% of total solar capacity is part of a hybrid system,” NERC said.

An ERO working group is currently drafting guidance on the application of the bulk electric system definition to BESS and hybrid resources and how owners of such facilities will have to register them.

February 9, 2021

SolarWinds Recovery May Require Extreme Actions

Large-scale replacement of computer systems “may be the only option” for some users of SolarWinds, FERC’s Joseph McClelland told NARUC attendees.

Large-scale replacement of computer systems “may be the only option” for some users of the compromised SolarWinds Orion network management software to ensure there are “no footholds left for an adversary to drill into the network,” according to Joseph McClelland, director of FERC’s Office of Energy Infrastructure Security.

“I’d say that absolutely is a possibility. We really don’t know the full extent,” McClelland said in a panel at the National Association of Regulatory Utility Commissioners’ Winter Policy Summit last week. “The number is growing, [and] we really don’t know how many other systems our adversary was able to burrow into.”

Orion’s Massive Reach Aided Hack

About 18,000 public- and private-sector organizations are confirmed to have been impacted by the SolarWinds compromise, according to a joint statement issued last month by the FBI, the National Security Agency, the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) and the Office of the Director of National Security (ODNI). The Department of Energy and FERC were among the entities affected. (See FERC Pushes Cybersecurity Incentives.)

However, as McClelland implied, those numbers may not reflect the full extent of exposure. While the breach was first reported by U.S. cybersecurity firm FireEye in December 2020, the attackers — “likely Russian in origin,” according to the agencies’ statement — are known to have inserted a backdoor into updates for the Orion platform published as early as March 2020, if not before. As a result the hackers had an open window into victims’ information technology networks for nearly nine months before any effort was made to stop them.

Compounding the issue is the market dominance of Orion, which is used by “almost everyone” with a large corporate network and “has to know everything about the network to work,” according to McClelland. The insertion of the breach into official updates for the software allowed it to disseminate quickly among SolarWinds’ huge global customer network.

Finally, although SolarWinds has developed a patch for the software that removes the malicious code, the hackers’ long period of unobstructed access allowed them an intimate look at both the application itself and its update process. As a result, simply applying the patch is only the first step in safeguarding the system, and the extent of required actions may not be known for some time.

“It is likely that the adversary is in a strong position to identify any potential (and as yet unknown) vulnerabilities in the SolarWinds Orion code that are unrelated to the inserted malicious code and may therefore survive its removal,” CISA warned in its emergency directive on the breach.

Federal Breach Response Draws Praise

The extent of the breach highlights the importance of cooperation between private industry and government cybersecurity experts, McClelland said — echoing assessments from other observers since the discovery of the hack. (See Panel: Industry Dialogue Key to Cyber Resilience.)

In particular, he emphasized the quick response of CISA and other federal agencies in setting up its alert for the breach within four days of the FireEye report, noting that “DHS did outstanding work on this.” The alert allows the agency to provide detailed information on every aspect of the attack, including methods for detecting compromised code; newly discovered attack vectors, including Microsoft 365 and Azure applications; and possible mitigation measures, from software patches to complete rebuilds of affected networks.

McClelland also praised the quick work of the National Security Council in setting up a unified coordination group (UCG) by Dec. 15, two days after the breach was discovered. The UCG is composed of the FBI, CISA and ODNI with participation by the NSA, and is tasked with coordinating all relevant federal agencies to investigate and remediate the attack.

“If it’s something as big as SolarWinds, we’re all involved. We’re all meeting at least weekly, and we’re meeting at the highest levels to exchange classified information and to understand exactly where we are and how to better deploy it,” McClelland said.

This massive joint effort is aided by the supportive relationship between both management and ground-level staff at the various groups working to secure critical computer networks.

“I’ve known Bob for years; I consider him a friend and colleague,” McClelland said, referring to Robert Kolasky, assistant director at CISA’s National Risk Management Center, who also took part in the panel. “I can pick up the phone and call him any time; he calls me at any time; [and] our subject matter experts work together. … I’d say the same thing about the states too — [we have a] great relationship with the states, with [NARUC]. And I feel like I can pick up the phone at any time and call any of the members.”