The news media has picked up the headlines from grid operators’ summer assessments, causing people to wonder if we will have rolling blackouts this summer. These headlines have caused skeptics to raise questions about renewables and their role in providing reliable and affordable electricity. While no one knows how this summer will turn out, it is worth digging into the details beyond news headlines.
Drought in the western grid, an increase in utility-scale solar in Texas, and the lack of transmission capacity to transfer excess capacity from the south portion of MISO to the north region are the specifics that show renewables are most likely not the sole cause for possible firm load interruptions. Policy makers are better served by focusing on demand flexibility to solve this puzzle.
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California – Elevated Risk
When California was going through a tough time in late August 2020, neighboring states either didn’t have much to support or chose not to by imposing wheeling restrictions. California Independent System Operator (CAISO) is in a much better situation this summer than last summer (See “stack analysis,” page 3), so why is CAISO in the news? One of the answers is the lack of water in the reservoirs due to a reduction in snowpack – 38% this year on April 1 compared to last year’s 60% on April 1.
Load increase, most likely driven by optimism that we are past the pandemic is a factor in CAISO’s probabilistic analysis that indicates a 15% chance in 2022 compared to 6% in 2021 of entering NERC’s Energy Emergency Alert 3. EEA3 indicates there is an imminent load shed situation, or the balancing authority is in the middle of a firm load interruption – the technical name for the blackout.
What about renewable’s role in CAISO’s assessment? CAISO is concerned about solar production, but it is worth noting that the time when CAISO expects to run into a low reserve margin in the evening hours is when the sun sets. So, solar is naturally unavailable during likely instances of firm load interruption.
Texas – Elevated Risk
From the western grid’s CAISO example to the Texas grid ERCOT, we know that partly due to population growth, ERCOT’s summer demand is constantly breaking records. ERCOT has nearly 10,000 MW of operating reserves (Page 3 here) going into this summer compared to the 1,000 MW that leads to an EEA3 event. So, why is ERCOT at elevated risk?
The first cause for concern is that ERCOT has half of its normal operating reserves – 5,000 MW in an extreme situation. Others include the forecasting risk of relying on more than 10,000 MW of utility-scale solar and 2,000 MW of battery storage. So, similar to CAISO, ERCOT is concerned about solar production. But if clouds move in and solar production drops, it is worth noting that the air conditioner load could drop as well. An additional solution is enabling residential owners with batteries to provide those operating reserves.
Midcontinent ISO (MISO) summer assessment – High Risk
Shifting from elevated risky areas to a high-risk area in the Midwest, MISO states coal unit retirements (which is not new, as evident from MISO’s 2011 summer assessment, slide 9 here) and renewable penetration (MISO has 21% renewable capacity now compared to 9% in 2010) increase the likelihood of relying on emergency procedures. It is worth noting that MISO does not use the term “rolling blackouts” in these communications, but most presses include that in their headlines to grab the reader’s attention.
The attention generated by MISO’s summer warnings leads to some MISO states blaming other states. For instance, in Iowa, a news report suggests Alliant Energy “noted in a filing with the Iowa Utilities Board that Iowa, Minnesota, and Wisconsin have capacity that exceeds required reserves, while Illinois, Missouri, Indiana, and Michigan do not.” Some utilities are even suggesting there is no chance of rolling blackouts. Reporting from Milwaukee: “Wisconsin’s largest utility, We Energies, says the situation isn’t as dire as the report suggests because the state has excess power generation capacity.”
Even a state commissioner (Dan Scripps, chair of the Michigan Public Service Commission) in MISO has said, “Frankly, I’ve been dismayed by some of MISO’s statements.” In the light of these press statements, it is worth going back to MISO’s assessment for this upcoming summer.
MISO said: “Emergency resources and non-firm energy imports will be needed to maintain system reliability,” and followed up with this statement: “The need for emergency procedures will be impacted by the availability of non-firm resources.” If we compare the 2021 MISO summer assessment (slide 14) to the 2022 assessment, MISO has more generation in 2022 relative to 2021, even in a high outage scenario for the June-August months.
The key is that MISO says 3,700 MW of capacity is “stranded” in the South region, and an additional 7,000 MW of imports are “non-firm” for this summer. But MISO does not acknowledge the role demand response could play in reducing the need for conditions leading up to EEA3. Why? Because MISO is focused on laying the groundwork for a $10B transmission portfolio. In EEA2, before EEA3, MISO operators can call Load Modifying Resources and commit emergency demand response resources.
What is a possible solution?
Demand response and demand flexibility need to be incentivized to meet operational reserve needs. Our industry focuses on transmission, and it is the right time given that many transmission utilities have equipment aged beyond 60 years. But it is important to remember that building new transmission is a 10-year endeavor. The Entergy experience in MISO South indicates that powerful hurricanes can knock down high voltage transmission lines. And bringing those transmission lines back online takes at least a year.
To reduce the likelihood of firm load interruptions, we must incentivize demand reduction. ERCOT can fast-track aggregated residential battery systems to participate in providing operating reserves. Similarly, MISO must insist that its states opt-in their retail demand response programs to participate in MISO ancillary services markets.
