Proposals in MISO to clear queues using arbitrary criteria are missing the point, and the opportunity
In late May, on the heels of a record-breaking year of interconnection requests from energy developers, Midcontinent Independent System Operator (MISO) announced it would delay opening its new 2023 application window for proposed energy projects while quickly developing reforms to reduce the number of projects entering the queue. Then on June 21, with no advance notice, MISO announced a freeze on accepting new requests to connect to its grid.
Instead of rushing through queue reforms with little time for input from market participants, MISO should initiate a thorough stakeholder process to work through solutions that get to the heart of the problem. One clear solution: reform the interconnection process by studying the right things in the right context – enabling faster more accurate results while maintaining reliability and competition.
A high volume of interconnection requests signals a healthy competitive market
MISO has had a blockbuster year, notching 171 GW of new interconnection requests in 2022. This is a strong demonstration of commercial interest and a sign of a healthy and competitive market. This high number of interconnection requests, in and of itself, is not a problem.
The problem with the current queue process, which is paralyzed under this large volume, lies in the way MISO evaluates these new project proposals. The way that MISO currently studies projects in the queue takes far too much time and resources and produces study scenarios that will never happen.
Placing arbitrary restrictions on new generation projects will not solve the problem and distracts from meaningful reforms
MISO’s reaction to its large queue has been laser-focused on measures that aim to make it harder to enter and remain in the queue, such as increasing financial deposit requirements. Similar recent reforms in MISO have shown that this is unlikely to reduce volume: market forces will continue to drive robust competition to build clean energy projects. In the absence of transparent information regarding the cost to interconnect, generation developers will be forced to continue to ‘pay to play’ by entering the queue.
Capping the volume of projects that can enter a queue cycle does not solve the reality that many developers are entering more projects into the queue than they intend to build simply to obtain interconnection cost information, and thus MISO will still be spending time thoroughly studying projects that will not advance. Capping the size of queue cycles also creates a new problem, which is how to decide which projects are selected for a given cycle. Selecting project applications because they arrive seconds before the next one is highly arbitrary and does little to help advance the best projects. There is no good answer to this project selection question, and discussion on this topic is distracting from more meaningful reforms.
One Proposed Approach: Study projects for the proper level of service
So how do we get to a durable solution? MISO should start by creating space in its stakeholder process to reimagine how its interconnection studies work.
A quick primer on levels of interconnection service
Energy-only interconnection service, often termed Energy Resource Interconnection Service (ERIS), is the minimum level of service that all generators must have in order to connect to the grid. It allows a generator to provide energy to the grid when there is space (“capacity”) available on the transmission lines for that power to flow. A generator with this energy-only service is not guaranteed to be able to use the transmission system at all times and could be forced to reduce its output at times when the transmission system is constrained to maintain system reliability. When planners study proposed projects for energy-only interconnection service, they should be identifying what transmission system upgrades are needed to provide that level of interconnection service only.
Capacity interconnection service, often termed Network Resource Interconnection Service (NRIS), or “full deliverability,” is a higher, incremental level of service that builds on ERIS and ensures that a generator will be able to transmit its power reliably to customers, particularly at times of peak electricity demand. When grid operators study proposed projects for this full deliverability, they are identifying what transmission system upgrades are needed to ensure generators can be deliverable to the load (customers) through the transmission system at those peak times.
MISO currently studies all projects entering the queue as if they’re seeking deliverability (NRIS), which is why the studies take too long and produce unrealistic results. There are more projects entering the queue than needed to serve the peak load in the MISO region, so MISO is studying scenarios that will never happen.
This is not a good use of time and precious resources. But by focusing on an ‘as-available’ ERIS study framework first, MISO can achieve faster and more accurate study results for the large volume of projects entering the queue.
All projects need ERIS, but not all will need NRIS. That’s because some customers (like corporate buyers) are most interested in buying Renewable Energy Certificates (RECs), while their capacity needs are met elsewhere. So, after receiving ERIS study results and interconnection costs, generation developers can start to identify customers that need fully deliverable projects. Once those commercial arrangements are made, a much smaller pool of projects will then seek full deliverability (through additional NRIS studies). Meanwhile, for ERIS-only projects, developers can finish the interconnection process.
In parallel, MISO’s transmission planning process is proactively building transmission needed to support full deliverability for the subset of new projects that need it. To access that higher level of NRIS interconnection service, project owners must demonstrate they meet more stringent criteria (e.g., a commercial arrangement with a utility). Projects meeting the criteria would be allocated that higher level of interconnection service on a first-ready, first-served basis.
This straw-man proposal is not a scheme for generators to avoid paying for the larger system upgrades needed for full deliverability. We, as generators, should be willing to contribute to the cost of these more optimally planned upgrades in concert with a more streamlined, efficient, and reliable interconnection study process. Ultimately, this type of framework will result in a more efficient, lower cost grid for all customers.