The following is a contributed article by Rao Konidena, an independent consultant at Rakon Energy, and Allison Bates Wannop, senior director for legal and regulatory affairs at Voltus.
The Midcontinent Independent System Operator is shoring up its planning reserves with the MISO Board approving a $10 billion transmission portfolio. But today, well before all that transmission is built, MISO could avoid blackouts by building out its operating reserves, rather than a singular focus on planning reserves. And MISO could build up its operating reserve by deploying distributed energy resources. In order to leverage DERs as reliability resources, MISO must implement its 2222 DER aggregation model well before its proposed 2030 implementation date.
Operating reserves come from resources available in the next 10-30 minutes or an hour. Regulating reserves, spinning reserves and supplemental reserves are collectively called operating reserves at MISO. Both planning and operating reserves help MISO to avoid blackouts, the former in the long run and the latter in the short run.
Since MISO announced it would likely rely on emergency procedures this summer, it needs to increase the opportunity for current market registered resources capable of providing operating reserves. And by delaying the distributed energy aggregated resource, or DEAR, model until 2030, MISO is postponing market participation of aggregated DERs that are currently capable of providing regulating and spinning reserves. Allowing an earlier implementation of combinations of existing market model aggregations in the DEAR model reduces the chances of relying on emergency procedures in the short term while MISO waits for transmission to be built in the long term.
Regulating reserves deals with the next 5 minutes to maintain frequency regulation. With MISO’s ancillary services market, MISO became a single Balancing Authority responsible for the regulation, and the regulation requirement fell from 1,559 to 396 MW. This reduction in regulation is what MISO cites in its value proposition study (slide 12, 2019 Study) to show the benefits of member utilities staying in the MISO market.
Not all resources are capable of providing regulating reserves. For instance, demand response resources type 1 is not capable of providing regulating reserves. But demand response resources type 2, which are resources capable of following MISO operator dispatch instructions, can provide regulating reserves. The new electric storage resource, or ESR, model at MISO and the DEAR can also provide these reserves. But, the ESR model just went live at MISO this past June, and if FERC approves MISO’s 2222 compliance plan, we must wait until 2030 for DEAR to provide regulating reserves.
Thermal generators can provide these regulating reserves, but wind and solar, which are dispatchable intermittent resources in MISO’s market, cannot. By delaying DEAR implementation until 2030, the MISO market favors thermal resources providing regulating reserves, not non-thermal ones.
Spinning reserves deal with the next 10-30 minutes to maintain frequency deviations. Resources capable of providing spinning reserves must be synchronized with the grid and available to be dispatched by the MISO operator. Most resources can provide spinning reserves except for the dispatchable intermittent resources.
Like regulating reserves, spinning reserves requirement decreased from 1,482 to 934 MW (slide 14, 2019 study).
The Federal Energy Regulatory Commission approved MISO’s spinning reserves modification in March 2021 due to a market inefficiency related to the selection and deployment of spinning reserves. Commissioner Allison Clements concurred with a statement that she is closely watching the impact of MISO’s spinning reserves modification on the reserves market.
Supplemental reserves are not synchronized with the grid, meaning they are “offline.” But they are capable of synchronization “online” with advance notice. Like spinning reserves, most resources can provide supplemental reserves except for the dispatchable intermittent resources. The operator exhausts the resources capable of providing spinning reserves before calling upon resources that provide supplemental reserves.
To meet the planning reserves, we need planning resources. Hence MISO has load-modifying resources, which include behind-the-meter generator, or LMR-BTMG, and demand response resource, or LMR-DRR. Examples of LMR-DRR are retail demand response programs such as interruptible loads, direct control load management programs, programmable thermostats, and air conditioner programs. Examples of LMR-BTMG are net energy metered solar and distributed storage.
This LMR importance is why MISO modified the capacity accreditation requirements for LMRs in a May 2020 FERC filing. But LMRs are not the problem at MISO because more than 10,000 MW of LMRs are registered. The problem is that MISO has only 100 MW of Demand Response Resources Type 2 (Table 15 - 2021 State of the Market Report), which are resources capable of following MISO operator dispatch instructions and providing operating reserves.
Demand response resources type 1 can’t follow real-time operator instructions. According to market capacity emergency procedure, which outlines the steps MISO should take during transmission and capacity emergencies, MISO can commit these demand response resources as early as Step 1a. If MISO operators have more demand response resources participating in the real-time market, it will reduce the need to take steps 2-5 of emergency procedure.
MISO must exhaust LMRs in Step 2 of an Event before utilizing operating reserves in Step 3 (slide 63 - MISO Seasonal Readiness Workshop, Summer 2022, April 28, 2022). In Step 4, MISO makes any emergency purchases from its neighbors. Shedding load is Step 5 — the last option in the emergency procedure.
Operating reserves are the final step before MISO makes any last-ditch emergency purchases. Hence MISO needs to focus on operating reserves to avoid blackouts. Under the current MISO market design, dispatchable intermittent resources cannot provide operating reserves. Only generators and demand-side resources can. So, MISO should enable an earlier implementation date for its distributed energy resource participation model, which allows combinations of existing models to provide more than 1,000 MW of operating reserves, even if some features that allow new models to participate in the MISO market will have to wait. And MISO states should enable higher participation of demand response resources type 2, which can provide regulating reserves to participate in wholesale markets to avoid load-shed events.