Hope for storage developers as the first interregional transmission project approaches approval

Midcontinent Independent System Operator (MISO) Board expects to approve a first interregional Market Efficiency Project (MEP) at its June 2020 meeting. Pennsylvania-New Jersey-Maryland Interconnection (PJM) Board already approved this project last December. This market efficiency project is a first for both MISO and PJM from a joint and common market perspective.

MISO’s Transmission Expansion Plan (MTEP) studied this project and almost recommended it in MTEP 2019. An Interregional MEP (IMEP) can lead to additional transmission projects in the future, fulfilling the vision of FERC Order 1000. With the possibility of energy storage as a transmission asset, it remains to be seen if future IMEP contain energy storage as a solution to an identified need.

MISO’s success with Market Efficiency Project (MEP)

As part of the Regional Transmission Organization (RTO) responsibilities, RTO staff study the need for new transmission projects both from a “top-down” and “bottom-up” perspective. Top-down transmission projects are based on RTO planning engineers 50,000-foot view of the region. On the other hand, bottom-up projects are stitched together from the local planning criteria of the Transmission Owning (TO) member. The big idea here is both top-down, and bottom-up projects cover the spectrum of regional and local transmission needs.

Since historical congestion within the RTO footprint is the primary driver, a Market Efficiency Project (MEP) is more of a top-down project. MEP projects in each RTO’s expansion plan are regional projects. In addition to the historical congestion in the Day-Ahead Market, and Real-Time Market, interregional projects include transmission congestion in Market-Market (MISO and PJM border).

If a transmission line or an interface (a bunch of lines) is consistently limiting power flows in an area, that leads to congestion. The primary purpose of MEP is a reduction in transmission congestion. At MISO, there are only two projects approved to-date in this category, one 345-kV line in Indiana in MTEP 2012, and another 345-kV line in Illinois in MTEP 2009. In MTEP 2017, a 500-kV transmission line was approved by MISO Board for competitive bid as MEP.

Market Congestion Planning Study

Federal Energy Regulatory Commission (FERC) Order 1000 was adopted so that RTOs could jointly plan and meet regularly as “Planning Authorities.” MISO and PJM are also discussing planning, operations, and market opportunities as part of their coordination agreement. This IMEP is the first time FERC Order 1000 has yielded an interregional project after years of coordinated planning.

On the MISO side, Top Congested Flowgate Study was the first name MISO gave to the study before renaming these studies as Market Congestion Planning Study (MCPS). A flowgate is a single transmission line or a group of transmission lines. This Interregional MEP is the result of the MISO Transmission Expansion Plan (MTEP 19) MCPS.

The planning process

The IMEP of MISO and PJM is in Indiana, at the intersection of Indiana border and Lake Michigan. The leading causes of this market efficiency project are, 1) congestion on the market-market flowgate called Bosserman to Trailcreek 138 kV in the area, 2) East to West transmission flows in northern Indiana, and 3) generation retirements in the area.

The cost of the project is more than $20 million, out of which PJM transmission customers’ share is 89%, and MISO customers share the remaining 11%. This cost allocation is because PJM’s member companies benefit the most ($70 million) compared to the MISO member benefits of $8.5 million. The projected in-service date is the end of 2023.

MISO had identified 16 top congested flowgates to study in the 2019 study. Ten flowgates are interregional, and the remaining are for the MISO region alone. Out of the ten interregional, there were three MISO-PJM flowgates. The remaining majority of congested flowgates are on the MISO-SPP seam. To study these three interregional flowgates, MTEP19 evaluated ten possible solutions. Out of these ten candidate projects, three didn’t pass the initial screening. From the remaining seven, only two showed promise. The selected IMEP (designated “NC-11″) had a higher benefit to cost ratio, compared to the other candidate project.

Status at other ISOs

Like MISO and PJM Joint and Common Market (JCM), New York ISO (NYISO), PJM and New England ISO (ISO-NE), have their own interregional planning group called Inter-area Planning Stakeholder Advisory Committee (IPSAC). Even though all three northeastern RTOs (e.g., NYISO, PJM, and ISO-NE) are coordinating transmission planning and following FERC Order 1000, there is no IMEP to-date.

This fact alone makes MISO-PJM IMEP unique in FERC Order 1000 history.

Additional project opportunities?

MISO is kicking off its MTEP 2021 planning efforts that might yield additional projects. Like IMEP falling out of MTEP 19 but receiving MISO Board approval in June 2020, there are three possible promising solutions along the MISO North-South interface discussed in 2019-20 that may receive Board approval in MTEP 2021. MISO North-South project is a regional project.

Will we see a storage project in the future?

Both MISO and PJM are in different stages of the stakeholder process for Storage As a Transmission Asset (SATA). MISO filed at FERC a proposal for Storage As a Transmission Only Asset (SATOA), restricting the use case for storage only for transmission reliability needs, and PJM just started discussions with its stakeholders on SATA. Both these efforts offer hope for storage and renewable energy developers because transmission is another value in the energy storage value stack.

Next Steps

MISO and PJM are expecting final FERC guidance on this IMEP cost allocation. In April 2020, MISO had filed at FERC for compliance with FERC’s March 2020 order. Both RTOs are hoping for quick FERC decision. This IMEP is also the first interregional project for competitive transmission administration for MISO.

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Rao Konidena found Rakon Energy LLC because Rao is passionate about connecting clients to cost-effective solutions in energy consulting, storage, distributed energy resources, and electricity policy. Rao likes helping clients with his expertise in electricity policymaking, and US energy markets. Most recently, Rao was with Midcontinent ISO (MISO) as Principal Advisor for Policy Studies, working on energy storage and distributed energy resources.

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