Lessons from MISO on Transmission Planning for a Changing Grid

Posted by Jeff Dennis on Aug 24, 2022 2:00:00 PM

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On July 25, the Midcontinent Independent System Operator (MISO) Board of Directors approved an ambitious long-term plan to expand transmission infrastructure in the MISO North and Central regions (now called MISO Midwest) to serve growing demands for renewable energy and improve system reliability. The Long-Term Regional Transmission Plan (LRTP) is the second such major long-term regional transmission plan approved by MISO in the past 12 years, building on the Multi-Value Projects (MVP) transmission plan approved by MISO in 2011. MISO’s long-range planning efforts in MISO Midwest can serve as a national model for how to conduct long-range transmission planning to meet the needs of a changing generation resource mix. Meanwhile, the fact that the MISO South region will not see a similar plan until 2024 at the earliest demonstrates the challenges that must be overcome to ensure such effective planning happens everywhere – and leads to development of the transmission needed for a clean energy future.

The LRTP projects approved by the MISO Board in July are the first tranche of what the RTO plans to be four tranches of planned new transmission facilities in the entire MISO region. This first approved tranche consists of 18 different regional transmission facilities, spanning nine states in MISO Midwest. The projects are designed to facilitate an expected retirement of 58 GW of existing generation resources (including 39 GW of aging coal generation) and support the integration of 90 GW of new generation, including 56 GW of wind and solar generation. MISO estimates that the $10.3 billion cost of the LRTP portfolio will generate between $37 billion and $69 billion in total benefits for the region, primarily through reduced fuel costs, reduced transmission congestion (which forces dispatch of higher cost generators), avoided investment in less efficient local facilities, and decarbonization.

LRTP Image[1]

While a long time in the making, the LRTP builds on a successful regional planning effort conducted by MISO over a decade ago that culminated in 2011 with the approval of the MVP portfolio of transmission projects. The 17 MVP projects, now almost entirely in service, consisted of regional transmission infrastructure investments planned in response to growing state renewable energy portfolio standards and delays in connecting renewable energy to the grid caused in part by a lack of transmission capacity.

Last month’s approval of the LRTP comes as the Federal Energy Regulatory Commission (FERC), the U.S. Department of Energy (DOE), and state policymakers and public utility regulators focus on policies needed to support expansion of transmission infrastructure to meet the demands of a changing resource mix, bolster reliability, and improve resilience to extreme weather. So, what lessons for effective transmission planning can FERC, DOE, and the states take from MISO’s example? Here are four:

  1. Assess transmission needs on a long-term basis: To develop the LRTP project portfolio (and the MVP portfolio that came before it), MISO planners assessed a range of key factors driving transmission needs in the region over a 20-year future planning horizon. While such long-term multi-factor planning in the face of a rapidly changing and decarbonizing generation resource mix does not seem groundbreaking on its face, it is surprisingly rare in the United States. MISO, the California Independent System Operator, and the Southwest Power Pool have conducted such long-range planning in the past decade. But for much of the industry, planning is conducted primarily with a focus on addressing immediate reliability needs. That short-term, narrow focus can miss opportunities to develop regional solutions that meet reliability needs more cost-effectively or efficiently while also providing economic benefits like reduced power costs, not to mention addressing longer-term needs driving changes in the resource mix, such as state, utility, and customer clean energy commitments and projected changes in demand driven by electrification of transportation and buildings.
  2. Develop multiple future scenarios to inform options: In both the MVP and LRTP process, MISO developed multiple scenarios (called Futures) reflecting assumptions of potential technology and market changes, including load growth, electrification trends, clean energy and climate policies, generator retirements, renewable energy growth, and fuel and generation costs over the 20-year planning horizon. These assumptions are used to model the potential generation resource mix in the future, and once those generators are sited, to design the transmission facilities that will be needed to reliably deliver energy to customers. While the original MVP projects were designed based on multiple futures, MISO used only one future to design Tranche 1 for the LRTP. Specifically, MISO used the most conservative of the three Futures it developed (Future 1), which assumes the retirement of 58 GW of existing generation resources (including 39 GW of aging coal generation) and the development of 90 GW of new generation (including 56 GW of wind and solar generation) over the 20-year planning horizon. MISO says this future would result in a 63% reduction in carbon emissions.
  3. Evaluate all benefits simultaneously and allocate costs to those who benefit: In identifying the regional transmission projects included in the LRTP portfolio, MISO assessed and summed the multiple benefits of the proposed facilities together and compared those benefits to the costs. MISO considered a broad range of benefits, including fuel and congestion cost savings, avoided local investment, decarbonization, and avoided risk of blackouts. It compared these benefits to the costs on a portfolio-wide basis to determine net benefits to the region, and to broadly allocate the costs of the transmission to those that benefit. This approach stands in contrast to existing practices in many regions, where transmission benefits are considered separately (reliability, economic savings, and achievement of public policy). This siloed approach hampers the ability of the transmission planning process to identify regional transmission solutions that provide multiple benefits, and to share the costs among all states and customers who benefit, which lowers the cost burden (and potential for that burden to derail projects) to specific states or customers.
  4. Engage states and stakeholders early and often: As noted above, LRTP was similar to the 2011 MVP process, which was a product of early engagement and cooperation among governors in the MISO states. The Midwest Governors Association’s 2007 Energy Security and Climate Stewardship Platform included expansion of “collaborative regional transmission planning and siting to enable future development of renewable electricity generation” as a recommended policy option. This cooperation among governors, and work among the states that followed, was a catalyst for expanded regional transmission planning in MISO, and provided a model for the later LRTP process. During the LRTP process, MISO worked with states and stakeholders to develop the Futures scenarios on which planning is based.

The good news is that many of these lessons for success in regional transmission planning are part of FERC’s April 2022 Notice of Proposed Rulemaking on transmission planning and cost allocation. For example, FERC proposed to require that transmission providers: (1) conduct long-range regional transmission planning over a minimum 20-year planning horizon; (2) develop multiple (at least four) long-term scenarios with reasonable assumptions of changes in the resource mix and demand driving transmission needs (including state clean energy policies, projections of future electrification of transportation and buildings, and customer demands for clean energy); (3) evaluate a wide range of transmission benefits in transmission planning and when allocating costs to those who benefit; and (4) seek agreement of the states on cost allocation methods and allow for the voluntary agreement of states to certain cost allocation approaches and, if agreement cannot be found, to provide some pre-determined default cost allocation. In comments filed this month, AEE urged FERC to not only finalize these proposals, but strengthen them in many areas, to ensure that the lessons learned in successful efforts like the MISO LRTP process become standard practice in every region of the country.

While the LRTP will bring much needed new transmission infrastructure and substantial economic benefits to MISO’s Midwest region, MISO’s South region was left behind. In addition, MISO’s South region will continue to be isolated from its Midwest region by a weak transmission connection that is chronically congested. This prevents low cost and lower-emitting generation in MISO Midwest from getting to customers in the South and prevents those resources from bolstering resilience to extreme weather events like cold snaps or hurricanes. The weak north-south link will also prevent the MISO South states from exporting their power into the MISO Midwest when needed.

MISO Map Image[1]

MISO expects to develop a transmission plan for MISO’s South region as the third tranche of LRTP, and to address the South to Midwest connection as part of the fourth and final tranche. That addressing the South region and connection between regions has fallen to bottom of the planning list can be explained by lack of state and stakeholder recognition of the wide range of transmission benefits brought by regional lines in MISO South and their rejection of the cost allocation used in the original MVPs and for LRTP tranche 1 in MISO Midwest – that is, the very factors that have made MISO’s transmission planning to date so successful.

The dichotomy between MISO’s recent LRTP success in its Midwest region, and the continued lack of action to resolve long-standing transmission needs in its South region, underscores the need for FERC to require more robust regional transmission planning across the country. That will put us on a path to resolving transmission capacity deficiencies and interconnection backlogs standing in the way of a vast deployment of advanced energy technologies.

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Topics: Wholesale Markets, Transmission