Beginning in 2019, Minnesota’s three investor-owned utilities will file resource plans that will chart a path into a time period of significant change and opportunity. With nearly all the state’s power sector CO2 emissions coming from fossil-fuel plants that are retiring or potentially retiring in the next 20 years, the state has a once-in-a-lifetime opportunity for a transformation towards decarbonized electricity generation.
Yet this timeframe also sees the potential retirement of existing nuclear capacity, which creates a large gap in a carbon-free generation that could be replaced by natural gas, and the additional challenge of integrating new loads from the electrification of transportation and buildings. With all of this in mind, implementing a successful transition to a decarbonized electric system in Minnesota will require new thinking about how low-carbon technologies and approaches can replace natural gas as the main source of new generation.
On December 3, 2018, the e21 Initiative (which is co-convened by GPI and the Center for Energy and Environment) held a public forum on integrated systems planning (ISP)—the concept of end-to-end electric system planning from the wholesale market to the distribution system—to generate new ideas in response to this challenge. ISP was addressed in detail in the e21 Phase II report, a document that developed a series of recommendations with broad support among diverse stakeholders for modernizing Minnesota’s electric system. However, the recommendations were focused more on changes to the way we conduct resource planning than the specific resources that we should be planning around. This forum sought to take the next step by generating discussion around what mix of low-carbon technologies and approaches can provide the services required by a 21st-century electric system.
Mike Bull from the Center of Energy and Environment kicked off the forum by reviewing what stakeholders had accomplished in e21’s Phase II, including earlier and more proactive stakeholder engagement, improved modeling capabilities, and more emphasis on a systems-wide approach. He then posed five key questions for the audience to consider:
- How do we create a grid that is reliable, flexible, and resilient?
- How do we keep costs affordable for customers?
- How do we treat load as a serious resource?
- How do we best address the needs of power plant communities and workers?
- What is the role of natural gas in this transition?
Following Bull, Minnesota Public Utilities Commissioner Matthew Schuerger gave a keynote presentation on systems planning from a regulator’s perspective. He discussed wind integration as an example of progress in grid planning and operations, describing that between the early 2000s and today, grid planners and operators have evolved their thinking and their approaches, tools, and market rules to support large amounts of variable wind generation.
Schuerger explained how the current challenges are different but the need for evolving our planning and operations methods is the same. One of those challenges, he described, is the changing resource mix from coal and nuclear towards renewables, demand response, and natural gas. These resources will need to not only provide energy and capacity, but also voltage control, frequency support, and ramping capability, all of which will require new ways of planning and operating the grid. Schuerger suggested that flexible loads, in combination with the regional grid and markets, are the key to addressing these challenges. He then showed how Minnesota is addressing these challenges through a series of dockets, including interconnection standards, distribution planning, rate design, and performance-based regulation.
Following Commissioner Schuerger, a group of four panelists moderated by Donna Attanasio from The George Washington University Law School discussed the question, “What grid services will be required by a 21st century electric system, and what mix of low-carbon technologies and approaches can provide those?”
Below, we have listed some highlights from panelist remarks. The panelists included:
- Jenny Edwards, Center for Energy and Environment
- Rob Gramlich, Grid Strategies LLC
- Carl Linvill, Regulatory Assistance Project
- Jennifer Peterson, Minnesota Power
1) WHAT ARE SOME IMPORTANT CONSIDERATIONS REGARDING PLANNING END-TO-END AROUND LOW-CARBON TECHNOLOGIES AND APPROACHES?
- Recognizing load as a resource. We have done a crude job of incorporating load into resource planning. We need to better incorporate time and locational values of load resources. Smart meters and advanced metering infrastructure (AMI) will be able to help us understand those values. To understand and operationalize load resources, we should get planners to understand and plan around them. When we plan for capacity we just care about the peak value. However, it is not just the size of the pipe, but also how long it’s open for. We need to define what we want to plan for and which grid service should the load address.
- Collaboration with MISO. Almost every state and region has remote variable resources that are least-cost, but we need to balance the system 24/7 and 365 days a year. To do that, we need to collaborate and be an integral part of MISO (Midcontinent Independent System Operator), especially with increasing wind and solar.
- A mix of supply and demand approaches. In many places, we see either a competition between the demand and supply-side or a focus on only one or the other. However, we need a lot of grid flexibility, from both the demand side and supply side.
2) WHAT DO THESE RESOURCES NEED TO PROVE TO BE ABLE TO TRUST THEM?
- The foundational thing any new technology needs to do is meet those core values of affordability, reliability, etc. Load resources require planning around something that is enabled or disabled by customer behavior. The key question is, will it be there? With this, it’s important to consider that utilities operate on a long term (10–15 years) planning horizon.
- Distributed energy resources (DER’s) are location-specific—what are the benefits they provide, and how does the grid need to accommodate them? DER’s won’t always defer investments; the particulars matter.
- Not all utilities and customers will have the same appetite for cost increases, so it’s important to balance costs with other values.
3) THINKING ABOUT THOSE RESOURCES, WHAT ARE YOU SEEING IN WORKING WITH CUSTOMERS?
- Strong historic demand response participation, though it varies year-to-year. Important to recognize that customers have different business goals and operational requirements.
- Demand response is key to making all of this work. What is important is flexibility. We need to give equal opportunity to both demand and supply side, and on both a local and regional basis. We need to get price signals right at the wholesale level, but then need to address it in planning—what is my need for flexibility at specific times of day/year? We need to know the system needs and plan for that.
- Reliability is a game about statistics. We need enough resources out there in large numbers. The risk profile is depended in part on customers per feeder. One customer on its own feeder can be a higher risk.
- Customer resources create both a dependency, but also an opportunity to expand the resource base by bringing on more participants. The key is in pricing—if the prices reflect what the system needs, then it’s a very reliable resource. We need to create the right pricing and the opportunity to participate.
4) HOW IS OUR DEFINITION OF NEED EVOLVING? IF WE DEFINE RESOURCES AS A “PRODUCT,” DOES THAT HELP?
- Yes, seeing the definition of “need” changing. The Demand Response Advisory Committee for the Northwest Power and Conservation Council recently decided that DR can completely meet the peaking needs of about 400MW. The phrase “shape, shift, shed, and shimmy” is expanding our concept of DR. We need price signals that correspond to the needs we’re trying to fill with products.
- Commissioner Schuerger mentioned NERC essential reliability services. Those are distinct from energy and capacity. We’re going to find more value and need for these services and more innovative ways to supply them. We need to be deliberate at the RTO (Regional Transmission Organization) and regional planning level to allow this.
5) DO WE NEED MARKETS FOR ALL THESE THINGS?
- Certainly at the wholesale level. Some needs are also very localized.
- There’s the idea of being a good “grid citizen” and that there should be standards for this.
- We need to figure out the pricing and rewards for services.
- The markets are important, but they don’t do our planning for us. This is about deciding what we want. The markets can then deliver that in a low-cost way.
6) IN WHAT WAYS CAN THE REGULATORY PROCESS ACCOMMODATE THIS?
- Utilities have been planning distribution systems for a hundred years. But the benefit of a commission process is transparency and being able to ask questions to ultimately improve the process.
- There are two important forces shaping the demand part of this—modernizing the grid and electrification. Both are important opportunities to harness, and things that can work for us if we plan for them correctly. We need to be thinking outside the box and harvest all the benefits that they bring.
- The resource procurement issue is a challenge in the Northeast. Here in the Midwest it’s a question of where monopoly ends and where the third-party services begin.
- Time-varying rates are critical.
- With regard to generation, the issue of older plants self-declaring market participation is raising costs for ratepayers. For the new generation, the issue of whether new fossil plants are needed is a concern.
- With regard to transmission, we need to consider another round of MVP (multi-value project) lines.
- Resource procurement might look different from supply-side procurement. Maybe it’s putting out a tariff.
- The list of things recommended by e21 is the list of things to do. When the system needs become clearer, then you have the ability to meet those needs with products. Also, performance regulation changes what utilities are being asked to be and do. Traditional regulation punishes the utility for being a good platform.
7) IN TERMS OF CUSTOMER PARTICIPATION, HOW DO WE FACILITATE TRANSPARENCY AND GET ENGAGEMENT FROM NEW AUDIENCES?
- Some utilities are thinking about integrated distribution planning similar to integrated resource planning, where stakeholder outreach happens ahead of or as part of the planning process. Climate change is making both types of planning relevant.
- When we talk about load being a resource, we’re talking about customers being a resource. We need to know who is adopting electric vehicles and solar and let that inform our planning.
- Bottom-up engagement is important. At the moment, there seems to be a disconnect between policy and the average customer.
Finally, the forum turned to the audience for their suggestions on the question, “What outcomes would indicate success as Minnesota moves into this vital period of resource planning?”
Here are some of the comments shared by attendees:
- Real, genuine community and customer engagement, both for educational purposes and to explain the options and decisions to customers. It would be a win if this sort of quality engagement is able to happen.
- The process is looked at as a win for both regulators and communities; not just a “tire-spinning activity.”
- As we start to develop and put programs in place, we need to build the right price signals. While we have to be careful to not create winners and losers, we need programs that send the right price signals to create benefits for all ratepayers. There also needs to be some level of experimentation in doing this.
- Given the sense of urgency on climate, there’s a whole group of people who are not engaged in the resource planning process but are going to “storm the doors.” We need to engage with those people as well and engage them early in the process.
- The Midcontinent Independent System Operator is a policy taker, not a policy maker. There is an opportunity to engage in a broad dialogue with regional markets.
- Transparency in stakeholder engagement at all levels.
- This is the ultimate team sport, so we need to help each other learn about how to address complex challenges.
- We need to be open to new ideas, including looking at markets as a possible solution.
- We need more of a nimble process—things are happening quickly in this industry and we need to keep Minnesota relevant and ready for evolution over the long term.
Thanks to the speakers, panelists, and attendees who were able to join us for the e21 Forum on Integrated Systems Planning!
The information in this blog has been summarized from the presentations and the general discussion. Any notes on a particular presentation or from the discussion should not be attributed word-for-word to the presenter.
This blog was originally published at e21initiative.org. The e21 Initiative, which is co-convened by the Great Plains Institute and Center for Energy and Environment, facilitates multi-stakeholder collaboration to help utilities and regulators adapt to a changing electric system while better aligning utility business models with the public interest.