A revolution has begun.
Clean power from renewable resources is beating fossil fuels in price, reliability, and greenhouse gas (GHG) emissions. As governments support these climate-friendly sources of power with financial and other incentives, they pose a threat to suppliers of fossil fuel energy.
The Independent System Operator for New England (ISO-NE) has tried to hold back the wave of new, clean energy sources by rejecting their energy as unfairly priced because of the state support while ignoring governmental subsidies for fossil fuels. The center of the controversy is the Minimum Offer Price Rule (MOPR) which penalizes non-carbon-emitting sources of energy because of their subsidy by a state, thus defeating the desire of state legislatures to encourage a transition to clean, renewable energy. Chairman Glick and Commissioner Clements of the Federal Energy Regulatory Commission (FERC) agency overseeing ISO-NE, have demanded that they stop their anti-competitive rulings.
The [ISO-NE] MOPR appears to act as a barrier to competition, insulating incumbent generators from having to compete with certain new resources that may be able to provide capacity at a lower cost. Such overbroad barriers are the antithesis of market competition, in that they divorce capacity market clearing prices from the actual net going forward costs of would-be capacity suppliers and serve only to prop up capacity prices, protect incumbent generators, and increase the costs of state policies.”— Order Accepting Informational Filing and Directing Modification, 178 FERC ¶ 61,050 (2022)
Given the urgent need to stop burning fuel that creates GHGs, the dilemma for ISO-NE and other regional energy market regulators is this:
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How to encourage renewable, clean energy and connect it to the grid?
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How to retain sufficient continuous forms of energy to manage demand during times when renewables are not available?
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How to maintain the electric system in extreme scenarios, such as weather or other disasters?
If a renewable or storage system is allowed to compete on price, the more expensive, fossil-fuel facilities would not be able to sell their electricity into the forward capacity market. The plants would become stranded assets because they would have no customers.
ISO-NE claims that
an immediate elimination of the MOPR threatens to cause the retirement of existing capacity resources upon which the region relies to maintain reliability.”—ISO-NE and NEPOOL, letter to FERC, Revisions to ISO New England Transmission, Markets and Services Tariff of Buyer-Side Market Power Review and Mitigation Reforms, Docket No. ER22- -000
ISO-NE is proposing to delay a significant opening to new renewable/state-sponsored energy sources for two years.
It is not clear how the situation in two years would be different, and the delay would cripple the essential rapid transition away from fossil fuels.
According to Senator Will Brownsberger, the key to an orderly transition from fossil to clean energy generation and storage is to provide higher payments to fossil resources as an inducement to remain in the market.
A similar problem is facing another regional electric system. PJM, the largest U.S. grid operator, proposes to pause entry to the grid for 1,200 solar projects. PJM claims they are overwhelmed by the challenge to evaluate each project and its impact on system reliability.
We need to keep a realistic perspective on where we are, and how far we need to go and recognize the many barriers to changing the system.
Peter Shattuck is the President of Anbaric, a company that develops grid-scale battery systems in combination with expanding and upgrading the electrical transmission grid. Anbaric and the Massachusetts Municipal Wholesale Electric Company (MMWEC) is an example of a battery storage project that was prevented from entering the forward capacity market by the application of the MOPR regulation.
As we electrify heating and transportation, it will be critical to building the infrastructure that ensures reliability and a low-cost transition to the low-carbon economy. Modernizing the grid through the development of transmission and energy storage are two critical steps policymakers must take.”—Shattuck
Brownsberger points out that, while battery storage is an important technology going forward, for the immediate future it can provide a modest if valuable resource.
Every new renewable or battery storage facility should have priority ability to enter the market to reduce pollution and GHG emissions.
Reform is needed at every level of the energy system.
Many people object to the building of Project 2015A, the fossil fuel generator for reserve capacity power. This project was managed by MMWEC, and while they were telling the public that batteries were unreliable and would be unaffordable because of ISO-NE regulations, MMWEC was actively working with Anbaric to advance a 100MW battery. The Peabody peaker project had been almost finalized without public transparency before citizens became aware of it. The lack of public disclosure seems to be the hallmark of MMWEC.
In the Peabody Municipal Light Commission meeting on April 28, 2022, recorded for Peabody-tv, Matthew Ide, MMWEC Treasurer and Executive Director of Energy & Financial Markets reviewed the requirements for increasing the non-carbon-emitting energy that the Peabody Municipal Light Plant (PMLP) must meet going forward. He noted that wind power is projected to be the major new source of clean power. With very little discussion and no due diligence report, the PMLP commission agreed to participate in Project 2022A, a 100-MW battery. PMLP would invest $6.2 million and see a $1.2 million profit.
It appears that PMLP has not established a power supply policy, and instead depends on Mass Municipal Wholesale Electric Company (MMWEC) to provide piecemeal solutions. MMWEC is guided by laws defining future greenhouse gas emission standards (GGES), and those laws are not addressing the urgency of our situation.
If we are to decarbonize our energy supply, we need transparency, citizen participation, and long-range planning; and we need better regulation and oversight for the municipal light plant system and MMWEC.
Resources
Brownsberger, Will, Grid Reliability, April 17, 2022
Bruggers, James, The Largest U.S. Grid Operator Puts 1,200 Mostly Solar Projects on Hold for Two Years: PJM, based outside Philadelphia, said the pause was needed to cope with the “unprecedented influx” of proposals to generate electric power. Inside Climate News. April 29, 2022
ISO-NE and NEPOOL, letter to FERC, Revisions to ISO New England Transmission, Markets and Services Tariff of Buyer-Side Market Power Review and Mitigation Reforms, Docket No. ER22- -000
ISO NE 2021 Forecast Report of Capacity, Energy, Loads and Transmission)
Shattuck, Peter, President, New England Anbaric, Boston Globe: Letter To The Editor–Transmission, Storage Are Key Steps In Move To Renewable Energy, February 1, 2022