Chapter 5.2 Generator Portfolio Analysis
In 2014, MISO changed the way in which economic MTEP series models are identified. In 2013 and prior years, economic models were identified by the MTEP cycle in which the building process began. Because of the amount of time in which it takes to fully build a new economic model (develop assumptions, capacity expansions, topology updates, etc.) the vintage was always a year behind the report containing the results using said model. As such, beginning with MTEP15, models are now identified by the report where the data will be contained (Table 5.2-1). MTEP15 Market Congenstion Planning Studies will use the MTEP15 Economic Model (created in 2014).
|Economic Model Vintage||MTEP Report|
|MTEP13 Vintage/MTEP 14 Report||MTEP14|
Table 5.2-1: Model vintage and associated MTEP report
This chapter describes the MTEP resource forecasting results created in 2014 and used for MTEP15 for both the North, Central and South regions. MISO completed this assessment of resources using the Electric Generation Expansion Analysis System (EGEAS) model in 2014. Using assumptions developed in coordination with the Planning Advisory Committee (PAC), MISO developed these models to identify the least-cost resource portfolios needed to meet the resource adequacy requirements of the system for each future scenario.
MTEP16 Resource Forecasting results were produced in 2015 and will be used for MTEP16. MTEP16 resource forecasting results are presented in Appendix E2.
Resource Forecasting Results
The study determined the aggregated, least-cost resource expansions for each defined future scenario through the 2029 study year (Figure 5.2-1). These added resources are required to maintain planning reliability targets for each region. The reliability targets for MISO are defined in the Module E Resource Adequacy Assessment described in Book 2.
Results of the assessment for the Business as Usual (BAU) future show that 22,600 MW of additional nameplate resources are expected to be needed between 2014 and 2029, while an additional 12 GW of coal capacity is forecasted to retire. MISO, with advice from the PAC, models 12.6 GW of coal retirements as a minimum in all future scenarios. The Generation Shift future also includes age-related retirements of non-coal and non-nuclear resources and another 7 GW of coal retirements in addition to the 12.6 GW assumed in all futures. The Public Policy future includes additional coal retirements, totaling 22.3 GW, which was necessary to achieve the desired target of 25 percent energy from coal by the end of the study period.
The future resource expansions include demand response (DR) and energy efficiency (EE) programs, as well as natural gas combustion turbines, natural gas combined cycle units, wind and solar. The retired capacity is mostly coal generation, resulting from simulation of the impacts of proposed EPA regulations.
Scenario-based analysis provides the basis for developing economically feasible transmission plans for the future. A future scenario is a stakeholder-driven postulate of what could be. This determines the non-default model parameters (such as assumed values) driven by policy decisions and industry knowledge. With the increasingly interconnected nature of organizations and federal interests, forecasting a range of plausible futures greatly enhances the planning process for electric infrastructure. The futures development process provides information on the cost-effectiveness of environmental legislation, wind development, demand-side management programs, legislative actions or inactions and many other potential scenarios.
Future scenarios and their associated assumptions are developed with high levels of stakeholder involvement. As a part of compliance with the FERC Order 890 planning protocols, MISO-member stakeholders are encouraged to participate in PAC meetings to discuss transmission planning methodologies and results. Scenarios have been developed and refreshed annually to reflect items such as shifts in energy policy, changing demand and energy growth projections, and/or changes in long-term projections of fuel prices. The work completed in recent studies — including MTEP09, MTEP10, MTEP11, MTEP12, the Joint Coordinated System Planning Study, and the Eastern Wind Integration and Transmission Study — demonstrate MISO’s continued commitment to robust transmission planning.
The following narratives describe the MTEP15 future scenarios and their key drivers:
- The Business as Usual (BAU) future captures all current policies and trends in place at the time of futures development and assumes they continue, unchanged, throughout the duration of the study period. All applicable EPA regulations governing electric power generation, transmission and distribution (NAICS 2211) are modeled. Demand and energy growth rates are modeled at a level equivalent to the 50/50 forecasts submitted into the Module E Capacity Tracking (MECT) tool. All current state-level Renewable Portfolio Standard (RPS) and Energy Efficiency Resource Standard (EERS) mandates are modeled. To capture the expected effects of environmental regulations on the coal fleet, 6 GW of coal unit retirements are modeled.
- The High Growth (HG) future is designed to capture the effects of pre-recession level economic growth as well as an increase in renewable energy over the entire footprint. All current state-level RPS and EERS mandates are modeled. All existing EPA regulations governing electric power generation, transmission and distribution (NAICS 2211) are incorporated and 6 GW of coal unit retirements are included.
- The Limited Growth (LG) future is designed to capture the effects of the economy turning back toward recession-like levels. All current state-level RPS and EERS mandates are modeled. All applicable EPA regulations governing electric power generation, transmission and distribution (NAICS 2211) are modeled. To capture the expected effects of environmental regulations on the coal fleet, 6 GW of coal unit retirements are included.
- The Generation Shift (GS) future focuses on several key items that combine to result in a substantial shift in the main sources of energy in the MISO footprint:
- MISO assumes each non-coal and non-nuclear thermal generator will be retired in the year it reaches 50 years of age
- Hydro units will retire in the year they reach 100 years of age
- Additional coal unit retirements, coupled with a $10/ton carbon cost and a 20 percent footprint wide renewable mandate, result in system-wide energy sales derived from coal generation falling to 40 percent by the end of the 20-year study period
- Demand and energy growth rates are modeled at a mid-level and EERS goals and mandates are considered.
- The Public Policy (PP) future captures the effects of increased carbon regulations and an even greater move toward clean energy production and efficient use of resources. Total energy sales derived from coal fall to 25 percent as a result of the combined effects of a cost on carbon emissions, coal unit retirements, and a 30 percent MISO-wide renewable mandate. Demand and energy growth rates are modeled at a mid-level and EERS goals and mandates are considered.
These scenarios were developed and approved prior to the current 111(d) rule the EPA has recently finalized and MISO is not specifically looking at that rule in MTEP15. The biggest driver of coal retirements in the BAU, HG and LG scenarios is the EPA Mercury and Air Toxics Standard (MATS). In the GS scenario, coal retirements are driven by the EPA MATS rule plus another 7 GW to aid in achieving the desired goal of 40 percent energy from coal by the end of the study period. MISO also considers additional retirements of generators in the GS future due strictly to their age. In the PP scenario, MISO considers EPA MATS plus other pending regulations such as Cooling Water Intake Structures (CWIS) and Coal Combustion Residuals (CCR).
Effective Demand and Energy Growth Rates
Many states have encouraged, and in some cases mandated, the use of demand-side management (DSM) technologies in order to reduce the need for investment in new power generation. To evaluate the potential of DSM within the footprint, MISO consulted with Global Energy Partners LLC in 2010. This effort led to the development of 20-year forecasts for various types of DSM for the MISO region and the rest of the Eastern Interconnection. The study found DSM programs have the potential to significantly reduce the load growth and future generation needs of the system. For MTEP15, the DSM program’s magnitudes were scaled to reflect state-level energy efficiency and/or demand response mandates and goals. To calculate the effective demand and energy growth rates, which are ultimately input into the production cost models (Steps 3, 4 and 5 of the MTEP planning process), MISO nets out only the impact of the energy efficiency programs from the baseline demand and energy growth rates. The resulting effective growth rates for the various futures range from 0.08 percent to 1.44 percent for demand and 0.10 percent to 1.45 percent for energy (Table 5.2-2). Demand response programs are modeled within the production costing simulations as oil-fired generators with a significantly high fuel cost when compared to other generators.
|Baseline Growth Rates||Effective Growth Rates|
|Business as Usual||0.80%||0.80%||0.75%||0.76%|
Table 5.2-2: MTEP15 effective demand and energy growth rates
Production and Capital Costs
EGEAS resource expansion data provides the present value of production and capital costs for the study period through 2029 (Figure 5.2-2). While EGEAS does not model transmission congestion, the results nonetheless demonstrate scenarios in which higher or lower production costs could be incurred when compared to a Business as Usual-type scenario. Production costs include fuel; variable and fixed operations and maintenance; and emissions costs (where applicable). Capital costs represent the annual revenue needed for new resources. Each future scenario has a unique set of input assumptions, such as demand and energy growth rates, fuel prices, carbon costs and RPS requirements that drive the future resource expansion capital investments and total production costs.
Due to the significantly higher production costs in the Public Policy future, it should be noted that approximately $164 billion of the total $327 billion in production costs are due to the $50/ton carbon tax modeled in that future. Also, the retirement of 23 GW of coal units (versus 12.6 GW in the other futures) leads to higher production costs resulting from higher capacity factors of gas-fired generation, which has a higher modeled fuel price than coal.
Natural Gas Fuel Price Forecasting
Accurate modeling of future natural gas prices is a key input to the MTEP planning process. While natural gas prices have remained relatively low over the past few years, they have reached well over $10/MMBtu as recently as 2008. Therefore, it is important to capture a wide range of forecasts that take into account this potential volatility. For MTEP15, MISO, in coordination with stakeholders through the PAC, chose to utilize a natural gas forecast developed by Bentek as a baseline. High and low forecasts were developed by adding or subtracting 20 percent from the baseline. Since Bentek assumed an inflation rate of approximately 3.5 percent in their forecast, it was necessary to remove this inflation rate and to use the inflation rates for each future scenario that were identified by the PAC and MISO in the futures development process. The five resulting MTEP15 natural gas forecasts are shown in nominal dollars per MMBtu (Figure 5.2-3).
Renewable Portfolio Standards
Nearly every state in the MISO North and Central footprints has some form of state mandate or goal to provide a specified amount of future energy from renewable resources. The Department of Energy’s Database of State Incentives for Renewables and Efficiency (DSIRE) provides a breakdown of each state’s mandate or goal. MISO uses the DSIRE information to calculate future penetrations of renewables, which are assumed to be primarily wind and solar, in each of the MTEP futures (Table 5.2-3). The MTEP15 BAU, HG and LG futures model state-mandated wind and solar only. The GS future models a 20 percent MISO-wide mandate, with solar comprising 5 percent of the overall mandate. The PP future models a 30 percent MISO-wide mandate, with solar comprising 10 percent of the overall mandate.
|Future Scenario||MISO Incremental Wind Penetration||MISO Incremental Solar Penetration||Percentage of Energy from All Renewable Resources in 2028|
|Business As Usual||5,800 MW||1,375 MW||11%|
|High Growth||7,900 MW||1,525 MW||11%|
|Limited Growth||4,300 MW||1,250 MW||12%|
|Generation Shift||21,400 MW||3,675 MW||22%|
|Public Policy||33,400 MW||8,550 MW||31%|
Table 5.2-3: MISO wind and solar penetrations (including those with signed generation interconnection agreements through 2029)
Each of the future scenarios has a different impact on carbon dioxide output (Figure 5.2-4). These output values for 2029 for the different resource expansions can be compared to the base year, 2014, CO2 output. For all futures, except the HG future, total CO2 emissions decline or remain flat between 2014 and 2029. Coal plant retirements, in combination with increased levels of renewables and demand-side management programs, are key factors in allowing carbon emissions to decline.
An alternative way of looking at carbon emissions is to investigate total CO2 emissions per MWh of total annual energy (Figure 5.2-5). Coal retirements, coupled with increased renewable energy penetration, lead to declining rates of emissions in all MTEP scenarios. The sharpest decrease can be seen in the Public Policy future, which analyzes the highest amount of coal unit retirements.
Siting Of Resources
Generation resources forecasted from EGEAS are specified by fuel type and timing, but these resources are not site-specific. The process requires a siting methodology tying each resource to a specific bus in the powerflow model and uses the MapInfo Professional Geographical Information System (GIS) software.
DR programs are sited at the top five load buses for each LSE in each state having a DR mandate or goal. The amount of DR remains constant across all futures. More detailed siting guidelines, methodologies and the results for the other futures are depicted in Appendix E2.
South Region Resource Expansion Results
In order to sync MISO South with the MTEP15 economic planning process, MISO conducted a Market Congestion Planning Study focused on the MISO South region. This study incorporates stakeholder informed futures, resource forecasting analysis, model building and economic analysis.
One focus of MISO’s planning effort is the development of a set of futures that capture current and future potential energy policy outcomes. Futures are a set of postulates that aim to capture a plausible range of future outlooks. The futures development considers environmental regulations, renewable portfolio standards, demand-side management programs and other potential policies.
MISO developed four futures in collaboration with MISO South stakeholders:
- The BAU future is a status quo future that continues to model current economic trends. This future models existing policies with reference values and trends. This is the MTEP15 BAU for the North/Central region with updated load forecasts representing most recent Module E submissions.
- The South Industrial Renaissance (SIR) future models significant economic development in the Southern Louisiana and East Texas areas with considerable development occurring in all the areas due to lower fuel prices providing economic opportunity for electric growth and system expansion. Also considers the effects of age-related retirements on non-coal-fired, non-nuclear generators.
- The GS future captures the effects of significant amounts of age-related retirements of the non-coal, non-nuclear, thermal fleet by retiring units in the year in which they reach 60 years of age or 100 years for hydroelectric. Also models a declining cost curve for solar and wind resources.
- The PP future captures the effects of an additional 14 GW of carbon-reduction-targeted retirements. Also models a cost decline for solar and wind, increases in energy efficiency, and a $25/ton cost on CO2 emissions. Includes RPS goals and mandates and 50% of the CPP prescribed energy efficiency. Age-related retirements of non-coal and non-nuclear units are included.
There is a relationship between all the variables as assumed for the various futures that are input into the PROMOD PowerBase, EGEAS resource forecasting model and the PROMOD production costing models. Each future is defined by a set of uncertainty variables, the values of these variables change from one future to another. Appendix E2 has more details on the variables for these futures.
South Region Regional Resource Forecasting
MISO completed an assessment of generation required for the MISO footprint using the EGEAS model. Using assumed projected demand and energy for each company and common assumptions for resource forecasting, MISO developed these models to identify the least-cost generation portfolios needed to meet the resource adequacy requirements of the system for each future scenario.
Given the fact that the South region officially integrated into MISO in December 2013, the EGEAS resource expansion analysis was performed on the entire footprint. The results of the analysis can be seen in Figure 5.2-6. The dominant resource type added in most of the futures is natural gas-fueled, with combustion turbines comprising the majority of the natural gas-fueled additions. The PP future saw a larger amount of renewables selected as a reflection of the carbon price modeled as well as increased level of retirements.
Siting Forecasted Regional Resource Units
The EGEAS Regional Resource Forecast (RRF)specifies fuel type and timing, but these selections are not site-specific. The second step in MISO’s Value-Based Planning process is to tie the future resource additions (RRF units) to a bus location in the powerflow for production cost modeling purposes only. MISO uses a siting methodology to identify a bus location in the powerflow model using GIS software, MapInfo Professional.
For the BAU future, the combined cycle generators sited in the South footprint were a reflection of the RFPs in progress at the time. The remainder of the resources added in the BAU future were sited in the North and Central MISO regions (Figure 5.2-7).
The South Industrial Renaissance future requires a fairly significant amount of additional resources due to the higher demand and energy growth rates modeled in conjunction with an increase in the amount of existing resource retirements. A total of 9,600 MW of thermal capacity was sited in the MISO South region in the SIR future (Figure 5.2-8).
 Due to coal plant retirements that have already occurred, only the additional amount of modeled retirements are shown in the figure.
 MISO performed an EPA impact analysis study in 2011 in order to determine the potential of coal fleet retirements. The EPA analysis produced three levels of potential coal retirements: 3 GW, 12.6 GW and 23 GW. To capture these potential retirements in the scenario-based analysis, MISO analysts, in conjunction with the Planning Advisory Committee (PAC), chose to model a minimum of 12.6 GW of retirements in all futures, with the exception of 23 GW of retirements being modeled in the Environmental future.