Concerns about resource adequacy in the Midcontinent ISO region remain, even though more generating capacity will be added than retired in 2023.

The scheduled net addition of 8,937 MW in 2023 includes 10,890 MW of new capacity offset by 1,952 MW of retirements. Developers anticipate adding 7,410 MW of solar, 2,660 MW of wind and 815 MW of combined-cycle gas, according to an analysis of S&P Global Market Intelligence data. MISO expects retirements of 1,872 MW of coal-fired generation and one gas plant totaling 80 MW.

Utilities in MISO are retiring fossil capacity in exchange for investments in renewable energy resources either contracted or added to their rate base; however, those exchanges are not happening fast enough to replace all the generation coming offline, said Steve Piper, director of energy research for S&P Global Commodity Insights.

"MISO is somewhat an area of concern," Piper said. "We're assessing MISO as tight. There's a pretty immediate need for generation investment."

Compared with other markets, such as the Electric Reliability Council of Texas Inc., which Piper also characterized as tight, MISO's time to market is slower and has less flexibility, though both represent positive investment potential.

"MISO is facing resource shortfalls across this entire assessment period," the North American Electric Reliability Corp. said in December 2022 in a long-term reliability report. "Since the 2021 [Long-term Resource Assessment], 5,900 MW of generation has retired (mostly coal-fired generators) and 1,700 MW of new generation has been added. In the summer of 2023, MISO's capacity shortfall is projected to be 1,395 MW even after adding over 6.5 GW of new generation with signed interconnection agreements."

"As we shrink these margins, it is a reliability risk, so it is just something we need to consider. It is a risk that we are seeing, and it's a risk we're concerned about," Brian Thiry said April 13 in testimony to the Illinois Senate Energy Committee, according to a report by the Illinois Radio Network. Thiry is the director of external relations at ReliabilityFirst Corp., a grid reliability organization covering portions of the MISO and PJM Interconnection LLC regions.

MISO expects sufficient supply to cover normal spring conditions and is "preparing for risks that could materialize under a high-outage, high-load scenario," spokesperson Brandon Morris said in an email.

Additions

More generation additions from the planning queue "are not likely to be completed in sufficient quantity to make up for the capacity shortfall," according to the NERC report.

MISO's largest expected capacity additions in 2023 include Cooperative Energy's 550-MW R.D. Morrow combined-cycle repower project in Mississippi, which entered service in March and replaced a 400-MW coal-fired plant retired in 2018. Another large addition is NextEra Energy Inc. subsidiary NextEra Energy Resources LLC's 435-MW Dunns Bridge Solar II plant in Indiana, which is expected to come online in December. It has a related battery storage facility as well.

NextEra's 311-MW Clearwater Energy Resources wind plant in eastern Montana is scheduled to come online in December, adjacent to a larger facility that began operations in late 2022. A portion of its output is committed under power purchase agreements with utilities in the Pacific Northwest.

Retirements

Several fossil-fuel units are scheduled to be retired by the end of 2023. In May, the 682-MW unit 2 of the Sherburne County Plant (Sherco) in Minnesota, owned by Xcel Energy Inc.'s Northern States Power Co., will be retired. Also in May, CMS Energy Corp. subsidiary Consumers Energy Co. will retire 515 MW of coal-fired capacity at the Dan E. Karn plant in Michigan, while AES Corp. subsidiary AES Indiana will retire a 432-MW unit at its coal-fired Petersburg plant in Indiana. In June, Alliant Energy Corp. subsidiary Interstate Power & Light Co. will retire the remaining 243-MW unit at its Lansing plant in Iowa. WEC Energy Group Inc. subsidiary Wisconsin Public Service Corp. plans to retire two gas-fired units at its Weston CT plant in Wisconsin.

"MISO is definitely ground-zero for retirements now in the North American markets," Piper said. "You're looking at Indiana, Michigan with a lot of coal capacity coming out. If you look at other markets, nothing's really close right now."

MISO forecasts a decrease from its 2022 reserve margins, a decline driven mainly by lower capacity contribution from weather-dependent new generation additions replacing retiring units with higher contributions. Increasing demand projections also contribute to lower reserve margins, according to the NERC report.

"MISO delegates a lot more authority around resource adequacy to its members, who are regulated utilities, and they are not necessarily coordinating with each other," Piper said. Most of the concern is in the northern MISO zones, Piper added, with capacity expected to be adequate in MISO South.

Increased coordination among MISO members will be "critical to ensuring resource adequacy in the future," according to the NERC report. In most of the MISO area, load-serving entities with oversight by state or local regulators are responsible for resource adequacy.

MISO resource adequacy will likely face its next stressor this summer and could be "a bit of a reckoning" for its current resource model and drive future change, Piper said.

As the pace of the electric system accelerates, MISO states and members "must collectively accelerate our actions to mitigate the growing risk," Morris said.

"The gap in needed resources with the necessary reliability attributes is continuing to emerge in MISO and neighboring regions," Morris added. "MISO is focused on product development and market changes to address the risks and operational challenges associated with gas unavailability, load forecast uncertainty, and wind and solar variability."

MISO's 2022 wholesale power prices are expected to peak at the region's Illinois, Indiana and Michigan hubs in July, with Michigan the highest at $54.14/MWh. Prices will spike back near the highs for those hubs in December, with Indiana the highest at $51.40/MWh. Wholesale natural gas prices at the Chicago and Henry Hub trading points are expected to stay between about $2.05/MMBtu and $4.16/MMBtu for the year, peaking in December.

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