Even as the Midcontinent ISO region is forecast to see significantly more generating capacity added than retired in 2024, concerns about resource adequacy persist.

The scheduled net addition of 11,080 MW in 2024 includes 12,448 MW of new capacity offset by 1,368 MW of retirements. Developers anticipate adding 8,555 MW of solar, 3,149 MW of wind and 731 MW of energy storage, according to an analysis of S&P Global Market Intelligence data. MISO expects retirements of 559 MW of coal-fired generation and 739 MW of gas.

Utilities in MISO are retiring fossil capacity in exchange for investments in renewable energy resources that are either contracted or added to rate base. However, those exchanges may leave MISO with a lack of reserve margins, according to Steve Piper, director of energy research for S&P Global Commodity Insights.

"We think [MISO] will be pretty tight on reserve margins for the next couple of years," Piper said, adding that if 15% is a standard reserve margin benchmark for resource adequacy, "we're projecting 7.5% for MISO this upcoming summer."

As its electricity load grows, MISO is increasingly turning to emergency operating conditions to meet soaring demand.

"In MISO's region, we see a trend toward declining accredited capacity and increasing load," MISO spokesperson Brandon Morris told S&P Global Commodity Insights. "Margins are tightening, and we are utilizing emergency operating procedures more frequently than in the past to ensure reliability. In 2023, we executed our first seasonal capacity auction to improve reliability planning by identifying requirements, resource accreditation and risks for individual seasons."

Roughly 7 GW of coal are expected to retire in the MISO region over the next three years, and that pace is expected to continue for the next decade or so, Piper said.

"What we see coming in from an economic standpoint is just more storage to kind of start to balance out all of the solar and wind that has been deployed," Piper said, adding that the states and utilities in MISO's region don't coordinate their resource planning with the grid operator.

Conditions may improve by 2025, Piper said, but "you're going to have to deploy some resources pretty quickly — like storage or peakers — to replace mostly coal capacity that's been retiring."

While a great deal of solar and wind is being added, "that doesn't provide much in the way of reserves," Piper said. "So you just have this imbalance."

Compared with other markets, such as the Electric Reliability Council of Texas Inc. (ERCOT), MISO's reserve margins are lower and ERCOT has a higher relative mix of wind and solar resources. Those conditions could create more price volatility and ERCOT is experiencing more rapid demand growth, but Piper said his analysis classifies ERCOT as likely tight moving forward, while MISO has a more immediate need to deploy reserves in the next few years.

In a March 19 presentation to a MISO board committee, staff said the system operator and its members had reliably managed a severe storm in January using a new machine learning tool to inform operations. Based on that performance, MISO said it anticipated sufficient supply to cover typical spring conditions.

A total solar eclipse passing through the MISO footprint April 8 may impact the grid, according to the presentation, though MISO and its members are preparing to ensure reliability as solar generation is expected to rapidly decrease, then increase again.

MISO earlier in March unveiled a draft proposal for the second phase of its long-range transmission plan with a set of new projects in the Midwest subregion. The plan — intended to improve reliability, meet load growth expectations and accommodate evolving resources — is expected to cost between $17 billion and $23 billion. The proposed second phase or "Tranche 2" portfolio includes 765 kV lines, which the system operator said would reduce right-of-way permitting needs and help "address environmental concerns."

"The increasing risk and complexity MISO faces require significant transformational changes to our grid, markets, operations and technology," a March 19 presentation to another MISO board committee stated.

Additions

Solar additions far outstrip any other resource for MISO in 2024, with the 8,555 MW of anticipated solar more than doubling the next largest generation source, wind.

MISO's largest expected capacity additions in 2024 include NextEra Energy Inc. subsidiary NextEra Energy Resources LLC's 435-MW Dunns Bridge Solar II in Indiana, which also has a related battery storage facility. Dunns Bridge was previously set to enter service at the end of 2023 but remains under construction, according to S&P Global Market Intelligence data.

Another large addition is Apex Clean Energy Inc.'s 375-MW Montcalm Wind Project in Michigan, set to enter service in December.

Retirements

Several fossil-fuel units are scheduled to be retired by the end of 2024. WEC Energy Group Inc. subsidiary Wisconsin Electric Power Co.'s South Oak Creek, a 1,122-MW coal- and gas-fired plant, is expected to shutter 499 MW of capacity in May and another 623 MW in May 2025, according to S&P Global Market Intelligence. South Oak Creek's oldest continually operating unit first entered service in 1959.

The utility said in February it planned to seek approval to add 1,100 MW to 1,200 MW of gas-fired generating capacity at the South Oak Creek plant site. In 2023, the utility delayed retirement of four units of South Oak Creek to 2024 and 2025, citing tight capacity in the Midwest and supply chain issues delaying renewable projects.

MISO officials said in August 2023 WEC's decision to delay the retirement contributed to reverse a capacity shortfall and helped ensure sufficient supply for the grid operator's capacity auction.

Entergy Corp. subsidiary Entergy Louisiana LLC is also expected to retire 411 MW of its gas- and oil-fired Waterford 1 & 2 plant sometime in 2024. Waterford entered operation in 1975, according to S&P Global Market Intelligence data.

Cleco Partners LP subsidiary Cleco Power LLC expects to retire 328 MW of its Teche gas-fired plant in June. Teche began operating in 1953, according to S&P Global Market Intelligence data.

Power prices

MISO forward power prices at the Louisiana Hub are set to peak in July for the summer at $96.50/MWh and in December for the winter at $83.90/MWh, according to Platts M2MS data. MISO Indiana Hub forward prices are forecast to peak in July for the summer at $102.90/MWh and in December for the winter at $89.50/MWh.

Chicago Hub wholesale gas forward prices are set to peak at $2.36/MMBtu in August and at $3.78/MMBtu in December, according to Platts data. At the Henry Hub, gas is forecast to hit $2.60/MMBtu in August and $3.51/MMBtu in December.