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MISO may need to consider more demand response as coal fleet shrinks

SNL Energy
June 28, 2020

By JP Finlay

As U.S. EPA rules combine with market factors to force utilities and power plant owners inside the Midwest ISO to make significant changes to their generation fleets, the grid operator may turn to demand response, according to a MISO official.

Mike Barber, demand response adviser for MISO, spoke June 28 at the Association for Demand Response & Smart Grid's National Town Meeting in Washington, D.C., and pronounced MISO open for demand response business.

"We've been long on capacity for some time and given recent EPA regulations that may change in a short time," Barber said. "From an energy standpoint we may open up the opportunity for a lot more demand response. The door is wide open."

Within MISO, more than $30 billion worth of changes and retrofits of coal plants are necessary for compliance, and all options will be considered, he said. MISO also is in the process of bringing a significant amount of wind energy on its grid, he said, another opportunity for demand response given the intermittency of wind. One concern Barber raised was with the reliance of demand response in emergency situations.

Similar questions about demand response participation were voiced by Paul Wattles, senior analyst of market design at the Electric Reliability Council of Texas Inc. Wattles joined Barber on a panel of regional grid operators to discuss demand response across the U.S.

Wattles explained that in ERCOT, most contracts are short-term, and in turn there is limited access to demand response resources because of the long-term investment required. The Texas grid faces similar problems with finding investment for new generation, he said.

But Wattles said the advanced metering infrastructure in ERCOT is built for demand response and smart grid success. "It's up to the market to come in and build the frame. We've got the foundation of the house built," he said, pointing to smart meter installations by investor-owned utilities across the state.

Christine Wright, a senior policy analyst at the Public Utility Commission of Texas, said much work has gone into enabling customers to engage in demand response and use smart grid functions, and the remaining steps are for customers to engage.

Demand response results in the Northeast can be seen with different levels of success, according to officials from the New York ISO and ISO New England Inc. In New England, officials are focused on implementing FERC changes, said Henry Yoshimura, director of demand resource strategy at ISO New England. In 2005, there was 500 MW of demand response on the New England grid. In 2012, that number jumped to 3,600 MW, he said.

Opportunities exist to increase demand response in New York with small-commercial electric customers, said Jim Gallagher, senior manager for strategic planning at the NYISO. New York contains a standard portfolio of demand response, he said, with a mix of emergency and economic function. State regulators also have acted aggressively toward dynamic pricing, which could boost demand response participation, he added.

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