Planning Year 2020-2021 Wind & Solar Capacity Credit December 2019

Executive Summary The MISO system-wide wind capacity credit for the 2020-2021 planning year is 16.6 percent. Since 2009, MISO has embarked on a process to determine the capacity value for the increasing fleet of wind generation in the MISO system. The MISO process, as developed and vetted through the MISO stakeholder community, consists of a two-step method. The first step utilizes a probabilistic approach to calculate the MISO system-wide Effective Load Carrying Capability (ELCC) value for all wind resources in the MISO footprint. The second step employs a deterministic approach using the historical output of each wind resource, which considers each wind resource’s location. The MISO system-wide ELCC value is then allocated across all wind Commercial Pricing Nodes (CPNodes) in the MISO system to determine a wind capacity credit for each wind CPNode. As of June 30, 2019, the MISO system had 20,452 MW (222 CPNodes) of registered wind capacity. This means 3,405 MW (20,452 MW x 16.6%) of unforced wind capacity potentially qualifies under Module E-1 of MISO’s tariff. To the extent that the 3,405 MW of unforced wind capacity is deliverable at the individual wind CPNodes, the unforced capacity megawatts may be converted to Zonal Resource Credits (ZRCs) to meet Resource Adequacy obligations. The capacity credit at the 222 individual wind CPNodes is proprietary information—however, the percent credit across all wind CPNodes ranged from 0.4 to 42.4 percent. Section 3 describes the details of allocating the total 3,405 MW to the 222 wind CPNodes. Upon request to MISO, the capacity credit details for individual wind CPNodes are available to the associated Market Participants. Figure 1-1 geographically illustrates the ten MISO Local Resource Zones (LRZs). The table in Figure 1-1 shows the most detailed results that MISO can share. MISO North & Central LRZs have multiple market participants with wind CPNodes with the exception of LRZ 5. Therefore, the values for LRZ 5 shown in Figure 1-1 have been combined with LRZ 4 so that proprietary information would not be revealed. MISO South does not currently have any wind CPNodes.

MISO System-Wide Wind ELCC Study Probabilistic Analytical Approach The probabilistic measure of load not being served is known as Loss of Load Probability (LOLP) and when this probability is summed over a period of time, e.g. one year, it is known as Loss of Load Expectation (LOLE). The accepted industry standard for what has been considered a reliable system has been the “less than 1 day in 10 years” criteria for LOLE. This measure is more often expressed as 0.1 day/year, as one year is the period of time for which the LOLE index is calculated. Effective Load Carrying Capability (ELCC) is defined as the amount of incremental load a resource, such as wind, can dependably and reliably serve, while also considering the probabilistic nature of generation shortfalls and random forced outages as driving factors to load not being served. ELCC has been used in the determination of capacity value for generation resources as far back as 1966 when L.L. Garver demonstrated the use of loss of load probability mathematics in the calculation of ELCC1 To measure the ELCC of a particular resource, the reliability effects need to be isolated for the resource in question from those of all the other sources. This is accomplished by calculating the LOLE of two different cases: one with and one without the resource. Inherently, the case with the resource should be more reliable and consequently have fewer days per year of expected loss of load (smaller LOLE).

With each case being at the same reliability level, as shown in Figure 2-2, the only difference between the two cases is the load adjustment values that were used to reach reliability. The difference between the adjustments for both cases is the amount of ELCC expressed in load or megawatts, which is 300 MW (100 minus -200) for the new resource in this example. This number may be divided by the Registerd Maximum Capacity (RMax) of the new resource and then expressed in percentage form. The new resource in the ELCC Example Figure 2-2 has an ELCC of 30 percent of the resource’s nameplate

The methodology illustrated in the simple example of Figure 2-2 was utilized as the analytical approach
for the determination of the 2019 MISO system-wide ELCC of the wind resources in the much more
complex MISO system. ELCC is the preferred methodology for determining the capacity value of wind.

MISO System-Wide ELCC Results MISO calculated ELCC percentage results for historical years 2005 through 2019 and at multiple scenarios of increased penetration levels, corresponding to 30 GW, 40 GW, and 50 GW of installed wind capacity. This creates an ELCC penetration characteristic for each year, as illustrated by the various trend lines in Figure 2-3. The ELCC characteristic of each year can be represented by a 2-order polynomial trend line equation that has an R-squared coefficient of no less than 0.99. The initial leftmost data point for each curve is at the lowest penetration point and represents the actual annual ELCC for that year. Annual historical ELCC values can be found in Table 2-1. The values along each year’s characteristic curve at the higher penetration levels reflect what that year’s wind ELCC would have been with similar wind generation and load profiles if more capacity had been installed over the same year and footprint. The high-end 50 GW level of penetration (approximately 32 percent on x-axis of Figure 2-3) is an estimate of the amount of wind generation that could result in MISO as the Load Serving Entities (LSEs) collectively increase renewable resource portfolios. Figure 2-3 illustrates the ELCC versus penetration characteristic of each of the fifteen years, and how those characteristics from multiple years were merged to establish the current wind capacity credit of 16.6 percent.

The 2020-21 Planning Year (PY) wind capacity credit is determined by averaging the fifteen ELCC values found along each year’s ELCC/penetration characteristic curve. The averaging is done at the penetration level that corresponds to the penetration level at the end of the 2nd quarter of 2019. The registered amount of capacity at the end of the 2nd quarter is the convention used to set the capacity going into the summer season. The penetration level at the end of the 2nd quarter of 2019 was 16.7 percent. The historical 2019 penetration level is calculated by dividing the 2nd quarter 20,452 MW wind capacity (from column 4 of Table 2-1) by the 122,210 MW peak load (column 1 of Table 2-1). The peak load is defined as the highest average integrated hourly load for the year. The vertical line that is expressed in the legend of Figure 2-3 as “Points Averaged at Penetration to date to get 2020 Capacity Credit” illustrates where each of the fifteen ELCC values from each year’s characteristic curve intersect with the most recent 16.7 percent historical penetration level. The legend of Figure 2-3 also indicates that the average of the intersected values is the 16.6 percent system-wide ELCC for the 2020-21 PY. The black projection line in Figure 2-3 starts with the 2020-21 PY 16.6 percent, and is more clearly observed as the current 16.6 percent point and forward capacity credit projection in Figure 2-4.

For the 2015-2016 Wind Capacity Credit analysis, MISO saw a lower penetration level of wind. This was due to the addition of MISO South in December 2013 to the MISO system. MISO South brought
a substantial amount of load to the MISO footprint with no wind capacity. This decreased the wind
penetration in MISO as compared to the 2014-2015 planning year.

Figure 3-1 shows how the system-wide 16.6 percent capacity credit percent compares with the individual capacity credit percent for the 222 active CPNodes as of the 2 nd quarter of 2019. This reflects implementing the formulas referred to earlier in this section to allocate the total system 3,405 MW to the 222 CPNodes. The CPNodes have been sorted by their capacity credit percentages. Along with the specific identity of CPNodes, a given market participant is provided only the results, or selected bars on the chart that correspond to their CPNodes. The percentage is applied to the node’s RMax and provides the CPNodes capacity credit in megawatts for the market participant. The CPNode’s deliverability status determines the amount of the capacity credit MW that qualifies for LRZ credits in Module E-1.


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