The changes sweeping across the power industry are reaching a fever pitch. With new generation resources, macroeconomic changes, environmental regulations and new technology changing how we produce and use energy, the challenges we face are truly unprecedented.
One forum that’s given us the ability to adapt to changes in the industry is wholesale energy markets. The employment of unit commitment and centralized economic dispatch systems have driven generating units to become more efficient, incentivized diversified generation portfolios and improved operating standards to be more cost-effective.
MISO operates one of the largest wholesale energy markets in the world, helping to ensure the reliable delivery of electricity to 42 million people across 15 states. MISO’s real-time and day-ahead energy markets optimize the use of all resources within the region based on bids and offers provided by market participants. These markets provided between $2.07 and $2.95 billion in annual benefits.
As the challenges across our footprint grow, so does MISO’s role in helping our members meet those challenges. Integrating the booming wind industry is a great example of using market-based solutions to address changes across the industry. Today, MISO has more than 13,000 megawatts (MW) of wind capacity – that’s enough energy to power about 1 million households. However, given the variability of wind, MISO faced the issue of integrating an intermittent resource into its energy markets, where a commitment to providing stable energy is essential.
Through its work with stakeholders, MISO conceived a solution that enabled the market to capitalize on the growth of wind in our region. With the introduction of a new type of resource – Dispatchable Intermittent Resource (DIR) – MISO was able to address some of the challenges associated with integrating wind generation into its portfolio. DIR status allows MISO to treat wind resources like any other generator in the market. This small change resulted in a huge benefit for market participants, electricity consumers and the environment.
The primary way we approach this is through our recently released Market Vision Program. The Market Vision Program provides a framework for MISO and its stakeholders – including generators, power marketers, regulators, traditional utilities and other groups – to develop and prioritize enhancements to MISO’s market services to meet future energy challenges. From the accommodation of emerging technologies for energy storage and demand response to new market products that will help us respond to changes on the transmission system more quickly, projects determined and prioritized through our Market Vision Program enable MISO to continue delivering reliable energy at the lowest cost.
Addressing industry challenges with market solutions reaches beyond MISO’s borders. Coordinating and standardizing how MISO’s markets work with adjacent power systems is critical to optimizing the transmission system. That takes working with our neighbors, such as PJM, the Southwest Power Pool, Southern Company, Tennessee Valley Authority and ERCOT, to develop market-based mechanisms to help ensure an open transmission system that improves the efficiency of our respective markets.
Regional transmission organizations were created for public benefit. We are here to not only ensure reliability, but also to do it in the most economical and efficient manner possible for electricity consumers. We accomplish this by providing reliability and market coordination across the regions, creating the freedom to move energy where it is needed, when it is needed.
Efforts are underway to improve coordination between bordering systems. MISO is working with neighboring entities to standardize processes and procedures in a way that unlocks the most value for consumers across the country. This means working together to best utilize resources – both energy and capacity – across our combined footprints.
While the challenges facing the industry are great, a market-based approach has shown remarkable resiliency to address changes in the industry. This method provides a level playing field for market participants and benefits consumers – our ultimate goal.
Todd Ramey is the Vice President for System Operations and Market Services for Midcontinent Independent System Operator (MISO)