MISO plans more exhaustive studies on CO2 rule

OREANDA-NEWS. The second largest US power grid aims by summer to finish projections on how much new transmission and pipeline capacity could be needed because of the Environmental Protection Agency's (EPA) proposed limits on power sector CO2 emissions.

The Midcontinent Independent System Operator (MISO) already has run two studies on potential cost increases and generator retirements that could arise as the 15 states in its balancing area try to comply with CO2 emission targets that could take effect as early as 2020. But those studies focused only on the generation-side of the rule and did not account for the costs of transmission or pipelines. Those studies estimated compliance costs at \$5bn-\$8bn/yr.

MISO limited the scope of those studies so it could finish them ahead of a deadline last month to comment on the proposed rule. EPA does not expect to finalize the rule until this summer, giving the midcontinent grid about six months to run more comprehensive reviews of the rule and build on its previous analyses.

The upcoming studies, like the two studies MISO completed last year, will estimate incremental power production costs and generator retirements that could occur because of the rule. But the new studies will also factor in the cost and time it will take to add pipeline and transmission infrastructure, interactions with neighboring grids and where new generation might be needed.

Those added factors could significantly change MISO' costs and ability to comply with the rule. EPA expects that large amounts of the CO2 emission cuts can be achieved by shifting dispatch from coal generation to gas and renewables. But such a shift could require new transmission and pipeline infrastructure that would take years to build. MISO also expects it will need to upgrade transmission as up to 14GW of coal generation retires because of the rule.

MISO in its next phase of studies has proposed modeling the reliability impacts and economic effects of five scenarios, senior policy studies engineer Jordan Bakke said today at a meeting of the grid's planning advisory committee in Carmel, Indiana.

The first scenario would be business as usual without having to comply with the rule. Two other scenarios will study the effects of MISO trying to comply with the rule using its existing grid and pipelines or converting 25pc of its coal capacity to natural gas. The final two scenarios look at retiring 25pc of coal capacity and replacing it with new gas or a mix of gas and wind.

The state-specific CO2 emission targets could change by the time EPA finalizes the rule, potentially limiting the applicability of the upcoming grid studies. But MISO wants a framework in place for studying the rule so it can quickly run the studies again once the final rule is released this summer, given the need to start planning for implementation.