SPP grid reliability proposal lowers Accreditation value of renewables

Late last month, Southwest Power Pool (SPP) filed a proposal with the Federal Energy Regulatory Commission (FERC) seeking to adopt new reliability metrics for renewable and thermal resources, including language that could potentially incentivize thermal resources.

In its proposal, SPP introduces a methodology dubbed “Effective Load Carrying Capability” (ELCC) for renewable resources and a separate methodology dubbed “Performance-Based Accreditation” (PBA) for conventional power plants. SPP says its goal is to “incentivize performance based on historical availability.”

The ISO’s senior communications strategist Meghan Sever further elaborated in an interview with NPM that the new methodologies would allow SPP to have a “more accurate understanding” of which resources will be available when needed based on past performance.

Sever says the filing is in response to “significant resource adequacy issues” that SPP has experienced “over the last several years” stemming from “rising demand for electricity with more frequent severe weather events” combined with intermittent renewables making up an “ever-increasing percentage” of the SPP generation fleet.

“SPP’s proposal specifically addresses concerns regarding generators that are offline during extreme weather events,” Sever said. “Our highest priority is to ensure the reliable delivery of electricity across our service territory and improved accreditation of resources is a critical component of that effort.”

Beyond the new accreditation methodology, the new proposal also proposes the adoption of an “accredited capacity” reserve margin for thermal plants. The proposal is not completely defined but could look similar to proposals from Texas legislators introduced during last year’s legislative session. If approved, this new reserve margin framework would take effect in 2026, giving the ISO time to refine its approach.

Sever says SPP introduced this accredited capacity reserve margin because it “recognizes that it is not enough to have sufficient nameplate generation installed.”

“The region needs assurance that its generators can and will deliver their expected output when it’s needed most,” Sever said. “Our real-world experience has taught us that our existing methods of accrediting conventional and variable energy resources don’t accurately reflect those resources’ contributions to regional reliability.”

SPP’s proposal has drawn the ire of environmental policy groups who argue it “perpetuates against renewable energy sources” in favor of coal and gas plants. Opposition groups include the Solar Energy Industry Association (SEIA), Sierra Club, Earthjustice and the Natural Resources Defense Council (NRDC), all of which have called for FERC to reject the plan.

These groups’ complaints stem from SPP’s methodologies in assessing renewable resources’ contributions to grid reliability. Perhaps the most controversial aspect of SPP’s proposal is its decreasing reliability value measurement for wind, solar and even storage as more is added to the grid.

In joint public statements, the groups argue the methodology “systemically disadvantages renewable resources” and fear it will lead to an “unnecessary expansion of gas infrastructure.” They also question whether this potential outcome would lead to higher reliability, citing thermal plant outrages during extreme weather.

Sever counters that SPP’s proposed methodologies “consider the historical performance of both conventional and variable resources and their relative contributions to system reliability.”

“We believe these improvements will enable us to better coordinate system reliability based on appropriate expectations regarding resource availability,” Sever said.

However, historical precedent indicates the environmental challengers may have a case. Although FERC initially approved a similar accreditation plan in 2022, the federal regulator ultimately reversed that decision a year ago following a similar challenge from many of the same environmental organizations.

FERC ultimately concluded that SPP’s proposal was discriminatory because it cut renewable accreditation based on historic performance without taking account for non-performance of thermal resources. Notably, between FERC’s initial vote for approval in August 2022 and its reversal in March 2023, gas fired generation accounted for 70% of the unplanned outages in December 2022’s Winter Storm Elliot.

Sever says SPP took FERC’s concerns into account for this new proposal and that the PBA methodology does consider the unavailability of conventional generators during periods of extreme weather.

However, in a statement from the Sierra Club, the organization argues this new proposal fails to resolve any of the “underlying discriminatory failures identified in the last round.”

“SPP has chosen to continue pretending that coal and gas plants never shut down en masse during the system’s most challenging hours,” the statement reads.

Renew Missouri Managing Director and Policy Coordinator Emily Piontek went a step further in her own statement, noting that wind generation performed above expectations in SPP during Winter Storms Gerri and Heather, during which the grid operator’s gas fleet struggled.

In its decision to reverse its initial approval of SPP’s proposal, FERC encouraged SPP to “expeditiously submit” a refiling that would better define terms like “seasonal net peak load.” However, even the lone dissenting voter in favor of keeping SPP’s last accreditation proposal on the books, Commissioner James Danly, “strongly encouraged” SPP to develop accreditation methodologies consistent across all resource types, which the grid operator has not done in the new filing with two separate methodologies for renewables vs. thermal generation.

On the other hand, SPP is not alone in seeking to accredit renewable resources significantly below thermal generators. MISO already accredits renewable capacity significantly lower than thermal resources as evidenced by its reliability imperative report updated just last month.

In that update, MISO noted that while it projects the grid’s installed capacity to increase nearly 60 GW by 2042, primarily from wind and solar resources, it forecasts an accredited capacity decline of 32 GW due to its lower accreditation of those resources. The report also considers the potential of implementing incentives for conventional generation, which could look similar to ERCOT’s Performance Credit Mechanism.

For now, SPP has asked FERC to approve its proposal by May 23. If approved, it would take effect beginning on October 1, 2025 with the accredited capacity reserve margin adoption to follow in 2026.

*This story was originally published exclusively for NPM subscribers last month.

NPM US (New Project Media) is a leading data, intelligence and events company dedicated to providing origination led coverage of the renewable energy market for the development, finance, advisory & corporate community.