CO2 Model Malfunction: 2 + 2 = 237?!

, , senior energy analyst, Climate & Energy Program | September 19, 2014, 9:58 am EDT
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Back in June, this blog celebrated the work of the grid operator Midcontinent ISO in describing scenarios for future power supply that met projected needs with a tripling of wind energy, 23% reduction in CO2, and almost no higher costs than “business-as-usual.” This week, something bad happened.

Low-Carbon Generation Shift for Midcontinent electricity supply. Source: MISO

Low-carbon Generation Shift for Midcontinent electricity supply (click to enlarge). Source: MISO

In reporting basic study results regarding the EPA Climate Protection Plan, MISO suggested just a doubling of wind energy would be the most expensive means to reducing carbon in their region, almost 5 times more than using natural gas. How can this be?

Wind and gas are about equal cost

As we have reported elsewhere, electricity from wind is nearly the same cost as electricity from natural gas. When the goal is reducing carbon emissions, a quick comparison for checking the MISO results suggests natural gas and wind are again roughly equal, megawatthour for megawatthour. (In simple terms, a megawatthour (mwh) of wind with zero emissions displaces either a gas-fired mwh with roughly 1000 lbs/mwh CO2 or a coal-fired mwh that has roughly 2,000 lbs/mwh CO2 emissions. At best, a gas-fired mwh with 1000 lbs emissions can displace a coal-fired mwh with 2000 lbs/mwh, saving 1000 pounds).

We know MISO can do better

The results MISO discussed this week are so far from what others have found, including recent analyses by MISO and neighboring grid operator PJM, we must ask MISO what went wrong. And we are asking that they withdraw these results.

This spring, MISO showed a case of “Generation Shift” for year 2030 with 22% of the region’s projected electricity need coming from windpower. Coal use dropped from 68% to 39%, 19,000 MW of additional windfarms would be built, and natural gas plant additions would be 1,200 MW more than projected for the business-as-usual (BAU) scenario. When counting all the new costs for wind and gas plants, and recognizing the fuel savings, the cost of Generation Shift was reported as 1% different from BAU. MISO has been testing the role of a carbon-price adder, shown as gold in the chart, which are not a cost to society when revenues are returned to the same people that are billed for them.

Turning away from savings

Yesterday, MISO described modeling for year 2030 with the “building blocks” of the EPA carbon plan that had wind providing 12% of energy needs. There was so little detail, less than provided in June, that we can’t say where MISO went wrong. The results that were reported in $/ton CO2 reduction are 10 times higher for wind, and for energy efficiency, than have been seen anywhere else.

The grid operators have great capabilities to see and understand how electricity is supplied, with preparations for every known contingency. Handling new energy supplies like wind and solar have not brought great difficulties, despite claims from many fossil-fuel interests. While MISO has the right tools for running the grid, these tools are not designed to plan how to change the power supply 15 years in the future.  Modeling the power system for 15 states is not a simple chore.

Do over

MISO must go back and do this again. They are the reliability planner for far too many citizens to let something this far off be used in any discussions about the future of our energy supply and climate preparations. From what little has been shared by MISO, we see uncertain assumptions about when the changes are made, and how well they produce cleaner energy. These were done well in June. What happened, MISO?

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  • nedford

    I don’t think it is appropriate to assert that UCS (or I) “automatically” assume MISO is wrong. For my purposes, I’m just skeptical of the way these comparisons get tossed off without careful scrutiny. The price of natural gas has jumped ten percent in the last week. That’s a fairly unsurprising event at this time of year, but there is almost no assurance that there won’t be such large leaps in gas prices, and they throw the assumed comparison with wind out the window. Wind, on the other hand, is available in several MISO states for a lot less than natural gas.

    Regardless of the wind/natural gas comparison, the efficiency/anything else comparison is the one which really deserves attention. The most aggressive states (five or six of them these days) are saving electricity at the rate of 2% of total sales per year. But even these states are still only spending money on efficiency which costs less than three cents per KWh saved, while we are all paying between four and six cents for each KWh generated at the wholesale level, and more than 9 cents at retail (except industrial energy users, who also have the largest and cheapest efficiency opportunities, which they neglect for a variety of reasons which utility programs can overcome).

    I’d like to know more about the MISO report or reports. I don’t work with MISO as much as I do with PJM, so a link and a page reference would be more helpful than just the article. But I think it is just sad that so much energy is put into creating doubt about the potential for a clean energy economy, when the doubts can be easily resolved simply by paying more attention to what we are actually doing right now, and building on the successes.

    • Mike_windpower

      Mike Jacobs replies:
      Ned, your comments are more than valid. Thank you. State regulators that take seriously the obligation to obtain the least-cost supplies for their consumers are pushing efficiency. The ISOs are poorly equipped to see or understand this resource. the MISO study was not well-designed, and has created more confusion than clarity.

  • Martin

    Why do you automatically assume MISO is wrong? Just because they present updated results that are not in lock step with overly optimistic traditional projections sanctioned by hugely biased proponents of wind energy? A little truth and accuracy courtesy of MISO should let a little sunlight and fresh air into the discussion. Up to this point there have been far too many yes men and far too few well-intended skeptics.

    • Martin- Thanks for reading the blog and asking if we are simply assuming there is an error.
      No, we have a series of studies by the Independent System Operators, including MISO itself, that lead to a different answer than in this recent study. The recent study was not based on a thoughtfully selected design. To find the wind number, which is the greatest outlier, MISO took all the windpower additions needed by 2030 and assumed they appear all at the same time, in 2020. As the blog explains, a basic sanity check of looking at the near zero incremental costs for wind energy and the incremental CO2 reductions that are roughly the same as increased gas use at existing generation plants, does not support MISO’s result. When MISO rolled out their plan for this study, we asked for a more thoughtful approach. MISO offered 4 powerpoint slides, and not much else, to explain this result.

  • nedford

    What does the MISO carbon study assume for efficiency? I don’t think any Midwest state is doing much more than 1%, when the EPA assumes 1.5%, and if you include generational efficiency and CHP 2% is an easy goal.

    I think the comparison of wind to natural gas is going to be tough as long as natural gas is under $3.75 and as long as the existing natural gas combined cycle fleet in MISO is under-utilized. Once they have to start building new plants, the cost-relationship switches to wind, even if the price of gas isn’t higher. And some of us are waiting for the price of natural gas to explode.

    But efficiency costs about a fifth as much as a new plant of either sort. Less if you regard the capacity savings of efficiency as a net benefit. There are a lot of flawed calculations of efficiency net costs, and studies which don’t even establish efficiency as the first technology that gets dispatched are invalid.

    • Ned-
      Thanks for the comment. In the material that MISO has provided to stakeholders, the efficiency scenario increases efficiency to be about 10% of the electricity supply in the year 2030. Coal declines from 69% to 53%, wind and gas each rise 2% above present share of the supply. That’s the good news. The trouble arises with the calculation of cost per ton of CO2 reduction. MISO’s result, meant to be indicative, not precise, was $70/ton CO2. Of the four “building blocks” described by EPA, efficiency was third-most expensive. We expected that modeling each block as a stand-alone solution, as MISO has done, would be flawed and confusing. The results for efficiency and wind are both outside the range of expected results, and we are asking MISO to sort this out with a new study design.