Did you know that the MISO energy market handles $40 billion in transactions annually, making it one of the largest energy markets in the world? The Midcontinent Independent System Operator (MISO) plays a crucial role in ensuring the reliability and efficiency of the electricity grid across a vast region of the United States and Canada.Â
In this article, we’ll explore what MISO is, how it operates, and why it’s a key player in the U.S. energy market. Whether you’re an energy professional, a stakeholder in the power sector, or simply curious about how electricity markets function, this guide will provide valuable insights into MISO’s role and operations. By understanding MISO, you can better appreciate the complexities and importance of energy management in today’s world. Â
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What is the MISO energy market? + MISO energy map
Figure 1: MISO Electricity Map / MISO market map. Source: MISOÂ
In the late 1990s, the Federal Energy Regulatory Commission (FERC) sought to increase competition and eliminate transmission access discrimination within the U.S. electricity market. This initiative led to the formation of Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs). MISO, established in 2001, was the first of these entities and initially operated as the Midwest Independent System Operator. In 2013, its name was changed to the Midcontinent Independent System Operator to reflect its expanded footprint, which now includes portions of Arkansas, Mississippi, Louisiana, and Texas.Â
Today, MISO is headquartered in Carmel, Indiana, and operates as a nonprofit member organization. It is responsible for the safety, reliability, and security of the bulk power transmission system, which refers to the large-scale electrical network that transports electricity from power plants to substations before it’s distributed to consumers, in 15 U.S. states and the Canadian province of Manitoba. With a footprint of over 1 million square miles, MISO serves 45 million people and coordinates 75,000 miles of high-voltage transmission lines and nearly 3,000 generating units.Â
With a footprint of more than 1 million square miles, MISO serves 45 million people. The MISO energy market coordinates 75,000 miles of high-voltage transmission lines and nearly 3,000 generating units from 54 transmission ownebulrs,145 non-transmission owners, and more than 500 market participants.Â
To ensure electricity supply meets demand within its footprint, MISO operates several markets, including day-ahead, real-time, and ancillary services markets. The day-ahead market involves trading electricity one day before the actual delivery, allowing participants to secure prices and commitments ahead of time. The real-time market, on the other hand, handles transactions on the day of delivery, adjusting for any discrepancies between the day-ahead commitments and actual demand. Ancillary services markets involve trading services that support the transmission of electricity from generators to consumers, such as maintaining the balance and stability of the grid.Â
MISO capacity market explainedÂ
MISO’s capacity market plays a crucial role in ensuring resource adequacy and maintaining the reliability of the electric grid across its footprint. It accomplishes this via Local Resource Zones (LRZs) and Planning Resource Auctions.Â
Local resource zonesÂ
LRZs are designated areas within the MISO footprint that are used to efficiently manage and plan the electric grid and ensure resource adequacy, as illustrated in the MISO zones map in Figure 2.Â
Figure 2: 2021 MISO Local Resource Zones Map. Source: MISOStates.orgÂ
The geographic boundaries of each zone are determined annually based on several factors, including the electrical boundaries of Local Balancing Authorities, which are entities responsible for maintaining the balance between electricity supply and demand within a specific area, state boundaries, transmission interconnections between Local Balancing Authorities, and previous studies on the Loss of Load Expectation, which is a measure of the probability that the available generation will be insufficient to meet the demand. Capacity requirements are set for each LRZ and, considering transmission constraints and regional demand, each zone is responsible for meeting its own capacity needs.Â
Planning Resource AuctionsÂ
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Like other ISOs/RTOs, MISO serves as an intermediary between utilities, power generators, transmission owners, and other stakeholders that buy and sell electricity within the region. Each year, MISO conducts a Planning Resource Auction to ensure there is adequate capacity available to meet peak demand. The auction sets the price for capacity and determines which resources will be committed to providing that capacity during the planning year, which runs from June 1 through May 31.Â
Day-ahead and real-time markets
MISO also operates day-ahead, real-time, and ancillary services markets to further ensure electricity supply meets demand within its footprint. Â
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