The tide goes out on intermittent, unreliable resources and the utilities that built them
“You don’t find out who’s been swimming naked until the tide goes out.”- Warren Buffett
For years, utility companies have pursued a reckless strategy of prematurely retiring their reliable, affordable coal plants while pretending that a combination of wind, solar, and storage could replace their dependable capacity.
In our opinion, this strategy was made possible by the fact that wind and solar resources were receiving unrealistically high capacity values in capacity auctions and in utility resource plans, which did not properly account for the fact that wind and solar resources have often failed to show up to work when needed most.1
At the very least, these unrealistic expectations didn’t address the reality of diminishing returns for wind and solar and the fact that every MW of wind and solar added to the grid contributes less to grid reliability than the one before it.
Now that grid operators like the Midcontinent Independent System Operator (MISO) are rightfully reducing the reliability values they are assigning to solar, storage, and wind resources, we are getting a good look at the companies that have been swimming without a suit and what it means for the affordability and reliability of the American electric grid.
NISPCO Lays it Bare
There is perhaps no better case study showing the impact of right-sizing the capacity values of wind and solar than the slide deck released by the Northern Indiana Public Service Corporation (NIPSCO) on October 20th, 2026 for a workshop outlining its Integrated Resource Plan (IRP).
The deck is remarkable because it shows that MISO’s adoption of new capacity accreditation metrics, called the Direct Loss of Load (DLOL), has left NIPSCO in a massive reliability hole thanks to the company’s decision to shutter nearly 1,700 megawatts (MW) of coal capacity in the last decade and replace it with 3,055 MW of wind and solar capacity.
For a brief explainer, in the electricity planning industry, capacity accreditation is used to value installed capacity’s contribution to reliability during the peak hours of electricity demand. In the case of wind and solar, these values are typically lower than thermal resources because of their dependency on the weather to produce electricity—meaning at times, wind and solar may not be producing any electricity when the grid needs it most.
So, when looking at installed capacity, it seems as though NIPSCO’s wind and solar additions replaced the coal capacity and then some. However, reliable capacity is another story entirely, and even generous capacity accreditation values for wind and solar of 30 percent show that NIPSCO was already in a reliable hole.
MISO’s update to DLOL accreditation makes it even worse.
Slide 15 of NISPCO’s presentation describes the thought process behind MISO’s change in capacity accreditation.
Essentially, MISO determined that building a system designed to meet the peak demand hour no longer reflected the greatest risk to grid reliability because adding solar resources, in particular, has shifted the highest-risk hours into the evening after the sun has walked off the jobsite.
As a result, solar, storage, and wind are less useful for meeting demand during the new high-risk hours, and therefore they receive lower DLOL values from MISO, especially as more of this capacity is added to the grid and each additional MW contributes even less to serving peak demand.
Slide 16 from the presentation shows that solar currently receives a 38 percent capacity value in summer using the outgoing effective load carrying capacity (ELCC) metric. However, under DLOL, solar’s capacity value falls to just 10 percent in the summer of 2030, and the annualized solar capacity value is 4.5 percent in 2030 and 2.25 percent in 2035.
Wind is slightly less affected, but the winter capacity values it has enjoyed undeservedly, in our opinion, for the last several years have been reduced to 20 percent in 2030 and 17 percent in 2035.
Unsurprisingly, solar and storage tend to receive the lowest capacity accreditation in winter because the days are short and winter peak electricity is often driven by the electricity needed for electric heating. This tends to occur on the coldest winter nights when the sun is not shining, as we saw in North Carolina during Winter Storm Elliot.
These decreases in capacity accreditation have highlighted the reliability crisis at the utilities that have retired firm, dispatchable generators in favor of weather-dependent resources.
The Resulting Gap at NIPSCO
For example, the declines in accredited capacity for solar, wind, and storage have left NIPSCO with a giant reliability hole to fill.
Slide 23 shows the accredited capacity of the NIPSCO system under the current ELCC capacity values, compared to the accredited capacity under DLOL.
The slide shows NIPSCO plans to receive 1,196 MW of accredited capacity for its solar facilities in 2027 before it evaporates to just 189 MW by 2030, and the capacity value of its wind fleet falls from 200 MW to 179 MW.
Of course, the most reasonable approach when one is in a reliability hole is to stop digging. Given the massive gap between its accredited capacity and the capacity it needs (shown as the Planning Reserve Margin Requirement blue line in the graph), it makes sense that the company is now considering keeping the Michigan City coal plant online.
However, it helps to know how the issue started in the first place. NIPSCO would not be in this hole if they had kept their coal fleet online. In fact, the company would be showing a surplus if it had not traded its coal fleet for wind and solar.
NIPSCO’s slideshow is a clear indication that utility companies should be celebrating the reliable, affordable coal plants on their systems that help keep the lights on for American families and businesses, rather than scrambling to replace them.
Utilities like Xcel Energy, Minnesota Power, We Energies, DTE and Consumers Energy should all take note of NIPSCO’s slides and reconsider their coal plant closures.
It’s Not Just MISO and NIPSCO
MISO’s DLOL accreditation obviously affects all investor-owned, cooperative, and municipal utilities in the Regional Transmission Organization (RTO), but PJM is also assigning low capacity credits to onshore wind, offshore wind, and solar to reflect their declining values as more resources are added to the system.
This means that Virginia Governor Abigail Spanberger’s efforts to lower PJM’s soaring capacity prices by building new onshore wind, offshore wind, and fast-tracking solar projects will effectively prioritize the resources with the worst capacity values, providing the least relief to electricity customers.
Conclusion
NIPSCO’s slides are a fantastic indication of what happens when the capacity accreditation for wind and solar finally catch up to reality.
It’s important to note, however, that this was always the reality, no matter how favorable the metrics were originally to weather-dependent resources. Wind and solar were never as reliable as prior capacity accreditation metrics made them out to be. How do we know? Because wind and solar routinely produced little to no electricity and underperformed these accreditations estimates during peak demand when grids across the country needed them most.
MISO’s decision to right-size the capacity values of all resources, particularly wind and solar, is a good step in the right direction, and sends an important market signal that prevents Green-Plating companies from pretending their resource plans are reliable under unrealistic wind and solar assumptions.
Also, go Brewers!
