ERCOT’s planning reserve margin is well below their target for resource adequacy this summer. To a naïve observer, the energy-only market structure’s test will be whether ERCOT can avoid shortfalls, i.e. a loss-of-load event. But no level of investment or reserve margin can entirely eliminate all risk or protect the grid from ever falling short. Instead, the true test of ERCOT’s market design is whether strong investment signals, i.e. higher prices, spur investment to drive the system back from acceptable risk to a more desirable level of risk. Fortunately ERCOT looks capable of meeting this subtler test, and it should stay the course to avoid expensive capacity markets.
Mark Ahlstrom, President of the Energy Systems Integration Group, lays out a creative solution that just might be the power market fix we’ve all been waiting for. He observes that we are having so much trouble making the markets work for the wave of new grid technologies upon us – but maybe that is because we set up the markets with a limited view of future options.
If you’re a utility regulator, you’re undoubtedly hearing about new regulatory models, more specifically, performance-based regulation. But regulatory processes can constrain the ability to get policies designed well in the implementation and incentive design phase. Experience shows it pays to get out in front of this movement and start the conversation now with stakeholders in your state.
We launched America’s Power Plan five years ago under the premise that renewables growth would soon accelerate, and therefore we needed to proactively examine and reform institutions that impede a high-renewables, low-cost, reliable grid. Updated levelized cost of energy (LCOE) data and forecasts from international energy analysts show that renewable energy costs keep falling, making changing outdated institutions more urgent than ever.
Offshore wind has always seemed just out of reach in America, but the offshore wind boom has officially arrived in Northeast Atlantic states – to the tune of 8,000 MW of planned capacity. In fact, the U.S. offshore wind industry is in a similar situation to Europe’s ten years ago. If they follow the same consistent path, Northeast consumers, local economies, and investors all stand to benefit.
Three often-used market terms – price suppression, capacity payments, and price spikes – that contain hidden biases against good market design and clean energy have become accepted into the market vernacular. It’s time to re-examine these terms, refine them, and reframe the conversation about designing markets for a clean, affordable, reliable electricity future.
For specific insights, we asked experts in the field, many of whom have been involved in America’s Power Plan from the beginning, to comment on changes they are witnessing in the field and what they are hopeful about for 2018. We focused on five topics: the implications of the changes in relative costs of electricity technologies, new utility models, wholesale power markets, transmission policy, and customer rate design. Here’s what we heard from some of our nation’s brightest minds.
Resilience may be the most trending topic in today’s electricity sector. The Department of Energy’s (DOE) report on baseload retirements impacts and subsequent Notice of Proposed Rulemaking (NOPR) to subsidize baseload units for the resilience they allegedly provide the U.S. power system begged the question not only whether 90-days of fuel onsite improves resilience – but more fundamentally, what is resilience and how can it be measured?
To reach a clean, resilient, affordable future, markets must evolve to value flexible resources – the key to reducing integration costs for variable resources. Two recent reports from America’s Power Plan (APP) outline how markets can evolve in the short- and long-term to cost-effectively integrate ever higher amounts of variable renewable generation like wind and solar.
On September 29, the Department of Energy released a Notice of Proposed Rulemaking (NOPR) that would bail out unprofitable coal and nuclear plants. It will be important to build a robust record that supports analysis from the DOE’s own report on reliability and resilience published in July—markets are more-than-adequately supporting reliability, and customers should benefit from lower costs as clean energy comes in to undercut other resources. In response, we offer some resources from the experts of America’s Power Plan and others.