Customer-Focused and Clean: Power Markets for the Future

Date Published: November 2018

Authors: Michael Goggin, Rob Gramlich, Steven Shparber, Alison Silverstein

This paper offers recommendations for how to update wholesale electric market rules, most of which were designed in earlier decades when the grid was dominated by large, slow-moving fossil-fired, nuclear and hydroelectric resources, to better suit the evolving resource mix. These recommendations seek to align wholesale market rules more closely with several considerations: the growing demand for clean, low-cost renewable generation, energy efficiency and distributed generation; the need for reliable, affordable electricity necessitated by a challenging global economy; and federal and state mandates requiring fair, non-discriminatory opportunities for all providers, technologies and customers. The reforms recommended will produce four highly beneficial features: markets that are flexible, fair, far, and free. Summary of recommended changes:

  1. Attract flexible resources including demand response and storage through open participation and efficient market pricing;
  2. Reduce inappropriate compensation and commitment of inflexible units;
  3. Allow renewable resources to participate in all reliability services markets;
  4. Respect resource choices by states without mitigation.

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