In My View: Market Design Practices: Which Ones Are Best?

Date Published: January 2019

Authors: William W. Hogan

Dr. Hogan argues that real-time spot markets are a better solution for future power markets, compared to creating new products to value flexibility or reliability attributes needed to support a generation mix dominated by variable renewable generation. He addresses two assumptions that are used to justify the former approach: that zero-variable-cost supply will produce low spot prices which will not support efficient investment, and that demand participation can be managed without efficient pricing mechanisms. He then advocates for changes to spot market implementation that improve market incentives, including better scarcity pricing and greater attention to multi-period dispatch and pricing.

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