The Energy Systems Integration Group (ESIG) has released a new report, Electricity Market Visions to Support a Reliable and Affordable Electric Grid Under Electricity Decarbonization, describing how organized electricity markets can play a key role in achieving a future clean electricity system that maintains the goals of affordability and reliability while fostering further innovation.
An ESIG task force undertook a collaborative effort to describe a coherent vision of how a future electricity market can provide efficient signals such that meeting electricity demand with all zero-emitting clean energy resources leads to a reliable and affordable system that is fair and equitable. This report presents a collective vision regarding particular goals and core fundamentals and highlights areas still under active debate. Task force participants included experts from independent system operators and regional transmission organizations, market participants, expert practitioners, and other key stakeholder groups.
Debra Lew, executive director of ESIG, said that “there is some debate today about the suitability of organized electricity markets to manage the evolving grid. The ESIG task force finds that organized electricity markets can indeed play a key role in achieving an affordable, reliable, and clean grid.”
The group focused on four key principles for what a market needs to do today and in the future: (1) to enable innovation such that market designs show the right signals to improve upon the existing technology when cost-effective, (2) to incentivize investment decisions when needed to meet reliability needs and maximize efficiency, (3) to allow for hedging from suppliers and consumers when uncertainty or variability can increase risk, and (4) to provide an incentive for the existing market participants to operate in a way to maximize efficiency and to contribute to reliability.
“This vision report shows that much of the current market design may still be valid,” said Erik Ela, a lead writer on the report and ESIG’s director of system operation and electricity markets, “and the parts that may require some updating would do well to work from consensus building, shared knowledge from market operators around the world, and critical thinking, with a focus on ensuring that the markets are enabling innovation.”
The market design vision draws from views on different aspects of price formation, market participation by responsive demand, operational reliability, resource adequacy, transmission and other infrastructure, and clean energy incentives. The task force recognizes that different regions may see different clean electricity scenarios at different times and thus may introduce market design and policy at different points. Global collaboration will be critical for understanding impacts and collaborating on future concepts that can support the evolution toward 100% clean electricity. ESIG is a nonprofit organization that marshals the expertise of the electricity industry’s technical community to support grid transformation and energy systems integration and operation.