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ACORE Releases Two White Papers To Help Guide US Electricity Markets

As many grid operators evaluate how to adapt their markets for the renewable energy transition, the American Council on Renewable Energy (ACORE) and Grid Strategies have released two white papers to help guide needed reforms in two of the largest electricity markets in the United States: PJM Interconnection (PJM) and the Midcontinent Independent System Operator (MISO).

The companion reports, produced in collaboration with the American Clean Power Association and the Solar Energy Industries Association, address the critical need for PJM, MISO, and other regional grid operators to create a level playing field for all resources. That includes ensuring that energy and ancillary service market rules allow renewable and battery storage resources to provide and be compensated for all of their reliability services, and also removing rules that unintentionally subsidise inflexible resources.

“In addition to reducing harmful carbon emissions, renewable energy and storage technologies offer a host of benefits to the grid that can improve system operations, but they must be given a chance to fairly compete” said ACORE President and CEO Gregory Wetstone. “A well-designed, technology-neutral market will help create a level playing field and enable a reliable and efficient transition to clean power.”

The reports offer the following recommendations for reforms that both MISO and PJM can implement: Use markets to reduce out-of-market actions and ensure that the market rules do not reward resources for their inflexibility. Increase energy market price caps to better reflect the value of reliability and incentivise real-time performance and flexibility.

Improve market transparency and efficiency by using more direct mechanisms to counter market power. Improve transmission utilisation both within PJM and MISO, and at seams with neighbouring grid operators, to decrease congestion costs, curtailment, and market power.

In addition, the reports recommend steps to reduce over-procurement in PJM’s capacity market to strengthen energy market price signals, and suggest reforming MISO’s voluntary capacity market to better incentivise performance and flexibility.

“Markets are powerful tools, but they have to be designed properly to incentivise resources to provide needed reliability services” added Michael Goggin, Vice President at Grid Strategies and author of the reports. “Renewable and battery storage resources greatly exceed the capabilities of conventional generators for providing a range of reliability services, but market reforms are needed to unleash their potential.”

While the papers primarily focus on reforms for PJM and MISO, many of the recommendations are broadly applicable in all regions. The Federal Energy Regulatory Commission has initiated a proceeding, Modernising Electricity Market Design, to further explore this critical issue.


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