IEEE Power & Energy Magazine - January/February 2021 - 46

the market should be investable. The market must provide sufficient revenue to attract investment in assets that
improve reliability or economic efficiency and promote the
orderly retirement of costly, inefficient resources that are
no longer needed.
The markets track of the ESIG workshop developed 20
questions requiring further examination. The track discussed
key challenges and explored two exercises to see whether
the solutions differ: designing markets for 1) a system that is
100% renewable and whose market could be designed from
scratch or 2) a system still in the process of transitioning
to 100% renewable. Topics ranged from how and what reliability services need to be incentivized to how an optimal
resource mix can be attained. Price-responsive demand was
a key enabler in all the discussions. With it, the group found
the challenges easier to address, but without it, the challenges
were difficult to overcome. Given the lack of fuel costs, the
following behaviors and attributes, which may need signals to
incentivise them, were highlighted:
✔✔ reducing fixed, capital, and operations and maintenance costs
✔✔ locating resources where they provide value and with
the least overall cost, including infrastructure
✔✔ locating resources where they can provide the most
energy without severely impacting reliability
✔✔ reducing the negative effects of forecast errors
✔✔ providing the most important reliability services at
times when they are most needed
✔✔ transferring energy from times of ample supply to periods where supply is needed
✔✔ consuming energy at times when the cost to do so is acceptable and reducing consumption
when it is not.
table 1. The change in average wholesale electricity price and the VRE

2)	 support grid reliability so that the incremental costs
of reliability do not exceed 1) the amount customers
would knowingly be willing to pay or 2) incremental
benefits
3)	 promote short-run efficiency through the optimized
dispatch of the lowest-cost resource mix
4)	 facilitate demand-side participation and grid flexibility
5)	 promote long-run efficiency, including efficient, competitive entry into and exit from the market, under conditions of significant uncertainty
6)	 minimize the exercise of market power and manipulation
7)	 minimize the potential for distortions and interventions
that would prevent or limit markets' ability to achieve
efficient outcomes, consistent with the public interest
8)	 enable the adequate financing of resources needed to
deliver cost-effective reliability based on the efficient
allocation of risk (i.e., those that can best mitigate risk
should bear it), preventing customers from bearing the
cost of poor investment decisions
9)	 be capable of integrating new technology as needs
evolve, adapting as technology changes
10)	have designs that are readily and realistically implementable.
T h ree broad ph ilosoph ies stem from these principles. First, real-time prices should indicate reliability needs
and incremental changes in supply and demand in the most
granular way possible. Second, a market must transform
physical system risk shared by all into fiscal risk shared
out proportionally (no free riders/no market manipulation).
Energy markets should aim to be able to manage as many
situations as possible by raising or lowering prices. Finally,

penetration increase for several recent studies in the United States.

Study

Market Region

Change in Price (US$/MWh)
per Percentage Increase in
VRE Penetration

Brancucci Martinez-Anido et al. (2016)

ISO New England

$−0.15

Deetjen et al. (2016)

ERCOT

$−0.25

EnerNex (2010)

Eastern
Interconnection

$−0.45

Fagan et al. (2012)

Midcontinent ISO

$−0.28

GE Energy (2014)

PJM

$−0.50

LCG Consulting (2016)

ERCOT

$−0.52

Levin and Botterud (2015)

ERCOT

$−0.41

Mills and Wiser (2012)-Solar

CAISO

$−0.13

Mills and Wiser (2012)-Wind

CAISO

$−0.10

New England States Commission
on Electricity (2017)

ISO New
England

$−0.80

New York ISO (2010)

NYISO

$−0.45

ERCOT: Electric Reliability Council of Texas.
46	

ieee power & energy magazine	

Market Operators
Are Adapting Now
to Prepare for the
Transition
In the United States and Canada, many organized markets are
a l ready obser vi ng h igh V R E
levels. In the early morning of
27 April 2020, the SPP reached
more than 73% of its instantaneous power provided by VRE.
Many regions also have the challenge of market designs that must
ha r mon ize wit h pol icy decisions made outside of the market.
Thus, market operators across
the continent have been facilitating design changes to enable
new technologies to participate,
ensure reliability in the face of
emerging challenges, and provide
january/february 2021
IEEE Power & Energy Magazine - January/February 2021

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