IEEE Power & Energy Magazine - January/February 2021 - 52

production is excessive (to raise prices) but small enough
not to consistently exceed energy needs during scarcity
conditions. Stochastic simulation tools could be used to
determine the optimal set of resources with the needed
attributes while being able to support investment where
short-term prices may be too uncertain to make those
decisions. Although these options are reminiscent of existing forward-capacity markets and transmission planning
processes, proposers suggest voluntary participation and a
focus on the incentivizing attributes needed in the future
resource mix while primarily relying on short-term energy
markets. Three possible options for long-term forward
markets are shown in Table 2.
Other options are possible. A recent set of awards was provided through the U.S. Department of Energy's Advanced
Research Program, which were aimed at evolving system
operations and electricity market operations to a more
risk-driven paradigm. The projects will propose and develop
new operating and market designs that evaluate and structure performance into market incentives, establish transparent risk-assessment methods, leverage existing approaches
to quantify and mitigate risk, and identify how resource performance assessment can create new business opportunities
to mitigate risk. It is expected that the market and market
clearing algorithms will capture uncertainty, allocate the
cost of uncertainty to those who cause it, and reward those
who mitigate it.
Another option is moving back toward a more regulated
system. If the benefits of competition from these future
power systems are not realized and monopolies of power
supply and reliability services are seen as inevitable, a regulated system may be a feasible option. That does not make
things simpler; the way that the system is planned and operated would continue to be just as complex. The decisions,
whether made by one entity or multiple parties, should use
the same engineering and economic principles for this future
resource fleet, with poor decisions still resulting in inefficient or unreliable outcomes.

Conclusions
Electricity markets have always been complex due to their
unique physics of electricity supply and delivery. That will
continue regardless of the future grid. There is no crystal
ball foretelling how best to achieve a system that emits no
carbon and how to get there cost-effectively. During this transition, innovations may cause paradigm shifts that require
rethinking. Although regions across North America are seeing substantial levels of VRE, conversations about what market structure and design may be most appropriate for each
region are just beginning. Further work is needed to evaluate
the different options and how they may work across different
jurisdictions. To supply the energy and services for this future
system, engineering and economic principles are needed to
provide the foundation for evaluating which options are best
to support a system that is reliable, economically efficient,
52

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and allows the needed resources an opportunity to recover
their costs and be rewarded for effective innovation.

For Further Reading
S. Aggarwal et al., " Wholesale electricity market design for
rapid decarbonization, " Energy Innovation, San Francisco,
CA, June 2019. [Online]. Available: https://energyinnovation
.org/publication/wholesale-electricity-market-design-for-rapid
-decarbonization/
A. D. Mills et al., Impact of Wind, Solar, and Other Factors on Wholesale Power Prices: An Historical Analysis-
2008 Through 2017. Berkeley, CA: Lawrence Berkeley National Laboratory, Nov. 2019. [Online]. Available: https://emp
.lbl.gov/publications/impact-wind-solar-and-other-factors
J. Tribulski and S. Coyne, " Carbon Pricing Senior Task
Force, " PJM.com, 2020. [Online]. Available: https://www
.pjm.com/committees-and-groups/task-forces/cpstf.aspx
M. Hogan, " Follow the missing money: Ensuring reliability at least cost to consumers in the transition to a low-carbon
power system, " Electricity J., vol. 30, no. 1, pp. 55-61, Jan./
Feb. 2017. doi: 10.1016/j.tej.2016.12.006. [Online]. Available: https://www.sciencedirect.com/science/article/pii/
S1040619016302512?via%3Dihub
" Reliability and market considerations for a grid in transition, " New York Independent System Operator Rensselaer,
Dec. 2019. [Online]. Available: https://www.nyiso.com/
documents/20142/9869531/Reliability%20and%20Market%
2 0 C o n s i d e r a t i o n s %2 0 f o r %2 0 a%2 0 G r i d %2 0 i n%
20Transition%20-%2020191220%20Final.pdf/7846db9c
-9113-a85c-8abf-1a0ffe971967
" Toward 100% renewable energy pathways: Key research
needs, " Energy Systems Integration Group, Oct. 2019. [Online].
Available: https://www.esig.energy/download/toward-100
-renewable-energy-pathways-key-research-needs

Biographies
Erik Ela is with the Electric Power Research Institute, Palo
Alto, California, USA.
Andrew Mills is with Lawrence Berkeley National Laboratory, Berkeley, California, USA.
Eric Gimon is with Energy Innovation, San Francisco,
California, USA.
Mike Hogan is with Regulatory Assistance Project,
Montpelier, Vermont, USA.
Nicole Bouchez is with the New York Independent System Operator, Rensselaer, New York, USA.
Anthony Giacomoni is with PJM Interconnection, Audubon, Pennsylvania, USA.
Hok Ng is with the Independent Electric System Operator, Toronto, Ontario, Canada.
Jim Gonzalez is with Southwest Power Pool, Little Rock,
Arkansas, USA.
Mike DeSocio is with the New York Independent System
Operator, Rensselaer, New York, USA.
p&e

january/february 2021

https://energyinnovation.org/publication/wholesale-electricity-market-design-for-rapid-decarbonization/ https://energyinnovation.org/publication/wholesale-electricity-market-design-for-rapid-decarbonization/ https://energyinnovation.org/publication/wholesale-electricity-market-design-for-rapid-decarbonization/ https://emp.lbl.gov/publications/impact-wind-solar-and-other-factors https://emp.lbl.gov/publications/impact-wind-solar-and-other-factors http://www.PJM.com https://www.pjm.com/committees-and-groups/task-forces/cpstf.aspx https://www.pjm.com/committees-and-groups/task-forces/cpstf.aspx https://www.sciencedirect.com/science/article/pii/S1040619016302512?via%3Dihub https://www.sciencedirect.com/science/article/pii/S1040619016302512?via%3Dihub https://www.nyiso.com/documents/20142/9869531/Reliability%20and%20Market%20Considerations%20for%20a%20Grid%20in%20Transition%20-%2020191220%20Final.pdf/7846db9c-9113-a85c-8abf-1a0ffe971967 https://www.nyiso.com/documents/20142/9869531/Reliability%20and%20Market%20Considerations%20for%20a%20Grid%20in%20Transition%20-%2020191220%20Final.pdf/7846db9c-9113-a85c-8abf-1a0ffe971967 https://www.nyiso.com/documents/20142/9869531/Reliability%20and%20Market%20Considerations%20for%20a%20Grid%20in%20Transition%20-%2020191220%20Final.pdf/7846db9c-9113-a85c-8abf-1a0ffe971967 https://www.nyiso.com/documents/20142/9869531/Reliability%20and%20Market%20Considerations%20for%20a%20Grid%20in%20Transition%20-%2020191220%20Final.pdf/7846db9c-9113-a85c-8abf-1a0ffe971967 https://www.nyiso.com/documents/20142/9869531/Reliability%20and%20Market%20Considerations%20for%20a%20Grid%20in%20Transition%20-%2020191220%20Final.pdf/7846db9c-9113-a85c-8abf-1a0ffe971967 https://www.esig.energy/download/toward-100-renewable-energy-pathways-key-research-needs https://www.esig.energy/download/toward-100-renewable-energy-pathways-key-research-needs

IEEE Power & Energy Magazine - January/February 2021

Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - January/February 2021