The shift to renewable energy sources as part of efforts to reduce greenhouse gas emissions will require existing electricity markets and the systems that run them to adapt. Resources for the Future (RFF), a think tank based in Washington, D.C., has been exploring these issues.
On Monday, the U.S. Federal Energy Regulatory Commission approved the first significant update to electric transmission policy in more than a decade. As Reuters reported, the policy update “aims to speed up new interregional lines to move more clean energy to meet growing demand amid the explosion of electric vehicles, data centers and artificial intelligence.”
Karen Palmer, a senior fellow, and Molly Robertson, a senior research associate, spoke to Resources magazine, published by the RFF, about how the U.S. electricity market should adapt during this time of transformation, including recommendations for policymakers.
They were asked: “As reforms to the electricity market are considered, what priorities should regulators keep in mind?”
The response from Robertson is below:
We think about evaluating changes to electricity markets in various ways, and whether the changes can meet the needs of the system.
First, solutions should enable the market to find low-cost approaches to meeting the needs of the grid, whether these approaches involve examples like meeting demand in real time or As decarbonization policies at the state and federal levels continue to evolve, market design solutions should be developed with the impact of those policies in mind. ensuring that the operating frequency of the grid is maintained.
Second, reforms to market structures should be built in a way that enables new and emerging technologies, which have different attributes, to provide services and compete.
Third, solutions should consider not only the ability of generators to increase supply, but also of customers to reduce demand.
Finally, as decarbonization policies at the state and federal levels continue to evolve, market-design solutions should be developed with the impact of those policies in mind. For example, if a state climate policy will require backup fossil generation to retire by a certain date, then markets should provide sufficient signals for new sources of non-intermittent clean generation to be built by that date.
“Evolving Electricity Markets,” Karen Palmer and Molly Robertson, Resources, May 16, 2024.
Read the full article originally published by Resources magazine on May 16, 2024.
