ACORE, Grid Strategies release reports on electricity market reforms

The American Council on Renewable Energy (ACORE), along with Grid Strategies, has issued two white papers that outline the reforms they see as necessary in two of the largest electricity markets — PJM Interconnection (PJM) and the Midcontinent Independent System Operator (MISO).

The reports, produced in collaboration with the American Clean Power Association and the Solar Energy Industries Association, focus on 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.

“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,” ACORE President and CEO Gregory Wetstone said. “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 include several recommendations for reforms that both MISO and PJM can implement. Among them, they suggest using markets to reduce out-of-market actions and ensure that the market rules do not reward resources for their inflexibility.

Also, they suggest increasing energy market price caps to better reflect the value of reliability and incentivize real-time performance and flexibility; improving market transparency and efficiency by using more direct mechanisms to counter market power; and improving transmission utilization both within PJM and MISO, and at seams with neighboring grid operators, to decrease congestion costs, curtailment, and market power.

Further, the two papers recommend steps to reduce over-procurement in PJM’s capacity market to strengthen energy market price signals. With MISO, they suggest reforming the voluntary capacity market to better incentivize performance and flexibility.

“Markets are powerful tools, but they have to be designed properly to incentivize resources to provide needed reliability services,” said 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 applicable in all regions.