Solar in wholesale markets was the theme of the second day of Solar Power International (SPI)’s virtual microconferences, which meant the industry jargon was flying thick and fast. Even by insider standards, it was impressive — capacity markets, scarcity pricing, ORDC (operating curve demand cycle), and ELCC (effective load carrying capacity), to name a few.
But underneath all the verbiage, the main issues were critical and clear. The complete decarbonization of electric power in the United States will ultimately depend on the integration of solar, wind, storage and other distributed technologies into wholesale markets. Based on the project pipelines grid operators are seeing across the country, the shift in resources is moving faster than expected, leaving all stakeholders scrambling to figure out a welter of market rules and regulations, while keeping the lights on efficiently, reliably and affordably
“Everyone is having the conversation of what adjustments need to be made and what is a fair system,” said Jessica Harrison, senior director of research and development at the Midcontinent Independent System Operator (MISO), which serves 15 states. “How do we allow flexibility, but also transparency and understanding the full capability of (any) asset, particularly if we’re thinking about reliability.”
One example, she said during the day’s first workshop on wholesale market modernization, is integrating intermittent renewables, which for MISO means “starting to rely on forecasting more than we would for other types of resources to integrate them effectively.”
On the developer side, a key question is storage valuation, in particular, balancing reliability with optimizing the multiple value streams battery storage can produce, said Virinder Singh, vice president of regulatory and legislative affairs at EDF Renewables North America.
For grid operators, he said, “that issue gets magnified when (storage) is co-located with solar to attain the investment tax credit. What do I do with this magic box you have and what can I rely on it to do at a given moment in time. What do I know, when do I know your battery is going to be available when I need it for reliability events while you’re also attaining all these other values? I don’t see any market that has it down perfectly; we’re all learning by doing right now.”
ERCOT: closest market to the ideal for a decarbonized system
The fact that wholesale markets are now dynamic and hybrid, and that state and federal regulators are increasingly at loggerheads, was brought into sharp relief during the day’s second workshop comparing PJM Interconnection and the Electricity Reliability Council of Texas (ERCOT).
Coming down hard on the side of state jurisdiction, Rob Gramlich, founder and president of Grid Strategies LLC, a Washington, D.C.-based consulting firm, called ERCOT, and its scarcity pricing model “the closest market to the ideal for a decarbonized, low-cost system.” The model seeks to incentivize supply reliability by setting super high prices during times of high demand.
“We really can’t make this nice distinction between capacity and energy and environmental attributes,” he said. “I think it all becomes more integrated. If you think about a different model where load-serving entities are keeping their portfolios balanced, they can look at demand-side options and supply-side options and make sure every retail supplier has all the power it needs and the environmental attributes it is required to get. That’s really a state jurisdictional role.”
The elephant in the room, of course, was the Federal Regulatory Energy Commission (FERC), and its recent minimum offer price rule (MOPR) on PJM’s capacity market, which many see as raising barriers for renewables. Capacity markets are aimed at ensuring reliability through advance contracting, and Gramlich very pointedly argued that a single vote at FERC can have major impacts on how they operate.
While acknowledging “there are lots of issues with the PJM capacity market,” Joseph Bowring, president of Monitoring Analytics, a spin-off of PJM, still defended it as a better option for competitive and efficient market operation that “will allow renewables to enter.”
“We need to stop supporting resources that are inefficient and uneconomic and should leave the market and ensure there are no barriers to renewables,” he said. “Renewables are competitive. The competitive developers tell us all the time, they think they can compete even with the MOPR.”
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If you are a utility and own 100 peaker plants powered by Natural Gas and you have to pay off loans, employees and taxes on your land and improvments, do you run your plant and pay the bills on it our buy renewables and lay off the workers, miss your loan payments and go into default with the tax collector. How about the natural gas futures you must take delivery of or take a loss in your investment. As debt service is retired, peaker plants have batteries for storage installed on the same land and Employees are trained in battery testing and maintenance as well as mechanicl maintenance of boilers and turbines, it will take time to get utilities on board untill EV automobiles are taking up the excess power and they can run both. Swithing from Gasoline and oil to natural gas and then on to fully renewable will take 50 years but if we do not start, we will never get there. Step by step, some utilities are buying batteries and making micro grids with storage, installing EV tariff meters on homes next to their regular meters and planning for an even bigger electrical boom ahead. Demands for conservation has caused utility prices to rise becuase their fixed costs are not getting paid for with lower sales. A boon in electricity usage, with cheap renewables, could actually lower consumer prices and help the bottom line of utilities if they do not get greedy…again.
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