Join World Resources Institute on December 13 for a webinar that explores grid reliability in the United States and how to help state decisionmakers, regulators, RTOs, and other key stakeholders understand what is needed in the immediate and long-term to build a more reliable grid.
Meeting the Grid Reliability Challenges of the Clean Energy Transition
1. MEETING THE GRID RELIABILITY CHALLENGES
OF THE CLEAN ENERGY TRANSITION
KarlHausker, Ph.D. KelliJoseph, Ph.D.
Senior Fellow Senior Fellow
khausker@wri.org kelli.joseph@gmail.com
2. Agenda
โข Presentation
โข Kelli Joseph presents new working paper
โข Comments by
โข Karen Palmer, Director, Electric Power
Program, Resources for the Future
โข Steve Corneli, Principal, Strategies for Clean
Innovation and Board Member, ISONE
โข Q&A
โข Submit in Q&A Zoom box
Check out the new paper and previous WRI
workshops:
https://www.wri.org/initiatives/
electricity-market-design
Or search โmarket designโ at wri.org
3. Meeting the Reliability Challenges
of the Clean Energy Transition
Kelli Joseph, PhD
Senior Fellow in Electricity Market Design
World Resources Institute
4. Meeting Paris Agreement Targets โฆ The U.S. Challenge
U.S. Nationally
Determined
Contribution
(NDC)
States with
various clean
energy targets
No National
Electricity Policy
And no one in charge of setting decarbonization
targets while also meeting grid reliability.
5. Outline
โข What is grid reliability?
โข What are grid reliability challenges as the resource mix
changes?
โข What are regional market structures for grid operations?
โข Why are there different market frameworks for generation
procurement across the United States?
โข What kind of coordinated planning is needed?
6. What is grid reliability?
North American Electric Reliability Corporation (NERC):
1) Resource Adequacy = Loss of Load Risk Assessments
(โplanningโ)
2) Operating Reliability = To withstand sudden disturbances
(โoperationsโ)
8. Challenges as the Resource Mix Changes
โข Resources that can produce at all times
โข Meeting โNetโ Load
โข Flexible, Dispatchable Resources that are Quick-Start and Fast-
Ramping
Growing sources of uncertainty
โข Generation output
โข Electrification Targets (heating + transportation)
โข Changing and extreme weather
โข Customer-sited generation (not visible to bulk grid operators)
9. Reliable Grid Operations (โAncillary Servicesโ)
โข Balancing Energy
โข Flexible Generation Resources
โข Fast-Start
โข Quick-Ramping
โข Operating Reserves
โข Produce within 10 min/30 min
โข Once deployed, must be replaced within
60-90 min
Today
provided by
batteries
and gas
generatorsโฆ
And both are
limited
11. Regional Integration: RTOs and EIMs
EIM = Enables some regional
coordination across different
BAs (RTO managed)
Regional Integration provides a
โDiversity Benefitโ that helps
mitigate net load uncertainty
RTO = Type of BA, wide
area, many utilities
Balancing
Authorities (BAs)
manage
supply/demand in
real-time
operations
โฆ But focus on which structure
ignores coordination needed to
enable regional benefits
12. Key Differences between an RTO and an EIM
RTO EIM
Ancillary services
providing regional
benefits in real-time
system operations
Balancing Energy and
Operating Reserves
Serves as the Ancillary
Services supplier of last
resort
Balancing Energy only
and only as a last resort
BAs participating in an
EIM are not to โlean
onโ their neighbors
13. How are the resources needed to meet
operating reliability needs procured?
14. States have different market frameworks
within these different market structures
RTOs EIMs
Various market
frameworks, depending
on the state.
Outside of the EIM market,
through utility IRP
processes.
No regional procurement
coordination for balancing
resources (prices alone).
No regional procurement
coordination for balancing
resources.
15. Challenges with relying on prices alone
โข Idea = Electricity is a commodity (deregulated/restructured states)
โข Doesnโt matter type of resource producing, only that produce
โข Hedging price/delivery riskโฆ.relies on exposure to high prices
Challenge: Reliable delivery requires ancillary services. Not all resource types meet
requirements for operating reserves and balancing energy equally at all times
Challenge: Various market โfixesโ since prices not enough (RA/Operating Reserves)
Challenge: Relying on prices alone for balancing energy in RTOs
17. The uncoordinated policy reality in the U.S.
โข Do not determine
type, size, location,
timing of resource
entry
RTOs and EIMs
DO NOT set
electricity policy
โข RTOs and Individual
BAs in an EIM are
NERC-defined
reliability-coordinators
Responsible for
Reliable Grid
Operations
โข States are not NERC-
definedreliability-
coordinators
States DO set
electricity policy
18. Electrification challenges in all market
frameworks (restructured and non-restructured)
Systems become winter peakingโฆsignificant ramping needs
MISO
PJM
ISO-NE NYISO
19. Generation Production in the U.S.
โข Natural Gas = 40% today
โข Increasingly used to provide
balancing energy (NERC 2023)
โข Challenge in the U.S.:
โข Coordinated policy planning
โข Bring on clean, flexible
resources while ensuring the
natural gas system is capable of
supporting electric system
needs throughout the transition
(see FERC 2023; NAESB 2023)
20. State Electricity Policy Challenges
1) Need resources that meet
operating reliability needs in
all hours and all seasons as
more renewable resources
come online. (TODAY)
That provide specific grid services
Batteries + Gas with sufficient fuel
available
2) Targeted incentives for
the kinds of resources
that can replace fossil
assets. (FUTURE)
That provide specific grid services
Examples: Geothermal, Advanced Nuclear, Hydrogen,
Bioenergy, Long-Duration (Multi-day) storage, Fossil
with Carbon Removal (โabatedโ)
22. Bulk Electric System Reliability is a Public Good
โข What grid operators do to prevent network collapse is both non-exclusive and
non-rivalrous. (Report to Congress on Electricity Market Competition 2007)
โข Everyone gets the benefit of what grid operators do to maintain system
reliability on an AC system. Must have the โrightโ mix of resources.
23. Reliability-Informed State Policy Planning
RTO Studies
โข Of Various State-
Determined
Policy Pathways
Reliability
Implications
โข RA and
Operating
Reliability
Reliability-
Informed Policy
Planning
โข Inform Resource
Selection
โข Targeted
Incentives
Coordinated, reliability-informed, regional planning
for a reliable energy transition
24. Electricity is too important, too critical, too essential.
โข Uncoordinated policy is a reliability risk (NERC 2023).
โข Getting it right in electricity is key to reaching any decarbonization
targets.
โข Reliability throughout the transition depends on having a SPECIFIC
MIX of resources that meet:
โข Policy targets + Balancing energy needs (ramping, quick-start) +
Operating reserve requirements.
โข Coordinated, regional planning is needed
26. Market/Financing Implications
MIT: Capacity Expansion Model (โperfect foresightโ)
โข Expect significant price volatility
โข Even with DR (Automated demand on TOU+CPP), LDS, dispatchable low-
carbon gen, hydrogen
โข All resources more dependent on these high-priced hours
โข Uncertainty in policy = uncertainty in the resource mix
โข How encourage investment in balancing resources and operating
reserves that meet RA + operating reliability under deep
decarbonization?
27. Possible market design solutions?
โข Hybrid Markets? (e.g. Joskow)
โข Competition โinโ the market (keep current energy markets) PLUS
competition โforโ the market
โข Policy as driver of new entry. Informed by system planning.
โข Auction designs that avoid lock-in when no longer needed?
โข Strategic Reserves?
โข All pay the cost of resources needed to maintain reliable grid operations.
โข Could still have competitive solicitationโฆwhich could enable new assets
types that can fully replace fossil when commercially available?
โข Regional IRP?
โข Other?