ORIGINAL REPORTING: Federal Regulators Seek Reliability Solutions From Customer-Owned Resources

Reliability concerns drive need for energy market design reforms, but regions diverge in FERC proceeding; Different changes can provide the flexibility needed to serve each region's rising variable resources, load and costs, stakeholders say.

Herman K. Trabish, April 11, 2022 (Utility Dive)

Editor’s note: Reliability remains under threat and central to regulators’ thinking across the country.

Industry and resource provider responses in a Federal Energy Regulatory Commission proceeding this February on U.S. power system supply-demand uncertainties revealed two important things about the nation’s accelerating energy transition.

First, rising penetrations of variable and distributed generation make reliability a growing concern for regional market operators governed by FERC, the FERC proceeding showed. Second, no single solution for affordably enhancing reliability seems adequate to the diverse needs of solar-rich California, the windswept heartlands, and the Northeast’s emerging offshore wind and distributed generation portfolio, representatives of clean energy developers, investor-owned utilities and market operators agreed in proceeding filings.

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Current energy market rules were issued by FERC in the 1990s based on “the inflexibility of large, central generators, which made up the large majority of energy supply” then, reported the American Clean Power Association in a Feb. 4 filing on behalf of renewables and transmission developers. New market rules allowing “flexible system operation” are needed for emerging generation and load variability, the group said.

“Changes” to the energy and ancillary services markets being reevaluated in FERC’s docket can allow operators to “reliably operate the system,” the Edison Electric Institute agreed in a Feb. 4 filing on behalf of member IOUs. “Competitive wholesale energy markets should provide accurate price signals, in both the day-ahead and real-time markets,” it added.

Despite widespread agreement that market design changes are needed to affordably protect reliability as renewables penetrations rise, proposed solutions vary significantly, stakeholders told Utility Dive. Regional power system dynamics are specific to local technologies, resources, weather and power demand. But FERC guidance can be crucial to each market operator’s efforts to meet its energy transition complexities, the stakeholders added.

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Every day, complex regional market operations allow customers to have electricity simply and instantaneously. Qualified generation can bid into a grid operator’s integrated markets under FERC-approved protocols and tariffs, Southwest Power Pool Manager of Market Design Gary Cate told Utility Dive. A single, computer-based market clearing engine with every “knowable characteristic” of supply and demand co-optimizes bids and prices for each operator’s market, Cate said.

Adequate resources are bid and committed for energy, for ancillary services, and for contingency needs at the lowest price that protects reliability for the day ahead. The “very complex calculation” done by operators’ engines are “proposed solutions” that are “reproduced and finalized every five minutes for their real-time markets,” Cate said. “But there may be real-time events not in the available forecast data that will be addressed by operator procurements from outside the market.” Though renewables offer cleaner, lower-cost power, their variability is increasing the need for those costly out-of-market actions, he added… click here for more

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