Market Design for the Clean Energy Transition: Advancing Long-Term Approaches
12:00 PM - 3:30 PM
WRI partnered with Resources for the Future to co-host a workshop aimed at advancing proposals for organized long-term electricity market designs.
Rapid expansion of zero- and low-carbon generating capacity requires effective policy frameworks for both vertically integrated utilities and organized (restructured) electricity markets. A vibrant debate has emerged regarding how well existing market designs in the U.S. can enable the investments needed for an affordable, reliable, deeply decarbonized electric grid that relies heavily on generation resources with variable output and zero or very low operating costs; and serves load that could grow rapidly in the decades ahead as electricity plays a pivotal role in decarbonizing other sectors of the economy.
Several experts have proposed market designs that involve improved day-ahead and real-time electricity markets, paired with an organized long-term market aimed at guiding investment in new low and zero-carbon generation. These approaches typically envision a periodic, competitive procurement of energy and capacity through long-term contracts that shape the capacity mix of a grid. Some refer to the resulting framework as a “hybrid” market.
This two-day virtual workshop was co-hosted by Karl Hausker, Ph.D., Senior Fellow, Climate Program, World Resources Institute, and Karen Palmer, Ph.D., Senior Fellow and Director of the Future of Power Initiative, Resources for the Future (RFF). The workshop featured plenary speakers, presentations of four papers on organized long-term market designs and discussion of a background paper on experience with clean energy resource procurement and planning. WRI and RFF also prepared a matrix document that provided a summary description of each market design and details on specific market design features in each proposal organized into six topics areas. These six topic areas formed the basis of the six breakout groups that met twice during the two-day workshop.
Modified Chatham House Rules applied to this workshop. Speaker videos, presentations and papers are public, but the workshop summary posted below, covering discussions in plenary and break-out sessions, does not attribute statements or positions to specific persons or organizations. For more information, please contact Heidi Ratz.
For speakers, presentations, papers and videos, please see the links below.
Karl Hausker, WRI and Karen Palmer, RFF
Project Overview and Experience with Procurement and Planning
Background Paper: Experience with Competitive Procurements and Centralized Resource Planning to Advance Clean Electricity by Kathryne Cleary, RFF and Heidi Ratz, WRI
Paul Joskow, Massachusetts Institute of Technology
Hybrid Electricity Markets to Support Deep Decarbonization Goals
Steve Corneli, Strategies for Clean Energy Innovation
A PRISM-Based Configuration Market for Rapid, Low-Cost and Reliable Electric Sector Decarbonization
Eric Gimon, Energy Innovation, LLC
Let’s Get Organized! Long-Term Market Design for a High Penetration Grid
Peter Fox-Penner, Boston University
The Need for Evolution in Market Design
Richard Schmalensee, Massachusetts Institute of Technology
Objectives, Constraints, and The Second Best
Susan Tierney, Analysis Group
Wholesale Power Market Design in a Future Low-Carbon Electric System: A Proposal for Consideration
Brendan Pierpont, Sierra Club (paper and participation contributed in independent capacity)
A Market Mechanism for Long-Term Energy Contracts
Jon Wellinghoff, Grid Policy, Inc.
Reflections on Future Market Designs