Electricity Market Design

Organized wholesale electricity markets in two-thirds of the United States are run by Independent System Operators (ISOs) and overseen and Regional Transmission Organizations (RTOs). ISOs and RTOs can help or hinder clean energy development depending on how their market rules are designed.

Recognizing that these wholesale markets are a critical link in the U.S. electricity system that will directly impact the clean energy transition, WRI is examining how innovative electricity market designs and governance can help align the operation of these markets and the clean energy goals of states, cities and other consumers.

WRI convened stakeholders from RTO and ISO staff, utility leadership, academia, policymaking and environmental non-profits to discuss the challenges facing electricity market design over the course of four workshops:

• July 2018 Workshop: Market Designs for the Clean Energy Transition
• November 2018 Workshop: Market Designs for the Clean Energy Transition: The Role of New Generator Finance
• December 2019 Workshop: Market Designs for the Clean Energy Transition: Proposed Forward Clean Energy Markets
• December 2020 Workshop: Market Designs for the Clean Energy Transition: Advancing Long-Term Approaches

Expanding and Improving Electricity Markets

The success of organized electricity markets has created a surge of interest in market expansion where utilities have traditionally maintained their own power plants with little regard for what the rest of the interconnected grid can provide. The California Independent System Operator opened its real-time energy market to non-member utilities to voluntarily participate through its Energy Imbalance Market (EIM). The EIM has demonstrated cost and emissions savings that continue to grow as utilities join. Southwest Power Pool has similarly started an Energy Imbalance Service. Western stakeholders are contemplating setting up a program to share resources to ensure that the region has adequate resources overall.

WRI is collaborating with the Clean Energy Buyers Association and Western Resources Advocates to develop guidance detailing how resource adequacy is ensured in the West and potential improvements. WRI is leveraging its previous work on resource adequacy and long-term resource procurement to apply it to the western context.

For more information about our relevant work, check out our page on Power System Reform. 

_{Photo by Matthew Henry on Unsplash}