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 US 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, PhD, Senior Fellow, Climate Program, World Resources Institute (WRI), and Karen Palmer, PhD, 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. The workshop summary below covers discussions in plenary and break-out sessions, but it does not attribute statements or positions to specific persons or organizations.
Project Overview and Experience with Procurement and Planning
Karl Hausker, WRI, and Karen Palmer, RFF
- Background paper on clean energy procurement and IRP by Kathryne Cleary, RFF, and Heidi Ratz, WRI
Hybrid Electricity Markets to Support Deep Decarbonization Goals
Paul Joskow, Massachusetts Institute of Technology
The Need for Evolution in Market Design
Peter Fox-Penner, Boston University
Objectives, Constraints, and The Second Best
Richard Schmalensee, Massachusetts Institute of Technology
Reflections on Future Market Designs
Jon Wellinghoff, Grid Policy, Inc.