Publications

Carbon Pricing in Wholesale Energy Markets

Conference Brief

May 26, 2020

Policy Integrity and the Nicholas Institute for Environmental Policy Solutions at Duke University convened a conference on March 3, 2020, to discuss current, and potential future, approaches to carbon pricing in wholesale markets. This brief highlights some of the major points of discussion and suggests open questions for future study. 

Carbon Pricing in Wholesale Electricity Markets

An Economic and Legal Guide

By Matt Butner, Bethany Davis Noll, Justin Gundlach, Burcin Unel, and Avi Zevin
March 25, 2020

This report explains how carbon-pricing rules in organized wholesale electricity markets can improve economic efficiency. It then explores the economic principles and legal requirements for RTOs, states, and the Federal Energy Regulatory Commission to consider when implementing a carbon-pricing rule in organized wholesale electricity markets. And it identifies several policy-design approaches that, to varying degrees, meet those economic principles and are likely to be found legally permissible.

Managing the Future of the Electricity Grid: Modernizing Rate Design

By Richard Revesz and Burcin Unel
February 1, 2020

This article, published in the Harvard Environmental Law Review, argues that the electricity sector is at a critical juncture, and that a shift to a paradigm with a long-term vision that includes better, economically efficient rate designs is necessary if we want to realize the clean energy future that the modern grid promises us.

(Not So) Clean Peak Energy Standards

By Jeffrey Shrader, Christy Lewis, Gavin McCormick, Isabelle Rabideau, and Burcin Unel
December 10, 2019

Growth in electricity storage has the potential to increase emissions from power generation. Concerns about this outcome are currently prompting many policies to address the issue. We study a particularly popular policy proposal called the “Clean Peak Standard” that incentivizes storage to discharge during periods of high electricity demand. The stated goal of the policy is to shift storage discharge to offset production from generators with high pollution emissions. We show that the policy is largely ineffective at achieving this emissions reduction goal. The policy reinforces existing incentives faced by storage operators, so it does not have a strong effect on discharging behavior. It is also unable to capture high-frequency changes in marginal operating emissions rates. Alternative policies, such as a carbon tax, are more effective at reducing the emissions increase caused by storage. Policymakers considering Clean Peak-style policies should instead consider these alternative policies.

Getting the Value of Distributed Energy Resources Right

Using a Societal Value Stack

By Justin Gundlach and Burcin Unel, Ph.D.
December 3, 2019

Our report notes the growing presence of distributed energy resources, like solar panels and energy storage installations, and explains how they should be compensated for providing electricity services valued by utilities and their customers. Currently, 40 states use net energy metering programs to compensate DERs. We describe a promising alternative, “value stacking,” which better reflects DERs’ value, and provide suggestions for how to implement this approach.