FERC and Cost-Benefit Analysis
This article, published in the Columbia Journal of Environmental Law, argues that, FERC’s management of this transition would be significantly enhanced if it embraced cost-benefit analysis—including accounting for important indirect costs and benefits such as the effect on climate change—to guide its decisionmaking. Changing course and adopting cost-benefit analysis will allow FERC to manage the energy transition while maximizing social welfare, enhancing transparency and accountability, and mitigating legal and political risk
An Economic and Legal Guide
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.
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.
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.
Using a Societal Value Stack
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.
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