Academic Article/Working Paper
On the Importance of Obligation Periods in Design of Capacity Markets
This paper discusses how variations in the availability of various resources (generation seasonality) and the fluctuations in the electricity usage (load seasonality) relate to efficient capacity market design. Even though capacity markets have been around for two decades, the necessity as well as the design of these markets are subjects of ongoing debates. Many design questions, such as how to determine the amount of capacity to be procured, how to prevent market power, or how to provide incentives for performance dominate both the academic literature and the policymaking discussions. Another design aspect that plays a crucial role for market participants is the length of the capacity product procured (“obligation period”), because it defines the length of time for which a seller commits to maintaining its capacity available. However, a thorough analysis of obligation periods has been overlooked by literature and policymaking discussions. Our article works to provide this analysis.
Academic Article/Working Paper
Moving Past Net Metering
This article provides an overview of the benefits and the costs of distributed generation and highlights the analytical flaws and missing elements in the competing positions and in most existing policies. We propose an alternative approach that recognizes the contributions to the electric grid of both utilities and distributed generators. The article is excerpted and revised from a longer academic article, “Managing the Future of the Electricity Grid: Distributed Generation and Net Metering,” which was selected by Environmental Law Reporter as one of the five best environmental law articles published in the 2017-2018 academic year.
Defining, Measuring, and Monetizing Resilience in the Electricity System
Grid resilience—generally, the electric grid’s ability to resist/absorb, manage, quickly respond, and recover from/adapt to high-impact, low-probability external shocks—has been a concern for electric utilities and energy planners for decades. While recent extreme weather and cyber security concerns have prompted the federal government to pursue policies that support coal and nuclear power plants, a more systematic focus on resilience will lead to very different solutions than what has been proposed by the Department of Energy. Our report aims to assist policymakers in understanding grid resilience and evaluating potential interventions aimed at improving grid resilience.
DERs are a growing part of the U.S. electric system and many state electric utility regulators are looking to more accurately compensate them by paying for a variety of the benefits that these resources provide. Most states are currently focusing on energy and distribution-level benefits, but this approach overlooks the environmental and public health impacts of DERs. Even though some states like California and New York have been working on analyses that include environmental attributes of DERs, few regulators have attempted a thorough evaluation of the environmental and public health benefits. Our report, Valuing Pollution Reduction, lays out a practical methodology for calculating the E value, the highlights of which are captured here. Specifically, this issue brief describes how to appropriately value environmental and public health benefits by monetizing the economic, health, and climate damages avoided emissions would have caused. State utility regulators can use the steps described here, weighing tradeoffs between accuracy and administrability, to implement their own program to holistically compensate DERs.
Avoiding Unnecessary and Problematic Reforms
Many states are taking action on climate change by paying zero- and low-emitting electricity generators for avoiding the emissions that fossil-fuel-fired resources would otherwise emit. These “externality payments” help level the playing field between emitting and non-emitting generators. Critics of these policies argue that these payments might negatively affect the efficiency of wholesale electricity markets by reducing capacity prices, which heavily affect how generators enter and exit the market. Our report shows why the premises underlying recent reforms, which seek to shield capacity markets from the potential price impact of pollution externality payments, are flawed.
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