Advanced Energy Perspectives

Friction between organized wholesale electricity markets operated by Regional Transmission Organizations and Independent System Operators (RTOs/ISOs) and the trend – driven by policy, technology, and market forces – toward cleaner energy options have generated plenty of headlines in recent years. The barriers to entry that advanced energy technologies sometimes face in wholesale markets have come into stark relief, as federal policies like the Federal Energy Regulatory Commission’s (FERC) Minimum Offer Price Rule (MOPR), legacy market rules and market designs, and efforts to use the levers of federal power to prop up aging uneconomic power plants and put new regulatory barriers in front of clean energy resources collide with rapidly increasing state and customer ambitions to switch to clean energy.    

Despite these conflicts, competitive wholesale markets have still shown themselves to be a platform to integrate new technologies, increase transparency, and harness competitive forces over broad geographic regions to scale development of low-cost advanced energy technologies, improve customer access to those technologies, and replace uneconomic existing fossil fuel plants. FERC opened these markets to full participation by energy storage resources with its Order No. 841, creating a 40 GW opportunity to scale up development of technology that will be instrumental in the 100% clean energy grid of the future. And outside of FERC, RTO/ISO stakeholder processes are moving ahead on their own to reform market rules and operating practices to integrate transformative hybrid solar/wind-plus-storage power plants and consider a role for carbon pricing in the markets, providing a forum for discussions and market design progress not available in other regions.   

In July, associations representing utilities and state regulatory agencies asked the United States Court of Appeals for the District of Columbia Circuit to overturn portions of the Federal Energy Regulatory Commission’s landmark Order No. 841. In that order, FERC adopted critical regulatory reforms that require regional wholesale electricity market operators to remove barriers to the participation of energy storage technologies in their markets. Last week, AEE led a broad coalition of clean energy associations and public interest advocates in formally intervening in the case to urge the court to uphold FERC’s bipartisan effort to remove regulatory barriers to the growth of electric storage. The entire advanced energy industry has much at stake.

In 2018, wholesale electricity markets were a bumpy ride for the advanced energy industry. The year began with major victories for the sector, including the Federal Energy Regulatory Commission’s (FERC) unanimous rejection of the Trump Administration’s proposal to bail out uneconomic coal and nuclear power plants, and FERC’s adoption of a final rule (Order 841) opening wholesale electricity markets to energy storage resources.  But headwinds developed as the year went on, including FERC’s June order requiring PJM to make major changes to its capacity market that could result in new barriers to participation for advanced energy resources, and moves in PJM and ISO New England to favor so-called “fuel secure” resources. After a turbulent 2018, what will 2019 bring? Here are some of the key areas where AEE will be engaged to ensure that advanced energy resources can continue to achieve growth in wholesale electricity markets.