Advanced Energy Perspectives

Over the past two years, climate change has resurfaced as a top policy priority in Congress with policymakers from both parties offering ways to reduce carbon emissions. AEE has actively engaged in this conversation, testifying to Congress on how the country can achieve a 100% clean energy future in the power sector cost effectively. While many, including AEE, have focused on the need to establish a strong and enforceable target for meeting a 100% clean future, less attention has been paid to the ways wholesale electricity markets could drive toward this target, lowering consumers costs, expanding consumer access to clean energy, and reducing carbon emissions. That is, until now, as federal lawmakers are turning to expansion and improvement of wholesale markets as well as reducing barriers for advanced energy to access these markets as part of their plans.

In the last decade, technology has changed nearly every facet of our lives. We’ve traded in touch-tone phones for smartphones, replaced cabs with ride sharing apps, and upgraded bulky desktops for sleek laptops. While technology has changed life in so many dramatic ways, less obvious, but no less dramatic is the way technological advancements have changed the way we use electricity. Most notable is the way technology has allowed us to gain control over electricity demand, through energy efficiency and demand response. The challenge now is to make sure that newfound power to reduce and manage demand gets fully utilized in wholesale electricity markets.

In 1999, the Texas Legislature passed Senate Bill 7, opening up the Lone Star State’s electricity market to competition. Since then, Texas has been at the forefront of energy innovation. Now, nearly 20 years later, distributed energy resources (DERs) are the cutting edge of energy innovation, continuing the two-decade process of making the Texas grid more secure, clean, reliable, and affordable. With the COVID-19 public health crisis changing where and how we use electricity, just as it has changed where we work and how we learn, DERs couldn’t have come along at a better time. 

As momentum builds for clean energy, the Western states are leading by example. From California to Colorado, Washington to New Mexico, states have set ambitious goals, and are now starting to figure out how to meet them. Suddenly, the notion of a regional power grid, instead of the electric power system managed state by state, has growing appeal in the independent-minded West. Could regionalizing the grid help these states reach their goals? And if so, what would a regional power market look like? AEE has put forward some principles to contribute to the conversation. 

If you’re looking for big trends to watch in electricity markets, there’s no shortage these days. Some are broad policy issues, like the growing number of states targeting 100% clean grids (definitions vary but they are all directionally similar). Others are being driven by technology innovation, such as the continuing price declines for renewable energy and batteries. Some have a strong consumer focus, like smart thermostats and electric vehicles. Others are downright wonky, like the ongoing challenges related to the participation of distributed energy resources (DERs) in organized wholesale markets, or how states are trying to modernize the utility business model for the 21st century. One that we’ll look at today is how state policies to achieve 100% clean grids affect resource adequacy – that is, ensuring there is sufficient generating capacity to meet demand at all times.