Power System Planning: Who gets paid (and how much) for backing up the system?
Bruce W. Radford is editor-in-chief at Public Utilities Fortnightly. Send a message to firstname.lastname@example.org.
Ed Krapels—the electric industry consultant from Boston who helped dream up the initial idea of a monster, undersea direct-current cable (the Neptune project) to bring cheap Canadian power south to the Eastern Seaboard of the United States—thinks he knows now why the merchant transmission business is in the toilet.
“Independent transmission projects,” he says, “need to be paid for their services to the capacity market.”
Krapels believes that private-grid developers need the same incentives that regulators in the Northeast have OK’d for power plants. Some plans would pay financial transmission rights (FTRs) in exchange for participant funding by grid investors, but Krapels says that’s not enough.
“Confining transmission projects to FTR payments,” he explains, “is like confining generators to energy-only payments.”
These words—from a press release that Krapels circulated by e-mail in early May through his firm, Energy Security Analysis Inc. (ESAI), of Wakefield, Massachusetts—speak volumes on what’s happening in today’s power industry, and on what the independent system operators (ISOs) and regional transmission organizations (RTOs) are trying to achieve, not only for merchant-grid projects but for merchant generation and system reliability.