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Pricing Negawatts

DR design flaws create perverse incentives.

Demand response isn’t energy: It’s a separate product, traded in a separate market. Policy trends, however, are moving toward equal treatment for demand and supply resources in electricity markets. Does treating DR as energy inflate its value and create perverse incentives?

Reconsidering Resource Adequacy, Part 2

Capacity planning for the smart grid.

The one-day-in-10-years criterion for capacity planning is coming under scrutiny. Making the most of the smart grid and demand management requires a less conservative approach. Markets and prices rather than administrative rules will ensure resource adequacy in a more efficient way.

Mandating Federal Renewables

The importance of getting the REC markets right.

The feds are ready to replace disjointed state policies with a coordinated national renewable energy credit market. Treating low-carbon energy consistently will promote investment in renewables.

3Rs for Power And Demand

Dynamic monitoring and decision systems maximize energy resources.

The operations and planning rules for integrating variable resources aren’t the same across the electric power industry in the United States at present. Opinions are somewhat divided about what these should be, as well as the assessments of potential benefits and costs. In order to support sustainable deployment of variable resources at value, it’s critical to identify major sources of potential problems and to proactively design and implement a systematic framework for managing their unique characteristics as reliably and efficiently as possible.

Smart Grid: Wholesale Market Realities

Granular customer data will revolutionize megawatt markets.

Advanced metering and other smart technologies will allow more granular monitoring of conservation efforts, making them highly predictable for resource planning and system dispatch. Eventually, the smart grid will erase distinctions between wholesale and retail markets.

RTOs and the Public Interest

Defining the mission when the consumer plays second-fiddle to the needs of the market.

Six months back, when ISO New England was mulling over various reforms that FERC had mandated last fall in Order 719 for the nation’s six regional transmission organizations and independent system operators (RTOs and ISOs are interchangeable terms in this column), the ISO refused point blank to include in its mission statement a proposal by stakeholders that it should operate the bulk power system at the “lowest reasonable cost.”

Carbon and the Constitution

State GHG policies confront federal roadblocks.

So far, states have taken the lead in carbon-control strategies. These state actions, however, could lead to constitutional conflicts—as recent court battles demonstrate. Only the U.S. Congress can regulate interstate trade, so states must step carefully in controlling carbon leakage.

Titans of Transmission

ITC and AEP jockey for the lead in building the grid of tomorrow.

On February 9, a group of the nation’s major grid system operators released a study estimating the nation’s electric industry sector needs to spend some $80 billion—more than 10 times the size of that portion of the Obama stimulus package directed specifically at transmission construction—in order to achieve a 20 percent retail penetration for renewable wind energy in just the Eastern Interconnection.

Dynamic Pricing Solutions

How to account for lack of strong price signals. A hard year puts deregulation to the test.

The greatest benefits of time-of-use pricing come from avoided costs of peaking power and T&D capacity—but only if hourly retail prices accurately model the true costs of delivered energy, including scarcity rents. Restoring the missing price signals will encourage economic investments in AMI, conservation and system capacity.

Optimizing Demand Response

A comprehensive DR business case quantifies a full range of concurrent benefits.

The benefits of DR remain difficult to quantify. Building a comprehensive business case requires a shift in how policy makers think about DR in order to understand its real possibilities.