This is an example of the hourly "Always on Capacity Exchange" (AOCE) concept at work, outside of wholesale capacity markets. The AOCE concept was introduced here on Energy Central in 2019 and is designed to acquire the right amount of grid services capacity, at the right time, at the right location for the right duration regardless of weather conditions and seasonal changes, every hour of the operating year - not just the peak demand hour, to maintain a resilient and reliable electric supply to consumers year round, at a just and reasonable cost to consumers and adequate compensation for grid service providers. AOCE was presented to PJM on June 1, 2023
AOCE was also submitted to NEPOOL in 2020 for consideration as a "Pathway Forward"
No generator, with an understanding of game theory and the dynamic forces playing out with the energy transition (see PJM presentation for dynamic factors), would commit their resources in a wholesale capacity market where it will be discounted by an ELCC or rMRI factor (guess), which devalues it's value and is sure to be wrong many hours of the operating year. The rational players will sell their capacity for full price out of market, like Brookfield is doing with Microsoft rather than take the "fire sale" valuations that wholesale markets are offering. The wholesale capacity market designs are disincentivizing generators by slashing their capacity values with these "guessed discount factors" (ELCC and rMRI). It makes no sense to me; ISO's really need people in market dev that understand competitive markets - these "guessed capacity discount factors" are disincentives for generators. Any chance FERC is onto to this little "burp" in wholesale capacity market designs currently being considered?
It really is time to enable green buyers to participate in wholesale capacity markets in a manner that meets their own needs, like this agreement between Microsoft and Brookfield demonstrates - click Read More below.
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