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White Paper

2019 Insights: Just in Time Capacity Acquisition through an Always on Capacity Exchange (AOCE)

This item is part of the Predictions & Trends - Special Issue - 01/2019, click here for more

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Wholesale Capacity Markets saw a buildup of generating resources to meet forecasted peak demands that never materialized and have been declining for the past few years. Capacity market requirements are now following the downward trend seen in peak demand, by reducing the amount of capacity being acquired each year. This results in a significant amount of excess existing capacity, that was acquired in just the past few years, sitting idle, costing electricity consumers as much as $1 Billion dollars over a two year period in capacity payments. This paper is intended to stimulate discussions for the development of an industry standard "just in time" capacity exchange that reduces consumer cost, makes capacity acquisition more efficient and puts these existing resources to work supplying capacity where and when it's needed. A distributed ledger/blockchain solution may be appropriate for this purpose.

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Richard Brooks's picture

Thank Richard for the Post!

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Discussions

Matt Chester's picture
Matt Chester on Jan 17, 2019 10:24 am GMT

This is a really great paper full of insights, Richard-- thanks for sharing!

What's your take on how deliberate over-building and energy storage might play into such 'just in time' markets? Is building up more intermittent renewable generation sources, for example, an investment that makes sense in this context? 

Richard Brooks's picture
Richard Brooks on Jan 17, 2019 2:42 pm GMT

Thanks, Matt. Great questions. The AOCE concept can accommodate intermittent renewable resources, in fact I would posit that this type of an exchange, where environmental charactersitics, operating performance, location and other factors enable buyers of capacity to choose exactly the "type" of capacity they want to acquire, as opposed to today's markets which treat all capacity equally. I recall a recent article where ISO New England's CEO, Gordon van Welie stated “The existing market has one objective, which is to provide reliable electricity at the least possible cost,” van Welie says. “That’s all this market does. It doesn’t incorporate an environmental objective.”

The AOCE addresses the reliability needs along with environmental objectives, as well as many others i.e. ramping performance, et al.

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