- Sep 7, 2019 3:16 pm GMT
- 627 views
This article exposes the very attitudes that are preventing the electricity establishment from acknowledging the powerful and momentous forces that are chipping away at the foundation of the status-quo and why existing capacity markets are unsustainable. The author identifies two issues affecting today's markets: " (1) how meaningful is a real-time market that frequently clears at a price of zero, and (2) how can a market with prices that hover around zero attract the investment needed to maintain adequate supply?" Both of the issues cited by the author are indeed actual outcomes from today's standard market designs (SMD) in use across ISO's. Given his critique of these market outcomes I find it hard to understand the authors conclusion that " none of these challenges suggests that we should radically move away from the standard market design that all U.S. ISOs currently employ."
The author is silent on some of the most powerful forces which are diminishing the effectiveness of existing auction based standard market designs. Leading indicators that real change is needed in today's markets is observable from the actions of Green Energy Buyers, State Energy Targets and other out of market activities (i.e. fuel subsidies). Consumers and Generators are taking matters into their own hands by establishing capacity exchanges (Power Purchase Agreements) that enable parties to secure long-term energy supply on terms that are agreeable to the transacting parties. The author makes no mention of this momentous force that's affecting SMD market outcomes, which can only be characterized as a glaring oversight or "cognitive dissonance" by the author, in my opinion.
I respectfully disagree with the authors analysis and conclusion and suggest that he "factor-in" the behaviors and actions of electricity consumers to control their energy destiny as part of any future analysis of market design. I do recommend reading the authors article as a means to understand some of the entrenched attitudes that are impeding progress toward a market design that is inclusive of consumer desires and State Energy targets.