Even though there’s more evidence than ever that wind and solar are now the least expensive forms of electricity in the US, growth of the clean energy technologies is still hindered. A new report from the Wind Solar Alliance (WSA) found that outdated wholesale market rules are preventing further growth of the technologies and keeping electric prices higher than they could be.
The new report, Customer-Focused and Clean: Power Markets for the Future, produced by Grid Strategies for WSA comes out shortly after two new studies showing that solar and wind are the cheapest forms of electric generation. One, from Lazard, showed that they’re the cheapest form of electric generation in the US—even cheaper than using existing natural gas and coal-fired power plants. The other, from the University of Austin at Texas, showed that in an increasingly larger portion of the US, they’re now cheaper than other sources of electricity.
The WSA report is focussed on wholesale markets and regional transmission organizations (RTOs) like PJM and MISO. The report said they are still using rules that were developed in the 1990s and early 2000s, before wind and solar dropped in price and made up an increasing portion of electric generation in states.
The report observed that over the past decade wind and solar power have significantly changed the US energy supply and increased approximately 500 percent during that period. Still, the operators are part of that trend. For instance, PJM’s recent auctions saw big gains for wind and solar power.
“The report demonstrates the numerous ways that existing market structures, particularly in PJM and MISO, are biased in favor of older, large, slow-to-react resources,” said John Kostyack, WSA executive director. “Although wind and solar power are beating all other sources on cost in many regions, grid operators limit their deployment by failing to utilize them for reliability services such as ramping and frequency regulation. It’s time for market operators to ensure these clean, low-cost technologies are appropriately recognized and rewarded for the reliability services they can provide.”
The report also comes as these grid operators are working on redesigns of their electric markets and operating procedures and proposes reforms to better meet customers’ and regulators’ demand for clean electricity.
“This report demonstrates some of the barriers that solar and other clean technologies face in markets designed for older resources, and helps provide a roadmap for future reforms that can both attract and retain sources of flexibility that are beneficial for the grid and consumers,” said Sean Gallagher, Vice President of State Affairs at the Solar Energy Industries Association.
As the RTOs consider new rules, WSA is recommending they make changes to make markets that are flexible, fair, far, and free. The will include changing rules to reflect the newer, more flexible and inexpensive generating and energy reliability capabilities of renewables and energy storage. It found that services like frequency stabilization and regulation, ramping, voltage regulation, disturbance ride-through, and 10- or 30-minute reserves can be provided as well or better by modern renewable energy sources and energy storage sources than by older electric generation sources like fossil fuels.
The report recommended that RTOs allow renewable energy resources to participate in all reliability services markets and respect state’s choices on renewables without mitigation. It also recommended that RTOs encourage more flexible resources to participate through open participation rules and efficient market pricing while reducing inappropriate pricing for non flexible electric generating sources.Tweet