The Impacts of US Wholesale Electricity Market Rules and Policies on Clean Energy Goals: A Primer for Local Governments

WRI.org

This paper discusses the evolving rules and policies of wholesale markets that can create barriers to local governments’ achievement of an effective and rapid clean energy transition. The report reviews the current barriers associated with transmission, market rules, and stakeholder processes across these markets while considering how these barriers affect local government clean energy and decarbonization goals, and the role of effective engagement in addressing these barriers.

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DOI https://doi.org/10.46830/wriwp.21.00097

 ENERGY

RegionNorth AmericaMarch 30, 2022

This Working Paper is part of Electricity Market Design within our Energy Program. Reach out to Zach Greene for more information.

Authors

Elise Caplan, Zach GreeneJoseph WombleKatrina McLaughlin and Lori Bird

Local governments across the U.S. are seeking to expand clean energy adoption in support of their climate, decarbonization, and equity goals. Their success will be partly dependent on cost-effective clean energy procurement within Regional Transmission Organization (RTO)/Independent System Operator (ISO) territories. While wholesale electricity markets contain many features that provide an enabling environment for the integration of clean energy resources into the electricity grid, their evolving rules and policies can affect the cost, timeliness, and feasibility of clean energy deployment. This paper explores current barriers and opportunities associated with transmission, market rules, and stakeholder processes across these markets while considering how they affect local government goals.

Key Findings

  • The design of specific market rules and transmission processes and practices can either create barriers to or opportunities for clean energy deployment.
  • Broader participation of stakeholders, including local governments, can benefit efforts to reform wholesale market policies that reflect outdated practices or incumbent interests.
  • By better understanding the barriers to clean energy within RTOs, local governments can strategically engage at the RTO or FERC level to advance their clean energy goals.
  • For deployment of large-scale renewables, transmission access and interconnection queues can be important issues that affect renewable energy project timelines and costs.
  • For local governments focused on distributed generation, developing plans to derive value from FERC Order No. 2222 represents a significant near-term opportunity.
  • Local governments have a variety of engagement pathways available to them to effect change on wholesale market issues.

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