Future Electricity Markets: Designing for Massive Amounts of Zero-Variable-Cost Renewable Resources

Abstract

The increase in variable renewable energy (VRE) on the bulk power system can create both challenges and opportunities, as described throughout this issue of IEEE Power a Energy Magazine. Many regions across the world are starting to approach penetration percentages that were unprecedented during the initial introduction of organized wholesale electricity markets. We have seen that market operators, market participants, and regulators have been up to the task. They have prioritized, designed, and implemented market-design changes to accommodate the variability, uncertainty, near-zero-cost, and emissions-free attributes of these resources. The challenge is to ensure that electricity is provided reliably and economically, with compatible incentives to compensate the parties that contribute to doing so. Around the world, markets are experiencing increasing levels of renewables, and ongoing design enhancements are being discussed. Market operators can borrow design characteristics from each other and learn which designs may or may not work. However, as an industry, we are starting to look past these modestly high penetration percentages of VRE. We are starting to ask what a market would look like if the entire energy supply for a particular interval were supplied with 70, 80, 90, or 100% renewable resources.