US grid designed for 'yesterday's technologies'

UNITED STATES: Outdated wholesale market rules in the US are preventing full participation by renewable energy, including wind power, according to a new report by consultancy firm Grid Strategies.

The US grid is designed for thermal generators and provides barriers to renewable sources

It’s as if in music streaming, content on vinyl records were allowed greater access whereas an MP3 format was discouraged, John Kostyack, executive director of the Wind Solar Alliance, said.

This lack of a level playing field exists despite record-low prices and increasing customer demand for wind and solar, the Customer-Focused and Clean: Power Markets for the Future report, which was commissioned by the alliance.

The study examines the two largest US grid operators, PJM and MISO, which handle many of the US’s wind projects. Both grid operators are currently reviewing their market design.

"The report demonstrates the numerous ways that existing market structures, particularly in PJM and MISO, are biased in favour of older, large, slow-to-react resources," said Kostyack.

"It’s time for market operators to ensure these clean, low-cost technologies are appropriately recognised and rewarded for the reliability services they can provide."

The report focussed on the MISO (orange) and PJM (yellow) networks 

The researchers found that the operators are not using wind and solar enough for ramping and frequency regulation.

For example, MISO bars dispatchable renewables from providing frequency regulation, spinning reserves, and supplemental (or non-spinning) reserves.

In fact, the authors said concepts such as "inertia" and "spinning reserve" reflect attributes of conventional electricity generators, and are not truly services that provide reliability.

Contrastingly, wind and solar plants with wholly electronic controls are actually able to provide regulation services with greater speed and accuracy than conventional power plants.

In addition, real reliability services — such as frequency stabilisation and regulation, ramping, voltage regulation, disturbance ride-through, and 10- or 30-minute reserves — can be provided by modern wind, solar, storage, and demand response resources, the report contended.

"The key to operating reliably and efficiently through the resource shift taking place is to make sure market design appropriately compensates flexibility, and eliminates undue compensation for inflexible resources," said Rob Gramlich, president of Grid Strategies and a co-author.

Michael Goggin, also of Grid Strategies, said that such market reform would enable renewables to achieve 70-90% penetration, as long as the report’s recommendations were implemented along with better transmission, for example.

Flexible, fair, far & free

The authors said electricity markets should be flexible, fair, far — with a broad geographic span — and with free access in order to accommodate higher amount of renewable energy.

A flexible market and power system can respond and adapt quickly to changes in uncontrollable or non-dispatchable factors such as consumption, wind speed, or forced generation outages and transmission disruptions.

Modern grid response capabilities need to be faster and cover more megawatts than in the past, the report said. Such a faster response can be enabled by modern technology.

A fair market treats all customers and resources evenly; it is designed around service requirements and performance capabilities.

It is fuel-neutral and technology-agnostic, and compensates based on metering of services delivered, rather than subjectively determined resource capabilities or attributes.

A far market would be wide reaching to maximise the efficiency benefits of supply and demand diversity.

Finally, a market offering free access would ease customer choice and would not raise barriers to market entry and exit.

It would also support customers’ selections and public policies with regard to balancing goals.


Specific recommendations for energy market reforms included: ensuring market prices reflect the value of reliability; allowing multi-day unit forecasts; pricing the inflexibility costs of conventional generators; ensuring detailed generator bid parameters; reducing operational over-commitment of conventional units; and encouraging improvements in renewable energy forecasting.

Meanwhile the report suggested reliability services could be reformed by: removing barriers to renewable energy providing operating reserves such as frequency regulation; the adoption of primary frequency response markets; and allowing renewables to provide and set price for all reliability services.

Finally, capacity market reforms should include: ensuring capacity markets reflect renewable resources’ true capacity value; allowing storage participation in capacity markets; ensuring conventional generators are not awarded excess credit relative to renewable resources; and allowing hybrid projects for purposes of meeting market rules.

Gramlich said all markets — from Spain and Ireland to Australia — are facing a similar transition and must develop tools to attract flexibility. "None of the markets define all the services very well yet," he said.

"The details matter and they need some work."