The last decade has seen the remarkable emergence of renewable energy as a major player in American electricity markets. Long considered marginal, drastic declines in the price of wind and solar power have led to a rapid expansion of those technologies. Where I sit in Texas, for example, wind power currently vies with coal  to be the second largest source of electricity. When one looks not simply at the current generation mix but at new generation, the success of wind and solar is even starker. This isn’t simply a matter of subsidies (which have been around for decades) but signals real progress which renewable energy technologies have made.
The widespread increase in renewable energy does pose some new challenges to the electric grid. Because wind and solar are intermittent, they work best as a part of a larger system which can match the rise and fall in electricity supply that renewables provide. For example, if in one area wind tends to blow more in the morning while in another area wind is more likely to blow in the afternoon, then you will be able to use more wind energy overall if both areas are part of a single wholesale electric market than if each is separate. And this is not only good for the environment; it can also make electricity cheaper. Much cheaper .
In much of the country, states have banded together to form Regional Transmission Organizations (RTOs) to increase the geographic scope of their wholesale electric markets. Other parts of the country that lack a RTO have developed other alternatives.
Clean energy advocates are increasingly aware of the important role that markets can play in the growth of renewable energy. This week, the Renewable Energy Buyers Alliance (REBA), an association representing over 100 large U.S. energy buyers, unveiled a new list of ten principles  to guide the expansion of wholesale power markets. According to the principles, a wholesale electric market should have the following features:
- An open and level playing field.
- A role for demand participation.
- Services that provide actual value to customers.
- Independent and responsive grid governance, management and operation.
- Broad stakeholder engagement and representation.
- Largest efficient operational scale available.
- Options for customers.
- Respect for federal and state public policy.
- Predictable investment decisions.
The new REBA push is part of a growing consumer-led movement which links clean energy with consumer choice in electricity. In the past, many in the environmental movement supported the monopoly utility regulatory model because it was simpler to have a single entity it could attempt to lobby, and consumers couldn’t always be trusted to make the “right” choice. But it’s increasingly become clear that it is not incumbent utilities (which often have legacy commitments to high emissions plants), but rather consumers themselves who are the most effective advocates of clean energy. The incumbent supplier model has a mixed record of success at best, and can lead to some pretty unsavory results . Clean energy succeeds not when it is viewed as something that has to be forced on people, but when it is something that people want, not only for the environmental benefits but for the cost and price predictability advantages that it increasingly provides.
Image credit: hrui
- “wind power currently vies with coal”: https://www.utilitydive.com/news/texas-wind-poised-to-outstrip-coal-generation-with-87-twh-in-2020-report-p/563481/
- “Much cheaper”: https://energyinnovation.org/2020/08/25/southeast-wholesale-electricity-market-rto-online-data-explorer/
- “ten principles”: https://rebuyers.org/programs/market-policy-innovations/organized-markets/
- “pretty unsavory results”: https://www.rstreet.org/wp-content/uploads/2020/09/Final-No-205-electric-competition-updated.pdf