Senior Advisor Susan Tierney Proposes Market Design for Zero- and Low-Carbon Electricity Grid
January 19, 2021
A growing number of states have embarked on ambitious programs to reduce or eliminate greenhouse gas (GHG) emissions from their power sectors. To achieve these goals, they will need to rely increasingly on low- and zero-carbon power generation resources, which in turn will entail significant upfront costs and low operating costs. This situation has raised questions about how well existing electricity markets can accommodate these objectives, and whether new designs for these markets will be needed.
This topic was the focus of “Market Design for the Clean Energy Transition: Advancing Long-Term Approaches,” a two-day workshop sponsored by the World Resources Institute (WRI) and Resources for the Future (RFF). The conference was an opportunity for experts to discuss proposals for long-term electricity market design and decarbonization. Analysis Group Senior Advisor Susan Tierney presented a paper at the conference titled “Wholesale Power Market Design in a Future Low-Carbon Electric System.”
In her paper, Dr. Tierney, who is on the boards of both WRI and RFF, notes that the current design of several regional energy markets will make it difficult, if not impossible, to achieve states’ clean energy goals. She proposes instead a design for wholesale electricity markets centered on three common elements. She argues that, with some regional variation, such a design can support state goals for GHG reduction without compromising the cost and reliability benefits that these markets have achieved over the past two decades.