Potential clean energy supply market
Report to MRC
PJM Interconnection stakeholders on March 23 reflected on potential electricity market improvements to allow states and others to purchase clean energy resource attributes on a voluntary basis through a new electricity system or market. regional and centralized supply.
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PJM and its stakeholders discussed the possibility of acquiring own resource attributes through the core resource adequacy working group and as part of a broader conversation about updating the rules of the capacity market to accommodate the shift in power generation fuel mix towards resources that produce less or no greenhouse gas emissions.
During a remote meeting of the Markets and Reliability Committee, stakeholders discussed a draft guidance document, or issue charge, focused on creating a new “working group principal on the supply of clean attributes” which would be the responsibility of the committee.
Additionally, staff at the Organization of States PJM, or OPSI, established the OPSI Competitive Policy Achievement Staff Working Group, or CPAWG, to develop and advance proposals that “enable the ‘acquisition of resources in accordance with the political objectives of the States’, according to the burden of issuing drafts.
Own resource attributes are considered attributes of a resource that reflect its “value to decarbonize the PJM network, separate and distinct from energy, ancillary services and capacity attributes,” the document says.
These attributes can include the clean energy, clean capacity, or carbon reduction characteristics of a resource. The core working group discussing this issue will enable coordination between the CPAWG, PJM members and the PJM, the silly question lead said.
The working group would focus on defining own resource attributes in jurisdictions, markets, and attribute-related supply mechanisms, and discuss the goals of market building to enable voluntary supply of property attributes. own resources, as well as options for the product definitions that would be used, depending on the project.
This could also develop representative market design options that could be used for qualitative and quantitative analysis.
Questions that could be explored through qualitative and quantitative analysis could include, but are not limited to:
- Reliability implications
- Cost implications
- Impacts of greenhouse gas emissions
- Jurisdictional implications
Additional work activities of the working group could include the selection of one or more Market Design Solutions for further development that would require Markets and Reliability Committee approval.
Ultimately, the working group would develop market rules for implementation, the draft document says.
The nonprofit Rocky Mountain Institute made the case for a three-year clean energy market at a PJM stakeholder meeting in February. RMI has created a PJM market simulator that compares the status quo with a clean energy futures market and an integrated clean capacity market.
Both proposed market designs are three-year futures markets and therefore connect to the capacity market, although supply in the clean energy futures market would immediately precede the baseline residual capacity auction.
States and other buyers would need to agree on a standardized attribute credit for clean energy, which may require changing state laws, which, while difficult, would be worth the effort, according to RMI.
Joe Bowring, president of PJM’s independent market monitor, Monitoring Analytics, presented at the February meeting with what he described as a simpler approach to clean energy supply.
Bowring suggested that creating a central renewable energy credit market would be a more efficient way to procure clean energy than the current design of bilateral contracts.
PJM could operate a central CER market using a single product definition and a single clearing price, Bowring said. It could be a futures market, but could be adjusted up to real time delivery so market participants know what is being bought in real time. There would be a single REC product for all of PJM that would conform to standard state revolving portfolio definitions, although not all RPS resources would qualify, he said.
For example, although waste incinerators are eligible for inclusion in some state RPS programs, these resources would not be eligible under the design of the REC Central Market because they still generate emissions.
Stakeholders gave the draft emission charge a “first reading” at the March 23 meeting and plan to vote at the next MRC meeting which is scheduled for April 27.