Wind Solar Alliance Report Quantifies Impact Of Electricity Market Reforms

A new report from the Wind Solar Alliance (WSA) finds that electricity market reforms in the Midwest, Great Lakes and Mid-Atlantic could end up saving consumers more than $6.9 billion every year.

Consulting firms Grid Strategies and Milligan Grid Solutions co-authored the report, Quantifying the Consumer Benefits of the Market Reforms in the Report “Customer Focused and Clean,” for WSA.

It concludes that the average residential customer in the PJM region, which includes the Mid-Atlantic and Great Lakes, could save up to $47 annually with significantly more wind, solar and storage on the grid. Consumers in the Midcontinent Independent System Operator (MISO) region, which includes 15 states and the Canadian province of Manitoba, could save up to $48 annually.

“Consumers are looking for clean, affordable and reliable energy that will keep their monthly electricity bills low,” says Kristin Munsch, deputy director of the Illinois Citizens Utility Board and president of the Board of the Consumer Advocates of the PJM States Inc. “There is great potential to achieve those goals with the cost-effective integration of wind, solar and storage plants into our wholesale power markets.”

These projected savings quantify of some of the primary market reforms recommended in another WSA report, Customer Focused and Clean: Power Markets for the Future, released last November.

“Enhancing the current market structures to encourage more flexible, efficient markets that also reflect the current public policy choices of state legislatures could save billions for consumers,” says Michael Milligan, president of Milligan Grid Solutions and report co-author. “The existing wholesale power market rules were largely developed for slower-to-react, ‘conventional’ generators, such as coal and nuclear plants. This report demonstrates the benefits of updating the rules to better accommodate the characteristics and potential contributions of newer sources of low-cost generation.”

Among the reforms considered, increasing power system flexibility through market structures is the most beneficial for consumers at higher penetrations of renewable resources, the report says.

“There are currently artificial barriers that are preventing the full participation of renewables, storage and other new technologies in the PJM and MISO markets,” notes Michael Goggin, vice president of Grid Strategies and report co-author. “Providing consumers with a real-time price signal that allows them to adjust their demand, rewarding flexible resources for their capabilities through improved market design, and allowing renewable and storage resources to participate in reliability services markets would yield the greatest consumer benefits.”

The report also found potential cost-savings from improving coordination across the seams between ISO markets and through limiting the self-scheduling of generators.

“The suite of reforms proposed in this report show that the current market structures are not reflecting and incentivizing the full capabilities of the low-cost wind and solar resources available today,” says Kevin O’Rourke, interim executive director of WSA. “We hope that regulators and market participants will use the findings from this report to advocate for more consumer-focused market structures going forward.”