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Key Takeaways: Achieving Low-Cost Decarbonization Through Power Markets, Infrastructure and Grid Operations

McDermott hosted Rob Gramlich, Founder and President of Grid Strategies, LLC, on July 16 for a discussion of low-cost decarbonization strategies for the electricity sector. We framed the discussion around 2020 US Presidential Candidate Joe Biden’s recently announced goal of getting to zero carbon emissions from the electricity grid by 2035. Here are three takeaways from our conversation: 1. Three Areas of Change. Rob highlighted three areas where improvements can be made to substantially increase the deployment of wind and solar resources: Power markets, grid infrastructure and grid operations. With respect to power markets, Rob emphasized that regional transmission organizations (RTOs) can play a bigger role in achieving very fast dispatch over large geographic areas. With respect to infrastructure, he emphasized that new transmission lines will be required to reach the best wind and solar resources, but also that many of those new lines can be built on...

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Highly Anticipated FERC Rule Removes Barriers to Electric Storage

On February 15, the Federal Energy Regulatory Commission (FERC) issued a much-anticipated order designed to remove barriers to electric storage resource participation in organized wholesale electricity markets. The order—dubbed Order No. 841—creates new rules that require each regional transmission operator (RTO) and independent system operator (ISO) to revise its tariff to establish a “participation model” consisting of market rules that facilitate the participation of electric storage resources in the RTO/ISO markets. Order No. 841 will make it easier for electric storage resources to participate in wholesale power markets and access the accompanying revenue streams. Each RTO/ISO must file its tariff changes to implement Order No. 841 within 270 days (i.e., by November 12, 2018). FERC will review the filings and must approve all tariff changes. Each RTO/ISO will have an additional one year from the filing date to implement its new tariff provisions. FERC...

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Divided Court of Appeals Panel Vacates FERC Order 745 on Compensation of Demand Response

FERC’s Order No. 745 requiring independent regional grid operators  (RTOs and ISOs) in limited circumstances to compensate providers of state-authorized demand response services in the same amounts that they compensate electricity generators was vacated in a May 23, 2014 decision by the majority of a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit in Electric Power Supply Association v. FERC.  Siding with challengers — principally electricity generators — Judge Brown writing for the two-judge majority held that FERC exceeded its Federal Power Act (FPA) jurisdiction over electricity wholesales and intruded impermissibly on retail jurisdiction reserved to states by “lur[ing]” retail customers into the wholesale markets of regional grid operators with “rich” incentives to reduce retail purchases and consumption whenever a net benefit accrues to the wholesale market in the form of lower market-clearing prices in the wholesale market.  Even if...

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