This week, the Massachusetts Attorney General’s office released a white paper documenting the results of a symposium convened last fall to discuss how electric markets should be organized to manage the transition to a “low / no-carbon future.” Policy wonks, such as myself, will find it fascinating reading, though it is moderately dense stuff.
Seriously, it is important to acknowledge that these issues are as complex as they are important. Simply establishing a zero carbon goal for 2050 – or earlier – isn’t going to get us there and keep the lights on at the same time. And the more we commit to electrifying our transportation systems and our buildings, the more important electric market design is going to be.
These issues really are too complicated to summarize in a blog post, so I’ll settle for highlighting what was apparently broad agreement on a number of key points:
- “A real-time energy market, providing price signals identifying the instantaneous value of energy, should be a cornerstone of any decarbonized end state wholesale market design.”
- “There was nearly unanimous support for some form of regional carbon pricing that is priced to help create incentives for compliance with the region’s clean energy goals.” (And that’s economy-wide carbon pricing.)
- The current Forward Capacity Market “is unsuited to the needs of ensuring resource adequacy in the decarbonized end state.”
- The region, i.e., ISO-NE, should implement more effective scarcity pricing.
There’s much more in here, and a lot more to do before real consensus is reached on specific approaches. However, if you believe we need to decarbonize our economy, I suggest you get this report and read it. Why?
Because it’s the energy markets, stupid!