Advancing technology and evolving economics have changed America’s power system dramatically over the past decade. Now, wholesale electricity markets need a similar transformation in order to respond to the needs of today’s system. Wind energy contributes to electric grid reliability, affordability and efficiency, but could contribute in even great ways with different approaches and assumptions about power system design, capability and operation. 

The North American Electric Reliability Corporation (NERC), the Federal Energy Regulatory Commission (FERC) and each Regional Transmission Organization/Independent System Operator (RTO/ISO), will play a role in designing a market that accurately reflect the reality of today’s system.  

FERC-approved RTO market rules and tariff provisions, and NERC and regional reliability standards and guidelines, were all designed around conventional power plants and grid operations. However, many current rules and standards do not account for inverter-based generation sources, like wind and solar, the fastest growing types of new electric generating capacity in the U.S. 

A changing resource mix means updating market rules

Wind, solar, and battery storage are inverter-based resources, meaning they connect to the grid through power electronics that convert Direct Current to the Alternating Current used on most of the country’s power system. Therefore, wind and solar have different operating characteristics from conventional resources.

These characteristics provide important services that help make the grid more reliable. For example, wind and solar have attributes that allow for faster and more controllable responses for regulating system frequency and voltage and riding through grid disturbances—in essence they can help the grid recover faster.

Changing consumer energy uses and the growth of variable renewable generation are also changing patterns in electricity supply and demand. And as energy storage technologies become more economical, they will change the competitiveness of both renewable and conventional resources, while offering more tools for flexible, reliable grid management. At the same time, the electrification of many energy uses that now consume other fuels directly (e.g., transportation, building and water heating, industrial processes) could increase and transform electric loads in unexpected ways.

Properly valuing services offered by wind and solar

All of these challenges point to the need to develop new, better market rules that allow all resources to compete fairly in markets, increase the flexibility of the grid, and advance reliability and affordability for American families and businesses.  A reliable, flexible grid will continue to include many existing generation resources and facilitate emerging resources such as demand response, distributed generation and energy storage. 

In order to treat all resources more equitably and support reliable and efficient grid operations today and in the future, AWEA supports performance-based markets based on technology-neutral services.  Policymakers should define what services the grid needs to remain reliable and allow generators to compete to provide the needed services at the lowest cost.  Competition should be open to all resources that can provide needed services with no undue barriers to entry.

By contrast, the proposed Department of Energy (DOE) bailout of uneconomic coal and nuclear power plants would disrupt the competitive functioning of the wholesale markets. The plants DOE proposes to save from “premature retirement” are being replaced by more efficient and economic plants that better support reliability.  In addition, NERC, FERC and various grid operators have determined that these plants are not needed to maintain reliability.

Large amounts of wind energy are reliably integrated today

  • Electricity markets promote competition, save consumers money, and improve electric reliability. Parts of the country that use centralized markets today are more reliable, economical, and have greater participation of renewable resources.
  • Wind is capable of providing numerous essential reliability services such as frequency response, voltage and reactive power support, disturbance ride-through, frequency regulation, and operating reserves. Barriers to wind providing these services in the market should be removed to create a stronger, more cost-effective system.
  • High penetrations of wind energy are successfully integrated in places like the Midwest, Colorado, and Texas. At times wind energy provides 60 percent or more of total system electricity, and the grid operators are managing this without issues. Grid operator studies and experience from other countries show that the power system can reliably and efficiently accommodate many times higher penetrations of renewables. 

“Ten years ago, we thought hitting even a 25 percent wind-penetration level would be extremely challenging, and any more than that would pose serious threats to reliability,” SPP Vice President of Operations Bruce Rew said. “Now we have the ability to reliably manage greater than 50 percent wind penetration. It’s not even our ceiling. We continue to study even higher levels of renewable, variable generation as part of our plans to maintain a reliable and economic grid of the future.”