A ROADMAP FOR FINDING FLEXIBILITY IN WHOLESALE MARKETS

The document examines the challenges RTOs face as the U.S. grid shifts from large central generators to variable renewables and distributed energy resources (DERs). It argues that 'flexibility'—the ability to respond to changes in supply and demand across various timeframes—is essential for reliability and cost minimization. The authors recommend eliminating self-scheduling for all generators and imports, preserving negative pricing, and improving the coordination between natural gas and electricity markets. It also suggests creating technology-neutral products that value specific capabilities, such as ramping and frequency response, and highlights successful examples like MISO's Dispatchable Intermittent Resource category and CAISO's Flexi-Ramp product.

• Self-scheduling by power plants reduces the amount of flexibility available to grid operators because these resources do not respond to market price signals. For example, a CAISO study indicated that making all resources dispatchable could increase down ramp capability from 0-3,000 MW to 2,000-5,000 MW on most days.
• MISO's Dispatchable Intermittent Resource (DIR) category successfully integrated variable wind resources into economic dispatch, virtually eliminating manual curtailments by requiring wind plants to follow dispatch signals and bid into markets.
• High levels of self-scheduled imports can lead to over-generation and the curtailment of renewable energy. In CAISO, reducing self-scheduled imports from 100% to 75% resulted in nearly a 75% reduction in over-generation.
• Negative pricing in energy markets is critical for efficient dispatch and provides a necessary investment signal for energy storage to manage over-generation and ramping.
• Poor coordination between natural gas and electricity markets limits flexibility. Many RTOs post day-ahead electricity commitments too close to or after the natural gas nomination deadline, leaving generators insufficient time to optimize gas purchases.
• Arbitrary restrictions on resource participation, such as PJM's rules for behind-the-meter battery storage or ERCOT's minimum load requirements for demand response, prevent the grid from utilizing available flexibility.
• Market products should be technology-neutral and focused on the desired service rather than the technology. PJM's Regulation D (RegD) product initially succeeded by accommodating fast-responding resources like batteries, but later changes that forced them to behave like thermal units undermined its value.
• ERCOT uses high scarcity pricing (up to $9,000/MWh) and an Operating Reserve Demand Curve (ORDC) adder to create strong financial incentives for flexible resources to be available during system stress.
• CAISO's Flexi-Ramp product ensures adequate ramping capability to handle deviations from forecasted load and compensates resources for the opportunity cost of providing that ramping.
• The growth of inverter-based generators (wind and solar) reduces the amount of endogenous frequency response (inertia) on the grid, creating a need for new market products to pay for these reliability services.

APA

Orvis, R., & Aggarwal, S. (2017). A ROADMAP FOR FINDING FLEXIBILITY IN WHOLESALE MARKETS. Energy Innovation. https://energyinnovation.org/wp-content/uploads/A-Roadmap-For-Finding-Flexibility-In-Wholesale-Power-Markets_FINAL.pdf

Chicago

Orvis, Robbie, and Sonia Aggarwal. A ROADMAP FOR FINDING FLEXIBILITY IN WHOLESALE MARKETS. Energy Innovation, 2017. https://energyinnovation.org/wp-content/uploads/A-Roadmap-For-Finding-Flexibility-In-Wholesale-Power-Markets_FINAL.pdf.

Wikipedia

{{cite report |last1=Orvis |first1=Robbie |last2=Aggarwal |first2=Sonia |title=A ROADMAP FOR FINDING FLEXIBILITY IN WHOLESALE MARKETS |publisher=Energy Innovation |date=October 2017 |url=https://energyinnovation.org/wp-content/uploads/A-Roadmap-For-Finding-Flexibility-In-Wholesale-Power-Markets_FINAL.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{orvis2017roadmap, author = {Orvis, Robbie and Aggarwal, Sonia}, title = {{A ROADMAP FOR FINDING FLEXIBILITY IN WHOLESALE MARKETS}}, institution = {Energy Innovation}, year = {2017}, month = oct, url = {https://energyinnovation.org/wp-content/uploads/A-Roadmap-For-Finding-Flexibility-In-Wholesale-Power-Markets_FINAL.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }