Search Climate Insights Directory

This research paper proposes the creation of Organized Long-Term Markets (OLTMs) to support the rapid deployment of clean energy resources in restructured wholesale electricity markets. The author argues that current market designs—including energy-only, capacity, and hybrid models—fail to provide the long-term investment signals and liquidity needed for grids with high penetration of variable renewable energy (VRE). The proposed OLTM acts as a derivative market that standardizes long-term energy delivery contracts, allowing producers to recover capital expenditures and consumers to hedge against price volatility while remaining linked to real-time spot market pricing.

The research paper proposes a wholesale electricity market design to facilitate rapid decarbonization by combining a centralized regional spot market for short-term efficiency with decentralized forward procurement for long-term investment. The authors argue that this approach minimizes the risks of over-investment and political interference associated with centralized capacity markets while leveraging public policy instruments to internalize carbon externalities.

This report by Energy Innovation examines the need to modernize wholesale electricity market designs to accommodate the transition from large, fuel-burning power plants to decarbonized resources like wind, solar, and energy storage. It identifies the limitations of the current 'marginal cost dispatch' paradigm and proposes ten principles for future markets, while outlining two primary pathways for evolution: a 'Robust Spot Market' approach and a 'Long-Term Plus Short-Term Markets' approach.

This research paper by the Climate Policy Initiative argues that existing electricity market designs, based on short-term marginal costs, are ill-suited for a low-carbon transition dominated by variable renewable energy (VRE). The authors propose a bifurcated market model—separating a long-term 'energy market' for commodity production from a short-term 'delivery market' for flexibility—to lower financing costs for capital-intensive assets and provide clearer incentives for flexibility resources like batteries and demand response.