Organized Wholesale Markets
Organized wholesale electricity markets are fundamental to advancing CEBA’s vision and goals. By leveraging the power of wholesale competition, organized wholesale markets produce billions in customer savings annually, they are critical to efficient decarbonization and clean energy integration, and increase customers’ ability to drive the clean energy transition.
CEBA supports ultimately instituting organized wholesale markets in all regions of the country which are designed and implemented consistent with the principles outlined below, operated by an Independent System Operator/Regional Transmission Organization
Download the Principles
Benefits of Organized Wholesale Markets
Well-implemented and designed organized wholesale markets provide significant customer, societal, and environmental benefits:
Organized wholesale markets unlock significant efficiencies and operational benefits, from improved resource capacity factors, reduced reserve margins, dispatch across a broader footprint, regional transmission planning, and least-cost dispatch. This produces billions in customer savings across existing markets today.
Organized wholesale markets centralize dispatch over larger regionalized balancing areas, which gives grid operators control over a more diverse resource mix to call upon to manage supply and demand.
Organized wholesale markets create competitive pressure upon firms to constantly innovate, iterate, and improve offerings to meet evolving customer and grid requirements.
Organized wholesale markets enable generation competition and greater clean energy integration, which translates to more options to meet customer preference for clean energy. Roughly 80% of bilateral corporate power purchase agreements to date have occurred in organized wholesale markets.
Buyers’ Principles on Wholesale Market Design
Unlock Organized Wholesale Market Competition to Catalyze Clean Energy
Well-designed and implemented organized wholesale markets catalyze clean energy resources. And those markets work best when founded on competitive forces, which include ensuring:
- An open and level playing field.
All generation, storage, demand, and other resources should be permitted to provide all services they are technically capable of providing.
- A role for demand participation.
Meaningful avenues for demand to participate, as well as incentives for responsiveness to the time and geographic-specific costs of electricity use, can reduce system costs for customers and incentivize efficient and emission-reducing investments.
- Services that provide actual value to customers.
Customers should only pay for services that provide value. Organized wholesale market design should be based on market pricing, cost causation, and supply and demand principles, which allow a market price for services needed by demand.
Safeguard Market Integrity
Markets best deliver durable benefits when rules, operation, and governance are conducted clearly, consistently, and fairly. This is achieved through:
- Independent and responsive grid governance, management, and operation.
Governance structures should ensure that grid operators are independent and incentivized to achieve reliable, cost-effective delivery of energy services without favoring or discriminating against particular resources or stakeholders..
Transparency across pricing, decision-making and governance improves benefits for all.
- Broad stakeholder engagement and representation.
Careful attention should be paid to ensure that governance provides all participants, including customers, with robust pathways to meaningfully participate in decision-making and the stakeholder process.
Design to Scale to the Future
Markets design should be constructed in recognition of the increasingly flexible, decentralized, and clean energy sector of the future, built to secure:
- Largest efficient operational scale available.
Because markets function more efficiently on larger scales, single larger geographic market footprints are preferred over multiple smaller ones. An independent operator should provide organized wholesale electricity services through competitive organized markets and oversee transmission operation and planning.
- Options for customers.
Markets should have mechanisms that permit customers to meet decarbonization commitments and facilitate efficient bilateral contracting.
- Respect for federal and state public policy.
Markets should facilitate and harmonize with other federal and state policy choices.
- Predictable investment decisions.
Market rules should be designed with durability and predictability in mind. Market rules may need updating over time, but changes should be minimized and avoided without a clear showing of need.
Cost and Emissions Saving from Organized Wholesale Markets
Source: Data compiled by Clean Energy Buyers Association©
To learn more about CEBA’s engagement on organized wholesale electricity markets in the Midwest, see CEBA’s letter to the Midwestern Governor’s Association on the importance of Midcontinent Independent System Operator (MISO) to businesses as they seek to access renewable energy in the region.
At Google, we believe that organized power markets are essential to a well-functioning electricity system. CEBA’s market principles establish a vision for how markets can be organized and governed to provide maximum benefit to customers, including low costs, reliability, and greater uptake of carbon free generation.
Google, Michael Terrell
Facebook wants to see a zero carbon energy future. Well-designed, organized wholesale markets are foundational to getting us there quickly, cost-effectively and in a way that works for customers.
Facebook, Peter Freed
Organized wholesale markets support GM’s overall commitment to protecting the environment as it pursues an all-electric, zero-emissions future by providing a platform that accelerates the deployment of cost-effective clean energy. GM is aware of the responsibility and opportunity to use its scale and resources to drive impact, including driving down costs for all energy customers, and facilitating broad integration of clean technology. The Organized Wholesale Markets Principles showcase how to optimize wholesale markets so that all customers can effectively pursue ambitious clean energy goals.
GM, Rob Thelkeld