1. Characteristics of Regional Power Markets
June 16, 2003
Harrisburg, PA
Website:

2. Market Issues Regional Power Markets – Some Concerns
Market power
Price spikes
Resource adequacy
Locational differences
Long-range market efficiency
System Planning and Expansion, including distribution system issues and challenges for the future (environment, diversity, other public interests.)
Security and Reliability

3. Distributed Energy Resources
DER is part of the big picture of electric utility investment
DER can solve/prevent system problems
State regulation, wholesale regulation, and wholesale markets can be organized to make the most of DER
DER happens at the retail level
Recognizing value

4. DER Values Values of distributed energy resources Reduced volatility
Reduced costs running cost
Reduced investment cost (if credit is allowed)
Improved environment
Cleaner than average (need to assess local margin)
Back out spinning reserve
Delay large asset construction (technology may provide better “big system” solutions later)
Improved security
Wouldn’t it be nice if a system operator could operate the same market, with the same loads and the same generators, year after year. The system would have its random influences of weather and forced outages. But the key forcing function of reliability concerns is sales and demand growth, and the faster the growth, the more difficult the system operator’s task, and the more volatile the market becomes.

5. Value Disconnect
Who will compensate the distributed generator for providing these values?
There are free-riders

6. Considerations Market Power – Needs active demand side
Price Spikes – Promoted by demand growth
Capacity – Customer resources may cost less and be less intrusive
Improve energy – environment connection
Efficiency – Regulation can help direct capital to most valuable investments
Need a regional perspective to attract customer resources beyond those that emerge from state regulation. Is that the ISO/RTO? Does a Multi-state Entity need to cast public interest influence on the market? And can this influence really direct investment to high value places in the market?
Can customer resources be regional resources?

8. The Market Value of Price-Responsive Load

9. Source: Optimal Energy

10. System Security Not too distinct from storms and failures
New contingencies
Resilient Network
Single facilities vulnerable
Assure minimal effect on customers in the event a facility is taken out
DER serves local loads
Lighter system loads than would otherwise exist reduces vulnerability