In the transition to a low-carbon energy sector, reliability at least cost will be a pivotal issue. This begs the question of whether the energy market is driving the right investments to ensure a reliable, low-carbon transition at least cost. In this presentation, Richard Sedano addresses this question by exploring the intricacies of market design options for integrating higher penetrations of renewable energy.

With the increase in variable renewable energy sources, flexible resources also grow in importance. Mr. Sedano encourages regulators to carefully identify the capability needs—resources with ramping and cycling capabilities—and provide fair compensation for all resources. Inflexibility can lead to higher operating costs, unnecessary investments in reserve generation, and can threaten reliability. He also recommends three pillars for creating an effective, equitable energy market—better shortage pricing, enabling demand response (DR) and DR aggregation, and raising or eliminating price caps.