In an interview with StateImpact, senior advisor Mike Hogan suggests that a capabilities market, which values the ability to rapidly change output or flex demand around the energy available from rising shares of variable  renewable resources (e.g, wind and solar), is more appropriate for Texas than the capacity market in place now. “It’s way too soon to say the Texas market has been a failure. It’s probably too soon to say it’s been a success. But certainly a lot of eyes of the world are on Texas right now to see what Texas is going to do in this situation because it’s a big question that a lot of people are struggling with,” said  Mr. Hogan.

Citing experience in New England, which has a capacity market, Mr. Hogan said, “We might just find out Texas actually doesn’t need any new capacity, at least not right now.” Instead, a beyond capacity markets approach, which rewards market participants for their ability to deliver system quality–the right mix of resource capabilities deployed to ensure that supply can be balanced with demand in every moment, is better-suited to meeting Texas’ goal of maintaining enough generation capacity to cover the state’s expected electricity needs at “economically optimal” cost. New England avoided the need for new capacity in part because it allowed demand response resources to compete with new generation in its capacity market.

Read the full article, Texans Use Less Power than Expected, Baffling State Regulators, and listen to the audio here.