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New England grid operator mulls 'multi-day' market design to boost reliability

The head of the ISO New England said March 14 that the grid operator's current market design quickly will become obsolete as the region continues to add renewables to the bulk power system.

"I think the construct that we've had up to now, which is reserve margins and operating reserves to deal with contingencies within the day, is rapidly going to be … yesterday's construct," CEO Gordon van Welie said at the North American Electric Reliability Corp.'s, or NERC's, fifth reliability summit.

The summit convenes wholesale power grid operators from across the nation every two years to develop a comprehensive report assessing potential areas of risk to the reliability of the nation's electric grid.

Van Welie's comments followed the ISO-NE's March 12 release of new data showing that in 2018, natural gas-fired power plants generated 49% of the electricity produced in New England and 41% of all that region's power, including imports from neighboring regions.

The six-state region is becoming increasingly dependant on natural gas imports despite growing grid reliability risks associated with pipeline constraints during winter cold snaps. In the course of a wide-ranging discussion, van Welie said demand response is useful for short-term contingency responses but is insufficient to address long-term energy deficiencies.

Nevertheless, van Welie said the ISO-NE will need to "work with the hydrocarbon infrastructure we have."

"What's the solution?" he asked. "I'd be naive to say, 'Build more pipelines.'"

Attempts to shore up regional gas capacity to ensure grid reliability have been stymied by court rulings blocking electric utility financing for building new pipelines.

Van Welie noted that unlike countries such as Spain, which controls its own electric transmission and natural gas infrastructure, the ISO-NE must rely on its competitive market design to achieve reliable outcomes. "[Spain is] looking forward and saying, 'What do I think I'm going to get in production from my renewables, so then I can figure out how much fuel to schedule,'" van Welie said. "And the problem we've got is that we don't operate the gas lines, so you've got to try and get that same response through a set of market incentives."

In February, van Welie announced that the grid operator is crafting changes to its competitive wholesale market to compensate generating resources for securing and conserving their fuel. In addition to auctioning long-term capacity obligations, the ISO-NE runs a day-ahead market in which participants purchase and sell electric energy at financially binding prices for the following day.

The grid operator's proposed changes likely will include a "multi-day" market that puts a price on an expected energy deficiency, "so that people will line up more fuel, store some energy, and not burn fuel today that we can use tomorrow," van Welie said March 14.

Van Welie added that he expects other grid operators facing similar challenges to adopt multi-day market constructs at varying rates. "Again, the areas that are moving to rapidly decarbonize or restructure are going to face these energy scheduling problems."