Evolution of Wholesale Electricity Market Design with Increasing Levels of Renewable Generation

This paper summarizes the impacts of projected increases in variable renewable generation on energy markets, ancillary service markets, and forward capacity markets. In light of these findings, the paper examines two important issues on market design: first, whether energy plus ancillary service markets provide adequate revenue to cover all system costs, and second, whether current market designs are sufficient to ensure the evolving needs of the bulk power grid are met. The paper concludes that it is possible that markets which properly reward flexibility can meet reliability and system planning and operation needs.