Designing the 21st Century Electricity System

Today’s power system was designed to optimize the outdated resource mix of the 20th century. The utility and regulatory structure we inherited was designed for baseload, intermediate, and peak load-serving conventional power plants. The resource mix of the 21st century looks very different from the past. Its characteristics in both the short-term day-to-day operations time frame and the long-term investment and planning time frame will require different methods and institutions. As the power system has evolved to integrate renewable sources and meet the demands of a 21st century energy customer, a re-envisioned system that enables dynamic management of power to meet demand while accelerating decarbonization is essential to achieving a zero-carbon future.   

Designing the 21st Century Electricity System Report

The Designing the 21st Century Electricity System report is a literature review and meta study that informs why and how we need to evolve today’s power system by building consensus through:   

  1. Comprehensive review of all evidence, research and recommendations to establish a common baseline of challenges for technical discussions among energy and energy market experts. 
  2. Key focus areas for policy proposals to support a 21st century power system
  3. Refined set of market design priorities for electricity customers to engage on with stakeholder groups at the state, regional, and federal levels.

The 21st century power system requires fundamental changes in order to achieve climate action targets, provide affordable electricity to all customers, and ensure reliability and resilience, including:

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Large regional transmission organizations (RTOs) with best practice market design, including fast dispatch and locational and value-based pricing along with hedging and a circuit-breaker mechanism to protect consumers.

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Transmission planning and cost allocation to expand regional and interregional capacity based on appropriate recognition of the future electricity portfolio and the resilience value of transmission.

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Resource adequacy assessments and stress testing of the integrated power, gas, water, and other infrastructure systems.

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Well-functioning energy procurement structures, on a voluntary or mandatory basis, to facilitate long-term contracting, resource adequacy, and lower financing costs for the large amount of new generation needed.

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R&D in two principal areas to bring the costs down and improve the performance of (1) clean long-duration storage sources and (2) high voltage direct current (HVDC) converter stations.

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Reliability and generation performance standards to ensure reliability and resilience.

Importance of Collaboration

“Key high-impact market design elements – if prioritized by planning institutions – can decarbonize 90 percent of our electricity system,” said Rob Gramlich, founder and president of Grid Strategies. “It’s vital that stakeholders across the markets spectrum – markets experts, operators, transmission planning entities, and the federal government – collaborate to optimize existing structures and methods, and partner with large electricity customers to design the system of the future.” 

“The Clean Energy Buyers Institute report is distinct in that it encapsulates the entire menu of market design concepts needed for the sustainable grid of the future. It helps create a roadmap for large electricity customers to work with key stakeholders to translate conceptual solutions into actionable proposals,” said Peter Freed, Head of Energy Strategy at Facebook. “We are in a pivotal moment for the energy industry transition, and we need a re-envisioned electricity system that can help achieve decarbonization goals quickly, reliably and for the benefit of all electricity customers.”