Energy

Leading the Way: Expanding Wholesale Electricity Markets to Advance Our States’ Clean Energy Goals

As the Intermountain West experienced record fires and floods in Glenwood Canyon, closing a main interstate highway to traffic for two weeks, and multiple wildfires raged across the Sierra Nevada mountains, forcing entire communities to evacuate, it is impossible to ignore the real and lasting effects of the ongoing climate crisis.

To address this crisis, our states — Colorado and Nevada — are leading the way, adopting ambitious clean energy goals. Specifically, Colorado enacted legislation ensuring at least an 80 percent reduction in greenhouse gas pollution from electric utilities by 2030 and Nevada adopted an ambitious renewable portfolio standard, requiring 50 percent renewables by 2030. The low cost of wind and solar energy allows our states’ utilities to rapidly decarbonize while maintaining affordable and reliable electricity.

However more action is needed to move toward a fully zero-carbon grid. As our states seek to accelerate the reduction of carbon emissions, we are exploring the benefits of multistate regional transmission planning through the development of organized wholesale electricity markets.

Competitive, organized wholesale markets grew over the last two decades and now operate in two-thirds of the country. However, the western United States continues to operate under the same market design that was established nearly 100 years ago, through roughly three dozen loosely connected electrical islands. While our existing network of transmission lines and market structures allowed rapid development of renewables in our states, as we look out to the future, utilizing above 80 percent renewable energy, we need an integrated grid and stronger regional market access.

States from the Pacific to the Atlantic are leading the efforts to address the ongoing climate crisis by modernizing the country’s outdated electricity market design. Earlier this year, Colorado and Nevada enacted legislation that would require transmission utilities and electricity providers to join a Regional Transmission Organization or an organized wholesale market by Jan. 1, 2030, as long as each state finds it to be in the public interest and that it supports achieving each states’ clean energy goals.

Important to Colorado and Nevada, organized wholesale electricity markets not only support grid reliability and promote energy savings for consumers, but if properly structured and governed, they enable increased clean energy onto the grid. A 2020 Congressional report found that “wholesale power markets have contributed to lower electricity prices for consumers and expanded deployment of clean energy. Greater participation in these markets could help accelerate the transition to clean energy.”

Our two states are not the only ones exploring opportunities to develop and expand organized wholesale electricity markets. Oregon and South Carolina enacted legislation directing their respective states to conduct a study to examine benefits, opportunities and challenges posed by the development or expansion of an organized wholesale market within their state. Other states, including Arizona and North Carolina, are also actively discussing organized wholesale markets.

For our states, while 2030 may seem a long way off, we need to begin working to build the technical capacity necessary to ensure that our state energy offices and utility regulators can make informed decisions. As our states implement these recent laws, we would like to collaborate with the Department of Energy’s Office of Electricity (DOE-OE) as they “develop new technologies to improve…the federal and state electricity policies and programs that shape electricity system planning and market operations.”

Additionally, joining forces with the DOE-OE would help ensure that our state energy and regulatory officials and consumers have the necessary tools — including grid, economic and emission modeling — to develop and expand organized wholesale markets into a region of the country where they currently do not exist.  

To support this collaboration, we urge Congress to provide $100 million through the budget reconciliation package to the DOE-OE to implement a voluntary technical assistance program for states to support market expansion and incorporate clean energy into the full range of electric transmission and distribution systems. We need holistic approaches, consistent funding, and state-federal partnerships. 

As our state’s energy officials, we will assist implementing these bills. Moving forward, we would like to collaborate with DOE-OE to make certain that as we expand organized wholesale markets in our states, we are developing markets that make sense for Colorado and Nevada and help us address the ongoing climate crisis.

 

David Bobzien is the director of the Nevada Governor’s Office of Energy, whose mission is to ensure the wise development of Nevada’s energy resources in harmony with local economic needs and to position Nevada to lead the nation in renewable energy production, energy conservation, the exportation of energy and transportation electrification.

Will Toor is the executive director of the Colorado Energy Office, whose mission is to reduce greenhouse gas emissions and consumer energy costs by advancing clean energy, energy efficiency and zero emission vehicles to benefit all Coloradans.

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