Establishing Multilateral Power Trade in ASEAN |
International case studies |
The measurable value of markets in the PJM region
The value of markets in the PJM region has led to the following empirical savings to customers.6
USD 2.3 billion per year is saved resulting from dispatching power plants based on their individual economic bids over a very large footprint and the ability of customers to obtain power from that wider pool of resources.
Over 32 000 MW of new cleaner generation replaced an equivalent amount of older generation that retired because of new environmental requirements. This transition was accomplished with cost savings to customers as the risks of retirement as well as new installations were borne entirely by private investors rather than customers.
Due to the competition drivers that forced the retirement of older, more inefficient generating units, annual emissions within the PJM footprint have declined by 30% over the last decade.
Local economic development has been enhanced as the ability to monetise investment in a generating plant through the market attracts new builds, which enhances local jobs and local economic development. Just in the PJM states of Pennsylvania and Ohio alone, there has been over USD 17 billion in investment in the local economies through the development of new, cleaner generation and demand response resources.
The ability to demonstrate and monetise the cost of new investments has led to the PJM region serving as a test bed for innovative new technologies. PJM became the test bed for one of the world’s largest battery installations at Laurel Mountain, West Virginia, and continues to work with developers on using innovative technologies such as electric vehicles and electric water heaters to provide valuable services to the grid such as frequency regulation and demand response.
ISO New England
The ISO New England electricity market has evolved organically since the six New England states formed the New England Power Pool in 1971 to co-ordinate regional dispatch. Today, the market is among the most advanced in the world, with active trading by hundreds of participants within New England as well as substantial trading with an external US market (New York Independent System Operator) and several Canadian provinces.
Market overview
New England, in the northeast of the United States, is made up of six states: Maine, New Hampshire, Vermont, Massachusetts, Rhode Island and Connecticut, which were among the earliest English colonies in the country. New England is bounded on the west by New York state, which was originally settled by the Dutch; by Canadian provinces on the northwest (Quebec, a former French colony) and northeast (New Brunswick, a former English colony); and on the east by the Atlantic Ocean.
The power mix is dominated by gas-fired generation, with some coal and oil (together 71%), followed by nuclear power (14%), hydropower (10%) and non-hydro renewables (5%).
6 This section was based on PJM (2018b).
56
Establishing Multilateral Power Trade in ASEAN |
International case studies |
Figure 36. New England overview and context
Capacity mix
14% |
10% |
|
Hydro |
5% |
|
|
|
|
|
|
|
|
|
|
Thermal |
|
|
|
|
|
|
|
|
|
|
|
Renewables |
|
|
|
|
|
|
|
|
|
71% |
|
Nuclear |
|
|
||
|
|
||
|
|
|
Indicator |
Value |
Population millions |
15 |
GDP/capita USD 000s |
69 |
|
|
# States, core market |
6 |
Electrification rate |
100% |
|
|
Peak demand MW |
28 817 |
Installed capacity MW |
34 000 |
|
|
Note:This map is without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.
Economic Analysis (2018), GDP by State; ISO New England (2017), 2017-2026 Forecast Report of Capacity, Energy Loads and Transmission.
New England has a regional electricity market covering six states in the northeastern United States. Most of its generating capacity is thermal, primarily fuelled by natural gas.
ISO New England is part of the Northeast Power Coordinating Council (NPCC) region of the North American Electric Reliability Corporation (NERC). NERC establishes grid codes and performs reliability assessments for Canadian and US power systems, as well as for a portion of northern Baja California, Mexico.
Market structure
Energy policy, planning and regulation for the New England power market are the responsibility of multiple layers of federal, state and regional entities. For example, in terms of policy, there are tax incentives for renewable generating technologies under federal law, and states may have renewable portfolio standards that mandate that specific proportions of demand be supplied by renewable technologies.
The New England Power Pool (NEPOOL), which is the predecessor organisation to ISO New England,7 is now the industry association of members in ISO New England, and in this capacity acts as a kind of regulatory institution for ISO New England, addressing areas not regulated by the Federal Energy Regulatory Commission (FERC) (in particular related to market rules) and providing legal and technical oversight to ensure compliance with FERC requirements.
Public utility commissions provide state-level regulation of utilities (other than in relation to FERC-approved transmission tariffs).
NEPOOL and ISO New England are responsible for planning for New England, with ISO New England playing the lead role.8 NERC also plays a role in planning, in particular by setting reliability standards and setting resource adequacy targets for the region. ISO New England is also the market and system operator.
7When ISO New England was formed, NEPOOL employees became employees of ISO New England.
8The main ISO New England planning documents are the annual Regional System Plans (in PDF) and Forecast Report of Capacity, Energy, Loads, and Transmission (CELT reports) (in Excel) (ISO New England, 2017). An example of NPCC’s planning work is its
Northeast Power Coordinating Council 2017 Long Range Adequacy Overview, 5 December 2017.
57