Full Title: Greenhouse Gas Accounting Systems in Wholesale Regional Electricity Markets: Considerations for the Western Interconnection
Author(s): Deborah Kapiloff, Vijay Satyal
Publisher(s): Western Resource Advocates
Publication Date: August 6, 2021
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Regional markets in principle have huge potential to create renewable energy cost savings and efficiencies while decarbonizing electricity, so a regional greenhouse gas accounting system is crucial for realizing the benefits of a regional wholesale electricity market. Our aim here is to offer best practices and recommendations for a future greenhouse gas accounting system for a regional wholesale electricity market in the West.
Without a regional (multi-state) accounting system, states cannot consistently track utility compliance due to energy transfers that are impacted by clean energy mandates or renewable energy requirements and result in displaced or avoided greenhouse gas emissions. Inadequate tracking in electricity markets can also result in unfair price advantages for certain types of generation resources, poor planning of optimal siting of renewable resources, and resource dispatch that does not reflect state public policies or mandates, leading to higher costs to deliver clean energy.
Wholesale regional electricity markets match generation resources to meet demand in the most cost-effective manner possible by dispatching the least-cost resources first. A multi-state centralized electricity market such as a Regional Transmission Organization (RTO) offers significant benefits in terms of economies of size and scale. Regional markets also are a key pathway to a decarbonized electric grid.
As Western states explore regional market expansion efforts to meet electricity demand, they must comply with individual states’ regulations related to clean energy and greenhouse gases. Interstate transfers of energy therefore require a robust and consistent system to account for greenhouse gases as electricity flows and serves load. Currently, Western states lack a coherent and multi-state regional greenhouse gas accounting framework. We offer best practices and recommendations centered around attribute-based accounting for greenhouse gases that tracks emissions attributes instead of physical power flows.