Brattle FERC Report: "Energy-Only Markets Can Attract The Optimal Level Of Generation Investments"

Simulations run by The Brattle Group and Astrape Consulting, "show that energy-only markets can attract the optimal level of generation investments from a societal-cost perspective," Brattle and Astrape said in a report to FERC.

Click here for Brattle/Astrape FERC report

The report is also notable for Brattle's admission that the notion of "reserve margin" is meaningless in so far as there is no accepted definition, calculation, or accounting conventions, and minor changes can lead to wide variation -- up to 5 percentage points -- is the "reported" reserve margin.

Brattle noted that, "One event in ten years translates to 0.1 loss of load events (LOLE) per year, regardless of the magnitude or duration of the anticipated individual involuntary load shed events. Alternatively, one day in ten years translates to 2.4 loss of load hours (LOLH) per year, regardless of the magnitude or number of such outages. As we show, the difference between these interpretations of the 1-in-10 standard translates to differences in planning reserve margins that may exceed five percentage points, with planning reserve margins of possibly less than 10% based on the 2.4 LOLH standard and more than 15% based on the 0.1 LOLE standard."

"We show that changing event definitions alone can translate to a four percentage point range in planning reserve margins. Due to these differences and its other limitations, the 0.1 LOLE standard does not represent a uniform level of reliability but instead can represent very different expected customer outage levels,"

"Additional differences exist in how planning reserve margins are calculated. For example, some system operators calculate reserve margins using the nameplate capacity of intermittent generation such as wind and solar, while others use a derated capacity value. Other differences exist in how voltage reductions or demand response are considered in reserve margin calculations. As we show, this means that reported planning reserve margins can differ by five percentage points based solely on supply and demand accounting conventions. Overall, these differences make it very challenging to meaningfully compare reported reserve margins across regions," Brattle said.