Data and technology-driven improvements to electricity market design

Wholesale electricity market and retail tariff design often uses anachronistic assumptions based on existing technology characteristics or historical computational and data limitations. This dissertation conducts four categories of analysis on how electricity market design can be modernized to increase efficiency and avert roadblocks to economy-wide deep decarbonization. First, electric utilities can capture most of the system benefit of customer-sited energy storage resource (ESR) adoption with critical peak pricing (CPP). CPP is proposed as a simple and Pareto-improving rate design for commercial and industrial customers with ESRs, similar to time-of-use rates for electric vehicle owners. Second, previous research quantifying correlated generator failures in the PJM Interconnection can

be incorporated in both resource adequacy and scarcity pricing using an operating reserve demand curve (ORDC). Because correlated failures occur at very high and low temperatures when electricity demand is highest, there are substantial effects on target winter and summer planning reserve margins and increased social welfare from better accounting for generator failure probability when designing ORDCs. Third, as electricity markets evolve toward higher shares of variable, low marginal cost resources with ESRs new rules are needed to ensure resources’ full, competitive participation. A bi-level model implemented on a realistic, high renewables nodal test system highlights strategies

ESRs and hybrids can use to raise prices, particularly cross-product and decongestion strategies, and suggests offer uniformity over co-optimized temporal intervals as a remedy. Fourth, metrics like effective load carrying capability (ELCC) are increasingly common for quantifying the system dependent contribution of variable generation and ESRs to resource adequacy. Extending these methods to a zonal evaluation of resource adequacy using data from the Midcontinent Independent System Operator (MISO) shows transmission and ESRs have a complementarity benefit in zonal resource adequacy that is not realized by variable nor conventional generators, suggesting the importance of increased zonal representation in planning with ESRs.