Study Kicks Off Multiyear Effort To Modernize U.S. Electricity Markets

A DOE Collaboration Is Developing Resources for National Grid Operators

June 22, 2021

Photo of NREL researchers analyzing U.S. electric grid data displayed on a large computer screen.

The U.S. electric grid is undergoing historic changes, and these changes are imminently important for the system operators that oversee grid markets, investments, and planning. To address challenges for future electric markets, a major research collaboration has published its first study for a national project targeting grid modernization: Research Priorities and Opportunities in United States Competitive Wholesale Electricity Markets.

The three-year project is organized as part of the Grid Modernization Initiative (GMI) and intends to provide foundational technical assistance to the seven U.S. independent system operators (ISOs) and regional transmission organizations (RTOs) that regulate around 70% of electric sales in the United States. The first task of the project and the subject of the preliminary report is to identify gaps and research priorities related to evolving competitive wholesale electricity markets.

“With this first report, we lay out a broad research agenda for future market designs that are high priority to the U.S. ISOs/RTOs over the next 2–10 years.”

“ISOs and RTOs are under pressure to maintain reliable, resilient, and affordable power as the grid transforms toward more distributed energy resources, customer participation, and changing market models,” said Yinong Sun, NREL researcher and the lead author of the study. “With this first report, we lay out a broad research agenda for future market designs that are high priority to the U.S. ISOs/RTOs over the next 2–10 years.”

The project team—composed of Argonne National Laboratory, the National Renewable Energy Laboratory, Lawrence Berkeley National Laboratory, the Electric Power Research Institute, and Johns Hopkins University—worked in close collaboration with the ISOs and RTOs to understand current market design challenges and opportunities. As a first step, the project team completed an extensive literature review and worked with the ISOs/RTOs to rank the priority of relevant topic areas. The highest priority topics were reliability services and operational flexibility, followed by new and emerging technologies (Figure 1 in the report). For each topic area, the report discusses current market practices, relevant ISO/RTO market design initiatives, and major research opportunities in wholesale market design.

Chart displaying the highest priority grid research challenges and opportunities.
ISOs and RTOs ranked the highest priority research challenges and opportunities, color-coded by high-level topic areas, which are analyzed and summarized in the preliminary report for the GMI project “Foundational Assistance to ISO/RTOs under Electricity Market Transformation.”

For the first application of the study, the project team is currently executing three parallel technical tasks to address ISO/RTO-identified challenges related to 1) flexibility and operational reliability, 2) resource adequacy, and 3) market mechanisms to support resource investments. The tasks will draw on the expertise of U.S. national laboratories and partner organizations to provide valuable guidance and assistance in market operations.

“The national laboratories have specialized software and capabilities to understand grid modernization at a large scale,” Sun said. “By the end of the project, these capabilities will help to inform ISOs and RTOs on how to address upcoming market-oriented challenges.”

The GMI project is titled Foundational Assistance to ISO/RTOs under Electricity Market Transformation and is integrated with other GMI efforts related to institutional support. Learn more about other recent GMI projects.