New Jersey Board of Public Utilities to Explore Resource Adequacy Alternatives Featuring Integrated Clean Capacity Market Framework by Brattle Consultants
Prepared for the New Jersey Board of Public Utilities
The New Jersey Board of Public Utilities (NJBPU) has announced a second Work Session in its ongoing Investigation of Resource Adequacy Alternatives, which seeks to examine how best to achieve long-term clean energy and environmental objectives. The work session will feature a presentation by Brattle consultants on the Integrated Clean Capacity Market (ICCM) proposal, a framework that would build on the successes of existing capacity markets while guiding a cost-effective, reliable transition to a clean grid.
This Work Session will explore alternative ways to integrate New Jersey’s clean energy goals into its resource adequacy structure, and whether such a structure could lower the cost of achieving the state’s clean energy goals or accelerate the timeline for meeting those goals, while also ensuring sufficient generation resources to meet customer demand.
Brattle Principal Dr. Kathleen Spees and Senior Associate Dr. Walter Graf will present the ICCM proposal, which was designed to both put New Jersey’s clean energy goals at the center of a revised resource adequacy market and chart a potential path for modernizing resource adequacy throughout the region operated by PJM Interconnection. The ICCM uses market principles to select a combination of clean and emitting resources based on participating states’ demand for zero-carbon generation that meets their policy needs, while maintaining resource adequacy.
“The ICCM’s flexible framework can accommodate both states with modest initial clean energy goals, and those seeking to quickly ramp up clean energy procurement to meet large-scale policy goals,” noted Dr. Spees. “This will enable states, customers, and clean energy companies across the PJM region to accelerate the transition to a reliable, affordable, and carbon-free electricity grid.”
Figure 1 shows how the ICCM could help to enable a clean energy transition by using competitive market principles to select the lowest-cost suite of clean energy and conventional resources that meet state requirements.
FIGURE 1: ILLUSTRATION OF THE CLEAN ENERGY TRANSITION ENABLED BY THE ICCM
Notes: Simplified simulation illustrating ICCM procurement outcomes with the same hypothetical supply curve under a range of clean energy demand scenarios in the clean energy transition. Contact authors for the underlying model used to create this numerical example.
Additional key features of the ICCM include:
- Because the ICCM is a locational market (i.e., prices are higher in electrically constrained areas and lower in unconstrained areas), it ensures that the reliability metrics established by PJM continue to be met and encourages clean energy development where it is needed.
- Clean energy resources may “lock-in” a portion of their revenues for a certain period, allowing for accelerated financing of clean energy infrastructure.
- Voluntary participation allows corporate sustainability buyers, retailers, cities, and others to place voluntary clean energy demand bids, providing easy access to the competitive marketplace and affordable prices, while promoting overachievement of state clean energy goals.
“The NJBPU looks forward to discussing the ICCM in more detail and the future of resource adequacy in PJM,” noted Abe Silverman, NJBPU General Counsel. “This could be a great opportunity for clean energy and competitive markets to work together to efficiently meet decarbonization targets.”View Report