electricity

Carbon Pricing in Wholesale Electricity Markets—Options for Fossil-Fuel Generators

Sunset and electric transmission lines

This article was co-authored by Jack Gross, a graduating senior of the George Washington University class of December 2020.

On October 15, 2020, the Federal Energy Regulatory Commission (FERC) announced in a proposed policy statement that it had jurisdiction over carbon pricing mechanisms within the wholesale electricity markets. In that same policy statement, FERC also confirmed it had the authority to approve such rules if brought forward by regional transmis- sion organizations (RTOs) and independent system operators (ISOs).

FERC’s announcement ushers in a new era of wholesale electricity market regulation, particularly for fossil-fuel power generators using natural gas, coal, and biomass. These generat- ing resources will no longer be able to rely on

inexpensive fuels to remain competitive. Instead, they will have to navigate carbon pric- ing mechanisms for existing and future power plants if they are to remain competitive in wholesale electricity markets designed to decarbonize the electric power sector. As is the case with any new proposal from FERC, it will take time for RTOs and ISOs to develop carbon pricing proposals with their stakeholders and market participants. This gives companies time to discuss and develop strategies.

Because fossil-fuel power generators consist of regulated electric utilities, electric and gas utilities and independent power producers (IPPs), each of their approaches to dealing with carbon pricing will likely vary. Some companies might take a “business as usual” approach, including operating existing power plants until the end of their existing economic life, even if it’s shortened by carbon pricing. Generation owners may also decide to do one or more of the following to address carbon pricing in wholesale electricity: [node:read-more:link]

Hydrogen: Hype or a Glide Path to Decarbonizing Natural Gas – Part 2

We continue the analysis of hydrogen which began in Part 1. This time we cover the following topics:

  • The status of efforts to blend hydrogen in the U.S. grid,
  • What hydrogen blending means for decarbonizing natural gas,
  • Regional opportunities to increase hydrogen in the U.S. and to serve Fuel-Cell Electric Vehicles (FCEV), and
  • The Disconnect between hydrogen policy and green hydrogen production shortages
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