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Price formation in zero-carbon electricity markets - fundamentals, challenges, and research needs
Future power systems dominated by zero-carbon generation resources may require significant revisions to electricity market designs to ensure capacity adequacy and market efficiency. Here, in this paper, we first conceptually outline key fundamentals underlying electricity market design and price formation in U.S. electricity markets. We then discuss a set of potential market design challenges related to price formation in a grid dominated by zero-carbon resources with marginal cost profiles that differ compared to traditional thermal resources. Next, we review electricity market design solutions that have been proposed in the literature to ensure market efficiency in zero-carbon systems, and the associated implications for price formation. We conclude by summarizing key observations and establishing a set of research questions that should be addressed to improve our understanding of market design, price formation, and market efficiency in zero-carbon power systems.
Combining anaerobic digestion and hydrothermal liquefaction in the conversion of dairy waste into energy: A techno economic model for New York state
There is increasing global interest and policies being enacted to lower greenhouse gas emissions, especially from the agricultural sector. In the U.S. for example, states with large dairy operations may combine proven manure valorization technologies, such as anaerobic digestion and hydrothermal liquefaction. Sustainable manure treatment would increase the recovery of energy and other useful co-products, namely biogas, biocrude oil and hydro-char as well as lower the environmental impacts. In this study, the economic feasibility of implementing a centralized bioenergy system in New York State was investigated. Here, the feasibility of this transformation depends on many factors, including capital costs, discount rates, and other financing arrangements, electricity selling prices, incentives and farm sizes and locations. For a large-scale implementation in New York State accounting for nearly 50% of the state’s dairy farms, our model of a distributed, hybrid anaerobic/hydrothermal system was shown to treat 590 million liters of wet manure per day, producing 607 million kWh of electricity, 162,000 L of biocrude oil and 117,000 kg of hydro-char per day. Electricity selling price is a critical factor. Increasing the electricity selling price from wholesale ($\$0.06$ /kWh) to retail ($\$0.18$ kWh) increased the net present value from $\$395$ million to $1.5 billion (considering a 40-year project lifetime).
Analysis of Residential Time-of-Use Utility Rate Structures and Economic Implications for Thermal Energy Storage
Thermal energy storage (TES) is an increasingly popular tool to level out the daily electrical demand and add stability to the electrical grid as more intermittent renewable energy sources are installed. TES systems can locally decouple high thermal loads from the operation of a heat pump or reduce the electrical energy demand of the heat pump by providing a more favorable temperature gradient. In addition, many policy makers and utility providers have introduced time-of-use (TOU) rate schedules for residential customers to better reflect the price of electricity generation and demand for specific times. TOU rate schedules price grid-provided electricity differently throughout the day depending on the region’s climate, time of year, and electrical production. Large differences between on-peak and off-peak electrical prices may create an economic advantage for a residential customer to install a TES system. In this work, the economic and energy savings are calculated for a modeled 2,400 square foot residential building with water/ice-based TES using a TOU rate structure. The weather data is from Fresno County, CA, ASHRAE climate zone 3B, and a representative residential TOU utility rate structure from Pacific Gas and Electric (PG&E) was used. The results showed that total energy consumption could be reduced by 14.5% with an 87.5% reduction in on-peak energy usage when the TES is installed. The cost of operating this system for space cooling was reduced by nearly 20% using the sample utility rate plan.
An expert system for cogeneration energy system selection
A demonstration expert system has been developed which assists engineers in cogeneration energy system selection by asking them such applications-related questions as the desired electrical and thermal loads, fuel price, and electric rates. The answers given will be interfaced with the expert system's knowledge base to recommend candidate systems. Attention is given to expert system use results obtained for a sample site; their suitability is compared to that of the detailed results obtained by an earlier cogeneration system study.
Regional Hybrid Energy Systems Technoeconomic Analysis
The National Renewable Energy Laboratory (NREL) has been working with the Idaho National Laboratory (INL) and Argonne National Laboratory (ANL) to analyze the potential that hybridizing Xcel Energy's two nuclear power plants in Minnesota might have. The hybrid nuclear power plants would maximize sales of electricity when its price is high and reduce electricity sales to maximize hydrogen production when the price of electricity is low. This presentation summarizes the project's approach and status and communicates future direction.
Port of New York and New Jersey Drayage Electrification Analysis
The National Renewable Energy Laboratory (NREL) evaluated the potential for drayage electrification in the Port of New York and New Jersey (PoNYNJ), with a focus on operators: Harbor Freight Transport (HF), Safeway Trucking (SWT), and International Motor Freight Inc (IMF). This report summarizes the data collection and electrification evaluation of all three drayage operators, includes detailed operational data, and identifies the performance requirements for battery electric tractors (BETs) and corresponding infrastructure operated within the context of PoNYNJ drayage operation. This report also details a methodology to evaluate opportunities, strategies, and challenges associated with future expansions of BETs in meeting PANYNJ emissions goals. The Port Authority has established a goal of achieving Net Zero carbon emissions by 2050 across all facilities, including from tenant and stakeholder sources such as drayage trucks. NREL used real-world performance data collected on the three PoNYNJ drayage operations, along with modeling and analysis tools to compare BET to diesel trucks. From March to July 2021, NREL collected 1Hz vehicle and engine data from 46 drayage trucks at the three operators totaling nearly 121,000 miles of operation, providing enough information to assess vehicle operations for electrification potential. A Future Automotive Systems Technology Simulator (FASTSim) electric truck powertrain model was validated using PoNYNJ data and scenarios were run to evaluate drayage truck electrification requirements over the real-world cycles. The first scenario examined BET viability with minimal changes to existing operations. This assumes the trucks charge when stopped for two hours or longer, have a functional battery size of 375 kWh, and can charge at 270 kilowatts (kW) average which are the specification of the commercially available Freightliner eCascadia. The second scenario looked at what operational, charging infrastructure, and BET technology changes would be needed to fully electrify. Finally, detailed analysis was run on charging rate structure to understand operational costs to the fleets. The studied drayage trucks averaged 5.1 MPG, spent roughly 9% of their energy at idle, and drove an average of 140 miles per day with a maximum daily distance of 573 miles. The FASTSim model results indicate a comparable BET would use 417 kWh of energy per day on average accounting for cargo weight, which is close to the full usable capacity of the eCascadia currently available on the market. Based on the daily average operating data, partial fleet electrification is possible with current technology. However, some specific days of operation would require over 1,600 kWh of energy due to longer distances traveled by the trucks and more intense operation. Trucks used for long distance and intense operation cannot be readily electrified with current technology without operational changes. Full adoption of BETs could reduce CO 2 emissions from these fleets by roughly 75% today, eliminating 76 metric tons of CO 2 (MTCO 2 ) per vehicle each year, which equates to 24,100 MTCO 2 per year for all three operators. Commercially available direct current fast chargers (DCFC) have charge rates up to 350 kW. Based on the average daily modeled energy use for each operator, current industrial rate structures, and the assumption of 350 kW peak charging, full drayage electrification would increase electricity consumption. In addition, peak demand usage would increase with unmanaged charging along with cost of electricity having a direct impact on cost per mile for electric vehicles. The resulting cost per mile for BETs along with comparable cost per mile for conventional diesel trucks are also examined at $\$$4.00 per gallon of diesel. It will be important for PANYNJ and the drayage operators within the PoNYNJ to consider these load impacts to their existing electrical infrastructure and devise operational strategies that avoid coincident charging of vehicles to mitigate demand charges. Despite these electricity cost increases, savings from reductions in diesel consumption will help offset the costs of this increased electricity consumption. However, prices of both electricity and diesel are subject to change based on various factors meaning the realized savings will vary over time. This shows BETs could be cost-competitive on an energy cost per mile basis for all scenarios while diesel is above $\$$3.00/gal. Further, if diesel prices dropped to the 15-year low of $2.33/gal, it would still be cost competitive to operate the EVs with electricity costs of 16.3 ¢/kWh or less.
Opportunities and Challenges for Nuclear-Renewable Hybrid Energy Systems
Nuclear-renewable hybrid energy systems (also known as integrated nuclear-renewable systems) are conceptual systems that have two or more energy inputs and produce two or more products. They maximize profitability, and usually equipment utilization, by adjusting between the products depending upon the availability of resources and market value. For example a nuclear-renewable hybrid energy system that produces electricity and hydrogen would maximize sales of electricity when its price is high and shift to hydrogen production when the electricity price is low. This presentation summarizes the results of several economic analyses of nuclear-renewable hybrid energy systems and they key overall conclusions from those analyses.
Opportunities and Challenges for Nuclear-Renewable Hybrid Energy Systems
Nuclear-renewable hybrid energy systems (also known as integrated nuclear-renewable systems) are conceptual systems that have two or more energy inputs and produce two or more products. They maximize profitability, and usually equipment utilization, by adjusting between the products depending upon the availability of resources and market value. For example a nuclear-renewable hybrid energy system that produces electricity and hydrogen would maximize sales of electricity when its price is high and shift to hydrogen production when the electricity price is low. This presentation summarizes the results of several economic analyses of nuclear-renewable hybrid energy systems and they key overall conclusions from those analyses.
Estimating the Breakeven Cost of Delivered Electricity to Charge Class 8 Electric Tractors
As vehicle electrification expands from the light-duty sector to include larger commercial medium- and heavy-duty vehicles, businesses need to decide if electrification is appropriate for their fleets. A key factor in this decision will be the total cost of ownership for on-road electric Class 8 tractors compared to their combustion counterparts. This report examines the breakeven price of electricity for electric Class 8 tractor charging to address its importance in the total cost of ownership for the operation of an electrified fleet and to account for the inherent differences of higher-power charging. To understand the likely cost of delivered energy--in this report the breakeven price--to charge electric tractors, this study followed an analysis framework that considers a wide range of factors to estimate the breakeven price to charge at various station types. This requires an estimation of electric vehicle adoption trajectories and analysis of real-world fleet data to assess energy needs of heavy-duty electric tractors and to determine expected charging station demand over time. Station demand informs the level of electric vehicle supply equipment (EVSE) deployment that is necessary at each station type, as well as the site utilization and anticipated load profiles. Then, by accounting for a wide range of capital investments, operating costs, and other expenses, a breakeven price of energy is determined.
A normative price for energy from an electricity generation system: An Owner-dependent Methodology for Energy Generation (system) Assessment (OMEGA). Volume 2: Derivation of system energy price equations
The methodology presented is a derivation of the utility owned solar electric systems model. The net present value of the system is determined by consideration of all financial benefits and costs including a specified return on investment. Life cycle costs, life cycle revenues, and residual system values are obtained. Break-even values of system parameters are estimated by setting the net present value to zero.
Market Pricing and Settlements Analysis Considering Capacity Sharing and Reserve Substitutions of Operating Reserve Products
Electricity market pricing and settlement are the key signals for real-time dispatch and long-term investment decisions. Regional transmission operators (RTOs) in the U.S. adopt uniform pricing scheme, which is based on the marginal costs of supplying an incremental MW of electric services. The marginal cost of an electric service is highly dependent on the constraints in the pricing models of RTOs. A slight difference in constraint modeling of pricing model on energy and ancillary services could result in drastically different market clearing prices (MCPs), cleared reserve quantities, and associated revenue. RTOs in the U.S. have various market designs and assumptions in ancillary services modeling in capacity sharing and reserve substitutes. This paper examines four combination models of capacity sharing and reserve substitutes and analyzes the associated market implications. The numerical results present that 1) cascading reserve requirements have direct impact on reserve pricing schemes 2) both cascading reserve requirements and sharing capacity have significant impact on reserve MCPs and locational marginal prices, and thus result in drastically different reserve revenue, energy revenue, generation cost, and generation profit.
Reinventing the Solar Power Satellite
The selling price of electrical power varies with time. The economic viability of space solar power is maximum if the power can be sold at peak power rates, instead of baseline rate. Price and demand of electricity was examined from spot-market data from four example markets: New England, New York City, suburban New York, and California. The data was averaged to show the average price and demand for power as a function of time of day and time of year. Demand varies roughly by a factor of two between the early-morning minimum demand, and the afternoon maximum; both the amount of peak power, and the location of the peak, depends significantly on the location and the weather. The demand curves were compared to the availability curves for solar energy and for tracking and non-tracking satellite solar power systems in order to compare the market value of terrestrial and solar electrical power. In part 2, new designs for a space solar power (SSP) system were analyzed to provide electrical power to Earth for economically competitive rates. The approach was to look at innovative power architectures to more practical approaches to space solar power. A significant barrier is the initial investment required before the first power is returned. Three new concepts for solar power satellites were invented and analyzed: a solar power satellite in the Earth-Sun L2 point, a geosynchronous no-moving parts solar power satellite, and a nontracking geosynchronous solar power satellite with integral phased array. The integral-array satellite had several advantages, including an initial investment cost approximately eight times lower than the conventional design.
Techno-Economic Evaluation of Electrified Vehicle Options in Drayage Fleets
The electrification of drayage fleets offers potential economic and operational benefits, but the financial viability of electrified vehicles remains sensitive to battery cost, energy price, and fleet usage patterns. While total cost of ownership (TCO) is a useful benchmark, fleet operators and investors are equally concerned with investment performance metrics such as payback period (PB) and Internal Rate of Return (IRR), which better reflect financial risks and investment return timelines. This study develops a unified techno-economic framework that jointly evaluates TCO, PB, and IRR to determine when electrified trucks become cost-effective alternatives to diesel trucks. Building on a previously developed cost modeling tool and using real-world telematics data from a Class 8 drayage fleet at the Port of Savannah, the analysis incorporates projected battery cost trajectories, electricity and diesel price trends, vehicle efficiency improvements, and multiple battery capacities. Parameter ranges reflect widely cited projections and observed drayage-duty-cycle variability. A surrogate-modeling method approximates economic performance across thousands of battery cost–electricity price combinations, enabling high-resolution identification of conditions that achieve TCO parity, acceptable PB thresholds, and target IRR levels. Additionally, the study estimates the evolving share of the fleet that can feasibly electrify over time under multiple economic metrics. This integrated framework offers a novel, data-driven approach to inform risk-aware decision-making for fleet electrification and supports investment planning under evolving cost and operational conditions.
Potential Early Markets for Fusion Energy
We examine potential early markets for fusion energy and their projected cost targets, based on analysis and synthesis of many relevant, recent studies and reports. Seeking to provide guidance to ambitious fusion developers aspiring to enable commercial deployment before 2040, we examine cost requirements for fusion-generated electricity, process heat, and hydrogen production based on today’s market prices but with various adjustments relating to possible scenarios in 2035, such as ‘‘business-as-usual,’’ high renewables penetration, and carbon pricing up to 100 $/tCO 2 . Key findings are that fusion developers should consider focusing initially on high-priced global electricity markets and consider including integrated thermal storage, depending on techno-economic factors, in order to maximize revenue and compete in markets with high renewables penetration. Process heat and hydrogen production will be tough early markets for fusion, but may open up to fusion as markets evolve and if fusion’s levelized cost of electricity falls below 50 $/MWh e . Finally, we discuss potential ways for a fusion plant to increase revenue via cogeneration (e.g., desalination, direct air capture, or district heating) and to lower capital costs (e.g., by minimizing construction times and interest or by retrofitting coal plants).
Impacts of variable renewable energy on wholesale markets and generating assets in the United States: A review of expectations and evidence
Here, we synthesize available literature, data, and analysis on the degree to which growth in variable renewable energy (VRE) has impacted or might in the future impact bulk power system assets, pricing, and costs in the United States. Most studies of future scenarios indicate that VRE reduces wholesale energy prices and capacity factors of thermal generators. Traditional baseload generators are more exposed to these changing market conditions than low-capital cost and more flexible intermediate and peak-load generators. From analysis of historical data we find that VRE is already influencing the bulk power market through changes in temporal and geographic patterns areas with higher levels of VRE. The most significant observed impacts have concentrated in areas with significant VRE and/or nuclear generation along with limited transmission, with negative pricing also often occurring during periods with lower system-wide load. So far, however, VRE, has had a relatively modest impact on historical average annual wholesale prices across entire market regions, at least in comparison to other drivers. The reduction of natural gas prices is the primary contributor to the decline in wholesale prices since 2008. Similarly, VRE impacts on thermal plant retirements have been limited and there is little relationship between the location of recent retirements and VRE penetration levels. Finally, although impacts on wholesale prices have been modest so far, impacts of VRE on the electricity market will be more significant under higher VRE penetrations.
Cost-optimized energy storage operation for a grid-connected solar PV system at community and individual scales
This study provides a comparative analysis of grid-connected PV-integrated battery storage at individual and community scales. The paper addresses the challenge of managing energy demand-generation mismatch by using a battery energy storage optimization algorithm, which minimizes operational costs while accounting for battery degradation. Also, this work introduces a broader evaluation basis that includes seasonal variability, grid exchange smoothness, and scalability across different battery capacities. Results show that community-scale storage more effectively dampens grid exchange power fluctuations and reduces system costs, particularly with moderate price differences between electricity buying and selling prices and low battery capacities. The paper also analyzes the impacts of static control versus cost-optimized battery system management. Here, it is shown that the gap in system costs between the cost-optimized and static control scenarios widens as the price difference increases.
Data-Driven Probabilistic Anomaly Detection for Electricity Market under Cyber Attacks
Information and communication technologies have been widely used in smart grid for efficient operation. However, these technologies are vulnerable to malicious cyber attacks, which may lead to severe reliability and economic issues. Recently, a variety of data-driven anomaly detection approaches have been explored to detect potential cyber attacks in smart grids. In this paper, we researched on the electricity market data aiming to identify anomalies from the locational marginal prices (LMPs) and provide a new indicator for potential cyber attacks in power grids. Specifically, a novel data-driven probabilistic anomaly detection framework is proposed for electricity market, which consists of three major components: long short-term memory (LSTM) based deterministic electricity price forecasting, probabilistic electricity price forecasting and anomaly detection. This framework is tested on a model-based electricity market simulator under two types of cyber attacks, i.e., load redistribution attack (LRA) and price responsive attack (PRA). Numerical results on the simulated LMPs show that the proposed framework is capable of detecting data anomalies over these attacks.