As we observe the 52nd annual Earth Day, EPSA celebrates competitive power markets’ contributions to reducing greenhouse gas (GHG) emissions and other pollutants, like NOx and SOx, over the past several years, while maintaining affordable and reliable energy for consumers across the country. Competition in electricity markets is one of the key drivers of higher rates of emissions reductions compared to markets that lack competition.
Competitive Markets Have Led to Cleaner Power
In competitive power markets, power producers are incentivized to pursue efficiencies and invest new technologies that reduce greenhouse gas emissions—including CO2—without increasing prices to consumers. These changes have led power producers to invest in new clean energy technology, and the results have benefited Americans for years.
Analysis by the Energy Choice Coalition (ECC) has found that market competition is a proven solution to accelerate GHG reduction. Specifically, ECC found that competitive markets promoted lower carbon emissions in four different ways:
- Competitive markets promote innovation and new technology adoption.
- Competitive markets favor low-cost resources.
- Competitive market designs can include environmental mechanisms to address externalities.
- Competitive markets better reflect consumer preferences.
The results are striking. ECC found that regions of the U.S. that were part of ISOs reduced emissions from power generation by 35 percent from 2005 levels while non-ISO markets reduced emissions by 27 percent over that same period. Additionally, ISO’s with more competitively owned power generation had even deeper emissions reduction from 2005 levels, such as ISO New England at a 61 percent reduction, New York ISO at 56 percent and PJM at 41 percent, respectively. Those reductions translate to cleaner air and the same reliable electricity Americans need to power their daily lives.
Learn more about PJM’s competitive markets.
Competitive markets work because they push power producers to respond to consumer demand for decarbonization and lower greenhouse gas emissions without impacting affordability or reliability.
As this demand for cleaner sources of energy continues to rise in the years to come, EPSA member companies are investing in the grid of the future, which incorporates an increasing percentage of renewables and batteries as part of the fuel mix.
Competitive Power Providers Are Investing in Low-Carbon Solutions
EPSA member companies operate more than 6,000 MW of power capacity from renewable resources, 5,000 MW of cost-competitive zero-emitting nuclear plants and over 7,000 MW of battery storage on the grid or in development and are continuing to invest in new projects. Here are some highlights from the past year:
- LS Power formed REV Renewables a dedicated energy and energy storage company which operates 2.4 GW of solar, wind, and energy storage projects. These and other LS Power assets have avoided more than 80 million metric tons of GHG emissions in 2021.
- In Colorado, bp launched its Bighorn Solar project, a 300 MW installation connected to the first steel mill to run almost entirely on solar power.
- Calpine operates 13 power plants capable of generating about 725 MW of electricity at The Geysers, the world’s largest geothermal generation complex. That’s enough to power 725,000 homes, or a city the size of San Francisco.
- GE Renewables and Calpine completed the Santa Ana battery project, a 20MW battery storage system that will be able to provide energy to up to 12,000 households in Southern California during normal conditions.
- NRG is partnering with Google to bring customers new tools to help Texas energy customers make sustainable choices with their energy use.
- Vistra has announced plans to expand its Moss Landing storage facility, bringing its capacity up to 750 MW, the largest in the world.
- Tenaska is planning a new battery storage facility, Nighthawk, in San Diego county that will provide 300 MW of storage to help improve grid reliability.
National Carbon Pricing Can Help Accelerate Decarbonization Through Competition
ISOs, power suppliers, and customers recognize that market solutions are the best way to promote decarbonization.
In addition to investments in renewables and storage, market-based solutions like a carbon price can incentivize further emissions reductions. By placing a carbon price in the market, competition will drive actors within that market to the most innovative solutions to target emissions at the lowest cost for consumers.
At EPSA’s Competitive Power Summit on March 29, numerous panelists pointed to government policy picking winners and losers among different energy solutions as a recipe for high costs and suboptimal results. Setting parameters around carbon pricing for the market should be the federal government’s priority on climate, as well as research and development into future decarbonization solutions.
Competition in power markets has led to major achievements, including maintaining affordable and reliable electricity for consumers, while meeting demands for cleaner sources of that electricity.
Striving for innovative climate solutions will continue to be essential moving forward and is in line with the broader spirit of Earth Day – raising awareness around reducing pollution and maintaining a clean habitat for future generations.
