Reliable Power When You Need It
We rely on electricity for almost every aspect of modern life, from brushing our teeth to powering life-saving operations. To ensure reliable service, our nation depends on enough power plants producing electricity at a given time, in addition to plants in reserve.
Competitive power suppliers provide about 150,000 MW of capacity to America’s power grid. They are committed to providing safe, reliable power at the least cost where and when it is needed most.
Competitive power suppliers provide more than 150,000 MW of capacity to America’s power grid. They are committed to providing safe, reliable power at the least cost where and when it is needed most.
Today, we provide reliable power with a diverse, flexible mix of resources and technologies. On-demand resources such as natural gas and battery storage support intermittent resources including wind and solar power.
We are also committed to protecting the power grid from cybersecurity threats.
Getting Power to Homes and Businesses
While we may take it for granted, getting power from where it is created to where it’s used in homes and businesses is a complex process. In parts of the country with competitive electricity markets, that process is overseen by independent regional and state grid operators (known as Regional Transmission Organizations and Independent System Operators (RTOs and ISOs). Sometimes compared to air traffic controllers, these organizations oversee the day-to-day operation of the power grid, manage wholesale electricity markets where power is bought and sold, and conduct regional power system planning to ensure the availability of power resources and transmission lines needed to meet current and future demand.
Competition Delivers Reliable Electricity
America’s competitive wholesale power markets have a strong track record of procuring reliable electricity for consumers at competitive prices.
- 183,175 MW: The total installed power generation capacity available to serve PJM customers in May 2021 – well in excess of forecasted peak summer demand. Throughout 2020, PJM dispatched reliable, secure power for the 65 million consumers its serves across 13 states and the District of Columbia (2020 PJM Annual Report).
- With the introduction of competition in the 1990s, competitive generators immediately began to reduce power plant outages and invest in reliability-enhancing innovation relative to monopolies (R Street Institute, 2021).
- Joining an organized market has led to improved reliability in monopoly states like Louisiana (R Street Institute, 2021).
Capacity Markets – the Key to Reliability
In order to ensure power is available when needed, some grid operators run capacity markets, which secure electricity commitments from power providers at a set offer price up to three years in advance. Generators must pay a significant fine if they fail to deliver service.
This ensures that electricity—an essential service—will be available to meet peak demand. In a pure energy market, there is no such requirement to provide power at a future date, making the grid reliant on short-term market dynamics.
Other types of competitive wholesale electricity markets include energy markets and ancillary services markets.
- Energy markets operate a lot like a stock exchange, where the market operator matches bids from consumers with offers from power suppliers on a day-ahead or real-time basis.
- Ancillary services markets help balance the system in cases of emergency or sudden shifts in electricity use and supply that could affect the stability of the power system. These markets call on resources that can quickly adjust output or come online within 10-30 minutes to meet an unexpected event.
Durable Market Design for a Sustainable Future
Competitive power markets were designed to secure reliable power at the least cost. As our grid and energy goals evolve, appropriate adjustments can help markets continue to factor in benefits such as emissions reductions while still putting pressure on generators to keep prices low.
It’s important for the power system to have a variety of resource types, including flexible and dispatchable resources that can quickly start up or power down in response to weather conditions and supply and demand changes.
PowerFact: Energy Vs. Capacity
Electricity is measured in both capacity and energy.
- Capacity is the amount of electricity a power generator can physically produce under specific conditions.
- Energy is the actual amount of energy a generator produces over a specific period of time. Many generators do not operate at their full capacity all the time.
