Price formation under evolving resource mix

A key function of electricity market is the formation of transparent prices that reflect the value of energy and system needs. Aligning market with reliability requirements ensures that electricity market prices reflect system operating conditions and encourages resource availability under extreme events. Efficient prices can incentivize market participants to make efficient operational and investment decisions in both the short- and long-run. Emergency and scarcity conditions can create challenges for price formation especially when out-of-market actions taken for reliability purpose may lead to price suppression. Evolution of resource mix imposes new challenges on how to address non-convexity, flexibility, and time coupling and value reliability needs with reduced marginal cost. In this panel, current price formation challenges from RTOs and advancements in developing new pricing methodology will be discussed.