U.S. Energy Department Announces Wholesale Electricity Market Program to Enhance State and Regional Participation

The U.S. Energy Department on Sept. 29 announced a $9 million program to enhance state and regional participation in wholesale power markets. The initiative – Wholesale Electricity Market Studies and Engagement Program – is designed to provide technical and financial support for states and regional entities to develop, expand, and improve wholesale markets. Such collaboration is expected to enable stakeholders to provide the necessary insight into various activities, including the development of interregional transmission infrastructure. Further, involving state and regional utilities and system operators in the wholesale markets can reduce their cost of electricity, which could lower consumer bills.

Wholesale markets manage the purchase and sale of power from producers to operators including state and regional transmission operators, independent system operators, and private utilities, which then sell the electricity to consumers. Two-thirds of consumers across the U.S. receive electricity purchased via wholesale markets, where pricing is determined by supply and demand and is subject to fluctuations, which affects consumer bills. The market penetration of clean and renewable resource will add flexibility and efficiency to markets, ensuring reliable power supply as well as lower prices for consumers. Although regional and state-level utilities have perspectives on market improvements to address this issue, many do not have the resources or training required for meaningful participation in market development. The new program intends to deal with this challenge.

Private industry and national laboratories that receive funding would have to collaborate with a state or regional operator, or a coalition of states or regional organizations. Program activities include analytical studies on critical market issues, expanding the capacity of a state or region to participate in market design reform initiatives and stakeholder planning processes at a regional level.

The program includes three rounds of funding to provide adequate time to develop coalitions and prepare joint applications. Concept papers for the first round must be submitted by Nov. 3, 2023.