Atlantic Council

GLOBAL ENERGY CENTER

ISSUE BRIEF Ensuring Energy

Security in a
FEBRUARY 2021

Renewables World
BEN HERTZ-SHARGEL

Introduction

The march toward a decarbonized generator fleet, anchored by renewables, has

begun. Despite the destabilizing effects that renewables have on electricity sup-
ply and demand balance, as well as electricity prices, their emissions-free pro-
file and low cost are increasingly winning them market share. Six of the sixteen
US states that have committed to 100 percent clean energy targets require that
the clean energy be renewable.1 Large corporations are increasingly securing
power purchase agreements with renewables projects, with high-visibility ini-
tiatives such as RE100 putting brand pressure on corporations to commit to 100
percent renewable energy targets.2 In tandem with this sustainability-driven de-
mand, the cost of renewable supply continues to fall. The overnight installed cost
of renewables is projected to decline faster than that of any other resource, with
the exception of the combined-cycle gas turbine (CCGT), a competitor freighted
with both fuel costs and, likely, carbon costs (see Figure 1).

While direct carbon capture remains an option for natural gas–fired generation
to compete with renewables as an emissions-free source, the cost of retrofits
today is prohibitive, at $1,000 per kilowatt—doubling the installed cost of the
resource—and the marginal production costs by 2035 are expected to be in the
vicinity of 5.3 cents per kilowatt-hour, barely below today’s cost.3

Other low-carbon technologies seeking to compete with renewables face simi-

lar challenges from a levelized cost of energy perspective. While hydrogen holds
promise as a lightweight energy storage alternative to batteries—for example,
The Global Energy Center to power construction and commercial fleet vehicles—it will require massive
promotes energy security
by working alongside
government, industry,
civil society, and public 1 Spencer Fields, “100 Percent Renewable Targets,” EnergySage, May 5, 2019, https://news.
stakeholders to devise energysage.com/states-with-100-renewable-targets/.
pragmatic solutions 2 “About Us,” RE100, https://www.there100.org/about-us; High Lantern Group, “2020 Brand
to the geopolitical, Pressure Index: Climate Change #1 Corporate Issue,” November 27, 2019, http://www.
highlanterngroup.com/news-insights/2019/11/27/hlg-analytics-note-aw9n5.
sustainability, and
3 Amol Phadke, Sonia Aggarwal, Mike O’Boyle, Eric Gimon, and Nikit Abhyankar, “Illustrative
economic challenges
Pathways to 100 Percent Zero Carbon Power by 2035 without Increasing Customer Costs,”
of the changing global Energy Innovation, September 2020, https://energyinnovation.org/wp-content/
energy landscape. uploads/2020/09/Pathways-to-100-Zero-Carbon-Power-by-2035-Without-Increasing-
Customer-Costs.pdf.

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 ISSUE BRIEF Ensuring Energy Security in a Renewables World
The High Renewables Cost and Low Renewables Cost cases assume different rates of cost reduction for
renewable
Figure 1.
technologies compared with the Reference case; non-renewables assume the same rates

AEO2020 overnight installed cost by technology

2019 dollars per kilowatt
natural gas combined cycle wind solar photovoltaic

Reference case Low Renewables Cost case High Renewables Cost case
$1,400

$1,200

$1,000

$800

$600

$400

$200

$0
2019 2050 2019 2050 2019 2050

U.S. U.S.
Energy Energy Information
Information Administration
Administration
NOTE: Excluding a bearish scenario in which the cost of renewables falls minimally over the coming three decades— #AEO2020 www.eia.gov/aeo 69
an outcome inconsistent with all evidence to date—the overnight installed cost of renewables (which excludes
interest payments during construction) is set to decline as fast, if not faster, than that of the most efficient fossil
fuel technology. Renewables have the added advantage of zero fuel cost as well as no exposure to carbon costs.
SOURCE: Reproduced from US Energy Information Administration, Annual Energy Outlook 2020 with Projections to
2050, January 29, 2020, https://www.eia.gov/outlooks/aeo/pdf/AEO2020%20Full%20Report.pdf, 69.

transmission and storage investment, mitigated only by low-cost, low-technology risk and zero-carbon profile
reusing today’s natural gas infrastructure, if it is to be of solar and wind generation in the next decade, during
Changes in cost assumptions for new wind and solar projects result in significantly different
used as a fuel for power generation.4 Green hydrogen, which the North American Electric Reliability Corpora-
projected fuel mixes for electricity generation
moreover, which is produced from water through hydro- tion (NERC) forecasts 330 gigawatts (GW) of wind and
lysis using renewables, can never reach cost parity with solar capacity will be installed in the United States and
renewables
AEO2020 as a power
electricity source,
generation as these resources are
from Canada, representing 65 percent growth over these
used tofuels
selected produce it. Blue hydrogen, which is extracted countries total installed capacity in 2019, inclusive of all
billion
fromkilowatthours
natural gas through a process known as steam resources.7 Europe is even more bullish on renewables:
2019 2019 2019
methane reformation, has a long way to go down the
3,000 In its most recent Ten-Year Network
3,000
Development Plan,
3,000

cost curve to history

be viable, and is dependent upon carbonprojections
projections the European Network of Transmission System Oper-
projections
capture advancements as well.5 Advanced nuclear faces ators for Electricity estimated that between 48 and 58
2,500
similar cost uncertainties, which will govern whether it percent of demand will be met by renewable generation.8
2,500 2,500

plays a supporting or a leading role in a future decarbon-

2,000
ized grid.6 None of these resources
natural gas is likely to match the The question, therefore, is not whether renewables will
2,000 2,000

1,500 1,500 1,500

renewables
4 National Renewable Energy Laboratory, Hydrogen Energy Storage: Grid and Transportation Services, February 2015, https://www.nrel.
1,000gov/docs/fy15osti/62518.pdf. 1,000 1,000

coalOut with Bold Claims for Cheaper, Cleaner ‘Blue’ Hydrogen,” Greentech Media, September 4, 2020.
5 Jason Deign, “Utilty Global Comes
6 Karen D. Tapia-Ahumada, John Reilly, Mei Yuan, and Kenneth Strzepek, Deep Decarbonization of the U.S. Electricity Sector: Is There a
500Role for Nuclear Power?, Massachusetts
nuclear Institute of Technology Joint Program on the Science and Polity of Global Change, Report 338,
500 500

September 2019.
7 North American Electric Reliability Corporation, 2019 Long Term Reliability Assessment, 2019, https://www.nerc.com/pa/RAPA/ra/
0Reliability%20Assessments%20DL/NERC_LTRA_2019.pdf; US Energy Information Administration, Annual Energy Outlook 2020 with
0 0

1990 2010
Projections to 2030
2050, January 29, 2020,2050 2015 2050 2015
https://www.eia.gov/outlooks/aeo/pdf/AEO2020%20Full%20Report.pdf. 2050
Reference case Low Renewables Cost case High Renewables Cost
8 European Network of Transmission System Operators for Electricity, Connecting Europe: Electricity, ENTSO-E 2025, 2030, 2040 Network case
Development Plan 2018, 2018, https://eepublicdownloads.blob.core.windows.net/public-cdn-container/clean-documents/tyndp-
U.S.
U.S. Energy Energy Information
Information Administration
Administration
documents/TYNDP2018/consultation/Main%20Report/TYNDP2018_Executive%20Report.pdf. #AEO2020 www.eia.gov/aeo 70

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 ISSUE BRIEF Ensuring Energy Security in a Renewables World

play a dominant role in the coming decarbonized grid balance. Put simply, supply follows demand, and not the
but rather how energy security can be ensured with re- other way around. Turbines cannot follow the wind and
newables playing such a role. The prospect of a generator system load at the same time, however, which is a con-
fleet that is directly subject to the sun, wind, and other flict that poses tremendous risks for system stability in
forces of nature, under a backdrop of unpredictable cli- a fully decarbonized power system.
mate change, has provoked anxiety. Some have gone as
far as to lay the blame for the blackouts that beset Cali- The physical laws governing electricity distribution are
fornia in August 2020 at the feet of renewables, raising unforgiving. Supply and demand must be balanced at
the question of whether the state has become a caution- every instant; otherwise, the frequency of the grid’s al-
ary tale of transitioning too quickly toward renewable ternating current will diverge from its target (60 hertz in
power.9 The reality is more nuanced: it is not the rate of the United States), causing devices to malfunction and
adoption of renewables that poses risks, in and of itself, ultimately the grid’s voltage to collapse. Renewables
but the failure to maintain sufficient capacity of com- tend to peak when there is low to moderate load on the
plementary flexible resources, such as battery storage, system—midday for solar, and overnight for wind—and
demand response, and gas-fired peaker plants, which are not always present in force when load does peak,
can be dispatched during the inevitable dips in renew- such as on weekday evenings in the summer, or during
able supply.10 Nevertheless, the unique cost and physical a deep freeze in the Northeast. When renewables cause
profile of renewables have taken the electric power sys- generation to exceed load, excess generation that can-
tem into uncharted territory, posing novel challenges to not be consumed by load or storage resources must be
energy security. While daunting, these challenges can curtailed to achieve balance—an action without risk to
be understood and addressed to ensure that the com- system stability, but one that induces waste. California
ing decarbonized electric power system is a viable one. curtailed 318 gigwatt-hours (GWh) of wind and solar in
April 2020 alone, enough to power roughly 380,000
homes during that period.11
Energy security challenges
The opposite case, in which renewable supply fails to
Intermittence and the need for flexible capacity meet demand, has significant energy security impli-
cations. In these times, the system must rely on com-
The intermittence of renewables has undermined a key plementary resources to fill in the gap, sometimes in
dynamic that has governed power markets since their a matter of minutes. Figure Two illustrates the “duck
inception in the 1990s. Despite the volatility of electric- curve” phenomenon in California, in which solar produc-
ity prices, which is greater than that of any other com- tion winds down just as evening residential load ramps
modity price, far less price-sensitive demand has arisen up, requiring complementary resources to ramp up dra-
in wholesale power markets than market designers an- matically. Bulk power systems are designed to support
ticipated. A vast majority of commercial and residential worst-case scenarios, which include days with minimal
customers consume electricity regardless of price, en- sun and wind.12 Resource adequacy may therefore re-
abled by the largely fixed rates offered by utilities and re- quire energy storage and flexible capacity on the same
tail energy providers, which charge a premium to shield order as the renewables they cover for even if they are
them from price volatility. As a consequence, the supply infrequently dispatched, a costly duplicate investment
side is relied upon to be fully flexible to meet demand, in capacity. While today’s flexible generation capacity
meticulously following its ebbs and flows to maintain is largely fossil-based (with the notable exception of

9 Katherine Blunt, “California Blackouts a Warning for States Ramping Up Green Power,” Wall Street Journal, August 17, 2020.
10 Cailifornia Independent System Operator, “Preliminary Root Cause Analysis: Mid-August 2020 Heat Storm,” October 6, 2020. Demand
response refers to loads that act as supply, earning revenue in wholesale markets by reducing consumption when called upon by the
system operator. Like CCGS, gas-fired peaker plants can be outfitted with carbon capture equipment to reduce emissions.
11 “Managing Oversupply,” California Independent System Operator, May 5, 2020, http://www.caiso.com/informed/Pages/
ManagingOversupply.aspx. The typical single-family residence consumes roughly 10 MWh of power per year, a quantity termed a
Residential Customer Equivalent.
12 Bulk power systems refer to transmission systems and the generation and energy storage resources directly connected to them. They
do not include distribution systems, the last mile of delivery to residential and small commercial and industrial customers.

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 ISSUE BRIEF Ensuring Energy Security in a Renewables World

Figure 2. Duck curve illustration.

MW Load Solar Net Load

35,000 Energy
30,000
supplied by
solar resources
25,000
Net Load
20,000 Net Load Hour Ramp
3 Hour Net Load 3
7.7 GW Hour Ramp:
15,000 Ramp 5.7 Insufficient
GW Demand 11.7 GW
10,000
for Online
5,000 Generation

0
1 3 5 7 9 11 13 15 17 19 21 23 1 3 5 7 9 11 13 15 17 19 21 23 1 3 5 7 9 11 13 15 17 19 21 23
Hour of Day Hour of Day Hour of Day
10,000 MW Installed Solar � 5,000 MW Installed Solar � 20,000 MW Installed Solar

NOTE: Duck curve illustration. Solar production during the day masks load on the system, resulting in minimal
net load that must be met by other resources. As late-day solar production declines, other resource must ramp
quickly to replace it, even as demand itself is ramping toward the evening peak.
REPRODUCTION: This information from the North American Electric Reliability Corporation’s website is the
property of the North American Electric Reliability Corporation and can be found at 2019 Long-Term Reliability
Assessment. This content may not be reproduced in whole or any part without the prior express written
permission of the North American Electric Reliability Corporation.

hydroelectric power), emissions-free technologies that The loss of inertia: The grid’s stabilizing force
are ultimately unable to compete with renewables on
cost may find a new lease on life by providing this valu- A second energy security vulnerability imposed by re-
able grid service. Flexible nuclear is a leading contender, newables arises from their intermittence: not in regard
as are hydrogen fuel cells: Green hydrogen can be pro- to following load, but in regard to the grid’s sensitivity to
duced when there is excess renewable capacity and con- sudden changes in load. The stability of bulk power sys-
sumed as fuel when renewable capacity is insufficient.13 tems relies on the synchrony of their generators, many
of which—known as synchronous generators—consist of
Accenture estimates that Europe will require 55-90 GW a massive magnet rotating in the vicinity of a stationary
of flexible capacity by 2030 across six markets: France, magnet, driven by steam, water, or wind. The collective
Great Britain, the Netherlands, Germany, Spain, and Ire- mass of these rotating magnets, known as rotors, pro-
land.14 At that time, the latter three countries may require vides inertia for the grid, enabling it to withstand sharp
flexible capacity exceeding 70 percent of total gener- fluctuations in load and supply. Inverter-based genera-
ating capacity.15 Supply imbalance fluctuations will be tors such as solar photovoltaic (PV) and battery storage
shorter than they are today, but their amplitudes 55-95 (including batteries in electric vehicles) do not have a ro-
percent greater, requiring increased ramping capabil- tating mass, and therefore do not naturally contribute in-
ity as well as generating capacity.16 ertia to the grid.17 While wind turbines do, the variability

13 Rita Baranwal, Mollie Johnson, Kihara Shinichi, and Stephen Speed, Flexible Nuclear Energy for Clean Energy Systems, National
Renewable Energy Laboratory Technical Report, NREL/TP-6A50-770, September 2020, https://www.nrel.gov/docs/fy20osti/77088.
pdf; National Renewable Energy Laboratory, Hydrogen Energy Storage.
14 Sander van Ginkel, Wytse Kaastra, Sanda Tuzlic, and Sytze Dijkstra, Flex and Balances Unlocking Value from Demand-Side Flexibility in
the European Power System, Accenture, 2018, https://www.accenture.com/_acnmedia/accenture/conversion-assets/dotcom/
documents/global/pdf/dualpub_26/accenture_flex_balances_pov.pdf.
15 Ibid.
16 Ibid.
17 Samuel C. Johnson, Dimitri J. Papageorgiou, Dharik S. Mallapragada, Thomas A. Deetjen, Joshua D. Rhodes, and Michael E. Webber,
“Evaluating Rotational Inertia as a Component of Grid Reliability with High Penetrations of Variable Renewable Energy,” Energy 180
(2019): 258-271.

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 ISSUE BRIEF Ensuring Energy Security in a Renewables World

of wind makes their inertial response intermittent, and Cybersecurity

therefore less dependable. A key challenge for a power
system driven primarily by renewables, therefore, is de- Cybersecurity is a perennial risk to power systems, but
termining where to source inertia for the system or, more it will take on a new character in a world powered to a
improbably, how to operate stably without it.18 large degree by customer-owned distributed energy re-
sources (DERs), such as residential and community solar,
An increased reliance on long-distance transmission stationary batteries, electric vehicles (EVs), and smart
thermostat-enabled air conditioners and heat pumps.
The physical characteristics of renewables are not the Unlike centralized resources, isolated on proprietary util-
only impact these resources have on a bulk power sys- ity and energy market communication networks, these
tem. Utility-scale renewable plants are frequently sited resources are exposed to the public internet, and reliant
far from population centers, due to the cost of land and on commercial software platforms and device owners
the availability of the relevant natural resource. Bringing to maintain their security. Botnet attacks have already
this power to population centers necessitates increased demonstrated the vulnerability of Internet of Things
and sometimes dedicated long-distance transmission (IoT) devices to cyber exploits, but the capability of DER
lines, which implicitly add to the cost of the power. To- botnets to deploy electrical power as well as compu-
day’s transmission capacity provides insufficient head- tational power introduces novel energy security risk.23
room for the anticipated growth in renewables, however,
and transmission planning processes have not been up Not all exploits of DERs will originate from internet hacks.
to the task, most notably in the context of multi-region Global supply chains represent significant vulnerabili-
projects.19 Only fifteen thousand circuit miles of trans- ties for device manufacturers, whose hardware compo-
mission are planned in the next six years, for instance, nents and firmware programming are exposed to the
compared with forty thousand built in the last decade, risk of backdoor infiltration and sabotage. NERC has fo-
despite the increased need.20 In the Southwest Power cused on the risk to bulk power system equipment, such
Pool (SPP) and the Electric Reliability Council of Texas as that used in transmission lines and within substations,
(ERCOT), a regional transmission organization (RTO) leading to reliability standards that address supply chain
and independent system operator (ISO), respectively, risk management.24 But the risk persists—and is, in fact,
renewables are already reaching transmission capaci- wider and more decentralized—for IoT devices, which
ty.21 This limitation does not apply to distributed solar, are produced by countless manufacturers and parts
which is sited on the distribution system, conveniently vendors across the globe, and whose role in grid op-
proximal to loads. But for utility-scale solar projects, erations may not even be known to ISOs and utilities.25
which have grown faster than residential- and commer-
cial-scale projects from 2015 through 2020, as well as
utility-scale wind, transmission capacity limitations gen-
erally imply generation capacity limitations.22

18 Paul Denholm, Trieu Mai, Rick Wallace Kenyon, Ben Kroposki, and Mark O’Malley, Inertia and the Power Grid: A Guide without the Spin,
National Renewable Energy Laboratory, NREL/TP-6120-73856, May 2020, https://www.nrel.gov/docs/fy20osti/73856.pdf.
19 Advanced Energy Economy, Wholesale Market Barriers to Advanced Energy—and How to Remove Them, May 2019, https://info.aee.
net/wholesale-market-barriers-to-advanced-energy.
20 North American Electric Reliability Corporation, 2019 Long Term Reliability Assessment.
21 Ibid. ISOs are system operators that manage the bulk power system and power markets within a single state. RTOs are system operators
that manage such entities across multiple states.
22 US Energy Information Administration, “Table 1.1.A. Net Generation from Renewable Sources: Total (All Sectors), 2010-August 2020” in
Electric Power Monthly, February 2020, https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_1_01_a.
23 Josh Fruhlinger, “The Mirai Botnet Explained: How IoT Devices Almost Brought Down the Internet,” CSO Online, March 9, 2018, https://
www.csoonline.com/article/3258748/the-mirai-botnet-explained-how-teen-scammers-and-cctv-cameras-almost-brought-down-the-
internet.html; Lindsey O’Donnell, “Security Glitch in IoT Camera Enabled Remote Monitoring,” Threatpost, July 27, 2018, https://
threatpost.com/security-glitch-in-iot-camera-enabled-remote-monitoring/134504/.
24 North American Electric Reliability Corporation, “Cyber Security Supply Chain Risks,” May 17, 2019.
25 Muhammed Junaid Farooq and Quanyan Zhu, “IoT Supply Chain Security: Overview, Challenges, and the Road Ahead,” via arXiv.org,
Cornell University, July 21, 2019, arXiv:1908.07828v1.

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Figure 3.
Daily CAISO solar generation and California peak air particulate matter (PM2.5) level
gigawatt hours
125
solar generation
100
75
50
25
0
micrograms per cubic meter August Complex fire starts North Complex fire Creek Fire
holiday fireworks August 16 starts starts
800 August 18 September 4
July 5
600
400
200
PM2.5
0
7/1/2020 8/1/2020 9/1/2020
NOTE:CAISO: California Independent System Operator; PM2.5: particular matter of 2.5 micrometers or less in diameter.
SOURCE:Reproduced from US Energy Information Administration, “Smoke from California Wildfires Decreases Solar
Generation in CAISO,” September 30, 2020, https://www.eia.gov/todayinenergy/detail.php?id=45336.

Wildfires and extreme weather fires has a particularly acute effect on production. Power
forecasting firm Amperon, in coordination with the Aus-
Extreme weather events represent a perennial risk to the tralian Energy Market Operator, studied the effect of
grid and will persist in a decarbonized system. Conven- bush fires on twenty solar plants during the summer of
tional thermal generation can fail in both the extreme 2019-2020 and found a 4.1 percent mean decrease in
hot and cold: High temperatures prevent power plants production over a two-month period—a massive loss in
from evacuating sufficient heat during the steam cool- energy.27 The California Independent System Operator
ing cycle, causing the plant to trip offline, and cold tem- (CAISO) saw a loss of up to a third of solar production at
peratures can cause mechanical failures and even fuel points during the wildfires that plagued California during
to freeze. For example, coal piles froze during the Polar September 2020.28 A recent study in Nature Energy ex-
Vortex of 2014, and both gas- and coal-fired plants were amined the effects of extreme weather on renewable
forced offline due to cold-induced mechanical failures generation and demand under various climate change
during the Polar Vortex of 2019.26 scenarios, and found up to a 16 percent drop in power
supply reliability.29 These are reminders that there is no
Renewables are not immune to extreme weather, of free lunch for grid reliability, whether the grid is powered
course: the efficiency of solar PV systems decays with by legacy resources or advanced renewables.
increased ambient temperatures, and smoke from forest

26 North American Electric Reliability Corporation, “Polar Vortex Review,” September 29, 2014; Emma Foehringer Merchant, “Surviving the
Polar Vortex: A Look at How the Electricity System Fared,” Greentech Media, February 6, 2019, https://www.greentechmedia.com/
articles/read/polar-vortex-electricity-system-fared#gs.dyyQeQ8W.
27 Geert Scholma and Ydo Wexler, “Attenuation of Large-Scale Solar PV Production by Bushfire Smoke in South-East Australia,” Amperon
Holdings, 2020, https://amperon.co/case-studies/Attenuation-of-Large-Scale-Solar-PV-Production-by-Bushfire-Smoke-in-South-East-
Australia.pdf?.
28 Peter Behr, “Solar Power Plunges as Smoke Shrouds Calif.,” E&E News, September 11, 2020, https://www.eenews.net/
stories/1063713459.
29 A.T.D. Perera, Vahid M. Nik, Deliang Chen, Jean-Louis Scartezzini, and Tianzhen Hong, “Quantifying the Impacts of Climate Change and
Extreme Climate Events on Energy Systems,” Nature Energy 5, no. 2 (2020): 150-159.

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 ISSUE BRIEF Ensuring Energy Security in a Renewables World

Extreme weather impacts demand as well as supply. One

of the chief factors underlying the two-day rolling black-
outs that CAISO imposed during the heat storm in August Understanding renewable
2020 was the unpredicted swell of air conditioning de- “cannibalization”
mand it induced.30 Residential electricity demand is highly
The low cost of renewables only
weather-sensitive, primarily due to air conditioning in the
begins to characterize the financial
summer and electric heating in the winter, sensitivity that
effect they have on power markets.
will only grow with the electrification of space heating Without variable costs, and often
through heat pumps. Failure to predict demand spikes with long-term power purchase
hour-ahead, or even day-ahead, can cause a grid contin- obligations to satisfy, renewables
gency even if sufficient supply exists to meet it. Such sup- can bid into markets at zero or even
ply does no good if it is sitting idle on the sidelines, not negative marginal cost (in the case
having been dispatched early enough to come online to of production tax credits). This
assist. A notable finding from the California blackouts was behavior lowers the market clearing
that certain virtual power trading strategies contributed price paid to all generators, as well
to the failure by masking the underestimation of demand.31 as the costs paid by consumers,
ostensibly a straightforward market
efficiency. The reduced market
Missing money and economic insecurity for
payments threaten the financial
generators viability of otherwise-economic
resources, however, pushing the
Not all energy security challenges are physical in nature. generator fleet toward an unstable
Renewables have exacerbated what is known as the “miss- technology mix and increasing
ing money” problem in power markets, which refers to blackout risks for customers. The
the insufficiency of real-time energy prices to drive the expectation of depressed future
efficient entry and exit of resources in the long run.32 Re- spot market prices also has the
al-time prices in markets are often capped below prices effect of reducing futures prices for
that customers are willing to pay in order to prevent the electricity, the market on which long-
term renewables financing is based.
exercise of market power by generators when supply is
The low cost by which renewables
tight. It is precisely the margin made during such scarcity
win today, therefore, reduces
periods that recovers resources’ fixed costs, however. At their viability to obtain long-term
other times, renewables depress real-time prices due to financing tomorrow.
their near-zero variables costs, displacing conventional re-
sources in the merit order of supply bids and reducing the
market clearing price paid to all resources. This dynamic
is entirely consistent with the principle of locational mar-
ginal pricing, upon which power markets are based, by
which all resources are paid the marginal total system cost
of serving the next increment of load. It calls that princi-
ple into question, however, as an increasing percentage of
the fleet have no marginal cost. All power markets, includ-
ing the bilateral market for power purchase agreements
through which renewable projects are typically financed,
are ultimately based on real-time (spot) market prices,
and therefore the economic viability of the entire fleet—
clean and dirty resources alike—is dependent on solving
the missing money problem.

30 Cailifornia Independent System Operator, “Preliminary Root Cause Analysis: Mid-August 2020 Heat Storm.”
31 Ibid.
32 Roy J. Shanker, “Comments on Standard Market Design: Resource Adequacy Requirement,” Federal Energy Regulatory Commission,
Docket RM01-12-000, 2003, http://elibrary.ferc.gov/idmws/common/opennat.asp?fileID=9619272.

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 ISSUE BRIEF Ensuring Energy Security in a Renewables World

Wind turbines in California, United States. Unsplash / Cameron Venti (@ventiviews)

Approaches to energy security even initiating a long-term arrangement with such a re-
source, known as a reliability-must-run (RMR) contract.
Effective transmission development Such actions are costly to consumers and exacerbate
the missing money problem for economic generators,
Increased transmission capacity is a clear requirement as a supply scarcity opportunity has been addressed
for the continued development of utility-scaled renew- outside of the competitive market. In September 2019,
able projects. These projects leverage economies of the Federal Energy Regulatory Commission (FERC) ap-
scale to produce power at lower cost than residential- proved a request from CAISO for unprecedented flex-
and commercial-scale facilities, and will therefore play ibility in procuring RMR resources, but only under the
an important role in meeting clean energy targets. condition that CAISO would consider transmission in-
vestments as a lower-cost alternative, and that RMRs
In addition to bringing far-flung generation to load cen- would be “a measure of last resort.”33
ters, such as metropolitan areas, transmission develop-
ment can address local energy availability and prices in There are important questions regarding how trans-
these areas as well. Even when a transmission path ex- mission capacity is developed. Transmission facilities
ists between regional resources and a load center, the are typically procured through administrative plan-
capacity of the transmission lines may not be sufficient ning processes, such as PJM’s Regional Transmission
to carry the needed power during peak times, leading Expansion Plan or Europe’s Ten-Year Network Devel-
to congestion in the network. Congestion raises energy opment Plan, which look at system needs over various
prices in the constrained area and can become a bottle- time horizons to identify needed investments. Once a
neck to such a degree that the system operator is com- need is identified and approved by the system opera-
pelled to take out-of-market actions to address it, such tor’s board, competitive project bids are solicited and
as dispatching a polluting and uneconomic resource, or paid on a cost basis. Long-term planning over horizons

33 Federal Energy Regulatory Commission, “Order Accepting Tariff Revisions,” 168 FERC ¶ 61,199, September 27, 2019.

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of five years or more can increase energy security, but Regionalization: Security through market size
often fail to take into account alternative, comparatively
short-term investments in local generation capacity.34 It Transmission networks enable long-distance power flow,
may be most cost effective to develop a solar plant or a but their effectiveness is limited by the reach of the
grid-scale battery storage facility in a congested area, for markets they serve. The US power grid is legally seg-
instance, or even solicit demand response, rather than mented into so-called balancing authority areas, each
investing in transmission to import additional power. It administered by a balancing authority—such as an ISO,
is therefore important that market transmission plan- RTO, or monopoly utility—tasked with ensuring stabil-
ning processes evolve to work around, rather than pre- ity through the balance of supply and demand. Imports
empt, market-driven generation investments, and let and exports of power across balancing authority areas
energy market price signals do their work. are permitted but are not optimized like power flows
within a wholesale market territory. This limits the ef-
A limitation of transmission planning processes is that fectiveness of excess generation in one area to serve
they centralize transmission investment. While ISOs and excess demand in another, an opportunity enabled by
RTOs provide a vital public good by assessing and ad- long-distance transmission.
dressing reliability-based transmission needs, they do
not facilitate economic-based transmission project de- Regional power markets, such as CAISO’s Western En-
velopment—for instance, a transmission line introduced ergy Imbalance Market (EIM), address this deficiency
between load zones to arbitrage congestion-based by co-optimizing load and generation across balancing
price differences between them, which provides mar- areas. As an imbalance market, the EIM was designed as
ket value. In a 2013 policy statement, FERC made clear a real-time market only, optimizing power flows that are
its support for decentralized, market-based investment, not committed by day-ahead schedules or long-term
enabling transmission developers to contract directly bilateral agreements. This includes facilitating the pur-
with loads or generators that stand to benefit from their chase of excess wind generation in the mountainous
investment.35 In situations where the beneficiaries of a Northwest by customers on the California coast, and
transmission investment may be too broad to contract the export of excess California solar to loads in Arizona.
with directly, developers might instead contract with Since its inception in 2014, the EIM has avoided more
the ISO/RTO directly, through standard transmission than 1.2 million megawatt-hours of renewables curtail-
operating agreements. In either case, the impetus for ment, reduced close to 550,000 tons of carbon diox-
the transmission investment is a market opportunity, ide, and generated over $1.1 billion in gross benefits for
rather than a reliability exigency. Facilitating such mer- its members.36
chant transmission investments—which, unlike admin-
istrative planning processes, are closely in tune with Regional markets offer energy security benefits in addi-
energy markets prices and alternative investment op- tion to cost savings. Their wide footprint increases the
tions—should be a tenet of power market reform. Mar- likelihood that a lull in wind or solar in one locale will be
ket-based transmission investment is not a substitute offset by a surplus in another, given natural variations in
for reliability-driven centralized procurement, but it is weather. By the same token, they enable higher penetra-
a valuable complement. tions of renewables than would otherwise be possible in
fragmented and less-coordinated networks.37 Addition-
ally, the impact of a generator tripping offline or a sudden

34 William W. Hogan and Susan L. Pope, Priorities for the Evolution of an Energy-Only Market Design in Texas, FTI Consulting, May 2017.
35 Federal Energy Regulatory Commission, “Allocation of Capacity on New Merchant Transmission Projects and New Cost-Based,
Participant-Funded Transmission Projects,” 142 FERC ¶ 61,038, January 17, 2013.
36 California Independent System Operator, Western EIM Benefits Report, Third Quarter 2020, October 29, 2020,
https://www.westerneim.com/Documents/ISO-EIM-Benefits-Report-Q3-2020.pdf.
37 David Newbery, Michael Pollitt, Robert Ritz, and Wadim Strielkowski, “Market Design for a High-Renewables European Electricity
System,” Cambridge Working Paper in Economics 1726, June 2017, https://www.eprg.group.cam.ac.uk/wp-content/
uploads/2017/06/1711-Text.pdf.

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 ISSUE BRIEF Ensuring Energy Security in a Renewables World

spike in demand is reduced when there is a vast network could be addressed by an expansion of the Midconti-
of regional generators from which to import. For these nent ISO (MISO) and/or PJM, both of which border the
reasons, the regional market model has become pop- region, either via full market integration or as a real-time
ular outside of the United States as well, including the imbalance market, similar to the EIM. Another possibil-
European Union’s Internal Electricity Market, the Cen- ity is a new RTO. A recent study found that over two
tral American Electricity Market, the Australian National decades such an RTO could generate $384 billion in cu-
Electricity Market, and the West African Power Pool.38 mulative economic savings and 285,000 additional jobs
Islands such as Great Britain, Ireland, and Hawaii can- compared with business as usual, with the jobs driven
not enjoy the benefit of regionalization, however, owing by the construction of new battery storage and renew-
to their predominant (or complete) electrical isolation. ables assets.43 Either option will require the support of
state lawmakers and regulators in the Southeast, who
Despite early successes, there is opportunity for this would be best served by opening public utility commis-
model to evolve and expand. CAISO is planning to ex- sion dockets to study the potential benefits of region-
tend the EIM with a day-ahead market to better coordi- alization to their ratepayers.
nate regional unit commitment and power scheduling
based on day-ahead load forecasts.39 Ironically, day- Market product and technology innovations for
ahead markets have a much greater impact on real-time flexibility
power flows than real-time markets do, given how much
power flow is scheduled day-ahead, so this extension The averaging effects of regional markets can mitigate
may significantly amplify the EIM’s cost savings and en- the intermittence of renewables, but they cannot make
ergy security benefits. The market continues to grow, them self-sufficient. Complementary flexible resources
with numerous utilities scheduled to join from 2020 will be required to cover the gap between system load
through 2022, including major providers Xcel Energy in and renewable supply, consuming power when renew-
Colorado and Avista in Washington State and Idaho. It ables overproduce and injecting it when they underpro-
is being challenged, however, by a new Western Energy duce. These swings from consumption to production will
Imbalance Service Market, led by SPP.40 Further region- occur over the span of seconds, minutes, and hours, with
alization in the West must continue, however, as lack of little warning—an exacting requirement for energy re-
coordination between wholesale markets will introduce sources, few of which can ramp up and down so quickly.
severe flexibility costs by the 2030s.41 Greater transmis-
sion capacity will likely also be required to meet long- Much of this flexible capacity will be procured in an-
term decarbonization goals.42 cillary service markets, whose products require much
greater flexibility on the part of assets than real-time
As regionalization in the West increases, by contrast, the energy products. Examples include frequency regu-
absence of basic deregulation and wholesale competi- lation, which requires assets to follow production set-
tion in the Southeast becomes even more glaring. This points that change every few seconds, and CAISO’s and

38 Arina Anisie, Elena Ocenic, and Francisco Boshell, “Regional Markets: Innovation Landscape Brief,” International Renewable Energy
Agency, 2019, https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2019/Feb/IRENA_Regional_markets_
Innovation_2019.pdf?la=en&hash=CEC23437E195C1400A2ABB896F814C807B03BD05.
39 California Independent System Operator, “2020 Draft Three-Year Policy Initiatives Roadmap and Annual Plan,” Market and Infrastructure
Policy, September 30, 2019; Unit commitment is the process by which the system operator determines which generators should be
producing in a future time window, and then instructs them in advance to come online.
40 Robert Walton, “Xcel, 3 Other Colorado Utilities Choose California’s Imbalance Market over Southwest Power Pool,” Utility Dive,
December 18, 2019, https://www.utilitydive.com/news/xcel-3-fellow-colorado-utilities-choose-californias-imbalance-market-
over/569361/.
41 Keegan Moyer, “Western Flexibility Assessment,” Energy Strategies, NW Energy Coalition Clean & Affordable Energy Conference,
December 2, 2019.
42 Ibid.
43 Eric Gimon, Mike O’Boyle, Taylor McNair, Christopher T.M. Clack, Aditya Choukulkar, Brianna Cote, and Sarah McKee, “Economic and
Clean Energy Benefits of Establishing a Southeast U.S. Competitive Wholesale Electricity Market,” Energy Innovation, August 2020,
https://energyinnovation.org/wp-content/uploads/2020/08/
Economic-And-Clean-Energy-Benefits-Of-Establishing-A-Southeast-U.S.-Competitive-Wholesale-Electricity-Market_FINAL.pdf.

10 atlantic council
 ISSUE BRIEF Ensuring Energy Security in a Renewables World

Figure 4. Actual and forecasted upward ramps in CAISO.

Solar supply, 2018 11,800 MW

1-hour upward ramp record set in March, 2018 7,545 MW

3-hour upward ramp record set in March, 2018 14,777 MW

3-hour upward ramps forecasted by March, 2021 17,000 MW

Total demand forecasted in 2021 54,629 MW

SOURCE: NERC 2019 Long Term Reliability Assessment

NOTE:In 2021, 3-hour ramps are expected to exceed 30% of total
system demand, requiring significant flexible ramping capacity.

MISO’s flexible ramping products, which compensate as- not based on the merits of the novel call option-based
sets for the number of megawatts (MW) they are able framework, or EIR.46 While an empirical comparison may
to ramp up or down from their current economic dis- not be possible, other ISOs and RTOs would do well to
patch setpoint within a five- or fifteen-minute timeframe, consider EIR as an alternative to flexible ramping prod-
respectively. Flexible ramping products are viewed as ucts. Like other ESI products, it has the potential to offer
a key tool in managing renewable variability: The New resources greater revenue than traditional products if
York ISO (NYISO) and ISO New England (ISO-NE) have they are prepared to meet their obligations.
carefully studied the current implementations, and both
SPP and its independent market monitor have concluded It is worth noting that flexible demand could be a tre-
that SPP should develop its own product.44 mendous source of flexible ramping capacity. Aggrega-
tions of heating and cooling loads, EVs, and commercial
ISO-NE has settled on a product, known as Energy Im- and industrial loads can be surgically dialed up at the
balance Reserve (EIR), that is similar to a flexible ramp- individual kilowatt level, offering more than the preci-
ing product but fits within a new framework for ancillary sion needed for demand response ramping products. In
services developed within the RTO’s Energy Security September of 2020, FERC issued a landmark order es-
Improvements (ESI) initiatives, filed with FERC in April tablishing aggregations of distributed energy resources
of 2020.45 All day-ahead ancillary services in the new (DER) as first-class participants in wholesale markets,
framework would be procured as call options on real-time with dedicated participation models that respect their
energy. In the case of EIR, that energy corresponds to unique characteristics.47 FERC acknowledged in its order
the upward ramping capacity of the resource, and the that market participation today would require complex
total reserves procured are equal to the difference (if and sometimes costly market communications integra-
positive) between the day-ahead forecasted load and tion, however, which must be streamlined to make par-
the day-ahead cleared load. This protects against load ticipation feasible for many DERs.48 In the meantime,
serving entities, such as utilities, collectively underesti- flexible load resources bidding their demand in a man-
mating day-ahead demand, and procuring less capac- ner that reflects their price sensitivity can offer similar
ity than the ISO forecasts will be needed. While FERC flexibility value to markets as supply-side participation,
has rejected ISO-NE’s ESI proposal, that rejection was and even earn these resources capacity payments for

44 Southwest Power Pool Market Monitoring Unit, “State of the Market 2018,” May 15, 2019.
45 ISO New England Inc., “Compliance Filing of Energy Security Improvements,” Docket No. ER20-1567, April 15, 2020.
46 Order Rejecting Proposed Tariff Revisions, 173 FERC ¶ 61,106.
47 Order No. 2222, 172 FERC ¶ 61,247.
48 Ibid.

11 atlantic council
 ISSUE BRIEF Ensuring Energy Security in a Renewables World

Figure 15. Midday

Figure 5. Demonstration AGC test (12:40
of utility-scale p.m.–1
solar p.m.). Illustration
performing frequencyfrom NREL
regulation.

Figure
NOTE: Results
16. Middayshowing
of a demonstration AGC that
testa (12:40 p.m.–1
utility-scale p.m.)
solar plant canmagnification.
follow an AutomaticIllustration
Generation from NREL
Control (AGC) sequence, required for providing frequency regulation. While the maximum power of solar
Results of the AGC test conducted during the afternoon are shown in Figure 17. The plant
plants is limited by solar irradiation, below that limit they have surgical, low-latency control.
SOURCE: Reproduced from Clyde Loutan, Peter Klauer, Sirajul Chowdhury, and Stephen Hall, Demonstration
demonstrated similar
of Essential Reliability ServicesAGC performance
by a 300-MW as in the
Solar Photovoltaic previous
Power cases;
Plant, National however, a cloud front was
Renewable
moving over the plant on the afternoon of August 24, which introduced variability in the plant’s
Energy Laboratory, Technical Report NREL/TP-5D00-67799, March 2017, https://www.nrel.gov/docs/
fy17osti/67799.pdf.
output. During these periods, the available peak power from the plant was reduced significantly,
causing the AGC set point to decrease as well, according to Eq. 4; however, even during these
periods, thetoplant
committing demonstrated
responsiveness good
during AGC performance
emergencies. 49 by closely
of renewables, following the
compromising commanded
energy security. set
point, as shown in Figure 18 for one such event.
Despite their value in high-variability environments, Beyond managing price signals, there are other actions
markets have not adequately priced ancillary services. markets can take to encourage greater flexibility from
In PJM, ancillary services account for less than 7 per- resources by adjusting market rules. Some involve cre-
cent of the revenue brought in through capacity mar- ating new participation models and market products to
kets, despite the absence of any flexibility requirement enable advanced technologies such as dispatchable re-
in capacity products, merely the commitment to be
18 newables, DER aggregations, flexible load, and advanced
available.50 In MISO that percentage is higher, but an- nuclear to leverage their full physical capabilities. It is an
This report
cillary is available
services at no cost
still account from0.3
for only thepercent
NationalofRenewable
the Energy Laboratory
underappreciated at www.nrel.gov/publications.
fact that while renewable generators
all-in price of electricity. Markets’ under-allocation of
51
cannot control their maximum output capacity at any
revenue to ancillary services due to an overreliance on given moment, due to their weather dependence, they
forward capacity and out-of-market dispatch is problem- have near-surgical control over their production below
atic: It may fail to incent sufficient investment in flexible that level. This fact should guide ancillary service market
capacity, locking in today’s uneconomic (and frequently reforms to leverage that capability, taking into account
high-emitting) backup resources for years to come. While the opportunity cost when a MW of energy production
adequate today, these resources may not be adequate is withheld as a MW of ancillary service capacity. A re-
in a high-variability future driven by high penetrations cent study has shown, moreover, that flexible nuclear

49 PLM, “Price Responsive Demand,” Factsheet, 2017, https://www.pjm.com/~/media/about-pjm/newsroom/fact-sheets/price-

responsive-demand.ashx.
50 Monitoring Analytics, LLC, State of the Market Report for PJM, Q1 2020, May 14, 2020, https://www.monitoringanalytics.com/reports/
PJM_State_of_the_Market/2020/2020q1-som-pjm.pdf.
51 Potomac Economics, 2018 State of the Market Report for the MISO Electricity Markets, June 2019, https://cdn.misoenergy.org/2018
State of the Market Report364567.pdf.

12 atlantic council
 ISSUE BRIEF Ensuring Energy Security in a Renewables World

would be expensive to develop, but advanced reactors greater flexibility from them, but potentially at the ex-
capable of cycling to meet load could result in nuclear pense of the otherwise-beneficial practice of long-term
being the largest or second-largest form of capacity contracting; this requirement must therefore be care-
in several major regions, including New England, Cali- fully studied, both from market and participant perspec-
fornia, and Florida.52 This scenario is predicated on nu- tives. Carve-outs would be required for truly inflexible
clear reaching costs of $50 per megawatt hour (/MWh) resources such as conventional nuclear, which provides
in 2006 dollars, however, with the potential of nuclear clean baseload generation, as well as resources such as
being phased out if prices remain above $76/MWh.53 hydroelectric plants whose actions must prioritize en-
While its future is uncertain, advanced nuclear must re- vironmental considerations above market ones.
main a part of the conversation around deep decarbon-
ization planning. Leveraging smart inverters and market competition
to create synthetic grid inertia
Improving coordination with natural gas markets is a
simple but effective tactic that system operators can Incremental improvements in resource flexibility and
take. By posting day-ahead unit commitments further ramping will support decarbonization in the near term,
in advance of the natural gas day-ahead window, power but as renewable capacity eclipses that of conventional
markets would enable generators to bid their full flexible resources, the ultimate challenge will be a lack of grid
capacity, in the knowledge that they will have time to es- inertia. Inverters today that enable batteries and renew-
timate and procure exactly as much fuel is necessary to ables to deliver power to the grid are grid-following, in
support however much of their bid clears the market.54 that they simply follow the alternating current of syn-
chronous generators. In an environment with few syn-
Another rule change would be to limit or even eliminate chronous generators, inverters will need to operate in a
the practice of resources self-scheduling their genera- more challenging grid-forming mode, as they do in an
tion, rather than participating in economic dispatch.55 islanded microgrid, in which they act as leaders rather
Resources typically self-schedule if they have already than followers in establishing alternating current syn-
contracted with a buyer, such as through a power pur- chrony.57 Beyond that, their power electronics will need
chase agreement, or if they have long lead times to start to react near-instantaneously to power transients, mim-
up and cannot wait for the day-ahead market to close. icking physical inertial response.58 This feat is analogous
These resources are inflexible in several respects: They to what a Segway scooter accomplishes in staying up-
are price-taking, rather than price-responsive; they in- right, despite the movements of its rider. Inverter de-
crease the risk of network congestion, as their dispatch signs capable of such “synthetic” or “virtual” inertial
cannot be optimized; and they frequently have pre- response are still in the developmental stage, however,
ferred treatment with respect to curtailment. Reducing and will need to prove themselves capable of stabilizing
self-commitment was one of the reasons the SPP’s Mar- the grid at scale, to the exacting requirements of NERC
ket Monitoring Unit recommended extending its day- and other regulators.59
ahead market to two days ahead.56 Requiring contracted
units to participate in economic dispatch would coerce To incentivize the development of this technology while

52 Tapia-Ahumada et al., Deep Decarbonization of the U.S. Electricity Sector.

53 Ibid.
54 Robbie Orvis and Sonia Aggarwal, “A Roadmap for Finding Flexibility in Wholesale Markets,” Energy Innovation, October 2017.
55 Ibid.
56 Southwest Power Pool Market Monitoring Unit, “Self-Committing in SPP Markets: Overview, Impacts, and Recommendations,” December
2019.
57 Benjamin Kroposki, Brian Johnson, Yingchen Zhang, Vahan Gevorgian, Paul Denholm, Bri-Mathias Hodge, and Bryan Hannegan,
“Achieving a 100% Renewable Grid,” IEEE Power & Energy Magazine, March 1, 2017, https://ipu.msu.edu/wp-content/uploads/2018/01/
IEEE-Achieving-a-100-Renewable-Grid-2017.pdf.
58 National Renewable Energy Laboratory, “When the Gears Stop Turning: NREL and PG&E Collaboration Demonstrates Synthetic Inertia,”
May 30, 2018, https://www.nrel.gov/news/program/2018/when-the-gears-stop-turning.html.
59 Roy Kuga, Mark Esguerra, Bennet Chabot, and Alejandro Avendaño Ceceña, EPIC 2.05: Inertia Response Emulation for DG Impact
Improvement, EPIC Final Report, Pacific Gas and Electric Company, February 20, 2019.

13 atlantic council
 ISSUE BRIEF Ensuring Energy Security in a Renewables World

it remains inessential, markets should consider valu- Increased transmission capacity will be key to bringing
ing inertial response as an ancillary service. This action far-flung renewable resources to population centers and
would have the added benefit of initiating the long and to decreasing transmission congestion. Transmission in-
complex discussion between markets, regulators, and vestment that is driven by market opportunities as well
stakeholders of how to measure and compensate for grid as societal needs, and that works around rather than
inertia. The Australian Energy Market Commission has preempts generation investment, can boost grid stabil-
begun such an investigation, and found that while requir- ity while reducing customer costs. The value returned
ing minimum levels of inertial response is adequate for by physical infrastructure depends on how efficiently
now, in higher variable energy resource environments a it is used, however. Regionalization of markets enables
market for inertial response might be needed in the fu- transmission equipment to serve a wider territory, car-
ture.60 In parallel to such market testing, the federal gov- rying renewable generation to where it is needed—and
ernment can accelerate the development of synthetic compensated—the most. Regional markets have aver-
inertia through Department of Energy research grants aging effects as well, increasing the likelihood that re-
and national laboratory research partnerships, such as newable generation deficits in one territory will be offset
the one between the National Renewable Energy Lab- by surpluses elsewhere. The Southeast United States,
oratory and Pacific Gas & Electric.61 which lags behind much of the country in deregulation
and access to competitive markets, could benefit by ei-
ther joining PJM or MISO, or by forming its own regional
Conclusion transmission operator.

The falling cost and minimal technology risk of renew-

ables has established them as the anchor of tomor-
row’s decarbonized grid. A key issue for policy makers,
regulators, and grid operators is determining how to
accommodate these resources at scale without com-
promising energy security or raising costs. As intermit-
tent resources, renewables will require a substantial
investment in flexible complementary resources, such
as battery storage and combined-cycle gas turbines,
and eventually clean generation sources, such as ad-
vanced nuclear, geothermal, and hydrogen fuel cells.
These resources must work together to follow loads, and
to recreate the physical inertia the grid will lose with the
retirement of conventional resources. Flexible loads will
have a grid-stabilizing role to play as well, both as sup-
ply-side demand response resources and demand-side
price-sensitive consumers of electricity. System opera-
tors must do their part by creating participation models
for advanced resources, such as renewables and DER
aggregations, enabling them to participate to their full
physical potential. They must also create markets for
ancillary services such as flexible ramping reserves and
perhaps even grid inertia, services which are technol-
ogy agnostic and create price signals for flexibility, driv-
ing innovation.

60 Australian Energy Market Commission, Frequency Control Frameworks Review, Final Report, July 26, 2018, https://www.aemc.gov.au/
sites/default/files/2018-07/Final%20report.pdf.
61 National Renewable Energy Laboratory, “When the Gears Stop Turning: NREL and PG&E Collaboration Demonstrates Synthetic Inertia,”
May 30, 2018, https://www.nrel.gov/news/program/2018/when-the-gears-stop-turning.html.

14 atlantic council
 ISSUE BRIEF Ensuring Energy Security in a Renewables World

Ben Hertz-Shargel is head of data science and demand

management at Rhythm, a retail clean electricity provider
combining technology and humanity for an effortless ex-
perience with energy. Previously, he was vice president, ad-
vanced grid services and analytics at EnergyHub, where he
was responsible for analytics within the company’s distrib-
uted energy resource management system (DERMS) and
energy market operations. At EnergyHub, Ben managed the
forecasting and optimization of some of the largest virtual
power plants in the world, comprised of electric vehicle (EV)
chargers, stationary batteries, grid-interactive water heat-
ers, and connected thermostats. Ben came to EnergyHub
from ThinkEco, where he was vice president, technology,
and prior to that was a member of the Quantitative Strate-
gies group at Credit Suisse.

Ben is an expert on the intersection between advanced en-

ergy technology and energy markets, contributing to reports
on the digitalization and decarbonization of the power sys-
tem published by the Atlantic Council Global Energy Center
and the Council on Foreign Relations. He is a Nonresident
Senior Fellow at the Atlantic Council Global Energy Center
and serves on the external Advisory Committee of the Al-
fred P. Sloan Foundation’s Energy and Environment Pro-
gram. He is also a contributor to Axios.

Ben holds a bachelor of arts in computer science from

Northwestern, a master of science in mathematics from the
Courant Institute at New York University, and a PhD in math-
ematics from UCLA.

Acknowledgments

The Atlantic Council wishes to thank the MacArthur Foundation.

15 atlantic council
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