Regulators in emerging markets must improve energy reliability, grow supply, and add large quantities of wind and solar in an environment characterized by limited financial and institutional resources. And yet proponents of development and reform tend to prescribe regulatory strategies from rich countries that aren’t facing the same challenges, with generally poor outcomes.

In a new policy memo published by Energy for Growth Hub, PESD associate director Mark Thurber explains why "best practices" approaches remain so popular, why they miss the mark, and how situational regulation can improve outcomes.

Writing for Energy for Growth Hub, Program on Energy and Sustainable Development Associate Director Mark Thurber and Latimer Energy Managing Director Olu Verheijen explain how open-cycle gas turbines could end up being the most affordable option for lower-income countries -- and the choice most compatible with a high-renewables future.

The Biden administration has pledged to reduce US greenhouse gas emissions to half of 2005 levels by 2030. A large share of these reductions would have to come from the power sector, with high-emitting coal-fired power plants being obvious targets for closure. Program on Energy and Sustainable Development (PESD) Associate Director Mark Thurber spoke on NPR's Here & Now about why phasing out coal-fired generation in the US by 2030 is an achievable goal -- and how we need to take care of affected workers along the way.  Listen to the interview.

Stanford's Program on Energy and Sustainable Development (PESD) is collaborating with the California Public Utilities Commissions (CPUC) on an Impact Lab that tackles an urgent policy question: How do we make sure the lights stay on as the electricity mix climbs towards state targets of 50% renewable energy in 2026 and 60% in 2030? Wind and solar are essential zero-carbon energy sources, but they are only available when the wind blows and the sun shines. Blackouts in Northern California last August were a warning that system reliability is at risk if the state doesn't act quickly to implement policies that ensure backup generation is available when needed.

The existing regulatory instrument for ensuring long-term resource adequacy, capacity payments, is not well-adapted to a high-renewables future. Capacity payments aim to ensure enough "firm capacity" is always available to keep the lights on, but the firm capacity construct is not applicable to wind and solar, which cannot be turned on and increased at the system operator’s discretion. 

The PESD/CPUC Impact Lab has proposed an alternative resource adequacy mechanism that is robust to a world of high and solar generation: auctions of Standardized Fixed-Price Forward Contracts (SFPFCs) that ensure every megawatt-hour of energy consumed in the state is hedged through long-term financial contracts. Unlike capacity payments, the SFPFCs provide a strong financial incentive for generators to meet their commitments to supply reliable energy wherever and whenever it is needed. PESD research suggests this novel policy mechanism can provide enhanced reliability and major cost savings relative to the capacity payment approach.

The CPUC has initiated a stakeholder process to consider possible implementation of this proposal, and PESD is assisting with research, policy outreach, and development of market simulation games that will allow stakeholders to gain hands-on experience with how the SFPFC mechanism would work in a realistic electricity market.

In a virtual panel discussion November 19 hosted by MIT’s Center for Energy and Environmental Policy Research (CEEPR), PESD Director Frank Wolak joined Alex Breckel, Associate Director of Strategic Research at Energy Futures Initiative (EFI), in addressing the impacts of power sector decarbonization on grid reliability. View recording

Recent record-breaking heat waves followed by rolling blackouts in California have sparked renewed discussion about the state’s options to address future power outages. Program on Energy and Sustainable Development Director Frank Wolak spoke to Bloomberg about power market reforms as one option where California could open up its electricity to retail competition.  While pricing would better reflect grid supply and demand, it’s unlikely this option would have backing given today’s political climate.   Read more (may require subscription)

The Program on Energy and Sustainable Development (PESD) and the California Public Utilities Commission (CPUC) are partnering on an Impact Lab to design and implement next-generation policies and regulations that support California's ambitious renewable energy goals. “Public support for aggressive climate action in California could decline if there are adverse grid reliability and cost implications from pursuing these goals,” said Frank Wolak, professor of economics and director of PESD. Wolak and the PESD team are working with the CPUC to develop: 1) policies to ensure resource adequacy with a very high share of intermittent renewable energy, 2) distribution pricing to support cost-effective and equitable renewable energy deployment, and 3) transmission planning frameworks that are robust to high wind and solar shares as well as future climate impacts. Read more (fifth white box near the bottom)

Given the urgency of climate change, it might seem sensible for aid agencies and multilateral donors to stop funding fossil fuel projects -- any fossil fuel projects -- in developing countries. But Program on Energy and Sustainable Development Associate Director Mark Thurber (writing with Energy for Growth Hub's Todd Moss) explains why shutting the tap on gas in Africa is bad development policy and bad climate policy.  Read more

On June 3, Program on Energy and Sustainable Development (PESD) Director Frank Wolak participated as one of three energy experts in a virtual panel discussion evaluating the pros and cons of proposed “reach codes”  banning natural gas in the city of Los Altos, California.  The panel discussion - "Mandating All Electric:  Is Banning Natural Gas Really The Answer?" - was organized by a group of Los Altos residents who believe city residents’ voices need to be considered in government decisions. 

Reach codes are being considered for all new residential and commercial building construction, and all “scrape” remodels in the city.  A reach code is a local building energy code that reaches beyond the state minimum requirements for energy and its use in building design and construction. These codes facilitate local government’s efforts focused on clean air, climate solutions, and renewable energy economics.

Recorded discussion