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Noah Dormady & Elena Maggioni

Climate Change Mitigation Policy and Energy Markets: Cooperation and Competition in Integrating Renewables into Deregulated Markets. Forging Closer Ties: Transatlantic Relations, Climate and Energy Berlin, November 29 – December 5, 2009. Noah Dormady & Elena Maggioni. Agenda.

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Noah Dormady & Elena Maggioni

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  1. Climate Change Mitigation Policy and Energy Markets: Cooperation and Competition in Integrating Renewables into Deregulated Markets Forging Closer Ties: Transatlantic Relations, Climate and Energy Berlin, November 29 – December 5, 2009 Noah Dormady & Elena Maggioni

  2. Agenda • Theoretical Context • California’s Energy Markets • Case of Los Angeles Department of Water and Power (LADWP) – Green Path North (GPN) • California’s Policy Response • Implications and Conclusions

  3. Theoretical Context • Scale Economies Determine Appropriate Organizational Form (Joskow & Schmalensee 1983; Joskow 1998; Williamson 1975, 1982, 1985; Wilson 1998) • Regulation, Political Economy, and Industrial Organization (Krueger 1976; Peltzman 1976; Stigler 1968, 1971) • Environmental Regulation and Competition (Hahn 1984; Helland & Matsuno 2003; Heyes 2009; Misiolek & Elder 1989; Salop & Scheffman 1983; Sartzetakis 1997; Von der Fehr 1993) • Deliberative Democracy as a Method for Solving Complex Policy Problems (Dryzek 2000; Friedman 1989; Hajer 2003)

  4. California Market Bilateral Contracting & Generator Bidding Several Markets Long-term Markets Short-Term Markets (Day-ahead, Hour-ahead, Spot) Locational Marginal Pricing (LMPs) Financial Transmission Rights (FTRs/CRRs)

  5. City A $ 42 Generator $1.00 $ 2.00 C $48 B $40 NFS

  6. RPS: Investors Owned Utilities • RPS and Investors Owned Utilities • 33% by 2020 Table 1 - Timeline for Electricity from . . .

  7. RPS: Publicly Owned Utilities

  8. Green Path North • LADWP needs to increase its renewable portfolio and wants to: • Tap into geothermal resources in the Southeastern part of California • Build its own power lines • It is encountering strong opposition from local communities

  9. Southern California Geothermal Resources and Connecting Transmission Lines

  10. Community Opposition

  11. Market Available Transmission Capacity Also physical capacity constraints ATC=TTC-OTC-TRM-ETComm-CBM-AS

  12. Collaborative Efforts to Break the Impasse • Renewable Energy Action Team: streamline cross-agency approval process • RETI - Renewable Energy Transmission Initiative: plan areas and corridors for renewables • California Transmission Planning Group: crossectoral integrated transmission plan

  13. Conclusions • Disconnect between energy markets and renewables policy • Small institutions and municipalities may be disadvantaged by: • Market Complexity • Quasi-competitive Markets • Available Physical Capacity • Uncertain success of current institutions • Firms are asked to cooperate to form the very markets on which they compete

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