Despite a deadlocked 2-2 vote by the Federal Energy Regulatory Commission on Tuesday, an energy market proposed by Southern utilities was allowed to take effect due to rules regarding tie votes by the agency.
The 15 utilities behind the Southeast Energy Exchange Market (SEEM) hailed the proposal as providing “cost, reliability and environmental benefits.” So, why is the renewable energy industry so concerned?
The Southern Alliance for Clean Energy describes the SEEM proposal as a “bilateral market among Southeast utilities that allows for trading in 15-minute increments, on a voluntary basis, with free transmission, and a split-the-difference price-setting mechanism” in the absence of a market monitor.
“The implementation of SEEM may slightly reduce the curtailment of solar among SEEM utilities, but could also potentially be used as a way for utilities to sell off excess generation that is a result of over building fossil gas resources,” Maggie Shober, the director of utility reform at SACE, wrote.
Meanwhile, a coalition of clean energy groups — Advanced Energy Economy, Advanced Energy Buyers Group, and Renewable Energy Buyers Alliance — issued a joint response to FERC’s split vote, calling it a “missed opportunity.”
“The acceptance of SEEM without a FERC order allows the sponsoring utilities to move forward without any Commission direction on how the new platform should be implemented and with no conditions that would improve transparency as to the benefits SEEM will actually deliver in practice,” said Jeff Dennis, AAE’s managing director and general counsel. “FERC appears to have passed on creating a forum to foster discussion with states and stakeholders regarding the future of wholesale power markets in the region. This result could allow utilities in the Southeast to lock in a subpar alternative that will not create meaningful savings for ratepayers and will do little to accelerate the adoption of advanced energy technologies, while allowing those utilities to cement their market dominance in the region.”
Background: On Aug. 20, Jeff Dennis, managing director and general counsel for Advanced Energy Economy, joined Renewable Energy World’s John Engel to discuss the latest back-and-forth (at the time) between SEEM and FERC.
Gizelle Wray, director of regulatory affairs and counsel at the Solar Energy Industries Association, said that SEEM will allow monopoly utilities to further cement their control on the marketplace.
“This proposal will embolden utilities to put up roadblocks for independent power producers and will slow our transition to clean energy,” Wray said in a statement. “We need a true market that encourages new entrants and competitive bidding, all of which could help bring Southeast utilities into the 21st century.”
A study released last month by the American Council on Renewable Energy determined that SEEM would produce the lowest cost savings and emission reductions of available options, and would imperil decarbonization goals.
The study — conducted by Vibrant Clean Energy — compared the proposed Southeast Energy Exchange Market to an optimal energy imbalance market (EIM) and regional transmission organization (RTO), finding an EIM would save $111 billion by 2040, while an RTO would save $119 billion.
Additionally, modeling from the study projects that an EIM and RTO would reduce carbon emissions by 67 and 70%, respectively, over the same time period, compared to just 30% under the SEEM framework.
“Accelerating the growth of renewable energy in the Southeast is critical to achieving our nation’s climate goals,” ACORE President and CEO Gregory Wetstone said following FERC’s effective approval of SEEM. “As our recent analyses have shown, a real-time energy market would generate significant cost savings and emission reductions beyond approved proposals.”
Southern Company, one of the driving forces behind SEEM, called the market a “21st century solution” that will provide “additional data transparency.”
“SEEM will allow resources to more easily access the electricity wholesale market and will enable and encourage new technologies and approaches necessary to deliver more economic and clean energy to our customers,” said Noel Black, Southern Company’s vice president of governmental affairs.
SEEM’s member utilities released a third-party report that estimated that SEEM would deliver $40-50 million in annual benefits to customers and utility grid operators in the near-term, increasing to $100-150 million annually in later years.
SEEM’s footprint will cover nearly 20 entities in parts of 11 states with more than 50 million people.