Rewarding reliability: Market reform policies for a clean, resilient grid

Decarbonizing electricity requires massive deployment of solar and wind, but these variable resources amplify vulnerabilities during extreme weather or multi-day high-demand, low-generation periods. Clean reliable technologies, like long-duration storage, natural gas with carbon capture, and enhanced geothermal, can fill these gaps and potentially lower overall system costs. However, current electricity markets fail to adequately and predictably pay for multi-day reliability, creating a “missing money” problem that blocks needed investments. Capacity payments designed to compensate for this gap undervalue resources capable of operating beyond 24-hour cycles.

This project evaluates how California can reform market rules (real-time scarcity pricing) and long-term capacity compensation (resource adequacy program reforms) to properly value multi-day reliability. Focused on California as a case study, we hope to expand successful policy candidates to other ISOs/RTOs. Working directly with grid operators and regulators, we will analyze policy options that ensure fair compensation without overpayment, creating investable revenue streams for reliable clean technologies while strengthening grid resilience and reducing long-term consumer costs.