The former dominant design for transmission operations and market making was the vertically integrated utility. Under such a design, utilities might trade with neighbors, but such transactions were arranged bilaterally. As of 2011, about 60% of the U.S. electric supply was managed by RTOs/ISOs, making the RTO/ISO the dominant design, but not by much. The vertically integrated utility model is still widespread.
There are significant, ongoing changes occurring in market making and transmission operations activities, including:
- Constant efforts to refine and improve market optimizations. Some of this comes from improvements in computer technology, enabling more faithful and realistic modeling of the constraints of generation and transmission resources. Such calculations allow the system to generate dispatches that optimize generation.
- Larger ISOs, RTOs, and balancing authorities enable trading over larger areas, providing more opportunities to match generation and load.
- Knowledge of the current state of transmission system improves over time with more and better telemetry and state estimation (e.g., phasor measurement unit). Telemetry refers to direct measurement of a transmission resource, whereas state estimation is a mathematical process by which one guesses the state of untelemetered transmission elements based on real measurements of a small subset of the transmission resource, and knowledge of the electrical characteristics of the grid. As the cost of telemetry decreases, there may be less reliance on state estimation, which always has uncertainty. Simultaneously, the art and science of state estimation itself is improving.
- Transmission planning is a technically complex and commercially sensitive process. Uncertainty regarding quantity and location of new load and new generation, and environmental considerations add layers of complications to this long, slow process. To the degree that better modeling and more telemetry on the system aid decision-making, transmission planning may become more straightforward.
- Improvements to market rules occur through experience. Market rules are intended to encourage straightforward participation in wholesale markets without making it possible for an individual participant to obtain and exercise market power. Because some participants will always seek market power, rules are incorporated into systems to automatically detect and mitigate such behavior. Additionally, ISOs/RTOs have market monitoring staff whose job it is to evaluate market results and investigate anomalies. These technologies and processes are expected to continue to improve over time.
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