Comparing GHG Compliance and Accounting in EDAM and Markets+ for Energy Markets

EDAM GHG Design

1. GHG accounting framework:

   • EDAM extends the Western Energy Imbalance Market (WEIM) GHG accounting framework to include day-ahead markets
   • It uses a resource-specific approach, where each participating resource’s emissions are accounted for individually
   • GHG bid adders are introduced to reflect both compliance costs and willingness to pay for emissions, aligning with greenhouse gas regulations

2. Optimization and bidding:

   • EDAM’s market optimization considers energy bids and GHG bid adders based on the location of resources and the GHG regulation area they serve
   • For resources outside a GHG regulation area, only energy bids are considered
   • For resources inside a GHG regulation area, both energy bids and GHG bid adders are included to ensure GHG compliance

3. GHG net export constraint:

   • A GHG net export constraint limits aggregate GHG attribution, preventing secondary dispatch and minimizing emissions leakage

4. Counterfactual approach:

   • EDAM adopts an optimized solution for the GHG counterfactual approach, aligning it with WEIM by comparing day-ahead energy awards to day-ahead GHG awards

5. Regulatory compliance:

   • EDAM’s framework is designed to meet state GHG accounting requirements and reporting standards, in line with greenhouse gas accounting standards
   • EDAM will evaluate and potentially enhance its GHG design after its first year, ensuring ongoing alignment with evolving GHG regulations

Markets+ GHG design

While the specific details of the Markets+ GHG design are still emerging, we can infer the general approach based on market practices.

1. GHG accounting framework:

   • Markets+ is likely to adopt a framework that aligns with the regulation of greenhouse gas emissions across participating regions
   • It may use a resource-specific or market-wide approach for GHG accounting, depending on the structure and preferences of regional stakeholders

2. Optimization and bidding:

   • Markets+ is expected to integrate GHG compliance costs directly into market bids and optimization processes
   • Different bidding mechanisms may be explored to reflect GHG costs effectively, balancing compliance with efficient market participation

3. GHG constraints and compliance:

   • The Markets+ design might implement GHG constraints or mechanisms to manage emissions in alignment with greenhouse gas accounting practices
   • Secondary dispatch constraints could be employed to optimize emissions across the market and prevent unintended GHG impacts

4. Regulatory compliance:

   • Like EDAM, Markets+ aims to meet GHG reporting and compliance requirements, adapting to the regulatory needs of participating states
   • The design is expected to undergo periodic evaluations to ensure it remains effective and aligned with greenhouse gas regulations

Summary: key differences in GHG compliance and accounting

• EDAM: Extends the WEIM GHG framework to day-ahead markets, with a resource-specific approach, GHG bid adders, and net export constraints. The design includes an optimized counterfactual approach and commits to regular evaluation.

• Markets+: Though specifics are still under development, it is expected to incorporate a regional GHG accounting framework, integrate compliance costs into market bids, and implement emission constraints to manage GHG impacts efficiently.

These distinct approaches illustrate the adaptability of energy markets to regional regulations and GHG compliance standards, highlighting how EDAM and Markets+ respond to the needs of diverse stakeholders. As the details of Markets+ emerge, more specific GHG measures will likely be established to ensure efficient, accountable operations within these evolving market designs.

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