The combination of intermittency, near zero marginal operating costs, imperfections in capacity and scarcity pricing mechanisms, and the reliance on out‐of‐market revenues to provide financial support to wind and solar generation, raise important questions about the continued reliance on market incentives to support efficient operations and to provide adequate revenue support to retain existing generators that are needed to balance the system, to attract entry of new flexible generators and storage.

I do not believe that “fiddling” with existing market designs will deal adequately with all of these challenges. I am not optimistic about the prospects for reforming capacity pricing and scarcity pricing mechanisms with minor modification to existing mechanisms. The mandates, subsidies and contracting obligations will just spread as the market fails to deliver adequate retention and entry of generating capacity and storage needed to manage intermittency. We might as well face this sooner rather than later.