Beyond fuel cost: Rethinking electricity market design for zero marginal cost resource integration

The pervasive integration of generation with zero short-run marginal cost (ZMC) such as wind, solar, and energy storage has fundamentally reshaped competitive wholesale electricity markets. This review develops a taxonomy of twelve challenges spanning operational impacts, market-clearing distortions, and investment adequacy. We survey recent reserve products and ancillary service reforms across seven North American ISO/RTOs, characterizing each product’s mathematical structure and mapping it to the challenges it addresses. We review academic solutions ranging from stochastic programming to machine learning-driven reserve sizing. The resulting diagnostic mapping reveals strong convergence between theory and practice in uncertainty-based reserve procurement, but persistent gaps in negative pricing frameworks, long-term investment signals, and demand-side integration. This is the first review to unify all seven North American ISO/RTOs within a common analytical framework. From the gaps identified, we derive a targeted research agenda for long-run market adequacy. Most consequentially, no ISO/RTO initiative addresses the inadequacy of marginal pricing for capital recovery in systems dominated by resources with high capital costs and low operating costs, a gap that capacity markets address only partially. We identify the merit order’s reliance on fuel cost as its primary dispatch metric as a structural source of this gap, and propose that research should examine whether deliverability, a resource’s ability to provide firm, dispatchable supply during system stress, can serve as an alternative value metric. Market design must evolve not only in what products are procured but also in what attributes are valued, shifting from fuel cost toward deliverability to ensure the continued resilience and economic viability of electricity systems.