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CAISO Begins Study Of Full Regional Electricity Market

CAISO will seek to understand how a regional system affects California’s transition to 50% renewables by 2030

According to Utility DIVE, the California Independent System Operator (CAISO) will study the possibility of turning the entire West into a single electricity market.

This study is predicated, in part, on California’s landmark Senate Bill 350 (SB 350). The bill has ordered the study in order to determine whether or not a regional market is the best path to achieving the state’s 50% renewables by 2030 mandate.

“The results could eventually turn as many as 38 individual balancing authority areas (BAAs) into a market richer in resources than the Midcontinent Independent System Operator (MISO) or the PJM Interconnection. But first, crucial questions need to be answered about who will pay, who will benefit, and what kinds of energy the system will carry.”

To have a regional grid, or not?

“A regional grid can access the untapped flexibility and diversity of resources throughout the West,” said Keith Casey, vice president of CAISO. “But we will do our due diligence to understand the full implications to the overall economy and the environment so we can make an informed decision.”

Palm Springs energy farm shutterstock_203643553A good number of energy consultants and academics are being called to assess the potential of such a regional market.

  • The Brattle Group will lead and coordinate the study
  • Energy+Environmental Economics (E3) will assess resources
  • University of California economists will assess costs and benefits
  • Aspen Environmental will study environmental impacts

Preliminary results from the study, and a timeline, were presented to California stakeholders February 8. The study is on track to be ready for official review by mid-June, stated Casey.

Origins of the Western market idea

Mr. Casey pointed to the concept of regional markets emerging back in the late 1990s when, led by the Clinton Federal Energy Regulatory Commission, power pools like PJM and ISO-New England were formalized. But at that time a number of Western BAAs were not eager to give up their independence

Casey pointed to changes now taking place which have spurred renewed interest in a potential regional market. “The tipping point,” said Casy, “was the operational challenge of integrating renewables.”

A regional market will allow system operators to do more advanced planning and give them increased situational awareness that will lead to lower cost power purchasing, it adds.

There will also be savings to ratepayers both from operating cost savings and investment cost savings, according to a preliminary assessment from Brattle.

Operating cost savings, Brattle anticipates, will come from the elimination of multiple transmission tariffs as resources are moved across BAAs. There will also be operating cost savings from using the wider region’s resources for balancing, instead of the EIM’s more limited resources.

The West’s BAAs see variability increasing on their systems, he said. “They are beginning to understand the region’s resource and demand diversity can make dispatch more flexible and efficient.”

Not everybody is on the same page

Writing for Utility DIVE, Herman K. Trabesh pointed out that although officials inside CAISO might be optimistic about the possibilities of a region-wide electricity market, some California legislators remain skeptical, and have sent a letter to Governor Jerry Brown.

The letter stipulated the regional grid plan must include:

  • No preemption or weakening of California’s clean energy and climate laws
  • Reduction of air and GHG pollution
  • Protection for the 50% renewables by 2030 mandate
  • Lower costs for California ratepayers
  • Lower costs to ratepayers
  • Transparency and access
  • Support for low-cost electric vehicle charging
  • Economic growth and job creation

Image: Palm Springs energy farm via Shutterstock

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