Starting October 1, CAISO will open its subhourly wholesale electricity market to PacifiCorp’s service areas, marking the first time that CAISO will dispatch electricity to regions outside its footprint.
On September 30, 2014, the Energy Information Administration (EIA) released a report on the California Independent System Operator’s (CAISO) effort to open subhourly wholesale electricity markets to PacifiCorp’s electric service areas in the western U.S. The action marks the first time that CAISO will dispatch electricity to regions outside its service territory. On October 1, CAISO will begin a one-month simulation of balancing subhourly electricity supply and demand for PacifiCorp’s service areas through an energy imbalance market (EIM) and begin financially binding operations from November 1. PacifiCorp expects the action to result in enhanced reliability and cost savings in the west, where renewable energy generation is relatively higher.
The CAISO uses the EIM to procure electricity to cover unscheduled real-time mismatches between supply and demand. Supply can fluctuate due to unplanned generator and transmission outages and variability in renewable generation. According to EIA, currently 38 electricity balancing authorities balance supply and demand in their portions of the western grid in coordination with neighboring balancing authorities. Energy transfers between balancing authorities primarily occur on an hourly basis though CAISO switched to 15-minute interchange scheduling earlier this year.
The EIA noted that sudden and frequent fluctuations in renewable energy generation make western grid management difficult with the limited resource pool under their control and relatively infrequent dispatch on an hourly basis. The fluctuations require generators to maintain higher levels of additional power reserves to handle unexpected supply-demand changes and lead to higher power prices. Despite the ability to automatically respond to electricity imbalances in real-time, the west lacks a commercial structure to compensate for and optimize the supply response. CAISO’s EIM includes 15-minute generation scheduling and five-minute dispatch, providing PacifiCorp with optimized and controlled subhourly balancing and facilitates supply resource compensation for adjustments.
PacifiCorp expects cost savings from access to more frequent dispatch of lowest-cost generators and a much larger resource pool across CAISO’s area. The ability to use renewable resource output over a wider geographic area – such as using excess renewable generation in California for PacifiCorp’s territories – would also provide additional cost savings. Increasing generation from renewable resources in the future would facilitate pooling of geographically diverse renewable resources and alleviate the variability of overall renewable generation.
PacifiCorp will retain normal service responsibilities after joining the EIM. The CAISO will engage in subhourly scheduling and dispatch of PacifiCorp’s EIM-participants without assuming any grid operator duties for PacifiCorp’s areas. The EIM-related power transfers will initially use transmission made available by PacifiCorp and capacity currently under CAISO control. NV Energy is expected to join the EIM in October 2015. PacifiCorp and NV Energy are subsidiaries of Berkshire Hathaway Energy.
Originally published by EnerKnol.
Founded in 2011, EnerKnol provides U.S. energy policy research and data services to support investment decisions across all sectors of the energy industry. Headquartered in New York City, EnerKnol is proud to be a NYC ACRE company.
