While solar and wind resources are abundant in the western United States, the region faces technical, operational and management challenges in transitioning to cleaner energy portfolios.
Integrating renewable energy into existing electric grids continues to be a difficult hurdle for many electricity markets. When utilities face intermittent renewable energy generation, energy imbalance markets (EIMs) have been developed to mitigate the gaps between production and demand.
According to a video by California (CAISO), EIMs pool electricity generation within a region and dispatch electricity to match demand. By pooling resources from a greater area, companies reduce costs associated with peak-demand spikes.
In April, the Western EIM managed by CAISO welcomed two new utility companies, Boise-based Idaho Power and Vancouver-based Powerex. A press release from CAISO said the addition of these two utilities allows the EIM to serve 55 percent of the electricity demand within the Western Interconnection, supplying power to more than 42 million customers.
To date, CAISO reports that this EIM has produced a savings of more than $400 million. It also reports that since 2015, this EIM has reduced greenhouse gas emissions by 250,845 metric tons. This is the equivalent of taking approximately 52,739 passenger cars off the road for an entire year.
As western utility companies have increased the percentage of power supplied from renewable energy sources, often in response to renewable portfolio standards, the need to ensure backup power has become an increasingly important issue across the western United States.
Because solar and/or wind energy production is intermittent, utility companies must provide backup resources to ensure continued electricity for customers during times when solar or wind resources are not available.
North American Electric Reliability sets standards of electricity availability and regulates the balancing authorities within each market. By linking multiple energy markets, the balancing authorities are able to work together and balance their demand across a greater pool of resources, reducing the need for buffers.
According to the CAISO video, because multiple balancing authorities can work together to support a centralized, region-wide dispatch authority, EIMs help achieve economic efficiency by reducing redundancy. They help maximize the use of existing infrastructure and help reduce the need for system expansion.
EIMs also benefit the environment by reducing carbon emissions. This happens because less of the renewable energy generated within the EIM market is wasted. Emissions are also reduced because more of the energy demand is met with electricity generated from renewable sources.
CAISO and the Western EIM
An independent governing body appointed by the CAISO manages the EIM. The Western EIM analyzes the demand load every five minutes and draws power from the most economical resource at five-minute intervals.
The EIM operates within the Western Interconnection, one of the two major alternating current electrical power grids in the lower 48 states. It is governed by Western Electricity Coordinating Council (WECC). The WECC promotes bulk electric systems reliability within the Western Interconnection.
Benefits of the Western EIM
The CAISO 2018 Q2 report estimates benefits from the EIM in three distinct categories for this quarter.
Reduced ramping reserves, also called flexible ramping requirements, reduced the total MW required in the EIM region between 35 and 43 percent in the same time period.
Additional benefits from the production of renewable credits were not quantified, but CAISO reports that the EIM allows for the creation of additional renewable energy credits that otherwise would not have been created due to the curtailment of excess renewable energy production within individual balancing authorities.
Two New Utilities in the Market
When Powerex and Idaho Power joined the EIM, CAISO issued a statement welcoming them.
“The Western Energy Imbalance Market continues to demonstrate that coordination of energy over a large area can lower costs for electric customers and reduce the cost of the transition to a more renewable-based grid,” said the statement from CAISO. “We’re happy to welcome Powerex and Idaho Power to the EIM and congratulate them on all of their successful efforts and hard work to get ready to participate in this growing market.”
Idaho Power began testing parallel operations on Feb. 1 and received full readiness certification on March 2. It joined the EIM on April 4. The company expects to save between $4-5 million, savings they deem will be passed along to customers.
“We have been working on this for the better part of two years to ensure a smooth transition and to make sure that our company and our customers will be well-served by our participation,” said Tess Park, Idaho Power’s vice president of power supply.
“Our participation in the western EIM allows the flexibility of five-minute generation dispatch transactions across a larger regional footprint," said Brad Bowlin, communications specialist at Idaho Power. "This provides additional opportunities to balance our system with more resources - closer to when the actual load and generation changes.”
Idaho Power reports that it serves more than 1.2 million people in southern Idaho and eastern Oregon. It has been in operation since 2016. The utility operates 17 hydroelectric projects with a total generation capacity of 1,709 MW.
Powerex, based in Canada, also serves United States customers near the British Columbia border in northwestern Washington. It is the first international company to join the Western EIM. Its activity in the EIM will only include United States customers.
Future of the EIM
Eight utilities have joined the EIM since its launch in 2014. Each member utility contributes generation and transmission resources. CAISO reports that the EIM serves over 42 million customers.
Several additional utilities are expected to join the EIM in the next few years. These include Seattle City Light, Salt River Project, Los Angeles Department of Water and Power, and Northern California/Sacramento Municipal Utility District.
The EIM now serves customers in eight western states. Its 2018 Q2 report said that “EIM is helping to displace less-clean energy supplies with surplus renewable energy that otherwise may have been curtailed.”
“Integration into the system is smooth. With each entity that joints the EIM, it gets stronger, better, and more liquid. The more participants we have, the more we see increased benefits,” said Steven Greenlee, senior public information officer at CAISO.