ORIGINAL REPORTING: The 3 key challenges to expanding the West's real-time energy market to day-ahead trading
The 3 key challenges to expanding the West's real-time energy market to day-ahead trading; Customer savings and streamlined emissions cuts can come from the Buffett-backed west-wide market plan
Herman K. Trabish, June 3, 2020 (Utility Dive)
Editor’s note: The effort to expand the Western real-time energy market is quietly gathering support as more states recognize the inevitability of the power system’s transition.
Utilities and stakeholders in Western states, seeing important benefits in their real-time energy market, are working toward expanding to a regional day-ahead collaboration that could hold much bigger benefits.
The voluntary Energy Imbalance Market (EIM) was launched by PacifiCorp, a subsidiary of Warren Buffett's Berkshire Hathaway Energy (BHE), and the California Independent System Operator (CAISO) in November 2014 to optimize real time dispatch, according to CAISO. It has generated $919 million in reduced energy costs and other benefits. Now, driven by new Western state renewables and zero emissions mandates, the 11 active participants and 9 new applicants are pushing to expand it to day-ahead trading.
"Generally, EIM entities are helping with the over-supply problem in California by absorbing the excess energy in the solar hours and helping meet California's morning and evening peaks," BHE Vice President for Government Relations Jonathan Weisgall told Utility Dive. With a day-ahead energy market, "those reductions in emissions and cost savings could be significantly increased" by optimizing dispatch from limited real-time trading to almost the entire Western energy market.
Western utilities and power providers from Canada to the Mexican border and from the Rockies to the Pacific are working on this voluntary Extended Day-Ahead Market (EDAM). It would expand optimized dispatch and delivery from 5% of the power flows in Western electricity markets to almost 100%. While there are few apparent declared opponents to the plan, stakeholders must address the three key challenges of the proposed market — its governance, transmission charges across jurisdictions, and guarantees among participants that they will meet their obligations.
Policymakers across the West have rejected efforts by CAISO to organize a formal regional market that would have eliminated cost barriers among the West's 38 balancing areas where individual jurisdictional entities optimize their own dispatch. California leaders primarily sought to protect the state from federal regulation while other Western leaders have been concerned with protecting their state's interests from California."But every state west of the Rockies except Wyoming now has a 100% renewables or zero emissions mandate or a utility with an agreement moving it in that direction," BHE's Weisgall said.
BHE subsidiary PacifiCorp "has achieved customer benefits in the EIM, but rising renewables penetrations represent new levels of variability," Weisgall added. "The greater resource diversity available through the EDAM will allow utilities optimal dispatch flexibility to meet that increased variability with cost savings for customers." The EIM would continue to serve the entities' real time needs. The EDAM, which would reduce barriers for its voluntary participants in the much larger day-ahead market, is being explored through EIM committees and CAISO working groups by most of the EIM entities… click here for more